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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from__________to___________
Commission File Number 0-29474
BIG FLOWER HOLDINGS, INC.
Commission File Number 1-14084
BIG FLOWER PRESS HOLDINGS, INC.
(Exact Names of Registrants as Specified in Their Charters)
DELAWARE 13-397-1556
DELAWARE 13-376-8322
(State of incorporation) (I.R.S. Employer
Identification Nos.)
3 East 54th Street
New York, New York 10022
(212) 521-1600
(Address, including zip code, and telephone number, including area code,
of Registrants' Principal Executive Offices)
Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes (X) No ( )
As of November 4, 1997, there were 19,498,436 shares of Big Flower Holdings
Inc.'s Common Stock, par value $0.01 per share, outstanding. There is no market
for the common stock of Big Flower Press Holdings, Inc., all outstanding shares
of which are owned by Big Flower Holdings, Inc.
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1
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PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................................ $ 3,804 $ 4,200
Accounts receivable, net of allowance for doubtful accounts
of $10,116 and $8,580, respectively.................................... 102,591 105,270
Inventories.............................................................. 40,136 30,126
Prepaid expenses and other assets........................................ 6,764 5,622
Deferred income taxes.................................................... 17,240 17,286
------------- ------------
Total current assets................................................... 170,535 162,504
Property, plant and equipment, net......................................... 325,033 296,426
Intangibles and other assets, net.......................................... 318,939 290,812
------------- ------------
Total Assets........................................................... $ 814,507 $ 749,742
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable......................................................... $ 124,943 $ 116,513
Compensation and benefits payable........................................ 42,568 38,087
Other current liabilities................................................ 26,261 37,349
Current portion of long-term debt........................................ 473 1,376
------------- ------------
Total current liabilities.............................................. 194,245 193,325
Long-term debt, net of current portion..................................... 496,092 430,766
Deferred income taxes...................................................... 18,244 13,073
Other long-term liabilities................................................ 13,843 16,228
------------- ------------
Total liabilities...................................................... 722,424 653,392
------------- ------------
Stockholders' equity:
Common stock............................................................. 185 186
Additional paid-in capital............................................... 115,835 119,019
Accumulated deficit...................................................... (22,843) (21,514)
Other.................................................................... (1,094) (1,341)
------------- ------------
Total stockholders' equity............................................. 92,083 96,350
------------- ------------
Total Liabilities and Stockholders' Equity............................. $ 814,507 $ 749,742
------------- ------------
------------- ------------
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
2
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PART I--FINANCIAL INFORMATION
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and shares in thousands except per share data)
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30,
1997 1996
----------- --------------
<S> <C> <C>
Net sales.................................... $ 341,579 $ 313,248
Operating expenses:
Costs of production........................ 268,827 249,899
Selling, general and administrative........ 33,060 30,806
Depreciation............................... 11,776 9,155
Amortization of intangibles................ 4,168 3,992
Merger costs............................... -- 429
----------- --------------
317,831 294,281
----------- --------------
Operating income............................ 23,748 18,967
----------- --------------
Other expenses (income):
Interest expense........................... 9,805 8,989
Amortization of deferred financing costs... 305 757
Interest income............................ (35) (208)
Other, net................................. 1,758 2,225
----------- --------------
11,833 11,763
----------- --------------
Income before income taxes................... 11,915 7,204
Income tax expense........................... 5,855 4,169
Income before extraordinary item............. 6,060 3,035
Extraordinary item, net of income
tax benefit of $6.9 million................. (10,504) --
----------- --------------
Net (loss) income............................ $ (4,444) $ 3,035
----------- --------------
----------- --------------
Per share of common stock:
Income before extraordinary item........... $ 0.31 $ 0.16
Extraordinary item, net.................... (0.54) --
----------- --------------
Net (loss) income.......................... $ (0.23) $ 0.16
----------- --------------
----------- --------------
Weighted average shares outstanding.......... 19,474 18,463
----------- --------------
----------- --------------
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
3
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PART I--FINANCIAL INFORMATION
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and shares in thousands except per share data)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
----------- --------------
<S> <C> <C>
Net sales.................................... $ 955,918 $ 844,286
---------- ----------
Operating expenses:
Costs of production........................ 752,981 694,433
Selling, general and administrative........ 96,162 72,470
Depreciation............................... 34,776 24,191
Amortization of intangibles................ 12,456 12,329
Merger costs............................... -- 542
---------- ----------
896,375 803,965
---------- ----------
Operating income............................. 59,543 40,321
---------- ----------
Other expenses (income):
Interest expense........................... 29,309 25,496
Amortization of deferred financing costs... 1,277 2,230
Interest income............................ (257) (577)
Other, net................................. 5,619 10,203
---------- ----------
35,948 37,352
---------- ----------
Income before income taxes................... 23,595 2,969
Income tax expense........................... 11,461 1,801
---------- ----------
Income before extraordinary item............. 12,134 1,168
Extraordinary item, net of income tax benefit
of $8.8 million and $1.3 million,
respectively............................... (13,463) (1,892)
---------- ----------
Net loss..................................... $ (1,329) $ (724)
---------- ----------
---------- ----------
Per share of common stock:
Income before extraordinary item........... $ 0.63 $ 0.06
Extraordinary item, net.................... (0.70) (0.10)
---------- ----------
Net loss................................... $ (0.07) $ (0.04)
---------- ----------
---------- ----------
Weighted average shares outstanding......... 19,379 18,358
---------- ----------
---------- ----------
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
4
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PART I--FINANCIAL INFORMATION
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
----------- --------------
<S> <C> <C>
Cash Flows from Operating Activities
Net loss...................................................... $ (1,329) $ (724)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization................................. 47,232 36,520
Extraordinary item, net....................................... 13,463 1,892
Provision for doubtful accounts............................... 2,260 541
Amortization of deferred financing costs...................... 1,277 2,230
Loss on disposition of property, plant and equipment.......... 603 259
Deferred income taxes......................................... (26) 885
Other......................................................... -- 110
Changes in assets and liabilities (excluding acquisitions):
Decrease (increase) in accounts receivable.................... 3,420 (5,035)
Proceeds from initial sale of accounts receivable............. -- 91,567
(Increase) decrease in inventories............................ (9,409) 20,929
Increase in prepaid expenses and other current assets......... (1,331) (805)
(Increase) decrease in other assets........................... (2,748) 1,193
Increase (decrease) in accounts payable, compensation
and benefits payable and other
liabilities................................................. 12,873 (62,398)
---------- ----------
Net cash provided by operating activities..................... 66,285 87,164
---------- ----------
Cash Flows from Investing Activities
Capital expenditures.......................................... (60,071) (38,180)
Acquisition of businesses, net of cash acquired............... (32,743) (77,770)
Other investing activities.................................... 317 276
---------- ----------
Net cash used in investing activities......................... (92,497) (115,674)
---------- ----------
Cash Flows from Financing Activities
Payments for long-term debt................................... (215,396) (116,002)
Proceeds from issuance of long-term debt...................... 250,000 75,000
Net borrowings under credit facilities........................ 14,259 48,204
(Decrease) increase in book overdrafts........................ (10,622) 22,356
Financing costs............................................... (9,267) (1,313)
Other financing activities.................................... (3,158) 49
---------- ----------
Net cash provided by financing activities..................... 25,816 28,294
---------- ----------
Net Decrease in Cash and Cash Equivalents..................... (396) (216)
Cash and Cash Equivalents at Beginning of Year................ 4,200 9,172
---------- ----------
Cash and Cash Equivalents at End of Period.................... $ 3,804 $ 8,956
---------- ----------
---------- ----------
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
5
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BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
Big Flower Holdings, Inc. ("Big Flower", and together with its subsidiaries,
the "Company") is a Delaware corporation and the parent of Big Flower Press
Holdings, Inc., a Delaware corporation ("Big Flower Press"). As described in
Note 7, on October 17, 1997, the common shares of Big Flower Press were
automatically exchanged for common shares of Big Flower in a reorganization of
the Company's legal structure, and Big Flower Press then became a wholly-owned
subsidiary of Big Flower. Big Flower's operations are conducted through Big
Flower Press which, in turn, conducts its operations through its operating
subsidiaries. Separate financial statements of Big Flower Press as issuer of
Senior Subordinated 8 7/8% Notes due 2007 have not been presented as they are
the same as those of the Company as of September 30, 1997 and for the periods
then ended.
The Company is responsible for the unaudited financial statements included
in this document. The financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") and include all normal and
recurring adjustments that the Company considers necessary for the fair
presentation of its financial position and operating results. The Company
prepared the condensed financial statements following the requirements of the
Securities and Exchange Commission for interim reporting. As permitted under
those rules, the Company condensed or omitted certain footnotes or other
financial information that are normally required by GAAP. As these are condensed
financial statements, one should also read the financial statements and notes in
the Company's latest Form 10-K.
Revenues, expenses, assets and liabilities can vary during each quarter of
the year. Therefore, the results and trends in these interim financial
statements may not be the same as those for the full year.
Prior year results have been restated for the acquisition of Scanforms, Inc.
("Scanforms"), which was accounted for as a pooling of interests. See Note 2.
2. ACQUISITIONS
The Company completed six acquisitions in 1996. The timing of these
acquisitions, and their related accounting treatment, affects the comparability
of the Company's financial results.
- - On March 19, 1996, the Company acquired Webcraft Technologies, Inc.
("Webcraft") for approximately $111.0 million. Assets acquired, excluding
intangible assets, were $198.1 million and liabilities assumed were $156.4
million.
6
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- - During the fourth quarter of 1996, the Company acquired PrintCo., Inc.
("PrintCo"), Pacific Color Connection, Inc. ("Pacific Color"), Designer Color
Systems, Ltd. ("Designer Color") and Digital Dimensions, Inc. ("Digital
Dimensions"). The aggregate purchase price was approximately $46.5 million in
cash, a $2.0 million note and 0.5 million shares of common stock with an
approximate market value of $9 million. Assets acquired, excluding intangible
assets, totaled $67.9 million and liabilities assumed were $41.9 million.
The aforementioned acquisitions were accounted for as purchases and,
accordingly, the financial statements include the results of the acquired
companies' operations from the respective dates of acquisition.
On October 4, 1996, the Company acquired Scanforms in exchange for rights to
receive 1,549,489 shares of the Company's common stock. This acquisition was
accounted for as a pooling of interests and, accordingly, the condensed
consolidated financial statements have been restated to include Scanforms'
results for all periods presented.
On September 18, 1997, the Company acquired Olwen Direct Mail, Ltd.
("Olwen") for approximately $36.8 million in cash, including the retirement of
outstanding debt. Assets acquired totaled $15.0 million and liabilities assumed
were $10.0 million. Subsequent to September 30, 1997, the Company completed
additional acquisitions as described in Note 7.
The Olwen acquisition was accounted for as a purchase and, accordingly, the
financial statements include its results of operations from the date of
acquisition.
The following unaudited pro forma information reflects the Company's
restated results (including Scanforms), adjusted to include the results of the
other acquired companies (including those acquired after September 30, 1997 as
described in Note 7) as though the acquisitions had all occurred at the
beginning of 1996.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1996
------------ ------------
<S> <C> <C>
Net sales............................................................................. $1,144,977 $1,177,761
Income before extraordinary item...................................................... 13,891 2,267
Net income ........................................................................... 428 375
Income per share before extraordinary item............................................ 0.67 0.12
Net income per share.................................................................. $ 0.02 $ 0.02
</TABLE>
3. ACCOUNTS RECEIVABLE
On October 4, 1996, the Company entered into a six-year agreement (the "A/R
Securitization") under which it may sell interests in certain accounts
receivable. The maximum amount to be sold is $150 million and the amount
outstanding at any time depends upon the level of eligible receivables. The
Company retains substantially the same risk of credit loss as if the receivables
had not been sold and, accordingly, any allowance for doubtful accounts related
to the receivables sold is retained. At September 30, 1997, and December 31,
1996, a $90.7 million and
7
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$79.8 million interest, respectively, had been sold under the A/R
Securitization. These amounts are reflected as reductions of accounts
receivable in the condensed consolidated balance sheets. Fees of this program
vary based on a Eurodollar rate plus an average margin of 3/8% per annum on
the amount of interest sold. These costs, which were approximately $1.5
million for the 1997 third quarter and $4.5 million for the nine-month period
ended September 30, 1997, are included in Other, net in the condensed
consolidated statements of operations.
4. INVENTORIES
Inventories as of September 30, 1997, and December 31, 1996, are summarized
as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS) 1997 1996
------------- ------------
(UNAUDITED)
<S> <C> <C>
Paper............................................................................... $ 32,123 $ 22,315
Ink................................................................................. 1,090 1,040
Other............................................................................... 6,923 6,771
------------- ------------
Total............................................................................... $ 40,136 $ 30,126
------------- ------------
------------- ------------
</TABLE>
5. LONG TERM DEBT
During 1997, the Company refinanced its debt through the following actions:
- - In June, Big Flower Press replaced its previous credit facility with a new one
(as amended to date, the "Credit Facility") providing up to $475 million of
revolving credit loans. The Credit Facility provides greater borrowing
capacity on more favorable terms, including lower interest rates, and covenant
terms that the Company believes provide greater financial flexibility. It
matures on June 12, 2002 with no repayment of principal until maturity.
Interest is payable at Big Flower Press' option either (a) at a base rate plus
a margin which ranges from 0.00% to 0.75% or (b) at a Eurodollar-based rate
plus a margin which ranges from 0.50% to 1.75%. The Credit Facility also
contains certain customary covenant requirements and dividend restrictions.
- - Also in June, Big Flower Press issued $250 million of 8 7/8% senior
subordinated notes due July 1, 2007 (the "8 7/8% Notes") and used the
proceeds to pay down amounts outstanding under the Credit Facility. Interest
on the notes is payable semi-annually on January 1st and July 1st. The notes
are subject to certain customary covenants including restrictions on
dividends.
- - In connection with the issuance of the 8 7/8% Notes, Big Flower Press
commenced a tender offer for all of its outstanding 10 3/4% senior
subordinated notes due 2003 (the "10 3/4% Notes"). The tender offer for the
10 3/4% Notes expired on July 23, 1997 and on July 24, Big Flower Press
purchased substantially all of them for approximately $137 million, funded
through borrowings under the Credit Facility.
8
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- - In connection with the Olwen acquisition, a subsidiary of Big Flower Press
entered into a revolving credit facility (the "UK Credit Facility") providing
for borrowings of up to L27 million (approximately $45 million). The UK
Credit Facility expires on November 30, 1997, and Big Flower Press intends to
replace it with additional borrowings under the Credit Facility, which it
will seek to amend to allow borrowings in foreign currencies.
At September 30, 1997 the balance outstanding under the Credit Facility was
$204.0 million and the balance outstanding under the UK Credit Facility was
approximately $37.6 million.
EXTRAORDINARY LOSSES
Subsequent to the acquisition of Webcraft in the first quarter of 1996, the
Company repurchased substantially all of Webcraft's outstanding debt at a
premium, which resulted in an extraordinary loss of $1.9 million, net of income
tax benefit of $1.3 million.
In connection with the inception of the Credit Facility, the Company
terminated its previous credit facility and wrote off approximately $4.9 million
of deferred financing costs, resulting in a second-quarter 1997 extraordinary
loss of $3.0 million, net of income tax benefit of $1.9 million.
In connection with the redemption of the 10 3/4% Notes and the early
retirement of debt owed by Olwen, the Company recorded extraordinary losses of
approximately $10.5 million, net of income tax benefit of $6.9 million, in the
third quarter of 1997.
6. NEW ACCOUNTING PRONOUNCEMENTS
Per share information is currently computed using the weighted average number
of shares of common stock outstanding and dilutive common equivalent shares
from stock options using the treasury stock method. The Company will adopt
Statement of Financial Accounting Standard No. 128, "Earnings Per Share"
("SFAS 128") in the fourth quarter of 1997, as required. The standard
specifies the computation, presentation and disclosure requirements for
earnings per share. Under SFAS 128, the pro forma basic and diluted net
(loss) earnings per share (inclusive of extraordinary losses) for the quarter
and nine months ended September 30 were as follows:
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Basic........................................................................ $(0.24) $0.17 $(0.07) $(0.04)
Diluted...................................................................... (0.23) 0.16 (0.07) (0.04)
</TABLE>
7. SUBSEQUENT EVENTS
On October 15, 1997, the Company completed its acquisition of Riverside
County Publishing Company, a California-based advertising insert provider that
will be integrated into Treasure Chest Advertising Company, Inc. ("TC
Advertising"). On October 31, the Company completed its acquisition of Columbine
JDS Systems, Inc., ("Columbine") a leading provider of software
9
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systems which manage the placement of broadcast advertisements, programming
material and sales information data to television stations, radio stations,
broadcast and cable networks, cable operators and direct broadcast satellite
services. On October 31, the Company also completed its acquisition of Gamma
One, Inc., a New England-based premedia business that will become a
subsidiary of Laser Tech Color, Inc. ("Laser Tech"). The aggregate purchase
price for these acquisitions was approximately $251.5 million, including cash
paid, debt assumed, the fair value of approximately 1.4 million shares of Big
Flower common stock and options and related transaction expenses. All of
these acquisitions will be accounted for as purchases. In connection with the
Columbine acquisition, the Company will record a one-time pre-tax charge of
approximately $55.7 million to write off in-process software costs, which is
not reflected in the pro forma figures in Note 2.
On October 17, 1997, Big Flower became the new holding company of Big Flower
Press, which has become a wholly-owned subsidiary of its new parent. The common
stock of Big Flower Press was automatically exchanged for common stock of Big
Flower. The purpose of this reorganization was to facilitate the financing
transactions described below.
In connection with the acquisitions described above, on October 20, 1997,
Big Flower Press issued an additional $100 million of 8 7/8% Notes. On the same
day, a subsidiary trust of Big Flower issued $115 million of 30 year, 6%
Convertible Quarterly Income Preferred Securities ("QUIPS"). The QUIPS may be
converted into approximately 4.0 million shares of the Company's common stock
and are redeemable, subject to certain conditions, at the Company's option after
three years.
10
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BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933. In addition, when used in this report, the
words "believes," "anticipates," "expects" and similar expressions are intended
to identify forward-looking statements. Such statements are subject to a number
of significant risks and uncertainties. Actual results in the future could
differ materially from those described in the forward-looking statements as a
result of many factors outside the control of the Company. These include
fluctuations in the cost of paper and other raw materials used by the Company,
changes in the advertising and printing markets, the financial condition of the
Company's customers and the general condition of domestic and international
economies. Consequently, such forward-looking statements should be regarded
solely as the Company's current plans, estimates and beliefs. The Company does
not undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect any future events or circumstances.
GENERAL
The Company is a leading advertising and marketing services company with
three principal operating units as of September 30, 1997: TC Advertising,
Webcraft, and Laser Tech. TC Advertising is a leading producer of advertising
insert programs for retailers and produces TV listing magazines, Sunday comics,
Sunday magazines and special supplements for many of the most widely circulated
U. S. newspapers. Webcraft is a market leader in producing highly customized
direct mail and specialty advertising products such as commercial games and
fragrance samplers. Laser Tech is a leading provider of outsourced, digital
premedia and content management services to retailers, advertising agencies, and
consumer product companies. As of September 30, 1997, the Company and its
subsidiaries operated in the advertising and marketing services industry.
The cost of paper is a principal factor in TC Advertising's pricing to
certain customers. As TC Advertising is the Company's largest operating unit,
the cost of paper significantly affects the Company's net sales. TC Advertising
is generally able to pass increases in the cost of paper to its customers, while
decreases in paper costs generally result in lower prices to customers.
Volatility in paper costs results in a corresponding volatility in the Company's
net sales, but generally has not affected volume or profits to any significant
extent. In late July and early August of 1997, several newsprint producers,
including those used by TC Advertising, announced an increase in the price of
newsprint of between $35 to $40 per metric ton, an
11
<PAGE>
increase of approximately 6-7% over third quarter 1997 prices, to take effect
in the fourth quarter of 1997. At this time, the Company does not anticipate
this increase to have a significant impact on its results of operations or
financial position for the remainder of 1997.
Capacity in the paper industry has remained relatively stable in recent
years. Increases or decreases in demand for paper have led to corresponding
pricing changes and, in periods of high demand, to limitations on the
availability of certain grades of paper, including grades utilized by the
Company. The Company believes that its strong relationships with major North
American paper suppliers should enable the Company to satisfy its paper
requirements on competitive terms even in periods of high demand.
RESULTS OF OPERATIONS
The following table presents the major components from the Condensed
Consolidated Statements of Operations as a percentage of net sales for the
three-month and nine-month periods ended September 30, 1997 and 1996:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ---------------------
1997 1996 1997 1996
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net sales............................................................ 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Costs of production................................................ 78.7 79.8 78.8 82.3
Selling, general and administrative................................ 9.7 9.8 10.1 8.5
Depreciation....................................................... 3.4 2.9 3.6 2.9
Amortization of intangibles........................................ 1.2 1.3 1.3 1.4
Merger costs....................................................... 0.0 0.1 0.0 0.1
--------- --------- ---------- ---------
93.0 93.9 93.8 95.2
--------- --------- ---------- ---------
Operating income..................................................... 7.0 6.1 6.2 4.8
--------- --------- ---------- ---------
Other expenses (income):
Interest expense................................................... 2.9 2.9 3.1 3.0
Amortization of deferred financing costs........................... 0.1 0.2 0.1 0.3
Interest income.................................................... 0.0 (0.1) 0.0 (0.1)
Other, net......................................................... 0.5 0.7 0.6 1.2
--------- --------- ---------- ---------
3.5 3.7 3.8 4.4
--------- --------- ---------- ---------
Income before income taxes........................................... 3.5 2.4 2.4 0.4
Income tax expense................................................... 1.7 1.3 1.2 0.2
--------- --------- ---------- ---------
Income before extraordinary item..................................... 1.8 1.1 1.2 0.2
Extraordinary item, net.............................................. (3.1) 0.0 (1.4) (0.2)
--------- --------- ---------- ---------
Net (loss) income.................................................... (1.3% 1.1% (0.2% (0.0%
--------- --------- ---------- ---------
--------- --------- ---------- ---------
Other data:
EBITDA (in thousands)................................................ $39,692 $32,543 $106,775 $77,383
--------- --------- ---------- ---------
--------- --------- ---------- ---------
EBITDA as a percentage of net sales.................................. 11.6% 10.4% 11.2% 9.2%
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
12
<PAGE>
"EBITDA" represents the sum of operating income, depreciation, amortization
of intangibles and merger costs. EBITDA is presented here to provide additional
information regarding the Company's ability to meet its future debt service,
capital expenditures and working capital requirements. EBITDA is not a measure
of financial performance and should not be considered an alternative to net
income as a measure of operating performance or to cash flows from operating
activities as a measure of liquidity.
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1997 WITH THE THREE
MONTHS ENDED SEPTEMBER 30, 1996
Net sales increased to $341.6 million for the three months ended September
30, 1997 from $313.2 million for the three months ended September 30, 1996,
an increase of 9.0%. Adjusting to include the operations of businesses
acquired in 1996 and 1997 for the entire comparable periods, and to exclude
the net sales of the Webcraft Games business divested in 1996, net sales
increased approximately 2% for the quarter, reflecting, in part, the impact
of changing paper and ink prices on the Company's revenues. Adjusting further
for the impact of paper and ink prices on the advertising inserts business,
net sales increased approximately 7% for comparable businesses owned. This
increase was due mostly to higher volume at TC Advertising, particularly for
inserts produced for grocery store, drug store and home furnishings
customers, and increased demand for higher margin versioning and heat set
printing services. Additional revenue gains were achieved with new customer
growth in pre-media services at Laser Tech, especially in the commercial and
consumer goods packaging areas, and strong demand for Webcraft's direct mail
products, particularly for customers in the publishing and financial services
industries. These increases were offset by softness in the commercial
printing business at Webcraft.
Operating income for the three months ended September 30, 1997 increased
25.2% over the prior year period, increasing to 7.0% of net sales from 6.1% last
year. Adjusting to include businesses acquired in 1996 and 1997 for the entire
comparable periods and to exclude the business sold, operating income increased
approximately 5% over the prior year. Adjusting further for acquisition-related
charges of approximately $3.2 million, operating income increased approximately
19% over the third quarter of 1996.
Costs of production as a percentage of net sales decreased to 78.7% for
current quarter from 79.8% last year, due principally to a decrease in the cost
of paper, the increased demand for the Company's higher margin products and the
inclusion of the 1996 acquisitions where paper is less of a component of costs.
Paper costs were 37.4% of the Company's net sales for the three months ended
September 30, 1997 as compared to 40.1% of net sales for the three months ended
September 30, 1996.
Selling, general and administrative expenses decreased to 9.7% of net sales
in the three months ended September 30, 1997 from 9.8% in the 1996 period.
Depreciation, however, increased to 3.4% of sales in 1997 compared to 2.9% last
year. The increase in depreciation was attributable to the 1996 acquisitions and
increased capital expenditures throughout 1996 and 1997.
13
<PAGE>
Net interest expense for the three months ended September 30, 1997,
including the amortization of deferred financing fees, was $10.1 million
compared to $9.5 million for comparable period in 1996. The higher expense in
1997 is due to higher debt levels related primarily to acquisitions, although
the average rate of interest decreased to 8.25% from 9.24% in 1996.
The effective income tax rate for the three months ended September 30, 1997
and 1996 exceeded the federal statutory rate due primarily to amortization of
certain goodwill (which is not deductible for income tax purposes) and state
income taxes. The decline in the effective tax rate from 1996 was due to the
Company's increased profitability, reducing the impact of non-deductible
expenses.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1997 WITH THE NINE MONTHS
ENDED SEPTEMBER 30, 1996
Net sales increased to $955.9 million for the first nine months of 1997 from
$844.3 million for the corresponding period in 1996, an increase of 13.2%.
Adjusting to include the operations of businesses acquired in 1996 and 1997
for the entire comparable periods, and to exclude the net sales of the
Webcraft Games business divested in the fourth quarter of 1996, net sales
decreased approximately 1% reflecting, in part, the impact of declining paper
and ink prices on the Company's revenues. Adjusting further for the impact of
paper and ink prices on the advertising inserts business, net sales increased
approximately 9% for comparable businesses owned. The increase was driven by
the growth of TC Advertising's customer base, where home improvement, home
furnishings and, particularly, grocery chains either were added as new
customers or increased their volume of advertising. Increasing demand for
targeted advertising, versioning and heatset printing services and additions
to the newspaper television listing guide customer base also contributed to
TC's revenue growth. New clients in Laser Tech's pre-media services,
including consumer packaged goods, retail and commercial advertising
accounts, contributed to that business' rapid growth. Webcraft continued to
experience strong demand for direct mail products and fragrance inserts,
offset in part by softness in the commercial printing business in the second
and third quarters.
Operating income for the first nine months of 1997 increased 47.7%,
increasing to 6.2% of net sales from 4.8% last year. Adjusting to include
businesses acquired in 1996 and 1997 for the entire comparable periods and to
exclude the business sold, operating income increased approximately 22% over the
1996 period. Adjusting further for charges totaling $3.8 million in 1997 and
$0.5 million in 1996 (mostly related to acquisitions), operating income
increased approximately 29% over the prior year period.
Costs of production decreased to 78.8% of net sales for the nine months from
82.3% for the same period last year, due to the lower cost of paper, increased
demand for higher margin products and businesses acquired in 1996 where paper is
less of a component of costs. Paper costs were 36.5% of the Company's net sales
for the nine-month period as opposed to 41.1% for the same period of 1996.
Selling, general and administrative expenses increased to 10.1% of net sales
for the nine months ended September 30, 1997 from 8.5% in the comparable 1996
period. The increase is principally due the changing mix of the Company's
businesses and their relative contribution to the
14
<PAGE>
consolidated results. Depreciation was 3.6% of net sales in the first nine
months of 1997 compared to 2.9% for the same period in 1996, reflecting the
1996 acquisitions and increased capital expenditures.
Net interest expense, including the amortization of deferred financing fees,
for the nine months was $30.3 million compared to $27.1 million for the 1996
period. The higher expense in 1997 is due to higher debt levels related to
acquisitions, although the average rate of interest decreased to 8.42% from
10.11% in 1996.
Other, net, was $5.6 million in the nine months ended September 30, 1997
compared to $10.2 million in the comparable period in 1996. The 1997 amount
consists primarily of costs related to the A/R Securitization (see Note 3 to the
Condensed Consolidated Financial Statements), while the 1996 amount also
includes $5.2 million of charges related to 1996 financing transactions.
The effective income tax rate for the nine months ended September 30, 1997
and 1996 exceeded the federal statutory rate due primarily to amortization of
certain goodwill (which is not deductible for income tax purposes) and state
income taxes. The decline in the effective tax rate from 1996 was due to the
Company's increased profitability, reducing the impact of non-deductible
expenses.
LIQUIDITY AND CAPITAL RESOURCES
The operations of the Company historically have been funded with internally
generated funds, term loans, borrowings under revolving credit facilities,
sales of accounts receivable and proceeds from the Company's initial public
offering in November 1995. During the first six months of 1997, Big Flower
Press initiated several refinancing actions including replacement of its
credit facility with a new, more flexible one that has more advantageous
interest and borrowing terms and the issuance of $250 million of 8 7/8%
notes. In July 1997, Big Flower Press also completed a tender offer for its
outstanding 10 3/4% notes, funded through borrowings under its new credit
facility. In connection with 1997 acquisitions, some of which were completed
after September 30 (see Notes 2 and 7 to the Condensed Consolidated Financial
Statements), a subsidiary of Big Flower Press also entered into a UK credit
facility for borrowings of up to L27 million (approximately $45 million) in
September and Big Flower Press issued an additional $100 million of 8 7/8%
notes in October. In addition, a subsidiary trust of the Company issued $115
million of convertible preferred securities in October. The UK credit
facility expires on November 30, 1997, at which time the Company intends to
replace it with additional borrowings under its new credit facility.
Management believes that the facilities in place will be sufficient to meet
the Company's operational needs for the near future.
Big Flower's current liabilities exceeded current assets by $23.7 million at
September 30, 1997 compared with $30.8 million at December 31, 1996, an increase
in working capital of $7.1 million. Excluding the effects of the A/R
Securitization, working capital at September 30, 1997 and December 31, 1996
would have been $67.0 million and $49.0 million, respectively. The ratio of
current assets to current liabilities as of September 30, 1997 was 0.88 to 1
(1.34 to 1 excluding the A/R Securitization), and as of December 31, 1996 was
0.84 to 1 (1.25 to 1 excluding the A/R Securitization).
15
<PAGE>
Net cash provided by operating activities for the nine months ended
September 30, 1997 was $66.3 million, an increase of $70.7 million from the
comparable period in 1996 (excluding the initial proceeds from the sale of
accounts receivable). Net cash used in investing activities was financed
primarily through borrowings under the Credit Facility and the A/R
Securitization.
Cash from operations and borrowings under existing credit facilities funded
capital expenditures of $60.1 million and $38.2 million for the nine months
ended September 30, 1997 and 1996, respectively.
Big Flower has grown through acquisitions and continues to seek similar or
complementary businesses. Such acquisitions are likely to require the incurrence
and/or assumption of indebtedness and other obligations, the issuance of equity
securities or some combination thereof. In addition, Big Flower may from time to
time determine to sell or otherwise dispose of certain of its existing
businesses. However, Big Flower cannot predict if any transactions will be
consummated, or the terms or forms of consideration required in such
transactions. Big Flower's recent acquisitions are discussed in Notes 2 and 7 to
the Condensed Consolidated Financial Statements.
SEASONALITY
The Company's advertising insert business is seasonal in nature, with
activity increasing prior to the following advertising periods: Easter (March
15-April 15); Memorial Day (April 15-May 15); Back to School (July 15-August
15); and Thanksgiving/Christmas (October 1-December 15). Sunday comics,
newspaper TV listing guides, other newspaper products and other publications are
not seasonal in nature. Net sales percentages for the Company by quarter for the
twelve months ended December 31, 1996 were 19%, 25%, 26% and 30% of total net
sales for the quarters ended March 31, June 30, September 30 and December 31,
respectively. Based on its historical experience and projected operations, the
Company expects its operating results to be highest in the quarter ended
December 31 and weakest in the quarter ended March 31.
16
<PAGE>
PART II--OTHER INFORMATION
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings -
No reportable developments occurred with respect to legal proceedings
during the quarter ended September 30, 1997.
Item 2. Changes in Securities -
On October 17, 1997, Big Flower became the new holding company of
Big Flower Press, which has become a wholly-owned subsidiary of
its new parent. The common stock of Big Flower Press was
automatically exchanged for common stock of Big Flower.
Item 3. Defaults Upon Senior Securities -
None
Item 4. Submission of Matters to a Vote of Securities Holders -
None
Item 5. Other Information -
None
Item 6. Exhibits and Reports on Form 8-K -
(a) Exhibits
2.1 Agreement and Plan of Reorganization, dated as of October 17, 1997,
among Big Flower Press Holdings, Inc., Big Flower Holdings, Inc.
and Big Flower Merger Co.*
2.2 Agreement, dated September 18, 1997, between Big Flower Limited
and Peter Rivett, Andrew Ruddle and 3i Group PLC. (1)
- -------------------------------------------------------------------------------
* being filed herewith
(1) Incorporated by reference to Big Flower Press Holdings, Inc. Current Report
on Form 8-K, dated September 18, 1997, concerning the consummation of the
Registrants' acquisition of Olwen (File #1-14084).
17
<PAGE>
(a) Exhibits (continued)
2.3 Asset Purchase Agreement, dated as of September 19, 1997, between
Gruner + Jahr Printing & Publishing Co. and Treasure Chest
Advertising Company, Inc. (2)
2.4 Stock Purchase Agreement, dated as of September 19, 1997, among
Big Flower Press Holdings, Inc., Columbine JDS Systems, Inc.,
Columbine BIAS, Ltd., each of the shareholders who is a signatory
thereto and each of the optionees who is a signatory thereto. (3)
2.5 First Amendment to Stock Purchase Agreement, dated as of
October 29, 1997, by and among Big Flower Press Holdings,
Inc., Columbine JDS Systems, Inc., and its stockholders
and option holders. (3)
3 (i) Restated Certificate of Incorporation of Big Flower Holdings,
Inc., effective October 20, 1997. (4)
(ii) Amended and Restated By-Laws of Big Flower Holdings, Inc.,
effective October 20, 1997. (4)
(iii) Certificate of Designation, Preferences and Rights of
Series A Junior Preferred Stock of Big Flower Holdings,
Inc. (4)
4.1 Rights Agreement, dated as of November 28, 1995, between Big Flower
Holdings, Inc., and The Bank of New York, as Rights Agent. (4)
- -------------------------------------------------------------------------------
(2) Incorporated by reference to Big Flower Press Holdings, Inc. Current
Report on Form 8-K, dated October 15, 1997, concerning the consummation of
the Registrants' acquisition of Riverside County Publishing Company
(File#1-14084).
(3) Incorporated by reference to Big Flower Holdings, Inc. Current
Report on Form 8-K, dated October 31, 1997, concerning the consummation of
the Registrants' acquisition of Columbine (File # 0-29474).
(4) Incorporated by reference to Big Flower Holdings, Inc. Registration
Statement on Form S-8 and Post-Effective Amendment No. 1 to Registration
Statement No. 333-2152, filed on November 4, 1997 (File# 1-14084)
18
<PAGE>
(a) Exhibits (continued)
4.2 (i) Amended and Restated Trust Agreement, dated as of October
14, 1997, among (i) Big Flower Holdings, Inc., (ii) The Bank
of New York, as property trustee, (iii) The Bank
of New York (Delaware), as Delaware trustee and (iv) Mark A.
Angelson and Richard L. Ritchie, as Administrative Trustees,
relating to the Preferred Securities of Big Flower Trust I.*
(ii) Guarantee Amendment, dated as of October 20, 1997, between
Big Flower Holdings, Inc., and The Bank of New York, as
Guarantee Trustee, relating to the Preferred Securities of
Big Flower Trust I.*
(iii) Indenture dated as of October 20, 1997, between Big Flower
Holdings, Inc. and The Bank of New York, as Trustee, relating
to the 6% Convertible Subordinated Debentures due October 15,
2027, of Big Flower Holdings, Inc., issued to Big Flower
Trust I.*
(iv) Registration Rights Agreement, dated as of October 20, 1997,
Among Big Flower Trust I, Big Flower Holdings, Inc., and
Goldman, Sachs & Co., on behalf of the purchasers listed
therein.*
10.1 Second Amendment to the Credit Agreement, dated as of October 15,
1997, among Big Flower Press Holdings, Inc., the financial
institutions party to the Credit Agreement, Bank of America NT & SA
and The Industrial Bank of Japan, Limited as Co Agents, Credit
Suisse First Boston, as Documentation Agent, and Bankers Trust
Company, as Administrative Agent.*
10.2 Sterling Pound Credit Facility Letter provided by Bankers Trust
Company (London Branch) to Big Flower Limited and Olwen Direct
Mail Limited, dated as of September 18, 1997.*
10.3 Guarantee of Big Flower Press Holdings, Inc. in favor of Bankers
Trust Company in respect of obligations of Big Flower Limited under
a Facility Letter dated as of September 18, 1997.*
- -------------------------------------------------------------------------------
* Being filed herewith
19
<PAGE>
27. Financial Data Schedules.
(b) Reports on Form 8-K
Current report on Form 8-K, dated September 18, 1997, concerning
the consummation of the Registrants' acquisition of Olwen.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIG FLOWER HOLDINGS, INC.
/s/ Richard L. Ritchie
----------------------------------
Richard L. Ritchie
Executive Vice President and Chief
Financial Officer (Principal Financial
and Accounting Officer)
DATE: November 14, 1997
BIG FLOWER PRESS HOLDINGS, INC.
/s/ Richard L. Ritchie
----------------------------------
Richard L. Ritchie
Executive Vice President and Chief
Financial Officer (Principal Financial
and Accounting Officer)
DATE: November 14, 1997
21
<PAGE>
BIG FLOWER HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO.
--------
<S> <C>
2.1 Agreement and Plan of Reorganization dated as of October 17,
1997, among Big Flower Press Holdings, Inc., Big Flower
Holdings, Inc. and Big Flower Merger Co.*
2.2 Agreement, dated September 18, 1997, between Big Flower
Limited and Peter Rivett, Andrew Ruddle and 3i Group PLC. (1)
2.3 Asset Purchase Agreement, dated as of September 19, 1997,
between Gruner + Jahr Printing & Publishing Co. and Treasure
Chest Advertising Company, Inc. (2)
2.4 Stock Purchase Agreement, dated as of September 19, 1997,
amoung Big Flower Press Holdings, Inc., Coumbine JDS Systems,
Inc., Columbine BIAS, Ltd., each of the shareholders who is a
signatory thereto and each of the optionees who is a signatory
thereto. (3)
2.5 First Amendment to Stock Purchase Agreement, dated as of
October 29, 1997, by and among Big Flower Press Holdings, Inc.,
Big Flower Holdings, Inc., Columbine JDS Systems, Inc. and its
stockholders and option holders. (3)
</TABLE>
- -------------------------------------------------------------------------------
* being filed herewith
(1) Incorporated by reference to Big Flower Press Holdings, Inc. Current
Report on Form 8-K, dated September 18, 1997, concerning the consummation
of the Registrants' acquisition of Olwen (File#1-14084).
(2) Incorporated by reference to Big Flower Press Holdings, Inc. Current Report
on Form 8-K, dated October 15, 1997, concerning the consummation of the
Registrants' acquisition of Riverside County Publishing Company
(File#1-14084).
(3) Incorporated by reference to Big Flower Holdings, Inc. Current Report
on Form 8-K, dated October 31, 1997, concerning the consummation of the
Registrants' acquisition of Columbine (File # 0-29474).
22
<PAGE>
<TABLE>
<S> <C>
3 (i) Restated Certificate of Incorporation of Big Flower Holdings, Inc., effective October 20, 1997.(4)
(ii) Amended and Restated By-Laws of Big Flower Holdings, Inc., effective October 20, 1997.(4)
(iii) Certificate of Designation, Preferences and Rights of Series A Junior Preferred Stock of Big Flower Holdings,
Inc. (4)
4.1 Rights Agreement, dated as of November 28, 1995, between Big Flower Holdings, Inc. and The Bank of New York, as
Rights Agent. (4)*
4.2 (i) Amended and Restated Trust Agreement, dated as of October 14, 1997, among (i) Big Flower Holdings,
Inc., (ii) The Bank of New York, as property trustee, (iii) The Bank of New York (Delaware), as Delaware
Trustee and (iv) Mark A. Angelson and Richard L. Ritchie, as Administrative Trustees, relating to the
Preferred Securities of Big Flower Trust I.*
(ii) Guarantee Agreement, dated as of October 20, 1997, between Big Flower Holdings, Inc., and The Bank
of New York, as Guarantee Trustee, relating to the Preferred Securities of Big Flower Trust I.*
(iii) Indenture dated as of October 20, 1997, between Big Flower Holdings, Inc. and The Bank of New
York, as Trustee, relating to the 6% Convertible Subordinated Debentures due October 15, 2027, of Big
Flower Holdings, Inc., issued to Big Flower Trust I.*
(iv) Registration Rights Agreement, dated as of October 20, 1997, among Big Flower Trust I,
Big Flower Holdings, Inc., and Goldman, Sachs & Co., on behalf of the Purchasers listed therein.*
</TABLE>
- -------------------------------------------------------------------------------
* being filed herewith
(4) Incorporated by reference to Big Flower Holdings, Inc. Registration
Statement on Form S-8 and Post-Effective Amendment No. 1 to Registration
Statement No. 333-2152, filed on November 4, 1997 (File # 1-14084).
23
<PAGE>
<TABLE>
<S> <C>
10.1 Second Amendment to the Credit Agreement, dated as of October 15, 1997, among Big Flower Press Holdings, Inc.,
the financial institutions party to the Credit Agreement, Bank of America NT & SA and The Industrial
Bank of Japan, Limited, as Co Agents, Credit Suisse First Boston, as Documentation Agent, and Bankers
Trust Company, as Administrative Agent.*
10.2 Sterling Pound Credit Facility Letter provided by Bankers Trust Company
(London Branch) to Big Flower Limited and Olwen Direct Mail Limited,
dated as of September 18, 1997.*
10.3 Guarantee of Big Flower Press Holdings, Inc. in favor of Bankers Trust
Company in respect of obligations of Big Flower Limited under a
Facility Letter dated as of September 18, 1997.*
27. Financial Data Schedules.
</TABLE>
- ---------------------------------------------------------------------------
* being filed herewith
24
<PAGE>
EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of October
17, 1997, among Big Flower Press Holdings, Inc., a Delaware corporation (the
"Company"), Big Flower Holdings, Inc., a Delaware corporation ("BFHI") and a
direct, wholly-owned subsidiary of the Company, and Big Flower Merger Co., a
Delaware corporation ("Mergeco") and a direct, wholly-owned subsidiary of BFHI.
RECITALS
WHEREAS, (A) as of the close of business on October 3, 1997, the
authorized capital stock of the Company consisted of (i) 50,000,000 shares of
common stock, par value $0.01 per share ("Company Common Stock"), of which
18,485,696 shares were issued and outstanding, 4,499,346 shares were reserved
for issuance under the Company's Restated 1993 Stock Award and Incentive Plan,
up to 1,000,000 shares were reserved for issuance in connection with the
acquisition of Columbine JDS Systems, Inc., up to 21,668 shares were reserved
for issuance in exchange for shares of Scanforms, Inc., and no shares were held
in treasury, and (ii) 10,000,000 shares of preferred stock, par value $0.01 per
share, of which none is outstanding but 250,000 shares have been designated as
Series A Junior Preferred Stock ("Company Series A Preferred Stock"), (B) on
October 14, 1997 a further 4,000,000 shares of Company Common Stock were
reserved for issuance upon conversion of the Company's Convertible Subordinated
Debentures Due 2007.
WHEREAS, as of the date hereof, the authorized capital stock of BFHI
consists of (i) 50,000,000 shares of common stock, par value $0.01 per share
("BFHI Common Stock"), of which 1,000 shares are issued and outstanding and no
shares are held in treasury, and (ii) 10,000,000 shares of preferred stock, par
value $0.01 per share, of which none is outstanding but 250,000 shares have been
designated as Series A Junior Preferred Stock ("BFHI Series A Preferred Stock").
WHEREAS, the designations, rights and preferences, and the qualifications,
limitations and restrictions thereof, of the BFHI Series A Preferred Stock and
the BFHI Common Stock are the same as those of the Company Series A Preferred
Stock and the Company Common Stock, respectively.
<PAGE>
WHEREAS, the Restated Certificate of Incorporation and the By-laws of BFHI
immediately after the Effective Time (as hereinafter defined) will contain
provisions identical to the Restated Certificate of Incorporation and By-laws of
the Company immediately before the Effective Time (other than with respect to
matters excepted by Section 251(g) of the General Corporation Law of the State
of Delaware (the "DGCL")).
WHEREAS, the directors of the Company immediately prior to the Merger (as
hereinafter defined) will be the directors of BFHI as of the Effective Time.
WHEREAS, BFHI and Mergeco are newly formed corporations organized for the
purpose of participating in the transactions herein contemplated.
WHEREAS, the Company desires to create a new holding company structure by
merging Mergeco with and into the Company with the Company being the surviving
corporation (sometimes hereinafter referred to as the "Surviving Corporation"),
and converting each outstanding share of Company Common Stock into one share of
BFHI Common Stock, all in accordance with the terms of this Agreement.
WHEREAS, the Boards of Directors of BFHI, Mergeco and the Company have
approved this Agreement and the merger of Mergeco with and into the Company upon
the terms and subject to the conditions set forth in this Agreement (the
"Merger").
WHEREAS, pursuant to authority granted by the Board of Directors of the
Company, the Company will, immediately prior to the Effective Time, contribute
to the capital of BFHI any shares of Company Common Stock then held by the
Company in its treasury.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained in this Agreement, and intending to be legally bound
hereby, the Company, BFHI and Mergeco hereby agree as follows:
-2-
<PAGE>
ARTICLE I
THE MERGER
Section 1.1 The Merger. In accordance with Section 251(g) of the DGCL and
subject to and upon the terms and conditions of this Agreement, Mergeco shall,
at the Effective Time, be merged with and into the Company, the separate
corporate existence of Mergeco shall cease and the Company shall continue as the
surviving corporation. The Company as the surviving corporation after the Merger
is hereinafter sometimes referred to as the "Surviving Corporation." At the
Effective Time, the effect of the Merger shall be as provided in Section 259 of
the DGCL.
Section 1.2 Effective Time. The Merger shall become effective upon the
filing, on or after the date hereof and on or before October 20, 1997, of a copy
of this Agreement with the Secretary of State of the State of Delaware (the time
of such filing being referred to herein as the "Effective Time").
Section 1.3 Restated Certificate of Incorporation of the Surviving
Corporation. From and after the Effective Time the Restated Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation
until thereafter amended as provided by law; provided, however, that, from and
after the Effective Time:
(a) Article FOURTH thereof shall be amended so as to read in its
entirety as follows:
"FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue shall be three thousand (3,000), consisting of three
thousand (3,000) shares of Common Stock, par value $0.01 per share. No shares of
the previously designated Series A Junior Preferred Stock having been issued,
such series is hereby terminated and all matters set forth in this certificate
of incorporation with respect to such series are hereby eliminated from this
certificate of incorporation. No shares of the Class B Common Stock remaining
outstanding, the Class B Common Stock has been terminated and all matters set
forth in this certificate of incorporation with respect to such series have been
eliminated from this certificate of incorporation."
-3-
<PAGE>
(b) A new Article EIGHTH shall be added thereto which shall be and
read in its entirety as follows:
"EIGHTH: Any act or transaction by or involving the Corporation that
requires for its adoption under the General Corporation Law of the State of
Delaware or this certificate of incorporation the approval of the stockholders
of the Corporation shall, by virtue of this reference to Section 251(g) of the
General Corporation Law of the State of Delaware, require, in addition, the
approval of the stockholders of Big Flower Holdings, Inc., a Delaware
corporation, or any successor thereto by merger, so long as such corporation or
its successor is the ultimate parent, directly or indirectly, of this
Corporation, by the same vote that is required by the General Corporation Law of
the State of Delaware and/or the certificate of incorporation of this
Corporation. For the purposes of this Article Eighth, the term "parent" shall
mean a corporation that owns, directly or indirectly, at least a majority of the
outstanding capital stock of this Corporation entitled to vote in the election
of directors of this Corporation without regard to the occurrence of any
contingency."
Section 1.4 By-laws. From and after the Effective Time, the By-laws of the
Company, as in effect immediately prior to the Effective Time, shall be the
By-laws of the Surviving Corporation until thereafter amended as provided
therein or by applicable law.
Section 1.5 Directors. The directors of the Company immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
and will hold office from the Effective Time until their successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and the By-laws of the Surviving Corporation or as otherwise
provided by law.
Section 1.6 Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
will hold office from the Effective Time until their successors are duly elected
or appointed and qualified in the manner provided in the Certificate of
Incorporation and the By-laws of the Surviving Corporation or as otherwise
provided by law.
Section 1.7 Additional Actions. Subject to the terms of this Agreement,
the parties hereto shall take all such reasonable and lawful action as may be
necessary or
-4-
<PAGE>
appropriate in order to effectuate the Merger. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either of Mergeco or the Company acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of each of Mergeco and the Company, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of Mergeco and the Company or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.8 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of BFHI, Mergeco, the Company or
the holder of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive one duly issued, fully paid and nonassessable share of BFHI Common
Stock.
(b) Each share of common stock, par value $0.01 per share, of
Mergeco issued and outstanding immediately prior to the Effective Time shall be
converted into and thereafter represent one duly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(c) From and after the Effective Time, holders of certificates
formerly evidencing Company Common Stock shall cease to have any rights as
stockholders of the Company, except as provided by law; provided, however, that
such holders shall have the rights set forth in Section 1.10 herein.
-5-
<PAGE>
Section 1.9 Preferred Share Purchase Rights.
(a) In accordance with Section 23 of the Rights Agreement dated as
of November 28, 1995, as thereafter amended, between the Company and The Bank of
New York, as Rights Agent (the "Company Rights Plan"), each outstanding
preferred share purchase right of the Company shall terminate as of the
Effective Time.
(b) BFHI shall, prior to the Effective Time, adopt a preferred share
purchase rights plan (the "BFHI Rights Plan") substantially similar in form and
substance to the Company Rights Plan and, in accordance therewith, BFHI shall,
at the Effective Time but without duplication of BFHI's obligations under the
BFHI Rights Plan, issue to each holder of BFHI Common Stock issued pursuant
hereto one preferred share purchase right ("BFHI Purchase Right") for each share
of BFHI Common Stock issued by it pursuant to Section 1.8(a) herein.
Section 1.10 No Surrender of Certificates; Stock Transfer Books. At the
Effective Time, the designations, rights, powers and privileges, and
qualifications, limitations and restrictions thereof, of the capital stock of
BFHI will, in each case, be identical with those of the Company immediately
prior to the Effective Time. Accordingly, until thereafter surrendered for
transfer or exchange in the ordinary course, each outstanding certificate that,
immediately prior to the Effective Time, evidenced Company Common Stock shall,
from the Effective Time, be deemed and treated for all corporate purposes to
evidence the ownership of the same number of shares of BFHI Common Stock.
ARTICLE II
ACTIONS TO BE TAKEN IN
CONNECTION WITH THE MERGER
Section 2.1 Assumption of Plan and Severance Agreement. BFHI and the
Company hereby agree that they will, at the Effective Time, execute, acknowledge
and deliver an assumption agreement pursuant to which BFHI will, from and after
the Effective Time, assume and agree to perform all obligations of the Company
pursuant to (x) the Company's Restated 1993 Stock Award and Incentive Plan ("the
Plan") and (y) the Executive Change in Control Severance Agreement, dated
January 6, 1997 (the "Severance
-6-
<PAGE>
Agreement"), by and between Big Flower Press Holdings, Inc. and Richard L.
Ritchie.
Section 2.2 Reservation of Shares. On or prior to the Effective Time, BFHI
will reserve sufficient shares of BFHI Common Stock to provide for the issuance
of BFHI Common Stock upon exercise of options outstanding under the Plan, in
connection with the acquisition of Columbine JDS Systems Inc. and in exchange
for shares of Scanforms, Inc., and will reserve a number of shares of BFHI
Series A Preferred Stock sufficient to provide for the issuance thereof upon
exercise of BFHI Purchase Rights.
ARTICLE III
CONDITIONS OF MERGER
Section 3.1 Conditions Precedent. The obligations of the parties to this
Agreement to consummate the Merger and the transactions contemplated by this
Agreement shall be subject to fulfillment or waiver by the parties hereto at or
prior to the Effective Time of each of the following conditions:
(a) The BFHI Common Stock to be issued pursuant to the Merger shall have
been approved for listing, upon official notice of issuance, by the New York
Stock Exchange.
(b) BFHI shall have adopted the BFHI Rights Plan and passed a resolution
declaring a dividend of one BFHI Purchase Right for each share of BFHI Common
Stock, the BFHI Purchase Rights to be issued in conjunction with the issuance of
BFHI Common Stock pursuant to the Merger shall have been approved for listing,
upon official notice of issuance, by the New York Stock Exchange.
(c) No order, statute, rule, regulation, executive order, injunction,
stay, decree, judgment or restraining order that is in effect shall have been
enacted, entered, promulgated or enforced by any court or governmental or
regulatory authority or instrumentality which prohibits or makes illegal the
consummation of the Merger or the transactions contemplated hereby.
(d) Sullivan & Cromwell, special tax counsel to the Company, shall not
have withdrawn its opinion that holders of Company Common Stock will not
recognize gain or loss for
-7-
<PAGE>
United States federal income tax purposes as a result of the Merger.
ARTICLE IV
COVENANTS
Section 4.1 Election of Directors. Effective as of the Effective Time, the
Company, in its capacity as the sole stockholder of BFHI, will, if necessary to
comply with Section 251(g) of the DGCL, remove each of the then directors of
BFHI, cause the board of directors of BFHI to effect such amendments to the
bylaws of BFHI as are necessary to increase the number of directors of BFHI to
equal the number of directors of the Company immediately prior to the Effective
Time, and elect each person who is then a member of the board of directors of
the Company as a director of BFHI, each of whom shall serve until the next
annual meeting of stockholders of BFHI and until his successor shall have been
elected and qualified.
Section 4.2 Listing of BFHI Common Stock. BFHI will use its best efforts
to obtain, at or before the Effective Time, authorization to list, upon official
notice of issuance, on the New York Stock Exchange BFHI Common Stock issuable
pursuant to the Merger and BFHI Purchase Rights issuable in conjunction
therewith.
Section 4.3 The Plan. The Company and BFHI will take or cause to be taken
all actions necessary or desirable in order for BFHI to assume the Plan and to
assume (or become a participating employer in) each other existing employee
benefit plan and agreement of the Company, with or without amendments, or to
adopt comparable plans, including, without limitation, the Severance Agreement,
all to the extent deemed appropriate by the Company and BFHI and permitted under
applicable law.
Section 4.4 Change in Capitalization. Prior to the Effective Time, BFHI
and the Company will take all action necessary or desirable under the DGCL to
designate 250,000 shares of Preferred Stock of BFHI as Series A Junior Preferred
Stock having terms and provisions substantially similar to those of the
Company's Series A Junior Preferred Stock.
Section 4.5 Contribution of Treasury Stock. Immediately prior to the
Effective Time, the Company will
-8-
<PAGE>
contribute to the capital of BFHI any shares of Company Common Stock then held
in the treasury of the Company.
Section 4.6 Contribution of Outstanding BFHI Stock. At the Effective Time,
the Company will contribute to the capital of BFHI all shares of BFHI Common
Stock and all BFHI Purchase Rights outstanding immediately prior to the Merger
and owned of record and beneficially by the Company.
ARTICLE V
TERMINATION AND AMENDMENT
Section 5.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time by
action of the Board of Directors of the Company, the Board of Directors of BFHI
or the Board of Directors of Mergeco if such Board of Directors should determine
that for any reason the completion of the transactions provided for herein would
be inadvisable or not in the best interest of such corporation or its
stockholders. In the event of such termination and abandonment, this Agreement
shall become void and neither the Company, BFHI or Mergeco nor their respective
stockholders, directors or officers shall have any liability with respect to
such termination and abandonment.
Section 5.2 Amendment. This Agreement may be supplemented, amended or
modified by the mutual consent of the Boards of Directors of the parties to this
Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Governing Law. This Agreement shall be governed by and
construed and enforced under the laws of the State of Delaware.
Section 6.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.
Section 6.3 Entire Agreement. This Agreement, including the documents and
instruments referred to herein, constitutes the entire agreement and supersedes
all other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
-9-
<PAGE>
IN WITNESS WHEREOF, BFHI, Mergeco and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BIG FLOWER PRESS HOLDINGS, INC.
By:________________________________
Name: Irene B. Fisher
Title: Vice President and
Associate General Counsel
BIG FLOWER HOLDINGS, INC.
By: _______________________________
Name: Irene B. Fisher
Title: Vice President and
Associate General Counsel
BIG FLOWER MERGER CO.
By: _______________________________
Name: Irene B. Fisher
Title: Vice President and
Associate General Counsel
-10-
<PAGE>
I, Mark A. Angelson, Executive Vice President, General Counsel and
Secretary of the Board of Directors of Big Flower Press Holdings, Inc. do hereby
certify that the Board of Directors of Big Flower Press Holdings, Inc. has
approved and adopted this Agreement by duly authorized written consent dated
October 14, 1997.
-----------------------------------
Name: Mark A. Angelson
Title: Executive Vice President,
General Counsel and Secretary of
the Board of Directors
I, Mark A. Angelson, Executive Vice President, General Counsel and
Secretary of the Board of Directors of Big Flower Holdings, Inc. do hereby
certify that the Board of Directors of Big Flower Holdings, Inc. has approved
and adopted this Agreement by duly authorized written consent dated October 14,
1997.
-----------------------------------
Name: Mark A. Angelson
Title: Executive Vice President,
General Counsel and Secretary of
the Board of Directors
I, Mark A. Angelson, Executive Vice President, General Counsel and
Secretary of the Board of Directors of Big Flower Merger Co. do hereby certify
that the Board of Directors of Big Flower Merger Co. has approved and adopted
this Agreement by duly authorized written consent dated October 14, 1997.
-----------------------------------
Name: Mark A. Angelson
Title: Executive Vice President,
General Counsel and Secretary of
the Board of Directors
-11-
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
BIG FLOWER MERGER CO.
I, Mark A. Angelson, the Secretary of Big Flower Merger Co., hereby
certify that the Agreement of Merger to which this certificate is attached,
after having been first duly signed on behalf of the corporation by the
President and Secretary under the corporate seal of said corporation, was duly
approved and adopted at a meeting of the stockholders of Big Flower Merger Co.
held on October 17th, 1997 by the holders of a majority of the outstanding stock
entitled to vote thereon.
Witness my hand and seal of said Big Flower Merger Co. on October 17,
1997.
---------------------------------
Mark A. Angelson
Secretary
-12-
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
BIG FLOWER PRESS HOLDINGS, INC.
I, Mark A. Angelson, the Secretary of Big Flower Press Holdings, Inc.,
hereby certify that the Agreement of Merger to which this certificate is
attached has been adopted pursuant to Section 251(g) of the General Corporation
Law of the State of Delaware and that the conditions of the first sentence of
such subsection have been met.
Witness my hand and seal of said Big Flower Merger Co. on October 17,
1997.
---------------------------------
Mark A. Angelson
Secretary
-13-
<PAGE>
EXHIBIT 4.2(i)
================================================================================
AMENDED AND RESTATED TRUST AGREEMENT
AMONG
BIG FLOWER HOLDINGS, INC.
as Depositor,
THE BANK OF NEW YORK
as Property Trustee,
THE BANK OF NEW YORK (DELAWARE)
as Delaware Trustee,
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
Dated as of October 14, 1997
BIG FLOWER TRUST I
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
DEFINED TERMS
SECTION 1.1. Definitions..................................................2
ARTICLE 2
ESTABLISHMENT OF THE TRUST
SECTION 2.1. Name........................................................16
SECTION 2.2. Office of the Delaware Trustee; Principal
Place of Business...........................................16
SECTION 2.3. Organizational Expenses.....................................17
SECTION 2.4. Issuance of the Preferred Securities........................17
SECTION 2.5. Subscription and Purchase of Debentures;
Issuance of the Common Securities...........................17
SECTION 2.6. Declaration of Trust........................................18
SECTION 2.7. Authorization to Enter into Certain
Transactions................................................18
SECTION 2.8. Assets of Trust.............................................24
SECTION 2.9. Title to Trust Property.....................................24
ARTICLE 3
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.............................................24
ARTICLE 4
DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION
SECTION 4.1. Distributions...............................................25
SECTION 4.2. Redemption..................................................26
SECTION 4.3. Conversion..................................................29
SECTION 4.4. Special Event Exchange or Redemption........................32
SECTION 4.5. Subordination of Common Securities..........................34
SECTION 4.6. Payment Procedures..........................................35
SECTION 4.7. Tax Returns and Reports.....................................35
SECTION 4.8. Payment of Taxes, Duties, Etc. of the Trust.................36
SECTION 4.9. Payments under Indenture....................................36
i
<PAGE>
PAGE
----
ARTICLE 5
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership...........................................36
SECTION 5.2. The Trust Securities Certificates...........................36
SECTION 5.3. Delivery of Trust Securities Certificates...................37
SECTION 5.4. Registration of Transfer and Exchange of
Preferred Securities; Restrictions on
Transfer....................................................38
SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates.....................................43
SECTION 5.6. Persons Deemed Securityholders..............................44
SECTION 5.7. Access to List of Securityholders' Names
and Addresses...............................................44
SECTION 5.8. Maintenance of Office or Agency.............................45
SECTION 5.9. Appointment of Paying Agent.................................45
SECTION 5.10. Ownership of Common Securities by
Depositor...................................................46
SECTION 5.11. Global Securities; Non-Global Securities;
Common Securities Certificate...............................46
SECTION 5.12. Notices to Clearing Agency..................................48
SECTION 5.13. Definitive Preferred Securities
Certificates................................................48
SECTION 5.14. Rights of Securityholders...................................49
Section 5.15. Restrictive Legends.........................................49
ARTICLE 6
ACT OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights................................50
SECTION 6.2. Notice of Meetings..........................................53
SECTION 6.3. Meetings of Preferred Security-holders......................53
SECTION 6.4. Voting Rights...............................................54
SECTION 6.5. Proxies, Etc................................................54
SECTION 6.6. Securityholder Action by Written Consent....................55
SECTION 6.7. Record Date for Voting and Other Purposes...................55
SECTION 6.8. Acts of Securityholders.....................................55
SECTION 6.9. Inspection of Records.......................................57
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the
Property Trustee and the Delaware Trustee...................58
SECTION 7.2. Representations and Warranties of Depositor.................59
ii
<PAGE>
PAGE
----
ARTICLE 8
THE TRUSTEES
SECTION 8.1. Certain Duties and Responsibilities.........................60
SECTION 8.2. Notice of Defaults..........................................62
SECTION 8.3. Certain Rights of Property Trustee..........................65
SECTION 8.4. Not Responsible for Recitals or
Issuance of Securities......................................68
SECTION 8.5. May Hold Securities.........................................68
SECTION 8.6. Compensation; Indemnity; Fees...............................68
SECTION 8.7. Property Trustee Required; Eligibility
of Trustees.................................................69
SECTION 8.8. Conflicting Interests.......................................70
SECTION 8.9. Resignation and Removal; Appointment
of Successor................................................70
SECTION 8.10. Acceptance of Appointment by Successor......................73
SECTION 8.11. Merger, Conversion, Consolidation or
Succession to Business......................................74
SECTION 8.12. Preferential Collection of Claims
Against Depositor or Trust..................................74
SECTION 8.13. Reports by Property Trustee.................................74
SECTION 8.14. Reports to the Property Trustee.............................75
SECTION 8.15. Evidence of Compliance with Conditions
Precedent...................................................75
SECTION 8.16. Number of Trustees..........................................76
SECTION 8.17. Delegation of Power.........................................76
SECTION 8.18. Appointment of Administrative Trustees......................77
ARTICLE 9
TERMINATION, LIQUIDATION AND MERGER
SECTION 9.1. Termination upon Expiration Date............................78
SECTION 9.2. Early Termination...........................................78
SECTION 9.3. Termination.................................................78
SECTION 9.4. Liquidation.................................................79
SECTION 9.5. Mergers, Consolidations, Amalgamations
or Replacements of the Trust................................81
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Securityholders.....................82
SECTION 10.2. Amendment...................................................83
SECTION 10.3. Separability................................................84
iii
<PAGE>
PAGE
----
SECTION 10.4. GOVERNING LAW...............................................85
SECTION 10.5. Payments Due on Non-Business Day............................85
SECTION 10.6. Successors..................................................85
SECTION 10.7. Headings....................................................85
SECTION 10.8. Reports, Notices and Demands................................85
SECTION 10.9. Agreement Not to Petition...................................86
SECTION 10.10. Trust Indenture Act; Conflict with
Trust Indenture Act.........................................87
SECTION 10.11. ACCEPTANCE OF TERMS OF TRUST AGREEMENT,
GUARANTEE AND INDENTURE.....................................87
ARTICLE 11
REGISTRATION RIGHTS
SECTION 11.1. Registration Rights.........................................88
EXHIBIT A Certificate of Trust of Big Flower Trust I
EXHIBIT B Form of Certificate Depositary Agreement
EXHIBIT C Form of Common Securities of Big Flower Trust I
EXHIBIT D Form of Preferred Securities of Big Flower Trust I
EXHIBIT E Form of Regulation S Certificate
EXHIBIT F Form of Restricted Securities Certificate
EXHIBIT G Form of Unrestricted Securities Certificate
EXHIBIT H Notice of Conversion
iv
<PAGE>
BIG FLOWER TRUST I*
Certain Sections of this Trust Agreement
relating to Sections 310 through 318
of the Trust Indenture Act of 1939:
TRUST INDENTURE TRUST AGREEMENT
ACT SECTION SECTION
Section 310 (a)(1) ............................... 8.7
(a)(2) ............................... 8.7
(a)(4) ............................... 2.7(a)(ii)
(b) ............................... 8.8
Section 311 (a) ............................... 8.12
(b) ............................... 8.12
Section 312 (a) ............................... 5.7
(b) ............................... 5.7
(c) ............................... 5.7
Section 313 (a) ............................... 8.13(a)
(c) ............................... 10.8
(d) ............................... 8.13(c)
(a)(4) ............................... 8.13(b)
(b) ............................... 8.13(b)
Section 314 (a) ............................... 8.14
(b) ............................... Not Applicable
(c)(1) ............................... 8.15
(c)(2) ............................... 8.15
(c)(3) ............................... Not Applicable
(d) ............................... Not Applicable
(e) ............................... 1.1, 8.15
Section 315 (a) ............................... 8.1(a), 8.3(a)
(b) ............................... 8.2, 10.8
(c) ............................... 8.1(a)
(d) ............................... 8.1, 8.3
(e) ............................... Not Applicable
Section 316 (a) ............................... Not Applicable
(a)(1)(A) ............................... Not Applicable
(a)(1)(B) ............................... Not Applicable
(a)(2) ............................... Not Applicable
(b) ............................... Not Applicable
(c) ............................... 6.7
Section 317 (a)(1) ............................... Not Applicable
(b) ............................... 5.9
Section 318 (a) ............................... 10.10
- ----------
* Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
v
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of October 14, 1997
among (i) Big Flower Holdings, Inc., a Delaware corporation (including any
successors or assigns, "the Depositor"), (ii) The Bank of New York, a New York
banking corporation, as property trustee (in such capacity, the "Property
Trustee" and, in its personal capacity and not in its capacity as Property
Trustee, the "Bank"), (iii) The Bank of New York (Delaware), a corporation duly
organized and existing under the laws of the State of Delaware, as Delaware
trustee (in such capacity, the "Delaware Trustee") and (iv) Mark A. Angelson, an
individual, and Richard L. Ritchie, an individual, each of whose address is c/o
Big Flower Holdings, Inc., 3 East 54th Street, New York, New York 10022, (each,
an "Administrative Trustee" and, collectively, the "Administrative Trustees"
and, collectively with the Property Trustee and Delaware Trustee, the
"Trustees"). The Depositor and the Trustees hereby agree as follows:
W I T N E S S E T H:
WHEREAS, the Depositor and certain of the Trustees have heretofore
duly declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into of that certain Trust Agreement, dated as of
October 14, 1997 (the "Original Trust Agreement"), and by the execution and
filing by certain of the Trustees with the Secretary of State of the State of
Delaware of the Certificate of Trust, filed on October 14, 1997, attached as
Exhibit A, for the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the Trust (as
defined herein) and investing the proceeds thereof in the Debentures (as defined
herein);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, the Depositor and the Trustees desire to amend and restate
the Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the issuance and sale of the Common Securities (as
defined herein) by the Trust to the Depositor, (ii) the issuance and sale of the
Preferred Securities (as defined herein) by the Trust pursuant to the Purchase
Agreement (as defined herein) and (iii) the acquisition by the Trust from
<PAGE>
the Depositor of all of the right, title and interest in the Debentures;
NOW THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the sufficiency
of which is hereby acknowledged, each party, for the benefit of the other party
and for the benefit of the Holders (as defined herein) of the Preferred
Securities, hereby amends and restates the Original Trust Agreement in its
entirety and agrees as follows:
ARTICLE 1
DEFINED TERMS
SECTION 1.1. Definitions. For all purposes of this Trust Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to the Trust Securities, the
amount of Additional Interest (as defined in the Indenture) paid by the
Depositor on the Debentures.
"Additional Sums" means, with respect to the Trust Securities, the
amount of Additional Sums (as defined in the Indenture) paid by the Depositor on
the Debentures.
2
<PAGE>
"Administrative Trustee" means each of Mark A. Angelson and Richard
L. Ritchie, each solely in his capacity as Administrative Trustee of the Trust
formed and continued hereunder and not in his individual capacity, or such
Administrative Trustee's successor in interest in such capacity, or any
successor in interest in such capacity, or any successor administrative trustee
appointed as herein provided.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, provided, however that an Affiliate of the
Depositor shall not be deemed to include the Trust. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Certificate or beneficial interest therein, the
rules and procedures of Euroclear and Cedel, and of the Clearing Agency for such
security, in each case to the extent applicable to such transaction and as in
effect from time to time.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjudication or composition of or in respect of such Person under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of such Person or of any
substantial part of its property or ordering the winding-up or liquidation
of its affairs, and the continuance of any such decree or
3
<PAGE>
order unstayed and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated
as bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law, or the consent by it to the filing of any such petition
or to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or similar official) of such Person or of any substantial
part of its property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due and its willingness to be
adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means either the board of directors of the
Depositor or any committee of that board duly authorized to act hereunder.
"Book-Entry Preferred Securities Certificates" means a beneficial
interest in the Preferred Securities Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 5.11.
"Business Day" means any day other than a Saturday or Sunday or a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or a day on which the
Corporate Trust Office of the Property Trustee or the corporate trust office of
the Debenture Trustee is closed for business.
"Certificate Depository Agreement" means the agreement among the
Trust, the Depositor and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, relating to the Trust Securities
Certificates substantially in the form attached as Exhibit
4
<PAGE>
B, as the same may be amended and supplemented from time to time.
"Certificated Preferred Security" means a Preferred Security in
registered, certificated form.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended, that has been designated to act as depositary for the Preferred
Securities pursuant to the Certificate Depository Agreement. The Depository
Trust Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the First Time of Delivery (as defined in the
Purchase Agreement).
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit C.
"Common Securities Purchase Agreement" means the Common Securities
Purchase Agreement, dated as of October 20, 1997, between Big Flower Trust I and
Big Flower Holdings, Inc.
"Common Security" means an undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount with respect to the assets of
the Trust of $50 and having the rights provided therefor in this Trust
Agreement, including the right to receive Distributions and a Liquidation
Distribution as provided herein.
5
<PAGE>
"Common Stock" means common stock, $0.01 par value per share, of the
Depositor.
"Conversion Agent" has the meaning specified in Section 4.3.
"Conversion Date" has the meaning specified in Section 4.3.
"Conversion Price" has the meaning specified in Section 4.3.
"Corporate Trust Office" means the principal corporate trust office
of the Property Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date hereof is located at
101 Barclay Street, New York, New York 10286, Attention: Corporate Trust &
Agency Department.
"Current Market Price", with respect to Common Stock, means for any
day the last reported sale price, regular way, on such day, or, if no sale takes
place on such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the New York Stock Exchange
Consolidated Transactions Tape, or, if Common Stock is not listed or admitted to
trading on the New York Stock Exchange on such day, on the principal national
securities exchange on which Common Stock is listed or admitted to trading, if
Common Stock is listed on a national securities exchange, or the Nasdaq National
Market, or, if Common Stock is not quoted or admitted to trading on such
quotation system, on the principal quotation system on which Common Stock may be
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose or, if not so available in such manner, as otherwise determined
in good faith by the Board of Directors.
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"Debenture Event of Default" means an "Event of Default" as defined
in the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to
be redeemed under the Indenture, the date fixed for redemption thereof under the
Indenture.
"Debenture Trustee" means The Bank of New York, a New York banking
corporation, as trustee under the Indenture.
"Debentures" means $118,600,000 aggregate principal amount of the
Depositor's 6% convertible subordinated debentures issued pursuant to the
Indenture.
"Definitive Preferred Securities Certificates" means either or both
(as the context requires) of (a) Preferred Securities Certificates issued in
certificated, fully registered form as provided in Section 5.11(a) and (b)
Preferred Securities Certificates issued in certificated, fully registered form
as provided in Section 5.13.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. (ss.) 3801, et. seq., as it may be amended from time
to time.
"Delaware Trustee" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Trust formed and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor Delaware trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Direct Action" has the meaning specified in Section 6.8.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
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"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means the occurrence of a Debenture Event of
Default, whatever the reason for such Debenture Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body.
"Exchange Notice" has the meaning specified in Section 4.4(b).
"Expiration Date" has the meaning specified in Section 9.1.
"Global Certificate" means a Preferred Security that is registered
in the Securities Register in the name of a Clearing Agency or a nominee
thereof.
"Guarantee" means the Guarantee Agreement executed and delivered by
the Depositor and The Bank of New York, a New York banking corporation, as
guarantee trustee, contemporaneously with the execution and delivery of this
Trust Agreement, for the benefit of the Holders of the Preferred Securities, as
amended from time to time.
"Holder" means a Person in whose name a Trust Securities Certificate
representing a Trust Security is registered, such Person being a beneficial
owner within the meaning of the Delaware Business Trust Act.
"Indenture" means the Convertible Subordinated Indenture, dated as
of October 20, 1997 between the Depositor and the Debenture Trustee, as amended
or supplemented from time to time.
"Investment Company Event" means the receipt by the Property
Trustee, on behalf of the Trust, of an Opinion of Counsel, rendered by a law
firm having a national tax and securities practice (which Opinion of Counsel
shall not have been rescinded by such law firm), to the effect that, as a result
of the occurrence of a change in law or regulation or a change in interpretation
or application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"),
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there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" that is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after the date of original
issuance of the Preferred Securities under this Trust Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed
of trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Liquidated Damages" has the meaning specified in the Indenture.
"Liquidation Amount" means an amount with respect to the assets of
the Trust equal to $50 per Trust Security.
"Liquidation Date" means each date on which Debentures or cash are
to be distributed to Holders of Trust Securities in connection with a
termination and liquidation of the Trust pursuant to Section 9.4(a).
"Liquidation Distribution" has the meaning specified in Section
9.4(d).
"1940 Act" means the Investment Company Act of 1940, as amended.
"Notice of Conversion" means the notice given by a holder of Trust
Securities to the Conversion Agent directing the Conversion Agent to exchange
such Trust Security for Debentures and to convert such Debentures into Common
Stock on behalf of such holder. Such notice is substantially in the form set
forth in Exhibit H.
"Officers' Certificate" means a certificate signed by (i) the
Chairman of the Board, a Vice Chairman, the President or a Vice President, and
by (ii) the Treasurer, an Assistant Treasurer, the Controller, the Secretary or
an Assistant Secretary, of the Depositor, and delivered to the Trustee. One of
the officers signing an Officers' Certificate given pursuant to Section 8.15
shall be the principal executive, financial or accounting officer of the
Depositor. Any Officers' Certificate delivered with respect
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to compliance with a condition or covenant provided for in this Trust Agreement
shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant of condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee or the Depositor, and who may be an
employee of any thereof, and who shall be reasonably acceptable to the Property
Trustee. Any Opinion of Counsel delivered with respect to compliance with a
condition or covenant provided for in this Trust Agreement shall include:
(a) a statement that each individual signing the Opinion of Counsel
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each individual in rendering the Opinion of
Counsel;
(c) a statement that each individual has made such examination or
investigation as is necessary to enable such individual to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
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"Optional Redemption Price" means, except as set forth below, with
respect to the Preferred Securities, the following percentages of the
Liquidation Amounts thereof, and accumulated and unpaid Distributions, if any,
to the date fixed for redemption if redeemed during the twelve-month period
commencing October 15 in each of the following years indicated:
Year Redemption Price Year Redemption Price
---- ---------------- ---- ----------------
2000 104.2% 2004 101.8%
2001 103.6% 2005 101.2%
2002 103.0% 2006 100.6%
2003 102.4% 2007 and 100%
thereafter
In the event of a redemption of Trust Securities upon the occurrence
of a Tax Event, Trust Securities shall be redeemed at the redemption price of
$50 per Trust Security and all accumulated and unpaid Distributions, if any to
the date fixed for redemption.
"Original Trust Agreement" has the meaning specified in the recitals
to this Trust Agreement.
"Outstanding", when used with respect to Trust Securities, means, as
of the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Securities
Registrar or delivered to the Securities Registrar for cancellation or
tendered for conversion;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee
or any Paying Agent for the Holders of such Trust Securities; provided
that, if such Trust Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust Agreement; and
(c) Trust Securities which have been paid or in exchange for or in
lieu of which other Trust Securities
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have been executed and delivered pursuant to Section 5.5;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Trust Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Trust
Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor
or any Trustee shall be disregarded and deemed not to be Outstanding, except
that (a) in determining whether any Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Trust Securities that such Trustee knows to be so owned shall be so
disregarded and (b) the foregoing shall not apply at any time when all of the
Outstanding Trust Securities are owned by the Depositor, one or more of the
Trustees and/or any such Affiliate. Trust Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Securities Registrar the pledgee's right so to act
with respect to such Trust Securities and that the pledgee is not the Depositor
or any Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of a
Book-Entry Preferred Securities Certificate as reflected in the records of the
Clearing Agency or, if a Clearing Agency Participant is not the Owner, then as
reflected in the records of a Person maintaining an account with such Clearing
Agency (directly or indirectly, in accordance with the rules of such Clearing
Agency).
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.9.
"Payment Account" means a segregated non-interest bearing corporate
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee shall
make payments to the Securityholders in accordance with Section 4.1.
"Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
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"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as Exhibit
D.
"Preferred Security" means an undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount with respect to the assets of
the Trust of $50 and having the rights provided therefor in this Trust
Agreement, including the right to receive Distributions and a Liquidation
Distribution as provided herein.
"Property Trustee" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust heretofore formed and
continued hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as herein
provided.
"Purchase Agreement" means the Purchase Agreement, dated as of
October 14, 1997 among the Trust, the Depositor, Big Flower Press Holdings, Inc.
and the Purchasers named therein.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, each Debenture Redemption Date.
"Redemption Price" means, with respect to any Trust Security, $50
per Trust Security, plus accumulated and unpaid Distributions (including any
Additional Sums) to the date of redemption.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated October 20, 1997, among the Depositor, the Trust, and the
Purchasers named in the Purchase Agreement.
"Regulation S Certificate" means a certificate substantially in the
form set forth in Exhibit E.
"Regulation S Global Certificate" has the meaning specified in
Section 5.2.
"Regulation S Legend" has the meaning specified in Section 5.15(b).
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"Regulation S Preferred Security" means all Preferred Securities
required pursuant to Section 5.4(c) to bear a Regulation S Legend. Such term
includes the Regulation S Global Certificate.
"Relevant Trustee" has the meaning specified in Section 8.9.
"Restricted Global Certificate" has the meaning specified in Section
5.2.
"Restricted Period" means, with respect to the Preferred Securities,
the one-year period, and with respect to the Debentures or the Common Stock
issuable on conversion of the Preferred Securities, the 40-day period, in either
case following the last original issue date of the Preferred Securities
(including any Preferred Securities issued to cover over-allotments).
"Restricted Securities" means all Preferred Securities required
pursuant to Section 5.4 to bear any Restricted Securities Legend. Such term
includes the Restricted Global Certificate.
"Restricted Securities Certificate" means a certificate
substantially in the form set forth in Exhibit F.
"Restricted Securities Legend" has the meaning specified in Section
5.15(a).
"Rule 144A Preferred Securities" has the meaning specified in
Section 5.2.
"Securities Act Legend" means a Restricted Securities Legend or a
Regulation S Legend.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.4.
"Securityholder" has the same meaning as "Holder."
"Special Event" means a Tax Event or an Investment Company Event.
"Successor Property Trustee" has the meaning specified in Section
8.9.
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"Successor Delaware Trustee" has the meaning specified in Section
8.9.
"Successor Securities" has the meaning specified in Section 9.5.
"Tax Event" means the receipt by the Property Trustee, on behalf of
the Trust, of an Opinion of Counsel, rendered by a law firm having a national
tax and securities practice (which Opinion of Counsel shall not have been
rescinded by such law firm), to the effect that, as a result of any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities under this Trust Agreement, there is more than an
insubstantial risk in each case after the date thereof that (i) the Trust is, or
will be within 90 days after the date thereof, subject to United State Federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Depositor on the Debentures is not, or will not be,
within 90 days after the date hereof, deductible, in whole or in part, for
United States Federal income tax purposes or (iii) the Trust is, or will be
within 90 days after the date thereof, subject to more than de minimus amount of
other taxes, duties, assessments or other governmental charges.
"Trust" means the Delaware business trust continued hereby and
identified on the cover page of this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement,
as the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for all
purposes of this Trust Agreement any such modification, amendment or supplement,
the provisions of the Trust Indenture Act that are deemed to be a part of and
govern this Trust Agreement and any such modification, amendment or supplement,
respectively.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on deposit
in, or owing to, the Payment Account and (c) all proceeds and rights in respect
of the foregoing to be held by the Property Trustee pursuant to the terms of
this Trust Agreement for the benefit of the Securityholders.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Trust Securities Certificate" means any one of the Common
Securities Certificates, the Global Certificates or the Certificated Preferred
Securities.
"Trustees" means, collectively, the Property Trustee, the Delaware
Trustee and the Administrative Trustees.
"Unrestricted Securities Certificate" means a certificate
substantially in the form set forth in Exhibit G.
ARTICLE 2
ESTABLISHMENT OF THE TRUST
SECTION 2.1. Name. The Trust created hereby shall be known as "Big
Flower Trust I", as such name may be modified from time to time by the
Administrative Trustees following written notice to the Holders of Trust
Securities and the other Trustees, in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of
Business. The address of the Delaware Trustee in the State of Delaware is White
Clay Center, Route 273, Newark, Delaware 19711, Attention: Corporate Trust, or
such other address in the State of Delaware as the Delaware
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Trustee may designate by written notice to the Securityholders and the
Depositor. The principal executive office of the Trust is 3 East 54th Street,
New York, New York 10022.
SECTION 2.3. Organizational Expenses. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of any
Trustee, promptly reimburse such Trustee for any such expenses paid by such
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.4. Issuance of the Preferred Securities. On October 14,
1997 the Depositor and an Administrative Trustee on behalf of the Trust executed
and delivered the Purchase Agreement. On the Closing Date, an Administrative
Trustee, on behalf of the Trust, shall execute in accordance with Section 5.2
and deliver to the Purchasers named in the Purchase Agreement Preferred
Securities Certificates, in an aggregate amount of 2,300,000 Preferred
Securities having an aggregate Liquidation Amount of $115,000,000, against
receipt of the aggregate purchase price of such Preferred Securities of
$115,000,000, which amount the Administrative Trustees shall promptly deliver to
the Property Trustee.
SECTION 2.5. Subscription and Purchase of Debentures; Issuance of
the Common Securities. Contem poraneously with the execution and delivery of
this Trust Agreement, the Administrative Trustees, on behalf of the Trust, shall
subscribe to and purchase from the Depositor the Debentures, registered in the
name of the Property Trustee (in its capacity as such) and having an aggregate
principal amount equal to $118,600,000, and, in satisfaction of the purchase
price for such Debentures, the Property Trustee, on behalf of the Trust, shall
deliver to the Depositor the sum of $118,600,000. Contemporaneously therewith,
an Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 5.2 and deliver to the Depositor the Common Securities Certificates
registered in the name of the Depositor, in an aggregate amount of 72,000 Common
Securities having an aggregate Liquidation Amount of $3,600,000 against receipt
of the aggregate purchase price of such Common Securities from the Depositor in
the amount of $3,600,000.
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SECTION 2.6. Declaration of Trust. The exclusive purposes and
functions of the Trust are (a) to issue and sell Trust Securities and use the
proceeds from such sale to acquire the Debentures, (b) to distribute the Trust's
income as provided in this Trust Agreement and (c) to engage in only those other
activities necessary or incidental thereto. The Trust shall not borrow money,
issue debt or reinvest proceeds derived from investments, pledge any of its
assets or otherwise undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified for United States Federal income tax
purposes as a grantor trust. The Depositor hereby appoints the Trustees as
trustees of the Trust, to have all the rights, powers and duties to the extent
set forth herein, and the Trustees hereby accept such appointment. The Property
Trustee hereby declares that it will hold the Trust Property in trust upon and
subject to the conditions set forth herein for the benefit of the Trust and the
Securityholders. The Administrative Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of the Property Trustee or the Administrative
Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of
the Trust for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Delaware Business Trust Act.
SECTION 2.7. Authorization to Enter into Certain Transactions. (a)
The Trustees shall conduct the affairs of the Trust in accordance with the terms
of this Trust Agreement. Subject to the limitations set forth in Section 2.6 and
paragraph (b) of this Section, and in accordance with the following provisions
(i) and (ii), the Trustees shall have the exclusive power, duty and the
authority to cause the Trust to engage in the following activities:
(i) As among the Trustees, each Administrative Trustee shall have
the power and authority to act on behalf of the Trust with respect to the
following matters:
(A) to issue and sell the Trust Securities, provided,
however, that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common
Securities, and, provided, further, that there
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shall be no interests in the Trust other than the Trust Securities,
and the issuance of Trust Securities shall be limited to
simultaneous issuance of both Preferred Securities and Common
Securities on the Closing Date, subject to the issuance of Trust
Securities pursuant to Section 5.5 and Successor Securities pursuant
to Section 9.5;
(B) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Registration Rights
Agreement, the Purchase Agreement, the Common Securities Purchase
Agreement and the Certificate Depository Agreement and such other
agreements as may be necessary or incidental to the purposes and
function of the Trust;
(C) to assist in the registration of the Preferred
Securities under the Securities Act of 1933, as amended (the
"Securities Act"), and under state securities or blue sky laws, and
the qualification of this Trust Agreement as a trust indenture under
the Trust Indenture Act;
(D) to assist in the listing of the Preferred Securities
upon such securities exchange or exchanges as shall be determined by
the Depositor and the registration of the Preferred Securities under
the Securities Exchange Act of 1934, as amended, and the preparation
and filing of all periodic and other reports and other documents
pursuant to the foregoing (only to the extent that such listing or
registration is requested by the Depositor);
(E) to appoint a Paying Agent, a Securities Registrar
and an authenticating agent in accordance with this Trust Agreement;
(F) to the extent provided in this Trust Agreement, to
wind up the affairs of and
liquidate the Trust and prepare, execute and file the certificate of
cancellation with the Secretary of State of the State of Delaware;
(G) unless otherwise determined by the Depositor, the
Property Trustee or
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the Administrative Trustees, or as otherwise required by the
Delaware Business Trust Act or the Trust Indenture Act, to execute
on behalf of the Trust (either acting alone or together with any
other Administrative Trustees) any documents that the Administrative
Trustees have the power to execute pursuant to this Trust Agreement;
and
(H) to take any action incidental to the foregoing as
the Trustees may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement
including, but not limited to:
(x) causing the Trust not to be deemed to be an
"investment company" required to be registered under the 1940
Act;
(y) causing the Trust to be classified for United States
Federal income tax purposes as a grantor trust; and
(z) cooperating with the Depositor to ensure that the
Debentures will be treated as indebtedness of the Depositor
for United States Federal income tax purposes;
provided that such action does not adversely affect in any material
respect the interests of Securityholders except as otherwise
provided in Section 10.2(a).
(ii) As among the Trustees, the Property Trustee shall have the
power, duty and authority to act on behalf of the Trust with respect to
the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of and taking title to the Debentures;
(C) the collection of interest, principal and any other
payments made in respect of the Debentures in the Payment Account;
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(D) the distribution from the Trust Property of amounts
owed to the Securityholders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Debentures;
(F) the sending of notices of default, other notices and
other information regarding the Trust Securities and the Debentures
to the Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance
with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust and the
preparation, execution and filing of the certificate of cancellation
with the Secretary of State of the State of Delaware;
(I) after an Event of Default, the taking of any action
incidental to the foregoing as the Property Trustee may from time to
time determine is necessary or advisable to give effect to the terms
of this Trust Agreement and protect and conserve the Trust Property
for the benefit of the Securityholders (without consideration of the
effect of any such action on any particular Securityholder);
(J) subject to this Section 2.7(a)(ii), the Property
Trustee shall have none of the duties, liabilities, powers or the
authority of the Administrative Trustees set forth in Section
2.7(a)(i); and
(K) to act as Paying Agent and/or Securities Registrar
to the extent appointed as such hereunder.
(b) So long as this Trust Agreement remains in effect, the Trust (or
the Trustees acting on behalf of the Trust) shall not undertake any business,
activities or
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transaction except as expressly provided herein or contemplated hereby. In
particular, the Trust shall not, and the Trustees shall not and shall cause the
Trust not to (i) invest any proceeds received by the Trust from holding the
Debentures (rather, the Trustees shall distribute all such proceeds to the
Securityholders pursuant to the terms of this Trust Agreement and the Trust
Securities), acquire any investments or engage in any activities not authorized
by this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage,
pledge, set-off or otherwise dispose of any of the Trust Property or interests
therein, including to Securityholders, except as expressly provided herein,
(iii) take any action that would cause the Trust to fail or cease to qualify as
a "grantor trust" for United States Federal income tax purposes, (iv) make any
loans or incur any indebtedness for borrowed money or issue any other debt, (v)
take or consent to any action that would result in the placement of a Lien on
any of the Trust Property, (vi) possess any power or otherwise act in such a way
as to vary the Trust assets or the terms of the Trust Securities in any way
whatsoever except as permitted by the terms of this Trust Agreement, or (vii)
issue any securities or other evidences of beneficial ownership of, or
beneficial interest in, the Trust other than the Trust Securities. The
Administrative Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the interest
of the Trust or the Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the right and responsibility to assist the
Trust with respect to, or effect on behalf of the Trust, the following actions
(and any actions taken by the Depositor in furtherance of the following prior to
the date of this Trust Agreement are hereby ratified and confirmed in all
respects):
(i) to file pursuant to the Registration Rights Agreement with the
Commission and to execute on behalf of the Trust a registration statement
on the appropriate form in relation to the Preferred Securities, including
any amendments thereto;
(ii) to determine the States and foreign jurisdictions in which to
take appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than actions
which must be taken by or on behalf
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of the Trust, and advise the Trustees of actions they must take on behalf
of the Trust, and prepare for execution and filing any documents to be
executed and filed by the Trust or on behalf of the Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such States and foreign jurisdictions;
(iii) to the extent necessary, to prepare for filing by the Trust
with the Commission and to execute on behalf of the Trust a registration
statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended, including any amendments thereto (it being understood
that neither the Trust nor the Depositor has any obligation under the
Indenture, the Purchase Agreement or the Trust Agreement to register any
Trust Securities under the Securities Exchange Act of 1934, as amended, or
to list any Trust Securities on any securities exchange); and
(iv) any other actions necessary or incidental to carry out any of
the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs of
the Trust and to operate the Trust so that the Trust will not be deemed to be an
"investment company" required to be registered under the 1940 Act, or taxed as a
corporation for United States Federal income tax purposes and so that the
Debentures will be treated as indebtedness of the Depositor for United States
Federal income tax purposes. In this connection, the Depositor and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the Certificate of Trust or this Trust Agreement, that each of
the Depositor and the Administrative Trustees determines in their discretion to
be necessary or desirable for such purposes, so long as such action does not
adversely affect in any material respect the interests of the Holders of the
Preferred Securities except as otherwise provided in Section 10.2(a).
SECTION 2.8. Assets of Trust. The assets of the Trust shall consist
of only the Trust Property.
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SECTION 2.9. Title to Trust Property. Legal title to all Trust
Property shall be vested at all times in the Property Trustee (in its capacity
as such) and shall be held and administered by the Property Trustee for the
benefit of the Trust and the Securityholders in accordance with this Trust
Agreement. Each Securityholder shall not have legal title to any part of the
assets of the Trust, but shall have an undivided beneficial interest in the
assets of the Trust.
ARTICLE 3
PAYMENT ACCOUNT
SECTION 3.1. Payment Account. (a) On or prior to the Closing Date,
the Property Trustee shall establish the Payment Account. The Property Trustee
and any agent of the Property Trustee shall have exclusive control and sole
right of withdrawal with respect to the Payment Account for the purpose of
making deposits in and withdrawals from the Payment Account in accordance with
this Trust Agreement. All monies and other property deposited or held from time
to time in the Payment Account shall be held by the Property Trustee in the
Payment Account for the exclusive benefit of the Securityholders and for
distribution as herein provided, including (and subject to) any priority of
payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE 4
DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION
SECTION 4.1. Distributions. (a) Distributions on the Trust
Securities shall be cumulative, and shall accrue from the date of original
issuance, or the most recent Distribution Date (as defined herein) and, except
in the event that the Depositor exercises its right to defer the payment of
interest on the Debentures pursuant to the Indenture, shall be payable quarterly
in arrears on January 15, April 15, July 15 and October 15 of each year,
commencing on January 15, 1998 (which dates correspond to
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the interest payment dates on the Debentures), when, as and if available for
payment by the Property Trustee, as further described in paragraph (c) of this
Section 4.1. If any date on which Distributions are otherwise payable on the
Trust Securities is not a Business Day, then the payment of such Distributions
shall be made on the next succeeding day which is a Business Day (and no
interest shall accrue for the period from and after such date until the next
succeeding Business Day) with the same force and effect as if made on such date
(each date on which Distributions are payable in accordance with this Section
4.1(a), a "Distribution Date").
(b) The Trust Securities represent undivided beneficial interests in
the Trust Property, and the Distributions on the Trust Securities shall be
payable at a rate of 6.00% per annum of the Liquidation Amount of the Trust
Securities, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. The amount of Distributions payable for any period
shall be computed on the basis of a 360-day year of twelve 30-day months. For
periods less than a full month, Distributions shall reflect interest on
Debentures computed on the basis of the actual number of elapsed days based on a
360-day year. The amount of Distributions payable for any period shall include
the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand and
available in the Payment Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be the date which is the fifteenth day (whether or not a Business Day)
next preceding such Distribution Date.
SECTION 4.2. Redemption. (a) Upon an optional redemption (as set
forth in the Indenture) of Debentures, the proceeds from such redemption shall
be applied to redeem Trust Securities having an aggregate Liquidation Amount
equal to the aggregate principal amount of the Debentures so redeemed by the
Depositor, including pursuant to Section 4.4, at the Optional Redemption Price,
and upon a mandatory redemption (as set forth in the Indenture) of Debentures,
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the proceeds from such redemption shall be applied to redeem Trust Securities
having an aggregate Liquidation Amount equal to the aggregate principal amount
of the Debentures so redeemed by the Depositor, at the Redemption Price.
(b) Notice of redemption (which notice will be irrevocable) shall be
given by the Property Trustee by first-class mail, postage prepaid, mailed not
less than 30 nor more than 60 days prior to the Redemption Date to the Depositor
and each Holder of Trust Securities to be redeemed, at such Holder's address as
it appears in the Securities Register. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price or the Optional Redemption Price, as
the case may be;
(iii) the CUSIP number;
(iv) if less than all of the Outstanding Trust Securities are
to be redeemed, the identification and the aggregate Liquidation
Amount of the particular Trust Securities to be redeemed;
(v) (A) that a Holder of Preferred Securities who desires to
convert such Preferred Securities called for redemption must satisfy
the requirements for conversion contained in Section 4.3 below and
(B) the Conversion Price;
(vi) that on the Redemption Date the Redemption Price or the
Optional Redemption Price, as the case may be, will become due and
payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accrue on and after said date;
and
(vii) the place or places where such Trust Securities are to
be surrendered for payment of the Redemption Price or the Optional
Redemption Price, as the case may be.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price or the Optional Redemption Price, as the case
may be, with the proceeds from the contemporaneous redemption of Debentures.
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Redemptions of the Trust Securities shall be made and the Redemption Price or
the Optional Redemption Price, as the case may be, shall be payable on each
Redemption Date only to the extent that the Trust has funds then on hand and
available in the Payment Account for the payment of such Redemption Price or the
Optional Redemption Price, as the case may be.
(d) If the Property Trustee gives a notice of redemption in respect
of any Preferred Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, so long
as and to the extent the Preferred Securities are in book-entry-only form,
irrevocably deposit with the Clearing Agency for the Preferred Securities funds
sufficient to pay the applicable Redemption Price. If the Preferred Securities
are no longer in book-entry only form, the Property Trustee, subject to Section
4.2(c), will irrevocably deposit with the Paying Agent funds sufficient to pay
the applicable Redemption Price or Optional Redemption Price, as the case may
be, on such Preferred Securities held in certificated form and will give the
Paying Agent irrevocable instructions and authority to pay the Redemption Price
or the Optional Redemption Price, as the case may be, to the Holders thereof
upon surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Securities Register for the Trust
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required,
then, upon the date of such deposit, all rights of Securityholders holding Trust
Securities so called for redemption will cease, except the right of such
Securityholders to receive the Redemption Price or the Optional Redemption
Price, as the case may be, but without interest, and such Trust Securities will
cease to be Outstanding. In the event that any date on which any Redemption
Price or the Optional Redemption Price, as the case may be, is payable is not a
Business Day, then payment of the Redemption Price or the Optional Redemption
Price, as the case may be, payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on such date.
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(e) If less than all the Outstanding Trust Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust
Securities to be redeemed shall be allocated on a pro rata basis (based on
Liquidation Amounts) among the Common Securities and the Preferred Securities
that are to be redeemed. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Preferred Securities not previously called
for redemption, by lot or by such other method as the Property Trustee shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to $50 or an integral multiple of $50 in excess thereof) of
the Liquidation Amount of the Preferred Securities. The Property Trustee shall
promptly notify the Securities Registrar and the Conversion Agent in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed; it being understood that, in the case of Preferred
Securities registered in the name of and held of record by the Clearing Agency
(or any successor) or any nominee, the distribution of the proceeds of such
redemption will be made in accordance with the procedures of the Clearing Agency
or its nominee. For all purposes of this Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Preferred
Securities shall relate, in the case of any Preferred Securities redeemed or to
be redeemed only in part, to the portion of the Liquidation Amount of Preferred
Securities which has been or is to be redeemed. In the event of any redemption
in part, the Trust shall not be required to (i) issue, register the transfer of
or exchange any Preferred Security during a period beginning at the opening of
business 15 days before any selection for redemption of Preferred Securities and
ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all holders of Preferred
Securities to be so redeemed or (ii) register the transfer of or exchange on any
Preferred Securities so selected for redemption, in whole or in part, except for
the unredeemed portion of any Preferred Securities being redeemed in part.
SECTION 4.3. Conversion. The Holders of Trust Securities, subject to
the limitations set forth in this Section, shall have the right at any time, at
their option, to cause the Conversion Agent to convert Trust Securities, on
behalf of the converting Holders, into shares of Common
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Stock in the manner described herein on and subject to the following terms and
conditions:
(i) The Trust Securities will be convertible into fully paid
and nonassessable shares of Common Stock pursuant to the Holder's
direction to the Conversion Agent to exchange such Trust Securities
for a portion of the Debentures, and immediately convert such amount
of Debentures into fully paid and nonassessable shares of Common
Stock at an initial rate of 1.7344 shares of Common Stock for each
Trust Security (which is equivalent to a conversion price of $28.828
per $50 principal amount of Debentures), subject to certain
adjustments set forth in the Indenture (as so adjusted, "Conversion
Price").
(ii) In order to convert Trust Securities into Common Stock,
the Holder of such Trust Securities shall submit to the Conversion
Agent an irrevocable Notice of Conversion to convert Trust
Securities on behalf of such Holder, together, if the Trust
Securities are in certificated form, with such certificates. The
Notice of Conversion shall (x) set forth the number of Trust
Securities to be converted and the name or names, if other than the
Holder, in which the shares of Common Stock should be issued and (y)
direct the Conversion Agent (a) to exchange such Trust Securities
for a portion of the Debentures held by the Property Trustee (at the
rate of exchange specified in the preceding paragraph) and (b) to
immediately convert such Debentures, on behalf of such Holder, into
Common Stock (at the conversion rate specified in the preceding
paragraph). The Conversion Agent shall notify the Property Trustee
of the Holder's election to exchange Trust Securities for a portion
of the Debentures held by the Property Trustee and the Property
Trustee shall, upon receipt of such notice, deliver to the
Conversion Agent the appropriate principal amount of Debentures for
exchange in accordance with this Section. The Conversion Agent shall
thereupon notify the Depositor of the Holder's election to convert
such Debentures into shares of Common Stock. Holders of Trust
Securities at the close of business on a Distribution payment record
date will be entitled to receive the Distribution paid
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on such Trust Securities on the corresponding Distribution Date
notwithstanding the conversion of such Trust Securities following
such record date but prior to such Distribution Date. Except as
provided above, neither the Trust nor the Depositor will make, or be
required to make, any payment, allowance or adjustment upon any
conversion on account of any accumulated and unpaid Distributions
whether or not in arrears accrued on the Trust Securities
surrendered for conversion, or on account of any accumulated and
unpaid dividends on the shares of Common Stock issued upon such
conversion. Trust Securities shall be deemed to have been converted
immediately prior to the close of business on the day on which an
irrevocable Notice of Conversion relating to such Trust Securities
is received by the Conversion Agent in accordance with the foregoing
provision (the "Conversion Date"). The Person or Persons entitled to
receive the Common Stock issuable upon conversion of the Debentures
shall be treated for all purposes as the record holder or holders of
such Common Stock on the date of conversion. As promptly as
practicable on or after the Conversion Date, the Depositor shall
issue and deliver, or shall cause to be issued and delivered, at the
office of the Conversion Agent a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion,
together with the cash payment, if any, in lieu of any fraction of
any share to the Person or Persons entitled to receive the same,
unless otherwise directed by the Holder in the notice of conversion,
and the Conversion Agent shall distribute such certificate or
certificates and cash to such Person or Persons.
(iii) Each Holder of a Trust Security by its acceptance
thereof initially appoints The Bank of New York not in its
individual capacity but solely as conversion agent (the "Conversion
Agent") for the purpose of effecting the conversion of Trust
Securities in accordance with this Section. In effecting the
conversion and transactions described in this Section, the
Conversion Agent shall be acting as agent of the Holders of Trust
Securities directing it to effect such conversion transactions. The
Conversion Agent is hereby
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authorized to (i) exchange Trust Securities from time to time for
Debentures held by the Trust in connection with the conversion of
such Trust Securities in accordance with this Section and (ii)
convert all or a portion of the Debentures into Common Stock and
thereupon to deliver such shares of Common Stock in accordance with
the provisions of this Section and to deliver to the Property
Trustee any new Debenture or Debentures for any resulting
unconverted principal amount delivered to the Conversion Agent by
the Debenture Trustee.
(iv) No fractional shares of Common Stock will be issued as a
result of conversion, but, in lieu thereof, such fractional interest
will be paid in cash by the Depositor to the Conversion Agent in an
amount equal to the Current Market Price of the fractional share of
the Common Stock, and the Conversion Agent will in turn make such
payment to the Holder or Holders of Trust Securities so converted.
(v) Nothing in this Section 4.3 shall limit the requirement of
the Trust to withhold taxes pursuant to the terms of the Trust
Securities or as set forth in this Agreement or otherwise required
of the Property Trustee or by law or the Trust to pay any amounts on
account of such withholdings.
SECTION 4.4. Special Event Exchange or Redemption. (a) If a Special
Event shall occur and be continuing, the Property Trustee shall direct the
Conversion Agent to exchange all Outstanding Trust Securities for Debentures
having a principal amount equal to the aggregate Liquidation Amount of the Trust
Securities to be exchanged and with accrued interest in an amount equal to any
unpaid Distribution (including any Additional Amounts) on the Trust Securities;
provided, however, that, in the case of a Tax Event, the Depositor shall have
the right to (i) direct that less than all, or none, as appropriate, of the
Trust Securities be so exchanged if and for so long as the Depositor shall have
elected to pay any Additional Sums (as defined in the Indenture) such that the
amount received by Holders of Trust Securities not so exchanged in respect of
Distributions and other distributions are not reduced as a result of such Tax
Event, and shall not have revoked any
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such election or failed to make such payments or (ii) cause the Trust Securities
to be redeemed in the manner set forth below. If a Tax Event shall occur or be
continuing, the Depositor shall have the right, upon not less than 30 nor more
than 60 days' notice, to redeem the Debentures, in whole or in part, for cash
upon the later of (i) 90 days following the occurrence of such Tax Event or (ii)
October 15, 2000. Promptly following such redemption, Trust Securities with an
aggregate Liquidation Amount equal to the aggregate principal amount of the
Debentures so redeemed will be redeemed by the Trust at the Optional Redemption
Price on a pro rata basis.
(b) Notice of any exchange pursuant to this Section 4.4 (an
"Exchange Notice") of the Trust Securities, which Exchange Notice shall be
irrevocable, will be given by the Property Trustee by first-class mail to the
Depositor and to each record Holder of Trust Securities to be exchanged not
fewer than 30 nor more than 60 days prior to the date fixed for exchange
thereof. For purposes of the calculation of the date of exchange and the dates
on which notices are given pursuant to this paragraph (b), an Exchange Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to each Holder. Each Exchange Notice shall be
addressed to each Holder of Trust Securities at the address of such Holder
appearing in the books and records of the Trust. Each Exchange Notice shall
state: (A) the exchange date; (B) the aggregate Liquidation Amount and any
unpaid Distributions (including any Additional Amounts) on the Trust Securities
to be exchanged and the aggregate principal amount and any accrued interest on
the Debentures to be exchanged therefor; (C) that on the exchange date the Trust
Securities to be so exchanged shall be exchanged for Debentures and that
Distributions on the Trust Securities so exchanged will cease to accumulate on
and after said date; and (D) the identity of the Conversion Agent, if any, and
the place or places where each Trust Certificate to be exchanged is to be
surrendered in exchange for Debentures. No defect in the Exchange Notice or in
the mailing thereof with respect to any Trust Security shall affect the validity
of the exchange proceedings for any other Trust Security.
(c) In the event that fewer than all the Outstanding Preferred
Securities are to be exchanged, then, on the exchange date, (i) if all of the
Outstanding Preferred Securities are represented by Definitive Preferred
Securities Certificates, the particular Preferred Securities
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to be exchanged will be selected by the Property Trustee from the Outstanding
Preferred Securities not previously called for redemption or exchange on a pro
rata basis, (ii) if all of the Outstanding Preferred Securities are represented
by Book-Entry Preferred Securities Certificates, the Property Trustee shall
provide for the selection for exchange of a portion of the Global Certificate
representing the Book-Entry Preferred Securities Certificates on a pro rata
basis and (iii) if Outstanding Trust Securities are represented by both
Definitive Preferred Securities Certificates and Book-Entry Preferred Securities
Certificates, the Property Trustee shall select the portion of the Global
Certificate representing the Book-Entry Preferred Securities Certificates and
the particular Outstanding Preferred Securities represented by Definitive
Preferred Securities Certificates to be exchanged on a pro rata basis. In the
case of clause (ii) or (iii) above, the particular Book-Entry Preferred
Securities Certificates to be exchanged shall be selected in accordance with the
applicable rules and procedures for the Clearing Agency in whose name, or whose
nominee's name, such global certificate is then held. Any Preferred Securities
Certificate that is to be exchanged only in part shall be surrendered with due
endorsement or by a written instrument of transfer fully executed by the Holder
thereof (or its attorney duly authorized in writing) and the Trust shall prepare
and deliver to such Holder, without service charge, a new Preferred Securities
Certificate or Certificates in aggregate stated Liquidation Amount equal to, and
in exchange for, the unredeemed portion of the Preferred Securities Certificate
so surrendered. The Common Securities shall be exchanged in a similar manner.
(d) In the event of an exchange pursuant to this Section 4.4, on the
date fixed for any such exchange, (i) if the Preferred Securities are
represented by Book-Entry Preferred Securities Certificates, the Clearing Agency
of its nominee, as the record Holder of such Preferred Securities, will exchange
through the Conversion Agent the Global Certificate representing the Preferred
Securities to be exchanged for a registered Global Certificate or certificates
representing the Debentures to be delivered upon such exchange, (ii) if the
Preferred Securities are represented by Definitive Preferred Securities
Certificates, the certificates representing the Preferred Securities to be so
exchanged will be deemed to represent Debentures having a principal amount equal
to the aggregate stated Liquidation Amount of such Preferred Securities until
such certificates
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are presented to the Conversion Agent for exchange for definitive certificates
representing Debentures and (iii) all rights of the Holders of the Preferred
Securities so exchanged will cease, except for the right of such Holders to
receive Debentures. The Common Securities shall be exchanged in a similar
manner.
(e) Each Holder, by becoming a party to this Agreement pursuant to
Section 10.11 of this Agreement, will be deemed to have agreed to be bound by
these exchange provisions in regard to the exchange of Trust Securities for
Debentures pursuant to the terms described above.
(f) Nothing in this Section 4.4 shall limit the requirement of the
Trust to withhold taxes pursuant to the terms of the Trust Securities, as set
forth in this Agreement or under applicable law or otherwise require the
Property Trustee or the Trust to pay any amounts on account of such
withholdings.
SECTION 4.5. Subordination of Common Securities. Payment of
Distributions (including Additional Amounts, if applicable) on, and the
Redemption Price of, the Trust Securities, as applicable, shall be made pro rata
based on the Liquidation Amount of the Trust Securities; provided, however, that
if on any Distribution Date or Redemption Date an Event of Default shall have
occurred and be continuing, no payment of any Distribution (including Additional
Amounts, if applicable) on, or the Redemption Price of, any Common Security, and
no other payment on account of the redemption, liquidation or other acquisition
of Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including Additional Amounts, if
applicable) on all Outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all Outstanding Preferred
Securities, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions (including Additional Amounts, if applicable) on,
or the Redemption Price of, Preferred Securities then due and payable.
SECTION 4.6. Payment Procedures. Payments in respect of the
Preferred Securities shall be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Securities Register or, if
the
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Preferred Securities are held by a Clearing Agency, such Distributions shall be
made to the Clearing Agency in immediately available funds, in accordance with
the Certificate Depositary Agreement on the applicable Distribution Dates.
Payments in respect of the Common Securities shall be made in such manner as
shall be mutually agreed between the Property Trustee and the Holder of the
Common Securities.
SECTION 4.7. Tax Returns and Reports. The Administrative Trustees
shall prepare (or cause to be prepared), at the Depositor's expense, and file
(or cause to be filed) all United States Federal, State and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared or filed) Form 1041 or the appropriate Internal Revenue
Service form required to be filed in respect of the Trust in each taxable year
of the Trust and (b) prepare and furnish (or cause to be prepared and furnished)
to each Security holder a Form 1099 or the appropriate Internal Revenue Service
form required to be furnished to such Securityholder or the information required
to be provided on such form. The Administrative Trustees shall provide (or cause
to be provided) the Depositor and the Property Trustee with a copy of all such
returns, reports and schedules promptly after such filing or furnishing. The
Trustees shall comply with United States Federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Securityholders under the Trust Securities.
SECTION 4.8. Payment of Taxes, Duties, Etc. of the Trust. Upon
receipt under the Debentures of Additional Sums, the Property Trustee, upon
receipt of written notice from the Depositor or the Administrative Trustees,
shall promptly pay from such Additional Sums any taxes, duties or governmental
charges of whatsoever nature (other than withholding taxes), as indicated in
such notice, imposed on the Trust by the United States or any other taxing
authority.
SECTION 4.9. Payments under Indenture. Any amount payable hereunder
to any Holder of Preferred Securities (and any Owner with respect thereto) shall
be reduced by the amount of any corresponding payment such Holder (or Owner) has
directly received pursuant to Section 5.8 of the Indenture in accordance with
the terms of Section 6.8 hereof.
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ARTICLE 5
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership. Upon the formation of the Trust and
until the issuance of the Trust Securities, and at any time during which no
Trust Securities are Outstanding, the Depositor shall be the sole beneficial
owner of the Trust.
SECTION 5.2. The Trust Securities Certificates. The Preferred
Securities Certificates shall be issued in minimum denominations of $50
Liquidation Amount and integral multiples of $50 in excess thereof, and the
Common Securities Certificates shall be issued in denominations of $50
Liquidation Amount and integral multiples thereof. The consideration received by
the Trust for the issuance of the Trust Securities shall constitute a
contribution to the capital of the Trust and shall not constitute a loan to the
Trust. Preferred Securities initially sold to qualified institutional buyers in
reliance on Rule 144A under the Securities Act ("Rule 144A Preferred
Securities") initially will be represented by one or more certificates in
registered, global form (collectively, the "Restricted Global Certificate").
Preferred Securities initially sold in offshore transactions in reliance on
Regulation S ("Regulation S Preferred Securities") initially will be represented
by one or more certificates in registered, global form (collectively, the
"Regulation S Global Certificate" and, together with the Restricted Global
Certificate, the "Global Certificates"). The Trust Securities Certificates shall
be executed on behalf of the Trust by manual or facsimile signature of at least
one Administrative Trustee and the Preferred Securities Certificates shall be
authenticated by the Property Trustee. Trust Securities Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be validly issued and entitled to the benefit of this Trust Agreement,
notwith standing that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such
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Trust Securities Certificate in such transferee's name pursuant to Section 5.4.
SECTION 5.3. Delivery of Trust Securities Certificates. On the
Closing Date, the Administrative Trustees shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 2.4 and
2.5, to be executed on behalf of the Trust and delivered to or upon the written
order of the Depositor, signed by its Chairman of the Board, any Vice Chairman,
its President, any Executive Vice President or any Vice President, Treasurer or
Assistant Treasurer or Controller without further corporate action by the
Depositor, in authorized denominations.
A Common Securities Certificate shall not be valid until executed by
at least one Administrative Trustee. A Preferred Securities Certificate shall
not be valid until authenticated by the manual signature of an authorized
signatory of the Property Trustee. The signature shall be conclusive evidence
that the Preferred Securities Certificate has been authenticated under this
Trust Agreement. Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Preferred Securities
Certificates for original issue.
The Property Trustee may appoint an authenticating agent acceptable
to the Administrative Trustees to authenticate Preferred Securities
Certificates. An authenticating agent may authenticate Preferred Securities
Certificates whenever the Property Trustee may do so. Each reference in this
Trust Agreement to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee to deal with the Depositor or an Affiliate with respect to the
authentication of Preferred Securities.
SECTION 5.4. Registration of Transfer and Exchange of Preferred
Securities; Restrictions on Transfer. (a) The Securities Registrar shall keep or
cause to be kept, at the office or agency maintained pursuant to Section 5.8, a
Securities Register in which, subject to such reasonable regulations as it may
prescribe, the Securities Registrar shall provide for the registration of
Preferred Securities Certificates and Common Securities Certificates (subject to
Section 5.10 in the case of the Common Securities Certificates) and registration
of transfers and exchanges of Preferred Securities Certificates as herein
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provided. The Property Trustee shall be the initial Securities Registrar.
Subject to the other provisions of this Trust Agreement regarding
restrictions on transfer, upon surrender for registration of transfer of any
Preferred Security at an office or agency of the Depositor designated pursuant
to Section 5.8 for such purpose, the Depositor shall execute, and the Property
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Preferred Securities of any authorized
denominations and of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Trust Agreement.
At the option of the Holder, and subject to the other provisions of
this Section 5.4, Preferred Securities may be exchanged for other Preferred
Securities of any authorized denomination and of a like Liquidation Amount, upon
surrender of the Preferred Securities to be exchanged at any such office or
agency. Whenever any Preferred Securities are so surrendered for exchange, the
Depositor shall execute, and the Property Trustee shall authenticate and
deliver, the Preferred Securities which the Holder making the exchange is
entitled to receive.
All Preferred Securities issued upon any registration of transfer or
exchange of Preferred Securities shall be the valid obligations of the Trust,
evidencing the same rights, and entitled to the same benefits under this Trust
Agreement, as the Securities surrendered upon such registration of transfer or
exchange.
Every Preferred Security presented or surrendered for registration
of transfer or for exchange shall (if so requested by the Depositor or the
Securities Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Depositor and the Securities
Registrar duly executed, by the Holder thereof or such Holder's attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.
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(b) Notwithstanding any other provision of this Trust Agreement or
the Preferred Securities, transfers and exchanges of Preferred Securities and
beneficial interests in a Global Certificate of the kinds specified in this
Section 5.4(b) shall be made only in accordance with this Section 5.4(b).
(i) Restricted Global Certificate to Regulation S Global
Certificate. If the owner of a beneficial interest in the Restricted
Global Certificate wishes at any time to transfer such interest to a
Person who wishes to acquire the same in the form of a beneficial interest
in the Regulation S Global Certificate, such transfer may be effected in
accordance with the provisions of this Clause (b)(i) and Clause (b)(iv)
below and subject to the Applicable Procedures. Upon receipt by the
Property Trustee, as Securities Registrar, of (A) an order given by the
Clearing Agency or its authorized representative directing that a
beneficial interest in the Regulation S Global Certificate in a specified
principal amount be credited to a specified participant's account and that
a beneficial interest in the Restricted Global Certificate in an equal
principal amount be debited from another specified participant's account
and (B) a Regulation S Certificate, satisfactory to the Property Trustee
and duly executed by the owner of such beneficial interest in the
Restricted Global Certifi cate or such owner's attorney duly authorized in
writing, then the Property Trustee, as Securities Registrar but subject to
Clause (b)(iv) below, shall reduce the share number of the Restricted
Global Certificate and increase the share number of the Regulation S
Global Certificate by such specified principal amount as provided in
Section 5.11(b).
(ii) Regulation S Global Certificate to Restricted Global
Certificate. If the owner of a beneficial interest in the Regulation S
Global Certificate wishes at any time to transfer such interest to a
Person who wishes to acquire the same in the form of a beneficial interest
in the Restricted Global Certificate, such transfer may be effected only
in accordance with this Clause (b)(ii) and subject to the Applicable
Procedures. Upon receipt by the Property Trustee, as Securities Registrar,
of (A) an order given by the Clearing Agency or its authorized
representative directing that a beneficial interest in
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the Restricted Global Certificate in a specified principal amount be
credited to a specified participant's account and that a beneficial
interest in the Regulation S Global Certificate in an equal principal
amount be debited from another specified participant's account and (B) if
such transfer is to occur during the Restricted Period, a Restricted
Securities Certificate, satisfactory to the Property Trustee and duly
executed by the owner of such beneficial interest in the Regulation S
Global Certificate or such owner's attorney duly authorized in writing,
then the Property Trustee, as Securities Registrar, shall reduce the
principal amount of the Regulation S Global Certificate and increase the
principal amount of the Restricted Global Certificate by such specified
principal amount as provided in Section 5.11(b).
(iii) Non-Global Certificate to Non-Global Certificate. A
Security that is not a Global Certificate may be transferred, in whole or
in part, to a Person who takes delivery in the form of another Security
that is not a Global Certificate as provided in Section 5.11, provided
that, if the Security to be transferred in whole or in part is a
Restricted Security, or is a Regulation S Preferred Security and the
transfer is to occur during the Restricted Period, then the Property
Trustee shall have received (A) a Restricted Securities Certificate,
satisfactory to the Property Trustee and duly executed by the transferor
Holder or such Holder's attorney duly authorized in writing, in which case
the transferee Holder shall take delivery in the form of a Restricted
Security, or (B) a Regulation S Certificate, satisfactory to the Property
Trustee and duly executed by the transferor Holder or such Holder's
attorney duly authorized in writing, in which case the transferee Holder
shall take delivery in the form of a Regulation S Preferred Security
(subject in every case to Section 5.4(c)).
(iv) Regulation S Global Certificate to be Held Through
Euroclear or Cedel during Restricted Period. The Depositor shall use its
reasonable best efforts to cause the Clearing Agency to ensure that, until
the expiration of the Restricted Period, beneficial interests in the
Regulation S Global Certificate may be held only in or through accounts
maintained at the Clearing Agency by Euroclear or Cedel
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(or by participants acting for the account thereof), and no person shall
be entitled to effect any transfer or exchange that would result in any
such interest being held otherwise than in or through such an account;
provided that this Clause (b)(iv) shall not prohibit any transfer or
exchange of such an interest in accordance with Clause (b)(ii) above.
(c) Securities Act Legends. Rule 144A Preferred Securities,
Certificated Preferred Securities and their respective Successor Securities
shall bear a Restricted Securities Legend as set forth in Section 5.15, and the
Regulation S Preferred Securities and their Successor Securities shall bear a
Regulation S Legend, subject to the following:
(i) subject to the following Clauses of this Section 5.4(c), a
Preferred Security or any portion thereof which is exchanged, upon
transfer or otherwise, for a Global Certificate or any portion thereof
shall bear the Securities Act Legend borne by such Global Certificate
while represented thereby;
(ii) subject to the following Clauses of this Section 5.4(c),
a new Preferred Security which is not a Global Certificate and is issued
in exchange for another Preferred Security (including a Global
Certificate) or any portion thereof, upon transfer or otherwise, shall
bear the Securities Act Legend borne by such other Preferred Security,
provided that, if such new Preferred Security is required pursuant to
Section 5.4(b)(iii) to be issued in the form of a Restricted Security, it
shall bear a Restricted Securities Legend and, if such new Preferred
Security is so required to be issued in the form of a Regulation S
Preferred Security, it shall bear a Regulation S Legend;
(iii) Any Preferred Securities which are sold or otherwise
disposed of pursuant to an effective registration statement under the
Securities Act (including in the Shelf Registration contemplated by the
Registration Rights Agreement), together with their Successor Securities
shall not bear a Securities Act Legend; the Depositor shall inform the
Property Trustee in writing of the effective date of any such registration
statement registering the Preferred Securities under the Securities Act
and shall notify
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the Property Trustee at any time when prospectuses may not be delivered
with respect to Preferred Securities to be sold pursuant to such
registration statement. The Property Trustee shall not be liable for any
action taken or omitted to be taken by it in good faith in connection with
the aforementioned registration statement;
(iv) at any time after the Preferred Securities may be freely
transferred without registration under the Securities Act or without being
subject to transfer restrictions pursuant to the Securities Act, a new
Preferred Security which does not bear a Securities Act Legend may be
issued in exchange for or in lieu of a Preferred Security (other than a
Global Certificate) or any portion thereof which bears such a legend if
the Property Trustee has received an Unrestricted Securities Certificate,
satisfactory to the Property Trustee and duly executed by the Holder of
such legended Preferred Security or such Holder's attorney duly authorized
in writing, and after such date and receipt of such certificate, the
Property Trustee shall authenticate and deliver such a new Preferred
Security in exchange for or in lieu of such other Preferred Security as
provided in this Article 5;
(v) a new Preferred Security which does not bear a Securities
Act Legend may be issued in exchange for or in lieu of a Preferred
Security (other than a Global Certificate) or any portion thereof which
bears such a legend if, in the Depositor's judgment, placing such a legend
upon such new Preferred Security is not necessary to ensure compliance
with the registration requirements of the Securities Act, and the Property
Trustee, at the direction of the Depositor, shall authenticate and deliver
such a new Preferred Security as provided in this Article 5; and
(vi) notwithstanding the foregoing provisions of this Section
5.4(c), a Successor Security of a Preferred Security that does not bear a
particular form of Securities Act Legend shall not bear such form of
legend unless the Depositor has reasonable cause to believe that such
Successor Security is a "restricted security" within the meaning of Rule
144 under the Securities Act, in which case the Property Trustee, at the
direction of the Depositor, shall authenticate and deliver a new Preferred
Security bearing a Restricted
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Securities Legend in exchange for such Successor Security as provided in
this Article 5.
SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates. If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft of any
Trust Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Trust shall execute and make available for authentication, where applicable, and
delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Trust Securities Certificate, a new Trust Securities Certificate of like
denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section, the Securities Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicative Trust Securities Certificate
issued pursuant to this Section shall constitute conclusive evidence of an
undivided beneficial interest in the assets of the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
SECTION 5.6. Persons Deemed Securityholders. The Property Trustee
and the Securities Registrar shall treat the Person in whose name any Trust
Securities Certificate shall be registered in the Securities Register as the
owner of such Trust Securities Certificate for the purpose of receiving
Distributions and for all other purposes whatsoever, and neither the Property
Trustee nor the Securities Registrar shall be bound by any notice to the
contrary.
SECTION 5.7. Access to List of Securityholders' Names and Addresses.
The Administrative Trustees or the Depositor shall furnish or cause to be
furnished (unless the Property Trustee is acting as Securities Registrar with
respect to the Trust Securities under the Trust Agreement) a list, in such form
as the Property Trustee may reasonably require, of the names and addresses of
the Securityholders
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as of the most recent record date (a) to the Property Trustee, quarterly at
least 5 Business Days before each Distribution Date, and (b) to the Property
Trustee, as promptly as practicable after receipt by the Depositor of a request
therefor from the Property Trustee in order to enable the Property Trustee to
discharge its obligations under this Trust Agreement, in each case to the extent
such information is in the possession or control of the Administrative Trustees
or the Depositor and is not identical to a previously supplied list or has not
otherwise been received by the Property Trustee in its capacity as Securities
Registrar. The rights of Securityholders to communicate with other
Securityholders with respect to their rights under this Trust Agreement or under
the Trust Securities, and the corresponding rights of the Trustee shall be as
provided in the Trust Indenture Act, except to the extent Section 3819 of the
Delaware Business Trust Act would require greater access to such information, in
which case the latter shall apply. Each Holder, by receiving and holding a Trust
Securities Certificate, and each Owner shall be deemed to have agreed not to
hold the Depositor, the Property Trustee or the Administrative Trustees
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 5.8. Maintenance of Office or Agency. The Securities
Registrar shall maintain in The City of New York an office or offices or agency
or agencies where Preferred Securities Certificates may be surrendered for
registration of transfer, exchange or conversion and where notices and demands
to or upon the Trustees in respect of the Trust Securities Certificates may be
served. The Securities Registrar initially designates 101 Barclay Street, New
York, New York 10286, Attention: Corporate Trust Department, as its principal
corporate trust office for such purposes. The Securities Registrar shall give
prompt written notice to the Depositor and to the Securityholders of any change
in the location of the Securities Register or any such office or agency.
SECTION 5.9. Appointment of Paying Agent. In the event that the
Preferred Securities are not in book-entry form only, the Trust shall maintain
in the Borough of Manhattan, The City of New York, an office or agency (the
"Paying Agent") where the Preferred Securities may be presented for payment. The
Paying Agent shall make Distributions to Securityholders from the Payment
Account
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and shall report the amounts of such Distributions to the Property Trustee and
the Administrative Trustees. Any Paying Agent shall have the revocable power to
withdraw funds from the Payment Account for the purpose of making the
Distributions referred to above. The Administrative Trustees may revoke such
power and remove the Paying Agent if such Trustees determine in their sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Trust Agreement in any material respect. The Paying Agent shall
initially be the Property Trustee, and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees and the Depositor
in their sole discretion. Any Person acting as Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Depositor. In the event that the Property Trustee shall no longer be the
Paying Agent or a successor Paying Agent shall resign or its authority to act be
revoked, the Administrative Trustees shall appoint a successor that is
reasonably acceptable to the Property Trustee and the Depositor to act as Paying
Agent (which shall be a bank or trust company). Each successor Paying Agent or
any additional Paying Agent shall agree with the Trustees that, as Paying Agent,
such successor Paying Agent or additional Paying Agent will hold all sums, if
any, held by it for payment to the Securityholders in trust for the benefit of
the Securityholders entitled thereto until such sums shall be paid to each
Securityholder. The Paying Agent shall return all unclaimed funds to the
Property Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Property Trustee. The provisions of
Sections 8.1, 8.3 and 8.6 shall apply to the Property Trustee also in its role
as Paying Agent, for so long as the Property Trustee shall act as Paying Agent
and, to the extent applicable, to any other paying agent appointed hereunder.
Any reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
SECTION 5.10. Ownership of Common Securities by Depositor. On the
Closing Date, the Depositor shall acquire and retain beneficial and record
ownership of the Common Securities. To the fullest extent permitted by law, any
attempted transfer of the Common Securities shall be void. The Administrative
Trustees shall cause each Common Securities Certificate issued to the Depositor
to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE".
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SECTION 5.11. Global Securities; Non-Global Securities; Common
Securities Certificate. (a) Each Global Certificate authenticated under this
Trust Agreement shall be registered in the name of the Clearing Agency
designated by the Depositor for such Global Certificate or a nominee thereof and
delivered to such Clearing Agency or a nominee thereof or custodian therefor,
and each such Global Certificate shall constitute a Preferred Security for all
purposes of this Trust Agreement.
(b) If a Global Certificate is to be exchanged for Certificated
Preferred Securities or canceled in whole, it shall be surrendered by or on
behalf of the Clearing Agency, its nominee or custodian to the Property Trustee,
as Securities Registrar, for exchange or cancellation as provided in this
Article 5. If any Global Certificate is to be exchanged for Certificated
Preferred Securities or canceled in part, or if another Preferred Security is to
be exchanged in whole or in part for a beneficial interest in any Global
Certificate, in each case, as provided in Section 5.4, then either (i) such
Global Certificate shall be so surrendered for exchange or cancellation as
provided in this Article 5 or (ii) the Liquidation Amount thereof shall be
reduced or increased by an amount equal to the portion thereof to be so
exchanged or canceled, or equal to the principal amount of such Certificated
Preferred Security to be so exchanged for a beneficial interest therein, as the
case may be, by means of an appropriate adjustment made on the records of the
Property Trustee, as Securities Registrar, whereupon the Property Trustee, in
accordance with the Applicable Procedures, shall instruct the Clearing Agency or
its authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment of a Global Certificate, the Property
Trustee shall, subject to Section 5.4 and as otherwise provided in this Article
5, authenticate and deliver any Preferred Securities issuable in exchange for
such Global Certificate (or any portion thereof) to or upon the order of, and
registered in such names as may be directed by, the Clearing Agency or its
authorized representative.
Upon the request of the Property Trustee in connection with the
occurrence of any of the events speci fied in the preceding paragraph, the
Depositor shall cause as promptly as practicable to be made available to the
Property Trustee a reasonable supply of Preferred Securities that are not in the
form of Global Certificates. The
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Property Trustee shall be entitled to rely upon any order, direction or request
of the Clearing Agency or its authorized representative which is given or made
pursuant to this Article 5 if such order, direction or request is given or made
in accordance with the Applicable Procedures.
(c) Every Preferred Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Certificate or any portion thereof, whether pursuant to this Article 5 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Certificate, unless such Preferred Security is registered in the name of
a Person other than the Clearing Agency for such Global Certificate or a nominee
thereof.
(d) The Clearing Agency or its nominee, as registered owner of a
Global Certificate, shall be the holder of such Global Certificate for all
purposes under the Trust Agreement and the Preferred Securities, and owners of
beneficial interests in a Global Certificate shall hold such interests pursuant
to the Applicable Procedures. Accordingly, any such Owner's beneficial interest
in a Global Certificate will be shown only on, and the transfer of such interest
shall be effected only through, records maintained by the Clearing Agency or its
nominee or its participants and such owners of beneficial interests in a Global
Certificate will not be considered the owners or holders of such Global
Certificate for any purpose of this Trust Agreement or the Preferred Securities.
(e) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
SECTION 5.12. Notices to Clearing Agency. To the extent that a
notice or other communication to the Owners is required under this Trust
Agreement, unless and until Definitive Preferred Securities Certificates shall
have been issued to Owners pursuant to Section 5.13, the Trustees shall give all
such notices and communications specified herein to be given to Owners to the
Clearing Agency, and shall have no obligations to provide notices directly to
the Owners.
SECTION 5.13. Definitive Preferred Securities Certificates.
Notwithstanding any other provision in this
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Trust Agreement, no Global Certificate may be exchanged in whole or in part for
Preferred Securities registered, and no transfer of a Global Certificate in
whole or in part may be registered, in the name of any Person other than the
Clearing Agency for such Global Certificate or a nominee thereof unless (i) such
Clearing Agency (A) has notified the Depositor that it is unwilling or unable to
continue as Clearing Agency for such Global Certificate or (B) has ceased to be
a clearing agency registered as such under the Securities Exchange Act of 1934,
as amended, and in either case the Trust and the Depositor thereupon fails to
appoint a successor Clearing Agency, (ii) the Depositor, at its option, notifies
the Property Trustee in writing that it elects to cause the issuance of the
Preferred Securities in certificated form or (iii) there shall have occurred and
be continuing an Event of Default or any event which after notice or lapse of
time or both would be an Event of Default. In all cases, Certificated Preferred
Securities delivered in exchange for any Global Certificate or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Clearing Agency (in accordance
with its customary procedures).
SECTION 5.14. Rights of Securityholders. The legal title to the
Trust Property is vested exclusively in the Property Trustee (in its capacity as
such) in accordance with Section 2.9, and the Securityholders shall not have any
right or title therein other than the undivided beneficial interest in the
assets of the Trust conferred by their Trust Securities and they shall have no
right to call for any partition or division of property, profits or rights of
the Trust except as described below. The Trust Securities shall be personal
property giving only the rights specifically set forth therein and in this Trust
Agreement. The Trust Securities shall have no preemptive or similar rights and,
when issued and delivered to Securityholders against payment of the purchase
price therefor, will be fully paid and nonassessable by the Trust. The Holders
of the Trust Securities, in their capacities as such, shall be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
Section 5.15. Restrictive Legends. (a) The Restricted Global
Certificate and the Certificated Preferred Securities that are Restricted
Securities shall bear the following legend (the "Restricted Securities Legend")
unless
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the Depositor determines otherwise in accordance with applicable law:
"THE SECURITIES EVIDENCED HEREBY AND THE COMMON STOCK ISSUABLE UPON
THEIR CONVERSION AND THE DEBENTURES THAT MAY BE ISSUED IN EXCHANGE THEREFOR HAVE
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT")
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A
PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION COMPLYING WITH RULE 144A, (2) IN AN OFFSHORE TRANSACTION
COMPLYING WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (3)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT, IN EACH CASE IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS."
(b) The Regulation S Preferred Securities shall bear the following
legend (the "Regulation S Legend") unless the Depositor determines otherwise in
accordance with the applicable law:
"THE SECURITIES EVIDENCED HEREBY AND THE COMMON STOCK ISSUABLE UPON
THEIR CONVERSION AND THE DEBENTURES THAT MAY BE ISSUED IN EXCHANGE THEREFOR
(COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE OFFERED, SOLD OR DELIVERED IN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON (i)
AS PART OF THEIR DISTRIBUTION AT ANY TIME OR (ii) OTHERWISE UNTIL AFTER THE
APPLICABLE RESTRICTED PERIOD DESCRIBED BELOW, EXCEPT IN ACCORDANCE WITH RULE 903
OF REGULATION S (OR RULE 144A IF AVAILABLE) UNDER THE SECURITIES ACT. THE
RESTRICTED PERIOD WILL BE ONE YEAR, FOR ANY SUCH SECURITIES CONSTITUTING
PREFERRED SECURITIES, OR 40 DAYS, FOR ANY SUCH CONVERTIBLE DEBENTURES OR COMMON
STOCK, IN EITHER CASE, AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING AND
THE CLOSING DATE. TERMS USED ABOVE HAVE THE MEANING GIVEN TO THEM BY REGULATION
S."
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ARTICLE 6
ACT OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights. (a) Except as provided in
this Section, in Section 8.9 and 10.2 and in the Indenture and as otherwise
required by law, no Holder of Preferred Securities shall have any right to vote
or in any manner otherwise control the administration, operation and management
of the Trust or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.
(b) Subject to Section 8.2 hereof, if an Event of Default with
respect to the Preferred Securities has occurred and been subsequently cured,
waived or otherwise eliminated, the provisions of Section 6.1(b)(ii) hereof
shall apply. During (x) the period commencing on the date of the occurrence of
an Event of Default with respect to the Preferred Securities and ending on the
date when such Event of Default is cured, waived or otherwise eliminated, or (y)
any period not described in either the preceding sentence or the preceding
clause (x), the provisions of Section 6.1(b)(i) shall apply.
(i) The holders of a majority in aggregate Liquidation Amount
of the Preferred Securities will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Property Trustee or to exercise any trust or power conferred upon the
Property Trustee under the Trust Agreement, including the right to direct
the Property Trustee to exercise the remedies available to it as a holder
of the Debentures but excluding the right to direct the Property Trustee
to consent to an amendment, modification or termination of the Indenture
(which shall be as provided below). So long as any Debentures are held by
the Property Trustee, the Trustees shall not (A) direct the time, method
and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or executing any trust or power conferred on the
Debenture Trustee with respect to such Debentures, (B) waive any past
default which is waivable under Section 5.13 of the Indenture, (C)
exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be due and payable or (D) consent to any
amendment,
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modification or termination of the Indenture or the Debentures, where such
consent shall be required, without, in each case, obtaining the prior
approval of the Holders of a majority in aggregate Liquidation Amount of
all Outstanding Preferred Securities (except in the case of clause (D),
which consent, in the event that no Event of Default shall occur and be
continuing, shall be of the Holders of all Trust Securities, voting
together as a single class); provided, however, that where a consent under
the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee
without the prior written consent of each Holder of Preferred Securities.
The Trustees shall not revoke any action previously authorized or approved
by a vote of the Holders of the Preferred Securities, except by a
subsequent vote of the Holders of the Preferred Securities. The Property
Trustee shall notify all Holders of record of the Preferred Securities of
any notice of default received from the Debenture Trustee with respect to
the Debentures. In addition to obtaining the foregoing approvals of the
Holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Trustees shall, at the expense of the Depositor, obtain an
Opinion of Counsel experienced in such matters to the effect that the
Trust will not be classified as an association taxable as a corporation or
partnership for United States Federal income tax purposes on account of
such action.
(ii) Subject to Section 8.2 of this Trust Agreement and only
after the Event of Default with respect to the Preferred Securities has
been cured, waived, or otherwise eliminated, the holders of a majority in
aggregate Liquidation Amount of the Common Securities will have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee or to exercise any trust or power
conferred upon the Property Trustee under the Trust Agreement, including
the right to direct the Property Trustee to exercise the remedies
available to it as a holder of the Debentures but excluding the right to
direct the Property Trustee to consent to an amendment, modification or
termination of the Indenture (which shall be as provided below). So long
as any Debentures are held by the Property Trustee, the Trustees shall not
(A) direct the time, method and place of conducting any proceeding for any
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remedy available to the Debenture Trustee, or executing any trust or power
conferred on the Debenture Trustee with respect to such Debentures, (B)
waive any past default which is waivable under Section 5.13 of the
Indenture, (C) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable or (D)
consent to any amendment, modification or termination of the Indenture or
the Debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the Holders of a majority in
aggregate Liquidation Amount of all Common Securities (except in the case
of clause (D), which consent, in the event that no Event of Default shall
occur and be continuing, shall be of the Holders of all Trust Securities,
voting together as a single class); provided, however, that where a
consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior written consent of each Holder of
Common Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Common Securities,
except by a subsequent vote of the Holders of the Common Securities. The
Property Trustee shall notify all Holders of record of the Common
Securities of any notice of default received from the Debenture Trustee
with respect to the Debentures. In addition to obtaining the foregoing
approvals of the Holders of the Common Securities, prior to taking any of
the foregoing actions, the Trustees shall, at the expense of the
Depositor, obtain an Opinion of Counsel experienced in such matters to the
effect that the Trust will not be classified as an association taxable as
a corporation or partnership for United States Federal income tax purposes
on account of such action.
(c) If any proposed amendment to the Trust Agreement provides for,
or the Trustees otherwise propose to effect the dissolution, winding-up or
termination of the Trust, other than pursuant to the terms of this Trust
Agreement, then the Holders of Outstanding Preferred Securities as a class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of the Holders of a majority in
aggregate Liquidation Amount of the Outstanding Preferred Securities.
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SECTION 6.2. Notice of Meetings. Notice of all meetings of the
Holders of the Preferred Securities, stating the time, place and purpose of the
meeting, shall be given by the Property Trustee pursuant to Section 10.8 to each
Preferred Securityholder of record, at its registered address, at least 15 days
and not more than 90 days before the meeting. At any such meeting, any business
properly before the meeting may be so considered whether or not stated in the
notice of the meeting. Any adjourned meeting may be held as adjourned without
further notice.
SECTION 6.3. Meetings of Preferred Security- holders. No annual
meeting of Securityholders is required to be held. The Administrative Trustees,
however, shall call a meeting of Securityholders to vote on any matter upon the
written request of the Preferred Securityholders of record of 25% of the
Preferred Securities (based upon their Liquidation Amount) and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of the Holders of Preferred Securities to vote on any
matters as to which such Holders are entitled to vote.
Holders of record of 50% of the Preferred Securities (based upon
their Liquidation Amount), present in person or by proxy, shall constitute a
quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the
Holders of record of Preferred Securities present, in person or by proxy,
holding more than a majority of the Preferred Securities (based upon their
Liquidation Amount) held by Holders of record of Preferred Securities present,
either in person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 6.4. Voting Rights. Securityholders shall be entitled to one
vote for each $50 of Liquidation Amount represented by their Trust Securities in
respect of any matter as to which such Securityholders are entitled to vote.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Depositor, the Trustees or any
affiliate of any Trustee shall, for purposes of such vote or consent, be treated
as if such Preferred Securities were not outstanding.
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SECTION 6.5. Proxies, Etc. At any meeting of Securityholders, any
Securityholders entitled to vote thereat may vote by proxy, provided that no
proxy shall be voted at any meeting unless it shall have been placed on file
with the Administrative Trustees, or with such other officer or agent of the
Trust as the Administrative Trustees may direct, for verification prior to the
time at which such vote shall be taken. Pursuant to a resolution of the Property
Trustee, proxies may be solicited in the name of the Property Trustee or one or
more officers of the Property Trustee. Only Securityholders of record shall be
entitled to vote. When Trust Securities are held jointly by several Persons, any
one of them may vote at any meeting in person or represented by proxy in respect
of such Trust Securities, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in respect
of such Trust Securities. A proxy purporting to be executed by or on behalf of a
Securityholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger. No
proxy shall be valid more than three years after its date of execution.
SECTION 6.6. Securityholder Action by Written Consent. Any action
which may be taken by Securityholders at a meeting may be taken without a
meeting if Securityholders holding more than a majority of all Outstanding Trust
Securities (based upon their Liquidation Amount) entitled to vote in respect of
such action (or such larger proportion thereof as shall be required by any
express provision of this Trust Agreement) shall consent to the action in
writing.
SECTION 6.7. Record Date for Voting and Other Purposes. For the
purposes of determining the Securityholders who are entitled to notice of and to
vote at any meeting or by written consent, or to participate in any Distribution
on the Trust Securities in respect of which a record date is not otherwise
provided for in this Trust Agreement, or for the purpose of any other action,
the Property Trustee may from time to time fix a date, not more than 90 days
prior to the date of any meeting of Securityholders or the payment of
Distributions or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
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SECTION 6.8. Acts of Securityholders. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Trust Agreement to be given, made or taken by Securityholders
or Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders or Owners in person
or by an agent duly appointed in writing; and, except as otherwise expressly
provided herein, such action shall become effective when such instrument or
instruments are delivered to an Administrative Trustee. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Securityholders or Owners signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Trust Agreement and (subject to Section 8.1) conclusive in favor of the
Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than the signer's individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of the signer's authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which any Trustee receiving the same deems
sufficient.
The ownership of Preferred Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Securityholder of any Trust Security shall bind every
future Securityholder of the same Trust Security and the Securityholder of every
Trust Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
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Without limiting the foregoing, a Securityholder entitled hereunder
to take any action hereunder with regard to any particular Trust Security may do
so with regard to all or any part of the Liquidation Amount of such Trust
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any part of such Liquidation
Amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder or
Trustee under this Article 6, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
Upon the occurrence and continuation of an Event of Default, the
holders of Preferred Securities shall rely on the enforcement by the Property
Trustee of its rights as holder of the Debentures against the Depositor. If the
Property Trustee fails to enforce its rights as holder of the Debentures after a
request therefor by a holder of Preferred Securities, such holder may proceed to
enforce such rights directly against the Depositor. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Depositor to pay interest or principal on
the Debentures on the date such interest or principal is otherwise payable (or
in the case of redemption, on the Redemption Date), then a holder of Preferred
Securities shall have the right to institute a proceeding directly against the
Depositor, for enforcement of payment to such holder of the principal amount of
or interest on Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities of such holder after the
respective due date specified in the Debentures (a "Direct Action"). In
connection with any such Direct Action, the rights of the Depositor will be
subrogated to the rights of any holder of the Preferred Securities to the extent
of any payment made by the Depositor to such holder of Preferred Securities as a
result of such Direct Action.
A Securityholder may institute a legal proceeding directly against
the Depositor under the Guarantee to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee
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(as defined in the Guarantee), the Trust or any Person or entity.
SECTION 6.9. Inspection of Records. Upon reasonable notice to the
Administrative Trustees and the Property Trustee, the records of the Trust shall
be open to inspection by Securityholders during normal business hours for any
purpose reasonably related to such Securityholder's interest as a
Securityholder.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee
and the Delaware Trustee. The Property Trustee and the Delaware Trustee, each
severally on behalf of and as to itself, hereby represents and warrants for the
benefit of the Depositor and the Securityholders that (each such representation
and warranty made by the Property Trustee and the Delaware Trustee being made
only with respect to itself):
(a) the Property Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York;
(b) the Delaware Trustee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(c) each of the Property Trustee and the Delaware Trustee has full
corporate power, authority and legal right to execute, deliver and perform its
obligations under this Trust Agreement and has taken all necessary action to
authorize the execution, delivery and performance by it of this Trust Agreement;
(d) this Trust Agreement has been duly authorized, executed and
delivered by each of the Property Trustee and the Delaware Trustee and
constitutes the valid and legally binding agreement of the Property Trustee and
the Delaware Trustee enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
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(e) the execution, delivery and performance by each of the Property
Trustee and the Delaware Trustee of this Trust Agreement have been duly
authorized by all necessary corporate or other action on the part of the
Property Trustee and the Delaware Trustee and does not require any approval of
stockholders of the Property Trustee or the Delaware Trustee and such execution,
delivery and performance will not (i) violate either of the Property Trustee's
or the Delaware Trustee's charter or by-laws, (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of any Lien on any properties included in the
Trust Property pursuant to the provisions of, any indenture, mortgage, credit
agreement, license or other agreement or instrument to which the Property
Trustee or the Delaware Trustee is a party or by which it is bound, or (iii)
violate any law, governmental rule or regulation of the United States, the State
of New York or the State of Delaware, as the case may be, governing the banking,
corporate, or trust powers of the Property Trustee or the Delaware Trustee (as
appropriate in context) or any order, judgment or decree applicable to the
Property Trustee or the Delaware Trustee;
(f) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee (as
appropriate in context) contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action with respect to, any governmental authority or agency under any
existing Federal law governing the banking, corporate or trust powers of the
Property Trustee or the Delaware Trustee, as the case may be, under the laws of
the United States, the State of New York or the State of Delaware;
(g) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal which,
individually or in the aggregate, would materially and adversely affect the
Trust or would question the right, power and authority of the Property Trustee
or the Delaware Trustee, as the case may be, to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.
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SECTION 7.2. Representations and Warranties of Depositor. The
Depositor hereby represents and warrants for the benefit of the Securityholders
that:
(a) the Trust Securities Certificates issued on the Closing Date on
behalf of the Trust have been duly authorized and will have been duly and
validly executed, issued and delivered by the Trustees pursuant to the terms and
provisions of, and in accordance with the requirements of, this Trust Agreement
and the Securityholders will be, as of such date, entitled to the benefits of
this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable
by the Trust (or the Trustees on behalf of the Trust) under the laws of the
State of Delaware or any political subdivision thereof in connection with the
execution, delivery and performance by the Property Trustee or the Delaware
Trustee, as the case may be, of this Trust Agreement.
ARTICLE 8
THE TRUSTEES
SECTION 8.1. Certain Duties and Responsibilities. (a) The duties and
responsibilities of the Trustees shall be as provided by this Trust Agreement
and, in the case of the Property Trustee, by the Trust Indenture Act. The
Property Trustee, before the occurrence of any Event of Default and after the
curing or waiving of all Events of Default that may have occurred, shall
undertake to perform only such duties and obligations as are specifically set
forth in this Trust Agreement and the Trust Indenture Act and no implied
covenants shall be read into this Trust Agreement against the Property Trustee.
In case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 8.2) of which a responsible officer of the Property Trustee
has actual knowledge, the Property Trustee shall exercise such rights and powers
vested in it by this Trust Agreement and the Trust Indenture Act, and use the
same degree of care and skill in its exercise, as a prudent individual would
exercise or use under the circumstances in the conduct of his or her own
affairs. Notwithstanding the foregoing, no provision of this Trust Agreement
shall require the Trustees to expend or risk their own funds or otherwise incur
any financial liability in the performance of any of their duties hereunder, or
in the
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exercise of any of their rights or powers, if they shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Trust Agreement relating to the
conduct or affecting the liability of or affording protection to the Trustees
shall be subject to the provisions of this Section. Nothing in this Trust
Agreement shall be construed to release the Administrative Trustees from
liability for their own grossly negligent action, their own grossly negligent
failure to act, or their own willful misconduct. To the extent that, at law or
in equity, an Administrative Trustee has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to the Securityholders, such
Administrative Trustee shall not be liable to the Trust or to any Securityholder
for such Administrative Trustee's good faith reliance on the provisions of this
Trust Agreement or advice of counsel. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of the Administrative
Trustees otherwise existing at law or in equity, are agreed by the Depositor and
the Securityholders to replace such other duties and liabilities of the
Administrative Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Property Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each
Securityholder, by its acceptance of a Trust Security, agrees that it will look
solely to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security. This
Section 8.1(b) does not limit the liability of the Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property Trustee, in
the Trust Indenture Act.
(c) No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
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(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(ii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in Liquidation Amount of the
Trust Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising
any trust or power conferred upon the Property Trustee under this Trust
Agreement;
(iii) the Property Trustee's sole duty with respect to the custody,
safekeeping and physical preservation of the Debentures and the Payment
Account shall be to deal with such property as fiduciary assets, subject
to the protections and limitations on liability afforded to the Property
Trustee under this Trust Agreement and the Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree with the
Depositor and money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Payment Account
maintained by the Property Trustee pursuant to Section 3.1 and except to
the extent otherwise required by law; and
(v) neither the Property Trustee nor the Administrative Trustees
shall be responsible for monitoring each other's compliance or the
compliance of the Depositor with their respective duties under this Trust
Agreement, nor shall the Property Trustee or the Administrative Trustees
be liable for each other's default or misconduct or that of the Depositor.
SECTION 8.2. Notice of Defaults. (a) Within ten days after the
occurrence of any Event of Default actually known to the Property Trustee, the
Property Trustee shall transmit, in the manner and to the extent provided in
Section 10.8, notice of such Event of Default to the holders of Preferred
Securities, the Administrative Trustees and the Depositor, unless such Event of
Default shall have been
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cured or waived, provided that, except for a default in the payment of principal
of (or premium, if any) or interest on any of the Debentures, the Property
Trustee shall be protected in withholding such notice if and so long as the
Board of Directors, the executive committee, or a trust committee of directors
and/or responsible officers of the Property Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of the
Preferred Securities.
(b) Within ten days after the receipt of notice of the Depositor's
exercise of its right to extend the interest payment period for the Debentures
pursuant to the Indenture, the Property Trustee shall transmit, in the manner
and to the extent provided in Section 10.8, notice of such exercise to the
Securityholders, unless such exercise shall have been revoked.
(c) The Holders of a majority in Liquidation Amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any Event of Default in respect of the Preferred Securities
and its consequences, provided that, if the underlying Debenture Event of
Default:
(i) is not waivable under the Indenture, the Event of Default
under the Trust Agreement shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in principal amount of the holders of the Debentures (a "Super Majority")
to be waived under the Indenture, the Event of Default under the Trust
Agreement may only be waived by the vote of the Holders of the same
proportion in Liquidation Amount of the Preferred Securities that the
relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding.
The provisions of Section 6.1(b) and this Section 8.2(c) shall be in
lieu of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Trust Agreement
and the Preferred Securities, as permitted by the Trust Indenture Act. Upon such
waiver, any such default shall cease to exist, and any Event of Default with
respect to the Preferred Securities arising therefrom shall be deemed to have
been cured, for every purpose of this Trust Agreement,
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but no such waiver shall extend to any subsequent or other default or an Event
of Default with respect to the Preferred Securities or impair any right
consequent thereon. Any waiver by the Holders of the Preferred Securities of an
Event of Default with respect to the Preferred Securities shall also be deemed
to constitute a waiver by the Holders of the Common Securities of any such Event
of Default with respect to the Common Securities for all purposes of this Trust
Agreement without any further act, vote, or consent of the Holders of the Common
Securities.
(d) The Holders of a majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any Event of Default with respect to the Common Securities and
its consequences, provided that, if the underlying Debenture Event of Default:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event of
Default under the Declaration as provided below in this Section 8.2(d),
the Event of Default under the Trust Agreement shall also not be waivable;
or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Trust Agreement as provided
below in this Section 8.2(d), the Event of Default under the Trust
Agreement may only be waived by the vote of the Holders of the same
proportion in Liquidation Amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise eliminated,
the Property Trustee will be deemed to be acting solely on behalf of the Holders
of the Preferred Securities and only the Holders of the Preferred Securities
will have the right to direct the Property Trustee in accordance with the terms
of the Securities. The provisions of Section 6.1(b) and this
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Section 8.2(d) shall be in lieu of ss.316(a)(1)(B) of the Trust Indenture Act
and such ss.316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded
from this Trust Agreement and the Preferred Securities, as permitted by the
Trust Indenture Act. Subject to the foregoing provisions of this Section 8.2(d),
upon such waiver, any such default shall cease to exist and any Event of Default
with respect to the Common Securities arising therefrom shall be deemed to have
been cured for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default with respect to
the Common Securities or impair any right consequent thereon.
(e) A waiver of a Debenture Event of Default under the Indenture by
the Property Trustee at the direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default under this Trust
Agreement. The foregoing provisions of this Section 8.2(e) shall be in lieu of
ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Trust Agreement and
the Preferred Securities, as permitted by the Trust Indenture Act.
SECTION 8.3. Certain Rights of Property Trustee. Subject to the
provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected in acting
or refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or parties;
(b) if no Event of Default has occurred and is continuing and, (i)
in performing its duties under this Trust Agreement the Property Trustee is
required to decide between alternative courses of action or (ii) in construing
any of the provisions in this Trust Agreement the Property Trustee finds the
same ambiguous or inconsistent with any other provisions contained herein or
(iii) the Property Trustee is unsure of the application of any provision of this
Trust Agreement, then, except as to any matter as to which the Holders of
Preferred Securities are entitled to
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vote under the terms of this Trust Agreement, the Property Trustee shall deliver
a notice to the Depositor requesting written instructions of the Depositor as to
the course of action to be taken and the Property Trustee shall take such
action, or refrain from taking such action, as the Property Trustee shall be
instructed in writing to take, or to refrain from taking, by the Depositor;
provided, however, that if the Property Trustee does not receive such
instructions of the Depositor within ten Business Days after it has delivered
such notice, or such reasonably shorter period of time set forth in such notice
(which to the extent practicable shall not be less than two Business Days), it
may, but shall be under no duty to, take or refrain from taking such action not
inconsistent with this Trust Agreement as it shall deem advisable and in the
best interests of the Securityholders, in which event the Property Trustee shall
have no liability except for its own bad faith, negligence or willful
misconduct;
(c) any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by
an Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established before
undertaking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and rely upon an Officers' Certificate and an
Opinion of Counsel which, upon receipt of such request, shall be promptly
delivered by the Depositor or the Administrative Trustees;
(e) the Property Trustee shall have no duty to accomplish any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel of its selection
(which counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees) and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon and in accordance with such advice; and the Property Trustee
shall have the right at any time, upon prior notice
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to the Depositor, to seek instructions concerning the administration of this
Trust Agreement from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Trust Agreement at the request
or direction of any of the Securityholders pursuant to this Trust Agreement,
unless such Securityholders shall have offered to the Property Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction;
(h) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolutions, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by Holders of record of 25% or
more of the Preferred Securities (based upon their Liquidation Amount), but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys or an Affiliate, provided that the Property Trustee shall be
responsible for its own negligence, recklessness or bad faith with respect to
selection of any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders of the Trust Securities,
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii) shall
be protected in acting in accordance with such instructions; and
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(k) except as otherwise expressly provided by this Trust Agreement,
the Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates shall not
be taken as the statements of the Trustees, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable for
the use or application by the Depositor of the proceeds of the Debentures.
SECTION 8.5. May Hold Securities. Except as provided in the
definition of the term "Outstanding" in Article 1, any Trustee or any other
agent of any Trustee or the Trust, in its individual or any other capacity, may
become the owner or pledgee of Trust Securities and, subject to Section 8.8 and
8.12, may otherwise deal with the Trust with the same rights it would have if it
were not a Trustee or such other agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay the Trustees from time to time such compensation for all
services rendered by them hereunder as the parties shall agree from time to time
(which compensa tion shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation
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and the expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its negligence or bad
faith;
(c) to the fullest extent permitted by applicable law, to indemnify
and hold harmless (i) each Trustee, (ii) any Affiliate of any Trustee, (iii) any
officer, director, shareholder, employee, representative or agent of any
Trustee, and (iv) any employee or agent of the Trust or its Affiliates (referred
to herein as an "Indemnified Person") from and against any loss, damage,
liability, tax, penalty, expense or claim of any kind or nature whatsoever
incurred by such Indemnified Person by reason of the creation, operation or
termination of the Trust or any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Trust Agreement, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of negligence or
willful misconduct with respect to such acts or omissions; and
(d) no Trustee may claim any lien or charge on any Trust Property as
a result of any amount due pursuant to this Section 8.6.
SECTION 8.7. Property Trustee Required; Eligibility of Trustees. (a)
There shall at all times be a Property Trustee hereunder with respect to the
Trust Securities. The Property Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust
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Securities. Each Administrative Trustee shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
persons authorized to bind that entity.
(c) There shall at all times be a Delaware Trustee with respect to
the Trust Securities. The Delaware Trustee shall be either (i) a natural person
who is at least 21 years of age and a resident of the State of Delaware or (ii)
a legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests. If the Property Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Property Trustee shall either eliminate such interest or resign, to the
extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Trust Agreement.
SECTION 8.9. Resignation and Removal; Appointment of Successor. (a)
Subject to Sections 8.9(b) and 8.9(c), any Trustee (the "Relevant Trustee") may
be appointed or removed without cause at any time:
(i) until the issuance of any Trust Securities, by written
instrument executed by the Depositor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a majority in Liquidation Amount of the Common Securities
voting as a class.
(b) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 8.9(a) until a successor possessing the
qualifications to act as a Property Trustee under Section 8.7 (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
instrument executed by such Successor Property Trustee and delivered to the
Trust, the Depositor and the removed Property Trustee.
(c) The Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 8.9(a) until a successor possessing the
qualifications to act as Delaware Trustee under Section 8.7 (a "Successor
Delaware Trustee")
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has been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Depositor and
the removed Delaware Trustee.
(d) A Trustee appointed to office shall hold office until his, her
or its successor shall have been appointed or until his, her or its death,
removal, resignation, dissolution or liquidation. Any Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing signed by the Trustee and delivered to the Depositor and the Trust,
which resignation shall take effect upon such delivery or upon such later date
as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(1) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee; or
(2) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders
of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee has
been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Depositor
and the resigning Delaware Trustee.
(e) The Holders of the Common Securities shall use their best
efforts promptly to appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with Section 8.9(d).
(f) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted
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appointment as provided in this Section 8.9 within 60 days after delivery
pursuant to this Section 8.9 of an instrument of resignation or removal, the
Property Trustee or Delaware Trustee resigning or being removed, as applicable,
may petition any court of competent jurisdiction for appointment of a Successor
Property Trustee or Successor Delaware Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Property Trustee or Successor Delaware Trustee, as the case may be.
(g) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(h) The Property Trustee shall give notice of each resignation and
each removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.8 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
(i) Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee
who is a natural person dies or becomes, in the opinion of the Depositor,
incompetent or incapacitated, the vacancy created by such death, incompetence or
incapacity may be filled by (a) the unanimous act of the remaining
Administrative Trustees if there are at least two of them or (b) otherwise by
the Depositor (with the successor in each case being a Person who satisfies the
eligibility requirement for Administrative Trustees or the Delaware Trustee, as
the case may be, set forth in Section 8.7).
(j) The indemnity provided to a Trustee under Section 8.6 shall
survive any Trustee's resignation or removal.
SECTION 8.10. Acceptance of Appointment by Successor. In case of the
appointment hereunder of a successor Trustee, such successor Trustee so
appointed shall execute, acknowledge and deliver to the Trust and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee,
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without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Depositor or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
if the Property Trustee is the resigning Trustee shall duly assign, transfer and
deliver to the successor Trustee all property and money held by such retiring
Property Trustee hereunder.
In case of the appointment hereunder of a successor Relevant
Trustee, the retiring Relevant Trustee and each successor Relevant Trustee shall
execute and deliver an amendment hereto wherein each successor Relevant Trustee
shall accept such appointment and which shall contain such provisions as shall
be necessary or desirable to transfer and confirm to, and to vest in, each
successor Relevant Trustee all the rights, powers, trusts and duties of the
retiring Relevant Trustee and upon the execution and delivery of such amendment
the resignation or removal of the retiring Relevant Trustee shall become
effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on request of the Trust or any successor Relevant Trustee, such retiring
Relevant Trustee shall duly assign, transfer and deliver to such successor
Relevant Trustee all Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the first or second preceding paragraph, as the case may be.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
SECTION 8.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Property Trustee, the Delaware Trustee
or any Administrative Trustee that is not a natural person may be merged or
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converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Relevant Trustee
shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
SECTION 8.12. Preferential Collection of Claims Against Depositor or
Trust. If and when the Property Trustee shall be or become a creditor of the
Depositor or the Trust (or any other obligor upon the Debentures or the Trust
Securities), the Property Trustee shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
SECTION 8.13. Reports by Property Trustee. (a) To the extent
required by the Trust Indenture Act, within 60 days after December 31 of each
year commencing with December 31, 1997 the Property Trustee shall transmit to
all Securityholders in accordance with Section 10.8 and to the Depositor, a
brief report dated as of such December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if to the
best of its knowledge it has continued to be eligible under said Section,
a written statement to such effect;
(ii) a statement that the Property Trustee has complied with all of
its obligations under this Trust Agreement during the twelve-month period
(or, in the case of the initial report, the period since the Closing Date)
ending with such December 31 or, if the Property Trustee has not complied
in any material respects with such obligations, a description of such
noncompliance; and
(iii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken by
the Property Trustee in the performance of its duties hereunder
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which it has not previously reported and which in its opinion materially
affects the Trust Securities.
(b) In addition, the Property Trustee shall transmit to
Securityholders such reports concerning the Property Trustee and its actions
under this Trust Agreement as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant thereto.
(c) A copy of such report shall, at the time of such transmissions
to Holders, be filed by the Property Trustee with each national securities
exchange or self-regulatory organization upon which the Trust Securities are
listed, with the Commission and with the Depositor.
SECTION 8.14. Reports to the Property Trustee. The Depositor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as required by Section 314 of
the Trust Indenture Act (if any) and the compliance certificate required by
Section 314(a) of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 8.15. Evidence of Compliance with Conditions Precedent. Each
of the Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Trust Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers'
Certificate.
SECTION 8.16. Number of Trustees. (a) The number of Trustees shall
be four, provided that the Holder of all of the Common Securities by written
instrument may increase or decrease the number of Administrative Trustees. The
Property Trustee and the Delaware Trustee may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number
of Administrative Trustees is not reduced pursuant to Section 8.16(a), or if the
number of Trustees is increased pursuant to Section 8.16(a), a vacancy shall
occur.
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(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative Trustees
shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 8.9, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
SECTION 8.17. Delegation of Power. (a) Any Administrative Trustee
may, by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of executing
any documents contemplated in Section 2.7(a), including any registration
statement or amendment thereof filed with the Commission, or making any other
governmental filing.
(b) The Administrative Trustees shall have power to delegate from
time to time to such of their number or to the Depositor the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
SECTION 8.18. Appointment of Administrative Trustees.
(a) The Administrative Trustees shall initially be Richard L.
Ritchie, an individual, and Mark A. Angelson, an individual, and their
successors shall be appointed by the Holders of a majority in Liquidation Amount
of the Common Securities and may resign or be removed by the Holders of a
majority in Liquidation Amount of the Common Securities at any time. Upon any
resignation or removal, the Depositor shall appoint a successor Administrative
Trustee. If at any time there is no Administrative Trustee, the Property Trustee
or any Holder who has been a Holder of Trust Securities for at least six months
may petition any court of competent jurisdiction for the appointment of one or
more Administrative Trustees.
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(b) Whenever a vacancy in the number of Administrative Trustees
shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with this Section 8.18, the Administrative
Trustees in office, regardless of their number (and not withstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
(c) Notwithstanding the foregoing or any other provision of this
Trust Agreement, if any Administrative Trustee who is a natural person dies or
becomes, in the opinion of the Holders of a majority in Liquidation Amount the
Common Securities, incompetent or incapacitated, the vacancy created by such
death, incompetence or incapacity may be filled by the unanimous act of the
remaining Administrative Trustees, if there were at least two of them prior to
such vacancy, and by the Depositor, if there were not two such Administrative
Trustees immediately prior to such vacancy (with the successor being a Person
who satisfies the eligibility requirement for Administrative Trustees set forth
in Section 8.7).
ARTICLE 9
TERMINATION, LIQUIDATION AND MERGER
SECTION 9.1. Termination upon Expiration Date. Unless earlier
terminated, the Trust shall automatically terminate on October 14, 2042 (the
"Expiration Date"), following the distribution of the Trust Property in
accordance with Section 9.4.
SECTION 9.2. Early Termination. The first to occur of any of the
following events is an "Early Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) the occurrence of a Special Event except in the case of a Tax
Event following which the Depositor has elected to (i) pay any Additional Sums
(in accordance with Section 4.4) such that the net amount received by Holders of
Preferred Securities in respect of Distributions are not reduced as a result of
such Tax Event and the Depositor has
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not revoked any such election or failed to make such payments or (ii)
redeem all or some of the Debentures pursuant to Section 4.4(a);
(c) the redemption, conversion or exchange of all of the Trust
Securities;
(d) an order for dissolution of the Trust shall have been entered by
a court of competent jurisdiction; and
(e) receipt by the Property Trustee of written notice from the
Depositor at any time (which notice is optional and wholly within the discretion
of the Depositor) of its intention to terminate the Trust and distribute the
Debentures in exchange for the Preferred Securities.
SECTION 9.3. Termination. The respective obligations and
responsibilities of the Trustees and the Trust created and continued hereby
shall terminate upon the latest to occur of the following: (a) the distribution
by the Property Trustee to Securityholders upon the liquidation of the Trust
pursuant to Section 9.4, or upon the redemption of all of the Trust Securities
pursuant to Section 4.2, of all amounts required to be distributed hereunder
upon the final payment of the Trust Securities; (b) the payment of all expenses
owed by the Trust; and (c) the discharge of all administrative duties of the
Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Securityholders.
SECTION 9.4. Liquidation. (a) If an Early Termination Event
specified in clause (a), (b), (d) or (e) of Section 9.2 occurs or upon the
Expiration Date, the Trust shall be liquidated by the Trustees as expeditiously
as the Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to each
Securityholder an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Trust Securities held by such Holder, subject to
Section 9.4(d). Notice of liquidation shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not later than 30 nor more than 60
days prior to the Liquidation Date to each Holder of Trust Securities at such
Holder's address as it appears in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
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(ii) state that, from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Preferred Securities held by such Holder;
and
(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for Debentures,
or, if Section 9.4(d) applies, receive a Liquidation Distribution, as the
Administrative Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to
effect the liquidation of the Trust and distribution of the Debentures to
Securityholders, the Property Trustee shall establish a record date for such
distribution (which shall be not more than 45 days prior to the Liquidation
Date) and, either itself acting as exchange agent or through the appointment of
a separate exchange agent, shall establish such procedures as it shall deem
appropriate to effect the distribution of Debentures in exchange for the
Outstanding Trust Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) the Clearing Agency or its nominee, as the record holder of
such Trust Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such distribution
and (iii) any Trust Securities Certificates not held by the Clearing Agency will
be deemed to represent an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Preferred Securities held by such Holders, and
bearing accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such Trust Securities until such certificates are presented to
the Property Trustee for transfer or reissuance.
(d) In the event that, notwithstanding the other provisions of this
Section 9.4, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practicable, the Trust Property shall be liquidated, and
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the Trust shall be dissolved, wound-up or terminated, by the Property Trustee in
such manner as the Property Trustee determines. In such event, on the date of
the dissolution, winding up or other termination of the Trust, Securityholders
will be entitled to receive out of the assets of the Trust available for
distribution to Securityholders, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, an amount equal to the Liquidation
Amount per Trust Security plus accrued and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation Distribution"). If, upon any
such dissolution, winding-up or termination, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then, subject to the next
succeeding sentence, the amounts payable by the Trust on the Trust Securities
shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder
of the Common Securities will be entitled to receive Liquidation Distributions
upon any such dissolution, winding-up or termination pro rata (determined as
aforesaid) with Holders of Preferred Securities, except that, if a Debenture
Event of Default has occurred and is continuing, the Preferred Securities shall
have a priority over the Common Securities.
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements
of the Trust. The Trust may not merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except pursuant
to this Section 9.5. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the Property Trustee, the
Delaware Trustee or the Holders of the Preferred Securities, the Trust may merge
with or into, consolidate, amalgamate, be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any State; provided, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the Preferred Securities or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Preferred Securities rank in priority with respect to
Distributions and payments upon liquidation, redemption and otherwise, (ii) the
Depositor
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expressly appoints a trustee of such successor entity, possessing the same
powers and duties as the Property Trustee, as the holder of the Debentures,
(iii) the Successor Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
other organization on which the Preferred Securities are then listed, if any,
(iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders of the Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease the
Depositor has received an Opinion of Counsel to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the Holders of the
Preferred Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the Holder's interest in the
new entity), (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease neither the Trust nor such successor
entity will be required to register as an "investment company" under the 1940
Act, and (c) following such merger, consolidation, amalgamation or replacement,
the Trust or such successor entity will be treated as a grantor trust for United
States Federal income tax purposes and (viii) the Depositor or any permitted
successor or assignee owns all of the Common Securities of such successor entity
and guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of Holders of 100% in
aggregate Liquidation Amount of the Preferred Securities, consolidate,
amalgamate, merge with or into, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it
if such consolidation, amalgamation, merger, replacement, conveyance, transfer
or lease would cause the Trust or the
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successor entity to be classified as other than a grantor trust for United
States Federal income tax purposes.
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Securityholders. The death or
incapacity of any person having an interest, beneficial or otherwise, in Trust
Securities shall not operate to terminate this Trust Agreement, nor entitle the
legal representatives or heirs of such person or any Securityholder for such
person to claim an accounting, take any action or bring any proceeding in any
court for a partition or winding-up of the arrangements contemplated hereby, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
SECTION 10.2. Amendment. (a) This Trust Agreement may be amended
from time to time by the Trustees and the Depositor, without the consent of any
Securityholders, (i) to cure any ambiguity, correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of this
Trust Agreement, (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will be classified for United States Federal income tax purposes as a grantor
trust at all times that any Trust Securities are Outstanding or to ensure that
the Trust will not be required to register as an "investment company" under the
1940 Act, or be classified as other than a grantor trust for United States
Federal income tax purposes, or (iii) to maintain the qualification of this
Trust Agreement under the Trust Indenture Act; provided, however, that in the
case of clause (i), such action shall not adversely affect in any material
respect the interests of any Securityholder, and any amendments of this Trust
Agreement shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 10.2(c) hereof, any provision of
this Trust Agreement may be amended by the Trustees and the Depositor with (i)
the consent of Holders representing not less than a majority (based upon
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Liquidation Amounts) of the Trust Securities then Outstanding, acting as a
single class, and (ii) receipt by the Trustees of an Opinion of Counsel to the
effect that such amendment or the exercise of any power granted to the Trustees
in accordance with such amendment will not affect the Trustee's status as a
grantor trust for United States Federal income tax purposes or the Trust's
exemption from the status of an "investment company" under the 1940 Act,
provided, however, if any amendment or proposal that would adversely affect the
powers, preferences or special rights of the Trust Securities, whether by way of
amendment or otherwise, would adversely affect only the Preferred Securities or
only the Common Securities, then only the affected class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a majority in Liquidation Amount of such
class of Trust Securities.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 6.3 or 6.6 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this
paragraph (c) of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
the status of an "investment company" under the 1940 Act or be classified as
other than a grantor trust for United States Federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor, this Trust Agreement may not be
amended in a manner which imposes any additional obligation on the Depositor.
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(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees shall promptly provide to the Depositor a copy of
such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
SECTION 10.3. Separability. In case any provision in this Trust
Agreement or in the Trust Securities Certificates shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 10.4. GOVERNING LAW. THIS TRUST AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND TRUSTEES WITH RESPECT
TO THIS TRUST AGREEMENT IN THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES AND EXCLUDING SECTIONS 3540 AND 3561 OF TITLE 12
THEREOF.
SECTION 10.5. Payments Due on Non-Business Day. If the date fixed
for any payment on any Trust Security shall be a day which is not a Business
Day, then such payment need not be made on such date but may be made on the next
succeeding day which is a Business Day (except as otherwise provided in Section
4.1(a) and Section 4.2(d)), with the same force and effect as though made on the
date fixed for such payment, and no interest shall accrue thereon for the period
after such date.
SECTION 10.6. Successors. This Trust Agreement shall be binding upon
and shall inure to the benefit of any successor to the Depositor, the Trust or
the Relevant Trustee, including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Depositor that is
permitted under Article 8 of the Indenture and pursuant to which the assignee
agrees in writing to perform the Depositor's obligations hereunder, the
Depositor shall not assign its obligations hereunder.
83
<PAGE>
SECTION 10.7. Headings. The Article and Section headings are for
convenience only and shall not affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands. Any report, notice,
demand or other communications which by any provision of this Trust Agreement is
required or permitted to be given or served to or upon any Securityholder or the
Depositor may be given or served in writing by deposit thereof, first-class
postage prepaid, in the United States mail, hand delivery or facsimile
transmission, in each case, addressed, (a) in the case of a Holder of Preferred
Securities, to such Holder as such Holder's name and address may appear on the
Securities Register; and (b) in the case of the Holder of the Common Securities,
to Big Flower Holdings, Inc., 3 East 54th Street, New York, New York 10022;
attention: General Counsel.
Any notice to Preferred Securityholders shall also be given to such
Owners as have, within two years preceding the giving of such notice, filed
their names and addresses with the Property Trustee for that purpose. Such
notice, demand or other communication to or upon a Securityholder shall be
deemed to have been sufficiently given, or made, for all purposes, upon hand
delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee, the Delaware Trustee or the Administrative
Trustees shall be given in writing addressed (until another address is published
by the Trust) as follows: (a) with respect to the Property Trustee, to The Bank
of New York, 101 Barclay Street, New York, New York 10286, Attention: Corporate
Trust & Agency Department, (b) with respect to the Delaware Trustee, to The Bank
of New York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711,
with a copy of any such notice to the Property Trustee at its address above, and
(c) with respect to the Administrative Trustees, to them at the address for
notices to the Depositor, marked "Attention: Secretary". Such notice, demand or
other communication to or upon the Trust or the Property Trustee shall be deemed
to have been sufficiently given or made only upon actual receipt of the writing
by the Trust or the Property Trustee.
84
<PAGE>
SECTION 10.9. Agreement Not to Petition. Each of the Trustees and
the Depositor agrees for the benefit of the Securityholders that, until at least
one year and one day after the Trust has been terminated in accordance with
Article 9, it shall not file, or join in the filing of, a petition against the
Trust under any bankruptcy, insolvency, reorganization or other similar law
(including, without limitation, the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 10.9, the Property Trustee
agrees, for the benefit of Securityholders, that, at the expense of the
Depositor, it shall file an answer with the bankruptcy court or otherwise
properly contest the filing of such petition by the Depositor against the Trust
or the commencement of such action and raise the defense that the Depositor has
agreed in writing not to take such action and should be stopped and precluded
therefrom and such other defenses, if any, as counsel for the Trustee or the
Trust may assert. The provisions of this Section 10.9 shall survive the
termination of this Trust Agreement.
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture
Act. (a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is the
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with
another provision hereof which is required to be included in this Trust
Agreement by any of the provisions of the Trust Indenture Act, such required
provision shall control. If any provision of this Trust Agreement modifies or
excludes any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Trust Agreement
as so modified or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Trust Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
85
<PAGE>
SECTION 10.11. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT
PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL
CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT
THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND
EFFECTIVE AS TO THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
SECTION 10.12. Counterparts. This Trust Agreement may contain more
than one counterpart of the signature page and this Trust Agreement may be
executed by the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.
ARTICLE 11
REGISTRATION RIGHTS
SECTION 11.1. Registration Rights. The Holders of the Preferred
Securities, the Debentures and the Guarantee and the shares of Common Stock of
the Depositor issuable upon conversion of the Debentures and/or the Preferred
Securities are entitled to the benefits of the Registration Rights Agreement.
86
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed as of the day and year first above
written.
BIG FLOWER HOLDINGS, INC.,
as Depositor
By:______________________________________
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By:______________________________________
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:______________________________________
Name:
Title:
______________________________________
as Administrative Trustee
______________________________________
as Administrative Trustee
87
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
BIG FLOWER TRUST I
A-1
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE
DEPOSITARY AGREEMENT
B-1
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number Number of Common Securities
__________ 72,000
Certificate Evidencing Common Securities
of
Big Flower Trust I
Common Securities
(liquidation amount $50 per Common Security)
Big Flower Trust I, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that Big Flower
Holdings, Inc. (the "Holder") is the registered owner of 72,000 common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust (the "Common Securities"). In accordance with Section 5.10
of the Trust Agreement (as defined below) the Common Securities are not
transferable and any attempted transfer hereof shall be void. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of October 14, 1997, as the same may be amended from time to time
(the "Trust Agreement") including the designation of the terms of the Common
Securities as set forth therein. The Holder is entitled to the benefits of the
Common Securities Guarantee Agreement entered into by the Holder and The Bank of
New York, as Guarantee Trustee, dated as of October 20, 1997 (the "Guarantee"),
to the extent provided therein. The Trust will furnish a copy of the Trust
Agreement and the Guarantee to the Holder without charge upon written request to
the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
C-1
<PAGE>
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this 20th day of October 1997.
BIG FLOWER TRUST I
By: _________________________
Name:
As Administrative Trustee
C-2
<PAGE>
EXHIBIT D
[ADD ANY SECURITIES ACT LEGENDS REQUIRED UNDER SECTION 5.15 TO THE
ACTUAL GLOBAL CERTIFICATES.
IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE, INSERT -
THIS PREFERRED SECURITY IS A BOOK- ENTRY PREFERRED SECURITIES CERTIFICATE WITHIN
THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS
PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE TRUST AGREEMENT AND NO TRANSFER OF THIS PREFERRED SECURITY
(OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE
OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE
REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (55 WATER STREET, NEW YORK), TO BIG FLOWER TRUST I OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.]
D-1
<PAGE>
Certificate Number Number of Preferred Securities
__________ ___________
CUSIP No. 089164206
$___________
Certificate Evidencing Preferred Securities
of
Big Flower Trust I
6% Convertible Preferred Securities
(liquidation amount $50 per Preferred Security)
Big Flower Trust I, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that __________________
(the "Holder") is the registered owner of _______ preferred securities of the
Trust representing an undivided beneficial interest in the assets of the Trust
and designated the Big Flower Trust I 6% Convertible Preferred Securities
(liquidation amount $50 per Preferred Security) (the "Preferred Securities").
The Preferred Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer as provided in Section 5.4 of the
Trust Agreement (as defined below). The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities are set forth in, and this certificate and the Preferred Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of the Trust dated
as of October 14, 1997 as the same may be amended from time to time (the "Trust
Agreement") including the designation of the terms of Preferred Securities as
set forth therein. The Holder is entitled to the benefits of the Guarantee
Agreement entered into by Big Flower Holdings, Inc., a Delaware corporation, and
The Bank of New York, as Guarantee Trustee, dated as of October 20, 1997 (the
"Guarantee"), to the extent provided therein. The Trust will furnish a copy of
the Trust Agreement and the Guarantee to the Holder without charge upon written
request to the
D-2
<PAGE>
Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust
has executed this certificate this 20th day of October 1997.
BIG FLOWER TRUST I
By: _________________________________
Name:
An Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Trust Agreement.
Dated: October , 1997
The Bank of New York,
as Property Trustee
By: _________________________________
Authorized Signatory
D-3
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ___________________
Signature: ____________________
(Sign exactly as our name appears on the other side of this Preferred Security
Certificate)
<PAGE>
Signature Guarantee: ______________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Securities Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Securities
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
2
<PAGE>
[TO BE ATTACHED TO GLOBAL CERTIFICATE]
SCHEDULE A
The initial liquidation amount of this Global Certificate shall be
$__________. The following increases or decreases in the liquidation amount of
this Global Certificate have been made:
================================================================================
Amount of
increase in
Liquidation Liquidation
Amount of this Amount of Amount of this Signature of
Global decrease in Global authorized
Certificate Liquidation Certificate officer of
including upon Amount of this following such Trustee or
exercise of over Global decrease or Securities
Date Made allotment option Certificate increase Custodian
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3
<PAGE>
EXHIBIT E -- Form of
Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to Sections 5.4(b)(i) and (iii)
of the Trust Agreement)
[Property Trustee]
Attention: Corporate Trust Department
Re: 6% Convertible Quarterly Income Preferred
Securities of Big Flower Trust I
(the "Securities")
Reference is made to the Amended and Restated Trust Agreement, dated
as of October 14, 1997 (the "Trust Agreement"), among Big Flower Holdings, Inc.
(the "Company"), The Bank of New York, The Bank of New York (Delaware) and the
Administrative Trustees named therein. Terms used herein and defined in the
Trust Agreement or in Regulation S or Rule 144 under the U.S. Securities Act of
1933 (the "Securities Act") are used herein as so defined.
This certificate relates to _________ shares of Securities, which
are evidenced by the following certificate(s) (the "Specified Securities"):
CUSIP No. U08996107
CERTIFICATE No(s). __________________
The Person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Certificate, they are
held through the Clearing Agency or participant in the name of the Undersigned,
as or on behalf of the Owner. If the Specified Securities are not
E-1
<PAGE>
represented by a Global Certificate, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Regulation S Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 904 or Rule 144 under the Securities Act and with all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
(A) the Owner is not a distributor of the Securities, an affiliate
of the Company or any such distributor or a person acting on behalf of any of
the foregoing;
(B) the offer of the Specified Securities was not made to a person
in the United States;
(C) either:
(i) at the time the buy order was originated, the Transferee
was outside the United States or the Owner and any person acting on its
behalf reasonably believed that the Transferee was outside the United
States, or
(ii) the transaction is being executed in, on or through the
facilities of the Eurobond market, as regulated by the Association of
International Bond Dealers, or another designated offshore securities
market and neither the Owner nor any person acting on its behalf knows
that the transaction has been prearranged with a buyer in the United
States;
(D) no directed selling efforts have been made in the United States
by or on behalf of the Owner or any affiliate thereof;
(E) if the Owner is a dealer in securities or has received a selling
concession, fee or other remuneration in
E-2
<PAGE>
respect of the Specified Securities, and the transfer is to occur during the
Restricted Period, then the requirements of Rule 904(c)(1) have been satisfied;
and
(F) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected pursuant
to Rule 144:
(A) the transfer is occurring after a holding period of at least one
year (computed in accordance with paragraph (d) of Rule 144) has lapsed since
the Specified Securities were last acquired from the Trust or from an affiliate
of the Trust, whichever is later, and is being effected in accordance with the
applicable amount, manner of sale and notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at least two
years has elapsed since the Specified Securities were last acquired from the
Trust or from an affiliate of the Trust, whichever is later, and the Owner is
not, and during the preceding three months has not been, an affiliate of the
Trust.
E-3
<PAGE>
This certificate and the statements contained herein are made for
your benefit and the benefit of the Trust and the Purchasers.
Dated: ___________
(Print the name of the Undersigned, as such term
is defined in the second paragraph of this
certificate)
By:
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the
title of the person signing on behalf of the Undersigned must be
stated.)
E-4
<PAGE>
EXHIBIT F -- Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Sections 5.4(b)(ii) and (iii)
of the Trust Agreement)
[Property Trustee]
Attention: Corporate Trust Department
Re: 6% Convertible Quarterly Income
Preferred Securities of Big Flower
Trust I (the "Securities")
Reference is made to the Amended and Restated Trust Agreement, dated
as of October 14, 1997 (the "Trust Agreement"), among Big Flower Holdings, Inc.
(the "Company"), The Bank of New York, The Bank of New York (Delaware) and the
Administrative Trustees named therein. Terms used herein and defined in the
Trust Agreement or in Regulation S or Rule 144 under the U.S. Securities Act of
1933 (the "Securities Act") are used herein as so defined.
This certificate relates to _________ shares of Securities, which
are evidenced by the following certificate(s) (the "Specified Securities"):
CUSIP No(s). ________________________
CERTIFICATE No(s). __________________
The Person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Certificate, they are
held through the Clearing Agency or participant in the name of the Undersigned,
as or on behalf of the Owner. If the Specified Securities are not
F-1
<PAGE>
represented by a Global Certificate, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Restricted Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 144A or Rule 144 under the Securities Act and all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:
(1) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
(A) the Specified Securities are being transferred to a person that
the Owner and any person acting on its behalf reasonably believe is a
"qualified institutional buyer" within the meaning of Rule 144A, acquiring
for its own account or for the account of a qualified institutional buyer;
and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the Owner may
be relying on Rule 144A in connection with the transfer; and
(2) Rule 144 Transfers. If the transfer is being effected pursuant
to Rule 144:
(A) the transfer is occurring after a holding period of at least one
year (computed in accordance with paragraph (d) of Rule 144) has elapsed
since the Specified Securities were last acquired from the Trust or from
an affiliate of the Trust, whichever is later, and is being effected in
accordance with the applicable amount, manner of sale, and notice
requirements of rule 144; or
(B) the transfer is occurring after a holding period of at least two
years has elapsed since the Specified Securities were last acquired from
the Trust or from an affiliate of the Trust, whichever is later, and the
Owner is not, and during the preceding three months has not been, an
affiliate of the Trust.
F-2
<PAGE>
This certificate and the statements contained herein are made for your
benefit and benefit of the Trust and the Purchasers.
Dated:___________________________
(Print the name of the Undersigned, as such term is defined in the second
paragraph of this certificate.)
By:__________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the title
of the person signing on behalf of the Undersigned must be stated.)
F-3
<PAGE>
EXHIBIT G -- Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to Section 5.4(c))
[Property Trustee]
Attention: Corporate Trust Department
Re: 6% Convertible Quarterly Income Preferred Securities
of Big Flower Trust I (the "Securities")
Reference is made to the Amended and Restated Trust Agreement, dated as of
October 14, 1997 (the "Trust Agreement"), among Big Flower Holdings, Inc. (the
"Company"), The Bank of New York, The Bank of New York (Delaware) and the
Administrative Trustees named therein. Terms used herein and defined in the
Trust Agreement or in Regulation S or Rule 144 under the U.S. Securities Act of
1933 (the "Securities Act") are used herein as so defined.
This certificate relates to ________________ shares of Securities, which
are evidenced by the following certificate(s) (the "Specified Securities"):
CUSIP No(s). ____________________________
CERTIFICATE No(s). ______________________
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Certificate, they are
held through the Clearing Agency or participant in the name of the Undersigned,
as or on behalf of the Owner. If the Specified Securities are not represented by
a Global Certificate, they are registered in the name of the Undersigned as or
on behalf of the Owner.
G-1
<PAGE>
The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Securities Act Legend pursuant to Section 5.4(c) of the
Trust Agreement. In connection with such exchange, the Owner hereby certifies
that the exchange is occurring after a holding period of at least two years
(computed in accordance with paragraph (d) of Rule 144) has elapsed since the
Specified Securities were last acquired from the Trust or from an affiliate of
the Trust, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Trust. The Owner also
acknowledges that any future transfers of the Specified Securities must comply
with all applicable securities laws of the states of the United States and other
jurisdictions.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Trust and the Purchasers.
Dated:___________________________________
(Print the name of the Undersigned, as such term is defined in the
second paragraph of this certificate.)
By:____________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the
title of the person signing on behalf of the Undersigned must be
stated.)
G-2
<PAGE>
EXHIBIT H
NOTICE OF CONVERSION
To: The Bank of New York
as Property Trustee of
Big Flower Trust I
The undersigned owner of these Trust Securities hereby irrevocably
exercises the option to convert these Trust Securities, or the portion below
designated, into Common Stock of BIG FLOWER HOLDINGS, INC. (the "Big Flower
Common Stock") in accordance with the terms of the Amended and Restated Trust
Agreement (the "Trust Agreement"), dated as October 14, 1997, by Mark A.
Angelson and Richard L. Ritchie, as Administrative Trustees, The Bank of New
York (Delaware), as Delaware Trustee, The Bank of New York, as Property Trustee,
Big Flower Holdings, Inc., as Depositor, and by the Holders, from time to time,
of individual beneficial interests in the Trust to be issued pursuant to the
Trust Agreement. Pursuant to the aforementioned exercise of the option to
convert these Trust Securities, the undersigned hereby directs the Conversion
Agent (as that term is defined in the Trust Agreement) to (i) exchange such
Trust Securities for a portion of the Debentures (as that term is defined in the
Trust Agreement) held by the Trust (at the rate of exchange specified in the
terms of the Trust Securities set forth in the Trust Agreement) and (ii)
immediately convert such Debentures on behalf of the undersigned, into Big
Flower Common Stock (at the conversion rate specified in the terms of the Trust
Securities set forth in the Trust Agreement).
The undersigned does also hereby direct the Conversion Agent that
the shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
H-1
<PAGE>
Any holder of Preferred Securities, upon the exercise of its
conversion rights in accordance with the terms of the Trust Agreement and the
Preferred Securities, agrees to be bound by the terms of the Registration Rights
Agreement relating to the Big Flower Common Stock issuable upon conversion of
the Preferred Securities.
Date: ____________, ____
in whole __ in part __
Number and type of Trust Securities to be
converted:
_______________________
If a name or names other than the
undersigned, please indicate in the spaces
below the name or names in which the shares
of Big Flower Common Stock are to be issued,
along with the address or addresses of such
person or persons
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
Signature (for conversion only)
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<PAGE>
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number
__________________________________________________
__________________________________________________
__________________________________________________
Signature Guarantee:*_____________________________
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* (Signature must be guaranteed by an institution which is a member of the
following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) in such other guarantee programs acceptable to the
Trustee.)
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EXHIBIT 4.2(ii)
- --------------------------------------------------------------------------------
GUARANTEE AGREEMENT
between
Big Flower Holdings, Inc.
and
The Bank of New York
Relating to the Preferred Securities of
Big Flower Trust I
Dated as of October 20, 1997
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE TABLE*
Section of Trust Section of
Indenture Act of Guarantee
1939, as amended Agreement
310(a)...................................................................4.1(a)
310(b)..............................................................4.1(c), 2.8
310(c).............................................................Inapplicable
311(a)...................................................................2.2(b)
311(b)...................................................................2.2(b)
311(c).............................................................Inapplicable
312(a)...................................................................2.2(a)
312(b)...................................................................2.2(b)
313.........................................................................2.3
314(a)......................................................................2.4
314(b).............................................................Inapplicable
314(c)......................................................................2.5
314(d).............................................................Inapplicable
314(e)............................................................1.1, 2.5, 3.2
314(f)......................................................................3.2
315(a)...................................................................3.1(d)
315(b)......................................................................2.7
315(c)......................................................................3.1
315(d)...................................................................3.1(d)
316(a)............................................................1.1, 2.6, 5.4
316(b)......................................................................5.3
317(a).............................................................Inapplicable
317(b).............................................................Inapplicable
318(a)...................................................................2.1(b)
318(b)......................................................................2.1
318(c)...................................................................2.1(a)
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* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions.....................................................2
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application................................6
SECTION 2.2. List of Holders.................................................6
SECTION 2.3. Reports by the Guarantee Trustee................................7
SECTION 2.4. Periodic Reports to Guarantee Trustee...........................7
SECTION 2.5. Evidence of Compliance with Conditions
Precedent.....................................................7
SECTION 2.6. Events of Default; Waiver.......................................8
SECTION 2.7. Event of Default; Notice........................................8
SECTION 2.8. Conflicting Interests...........................................8
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee
Trustee.......................................................8
SECTION 3.2. Certain Rights of Guarantee Trustee............................10
SECTION 3.3. Indemnity......................................................13
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.................................13
SECTION 4.2. Appointment, Removal and Resignation
of the Guarantee Trustee.....................................14
ARTICLE 5
GUARANTEE
SECTION 5.1. Guarantee......................................................14
SECTION 5.2. Waiver of Notice and Demand....................................15
SECTION 5.3. Obligations Not Affected.......................................15
SECTION 5.4. Rights of Holders..............................................16
SECTION 5.5. Guarantee of Payment...........................................17
SECTION 5.6. Subrogation....................................................17
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SECTION 5.7. Independent Obligations........................................17
SECTION 5.8. Subordination..................................................17
ARTICLE 6
COVENANTS
SECTION 6.1. Certain Covenants of the Guarantor.............................18
ARTICLE 7
TERMINATION
SECTION 7.1. Termination....................................................19
ARTICLE 8
SUBORDINATION OF GUARANTEE
SECTION 8.1. Guarantee Subordinate to Guarantor
Secured Indebtedness.........................................20
SECTION 8.2. Payment Over of Proceeds Upon
Dissolution, Etc.............................................20
SECTION 8.3. Payment Blockage Upon Acceleration
of Designated Senior Indebtedness, Etc.......................21
SECTION 8.4. No Payment When Guarantor Secured
Indebtedness in Default......................................22
SECTION 8.5. Guarantee Trustee to Effectuate
Subordination................................................23
SECTION 8.6. No Waiver of Subordination Provisions..........................23
SECTION 8.7. Notice to Guarantee Trustee....................................23
SECTION 8.8. Reliance on Judicial Order or
Certificate of Liquidating Agent.............................24
SECTION 8.9. Guarantee Trustee Not Fiduciary for
Holders of Guarantor Secured Indebtedness....................24
SECTION 8.10. Rights of Guarantee Trustee as Holder
of Guarantor Secured Indebtedness............................25
SECTION 8.11. Certain Conversions or Exchanges
Deemed Payment...............................................25
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Successors and Assigns.........................................25
SECTION 9.2. Amendments.....................................................26
SECTION 9.3. Notices........................................................26
SECTION 9.4. Benefit........................................................27
SECTION 9.5. Interpretation.................................................27
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SECTION 9.6. Governing Law..................................................28
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<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of October 20, 1997, is executed
and delivered by Big Flower Holdings, Inc., a Delaware corporation (the
"Guarantor") and The Bank of New York, a New York banking corporation, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of Big
Flower Trust I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of October 14, 1997 among the Trustees named
therein, the Guarantor, as Depositor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing 2,300,000 of its 6% Convertible Quarterly Income Preferred Securities
(liquidation preference $50 per preferred security) (the "Preferred Securities")
representing preferred undivided beneficial interests in the assets of the
Issuer and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and
the proceeds thereof, together with the proceeds from the issuance of the
Issuer's Common Securities (as defined below), will be used to purchase the
Debentures (as defined in the Trust Agreement) of the Guarantor which will be
deposited with The Bank of New York, as Property Trustee under the Trust
Agreement, as trust assets;
WHEREAS, as incentive for the Holders to purchase Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders of the Preferred Securities
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
<PAGE>
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. As used in this Guarantee Agreement, the
terms set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct common control with
such specified Person, provided, however, that an Affiliate of the Guarantor
shall not be deemed to include the Issuer. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled' have meanings correlative to the
foregoing.
"Bank Credit Agreement" means the Credit Agreement dated as of June
12, 1997, among the lenders party thereto in their capacities as lenders
thereunder, Credit Suisse First Boston, as documentation agent, and Bankers
Trust Company, as administrative agent, together with the related documents
thereto (including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including, without limitation, increasing
the amount of available borrowings thereunder or adding Subsidiaries of the
Guarantor as additional borrowers or guarantors thereunder) all or any portion
of the indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
"Common Securities" means the securities representing common
beneficial interests in the assets of the Issuer.
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"Common Stock" shall mean the common stock, par value $0.01, per
share, of the Guarantor.
"Designated Senior Indebtedness" means (x) all Guarantor Secured
Indebtedness under, or as a result of the Guarantor's guarantee of, indebtedness
pursuant to the Bank Credit Agreement and (y) at any time when no indebtedness
described in preceding clause (x) is outstanding, any issue of Guarantor Secured
Indebtedness with an aggregate principal amount in excess of $15.0 million that
is designated as "Designated Senior Indebtedness" by written notice from the
Guarantor to the Guarantee Trustee.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided, however,
that, except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received written notice of default and shall not have cured
such default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer shall have funds on hand
available therefor at such time, (ii) the redemption price set forth in the
Trust Agreement, including premium, if any, all accrued and unpaid Distributions
to the date of redemption (the "Redemption Price"), with respect to the
Preferred Securities called for redemption by the Issuer to the extent the
Issuer shall have funds on hand available therefor, and (iii) upon a voluntary
or involuntary dissolution, winding-up or liquidation of the Issuer, unless
Debentures are distributed to the Holders, the lesser of (a) the aggregate of
the liquidation preference of $50 per Preferred Security plus accrued and unpaid
Distributions on the Preferred Securities to the date of payment to the extent
the Issuer shall have funds on hand available to make such payment and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
in liquidation of the Issuer (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this
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<PAGE>
Guarantee Agreement and thereafter means each such Successor Guarantee Trustee.
"Guarantor Secured Indebtedness" means the principal (including
without limitation all unpaid drawings with respect to letters of credit) of and
premium, if any, and interest (including interest accruing on or after the
filing of any petition in bankruptcy relating to the Guarantor at the relevant
contractual rate whether or not such claim for post-petition interest is allowed
in such proceeding) on, and all other amounts owing with respect to, the
following, whether outstanding on the date of execution of this Indenture or
thereafter incurred, created or assumed, to the extent (but only to the extent)
the same is secured by a lien, charge, mortgage or other encumbrance on property
or assets of the Guarantor or its subsidiaries (which term, as used in this
paragraph, shall not refer to Big Flower Trust I): (i) indebtedness of the
Guarantor for money borrowed (including purchase money obligations, except
indebtedness to trade creditors) or evidenced by debentures (other than the
Debentures), notes, bankers' acceptances or other corporate debentures or
similar instruments; (ii) all capital lease obligations of the Guarantor; (iii)
all obligations with respect to letters of credit; (iv) all obligations with
respect to currency hedging agreements, interest rate protection agreements and
other similar agreements; (v) all indebtedness of others of the type referred to
in the preceding clauses (i) through (iv) assumed by or guaranteed in any manner
by the Guarantor or in effect guaranteed by the Guarantor; and (vi) renewals,
extensions or refundings of any of the indebtedness referred to in the preceding
clauses (i), (ii), (iii), (iv) and (v) and in this clause (vi). For purposes of
the foregoing definition, all indebtedness secured by a lien, charge, mortgage
or other encumbrance on property or assets of the Guarantor or its subsidiaries
shall be deemed to be secured for purposes of said definition, notwithstanding
any determination that the amount of indebtedness so secured exceeds the value
of the assets serving as security therefor and notwithstanding any determination
in any bankruptcy or other proceeding that a portion of such indebtedness shall
be treated as unsecured because of any insufficiency in the value of the
collateral securing such indebtedness. Without limiting the foregoing, in any
event all obligations of the Guarantor with respect to (including its guaranties
of obligations under) the Bank Credit Agreement shall constitute Guarantor
Secured Indebtedness.
"Holder" means any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that in determining
whether
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<PAGE>
the holders of the requisite percentage of Preferred Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor or the
Guarantee Trustee.
"Indenture" means the Indenture dated as of October 20, 1997, as
supplemented and amended between the Guarantor and The Bank of New York, as
trustee.
"List of Holders" has the meaning specified in Section 2.2 (a).
"Majority in Liquidation Preference of the Securities" means, except
as provided by the Trust Indenture Act, a vote by the Holder(s), voting
separately as a class, of more than 50% of the liquidation preference of all the
outstanding Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by (i) the Chairman, Chief Executive Officer, President or a
Vice President, and by (ii) the Treasurer, an Assistant Treasurer, the
Controller, the Secretary or an Assistant Secretary of such Person, and
delivered to the Guarantee Trustee. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
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<PAGE>
"Payment Blockage Period" has the meaning specified in Section 8.3.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee,
any Executive Vice President, Senior Vice President, any First Vice President,
any Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer or
Assistant Trust Officer or any other officer of the Corporate Trust Services
Division of the Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application. (a) This Guarantee
Agreement is subject to the provisions of the Trust Indenture Act that are
required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2. List of Holders. (a) The Guarantor shall furnish or
cause to be furnished to the Guarantee Trustee (unless the Guarantee Trustee is
acting as
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<PAGE>
Securities Registrar with respect to the Debentures under the Indenture) (i)
semi-annually, on or before January 15 and July 15 of each year, a list, in such
form as the Guarantee Trustee may reasonably require, of the names and addresses
of the Holders ("List of Holders") as of a date not more than 15 days prior to
the delivery thereof, and (ii) at such other times as the Guarantee Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any
such request, a List of Holders as of a date not more than 15 days prior to the
time such list is furnished, in each case to the extent such information is in
the possession or control of the Guarantor and is not identical to a previously
supplied list of Holders or has not otherwise been received by the Guarantee
Trustee. Notwithstanding the foregoing, the Guarantor shall not be obligated to
provide such List of Holders at any time the Preferred Securities are
represented by one or more Global Certificates (as defined in the Indenture).
The Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee. On or before July 15,
of each calendar year, the Guarantee Trustee shall provide to the Holders such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Guarantee Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to Guarantee Trustee. The Guarantor
shall provide to the Guarantee Trustee, the Securities and Exchange Commission
and the Holders such documents, reports and information, if any, as required by
Section 314 of the Trust Indenture Act and the compliance certificate required
by Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with such conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in
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<PAGE>
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers' Certificate.
SECTION 2.6. Events of Default; Waiver. The Holders of a Majority in
Liquidation Preference of the Securities may, by vote, on behalf of the Holders,
waive any past Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent therefrom.
SECTION 2.7. Event of Default; Notice. (a) The Guarantee Trustee
shall, within 90 days after the occurrence of an Event of Default, transmit by
mail, first class postage prepaid, to the Holders, notices of all Events of
Default known to the Guarantee Trustee, unless such defaults have been cured
before the giving of such notice, provided, that, except in the case of a
default in the payment of a Guarantee Payment, the Guarantee Trustee shall be
protected in withholding such notice if and so long as the Board of Directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of the Trust
Agreement shall have obtained written notice, of such Event of Default.
SECTION 2.8. Conflicting Interests. The Trust Agreement and the
Indenture shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
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<PAGE>
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee. (a) This
Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of
the Holders, and the Guarantee Trustee shall not transfer this Guarantee
Agreement to any Person except a Holder exercising his or her rights pursuant to
Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default actually known to the Responsible Officer
of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to the Responsible Officer of the Guarantee Trustee, the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the curing
or waiving of all such Events of Default that may have occurred;
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<PAGE>
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee Agreement,
and the Guarantee Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this
Guarantee Agreement; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Guarantee Trustee and
conforming to the requirements of this Guarantee Agreement; but in the
case of any such certificates or opinions that by any provision hereof or
of the Trust Indenture Act are specifically required to be furnished to
the Guarantee Trustee, the Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Guarantee Trustee,
unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in Liquidation
Preference of the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the Guarantee
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or liability
is not reasonably assured to it.
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SECTION 3.2. Certain Rights of Guarantee Trustee. (a) Subject to the
provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, proxy, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers' Certificate which, upon receipt of such
request from the Guarantee Trustee, shall be promptly delivered by the
Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and the
advice or opinion of such legal counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted to be taken by it hereunder in good
faith and in accordance with such advice or opinion. Such legal counsel
may be legal counsel to the Guarantor or any of its Affiliates and may be
one of its employees. The Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Guarantee
Agreement from any court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such adequate security and indemnity as
would satisfy a reasonable person in the position of the Guarantee
Trustee,
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<PAGE>
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this Section
3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Guarantee Agreement and use the
same degree of care and skill in the exercise thereof as a prudent person
would exercise or use under the circumstances in the conduct of his or her
own affairs.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
its agents or attorneys or any Affiliate, and the Guarantee Trustee shall
not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement
the Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from the
Holders of a Majority in Liquidation Preference of the Securities, (B) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (C) shall be protected in acting
in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
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in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.3. Indemnity. The Guarantor agrees to indemnify the
Guarantee Trustee for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of the Guarantee
Trustee, arising out of or in connection with the acceptance or administration
of this Guarantee Agreement, including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The Guarantee Trustee
will not claim or exact any lien or charge on any Guarantee Payment as a result
of any amount due to it under this Guarantee Agreement.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility. (a) There shall at all
times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of
Section 310(a) of the Trust Indenture Act. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority, then, for the
purposes of this Section and to the extent permitted by the Trust
Indenture Act, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(c).
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(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee. (a) Subject to Section 4.2(b) the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered to
the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
ARTICLE 5
GUARANTEE
SECTION 5.1. Guarantee. The Guarantor irrevocably and
unconditionally agrees, subject to Section 5.8 and Article 8, to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by or on behalf of the Issuer), as and when
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due, regardless of any defense, right of set-off or counterclaim which the
Issuer may have or assert other than the defense of payment. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2. Waiver of Notice and Demand. The Guarantor hereby
waives notice of acceptance of the Guarantee Agreement and of any liability to
which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Guarantee Trustee, Issuer or any other
Person before proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.
SECTION 5.3. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures as so provided in the Indenture), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or the Guarantee Trustee
to give notice to, or obtain the consent of, the Guarantor with respect to the
happening of any of the foregoing.
SECTION 5.4. Rights of Holders. The Guarantor expressly acknowledges
that: (i) this Guarantee Agreement will be deposited with the Guarantee Trustee
to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the
right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the
Holders of a Majority in Liquidation Preference of the Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of this Guarantee Agreement or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; (iv) any Holder may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against the Guarantee
Trustee, the Issuer or any other Person; and (v) if an Event of Default with
respect to the Debentures constituting the failure to pay interest or principal
on the Debentures on the date such interest or principal is otherwise payable
has occurred and is continuing, then any Holder shall have the right, which is
absolute and unconditional, to proceed directly against the Guarantor to obtain
Guarantee Payments without first waiting to determine if the Guarantee Trustee
has enforced this Guarantee Agreement or instituting a legal
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proceeding against the Issuer, the Guarantee Trustee or any other Person.
SECTION 5.5. Guarantee of Payment. This Guarantee Agreement creates
a guarantee of payment and not of collection. This Guarantee Agreement will not
be discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer) or upon distribution of
Debentures to Holders as provided in the Trust Agreement.
SECTION 5.6. Subrogation. The Guarantor shall be subrogated to all
(if any) rights of the Holders against the Issuer in respect of any amounts paid
to the Holders by the Guarantor under this Guarantee Agreement and shall have
the right to waive payment by the Issuer pursuant to Section 5.1; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 5.7. Independent Obligations. The Guarantor acknowledges
that its obligations hereunder are independent of the obligations of the Issuer
with respect to the Preferred Securities and that the Guarantor shall be liable
as principal and debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
SECTION 5.8. Subordination. The Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank subordinate
and subject in right of payment to the prior payment in full in cash of all
Guarantor Secured Indebtedness and pari passu with any guarantee now or
hereafter entered into by the Guarantor in respect of the Common Securities
or of any preferred or preference stock of any affiliate of the Guarantor.
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ARTICLE 6
COVENANTS
SECTION 6.1. Certain Covenants of the Guarantor. (a) Guarantor
covenants and agrees that if and so long as (i) the Issuer is the holder of all
the Debentures, (ii) a Tax Event (as defined in the Trust Agreement) in respect
of the Issuer has occurred and is continuing and (iii) the Guarantor has
elected, and has not revoked such election, to pay Additional Sums (as defined
in the Trust Agreement) in respect of the Preferred Securities and Common
Securities, the Guarantor will pay to the Issuer such Additional Sums.
(b) The Guarantor covenants and agrees that it will not, and will
not permit any subsidiary of the Guarantor to, (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any shares of the Guarantor's capital stock or (ii) make any
payment of principal, interest or premium, if any, on or repay or repurchase or
redeem any debt securities (including guarantees of indebtedness for money
borrowed) of the Guarantor that rank pari passu with or junior to the Debentures
(other than (a) any dividend, redemption, liquidation, interest, principal or
guarantee payment by Guarantor where the payment is made by way of securities
(including capital stock) that rank pari passu with or junior to the securities
on which such dividend, redemption, interest, principal or guarantee payment is
being made, (b) redemptions or purchases of any rights pursuant to the
Shareholders Rights Plan (as defined in the Indenture), or any successor to such
Shareholders Rights Plan, and the declaration of a dividend of such rights or
the issuance of preferred stock under such plans in the future, (c) payments
under this Agreement, (d) purchases of Common Stock related to the issuance of
Common Stock under any of the Guarantor's benefit plans for its directors,
officers or employees, (e) as a result of a reclassification of the Guarantor's
capital stock or the exchange or conversion of one series or class of the
Guarantor's capital stock for another series or class of the Guarantor's capital
stock and (f) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged) if at such time (x) there
shall have occurred any event of which the Guarantor has actual knowledge that
(A) with the giving of notice or the lapse of time, or both, would constitute an
"Event of Default" under the Indenture
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with respect to the Debentures and (B) in respect of which the Guarantor shall
not have taken reasonable steps to cure, (y) the Guarantor shall be in default
with respect to its payment of any obligations under the Guarantee or (z) the
Guarantor shall have given notice of its selection of an Extension Period (as
defined in the Indenture) with respect to the Debentures and shall not have
rescinded such notice, or such Extension Period, or any extension thereof, shall
be continuing.
(c) The Guarantor covenants and agrees (i) to maintain directly or
indirectly 100% ownership of the Common Securities, provided that certain
successors which are permitted by the Indenture may succeed to the Guarantor's
ownership of the Common Securities, (ii) not to voluntarily terminate, wind-up
or liquidate the Issuer, except (a) in connection with a distribution of the
Debentures to the holders of the Preferred Securities in liquidation of the
Issuer or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the Trust Agreement, (iii) to use its reasonable
efforts, consistent with the terms and provisions of the Trust Agreement, to
cause the Issuer to remain classified as a grantor trust and not as an
association taxable as a corporation for United States Federal income tax
purposes, (iv) for so long as Preferred Securities are outstanding, not to
convert Debentures except pursuant to a notice of conversion delivered to the
Conversion Agent (as defined in the Trust Agreement) by a Holder, (v) to
maintain the reservation for issuance of the number of shares of Common Stock
that would be required from time to time upon the conversion of all the
Debentures then outstanding, (vi) to deliver shares of Common Stock upon an
election by the Holders to convert such Preferred Securities into Common Stock
and (vii) to honor all obligations relating to the conversion or exchange of the
Preferred Securities into or for Common Stock or Debentures.
ARTICLE 7
TERMINATION
SECTION 7.1. Termination. This Guarantee Agreement shall terminate
and be of no further force and effect upon (i) full payment of the Redemption
Price of all Preferred Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Preferred Securities, (iii) full payment of
the amounts payable in accordance with
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the Trust Agreement upon liquidation of the Issuer or (iv) the distribution, if
any, of Common Stock to the holders of the Preferred Securities in respect of
the conversion of all such holders' Preferred Securities into Common Stock.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
must restore payment of any sums paid with respect to Preferred Securities or
this Guarantee Agreement.
ARTICLE 8
SUBORDINATION OF GUARANTEE
SECTION 8.1. Guarantee Subordinate to Guarantor Secured
Indebtedness. The Guarantor covenants and agrees, and each Holder, by its
acceptance thereof, likewise covenants and agrees, that the payment of the
Guarantee Payments pursuant to this Guarantee Agreement are hereby expressly
made subordinate and subject in right of payment to the prior payment in full in
cash of all amounts then due and payable in respect of all Guarantor Secured
Indebtedness (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Guarantor Secured Indebtedness and that no payment of the
Guarantee Payments pursuant to this Guarantee Agreement may be made unless full
payment of all amounts then due for principal, premium, if any, and interest
then due on all Guarantor Secured Indebtedness by reason of the maturity thereof
(by lapse of time, acceleration or otherwise) has been made or duly provided for
in cash or in a manner satisfactory to the holders of such Guarantor Secured
Indebtedness.
SECTION 8.2. Payment Over of Proceeds Upon Dissolution, Etc. Upon
any distribution of the Guarantor's assets in connection with any dissolution,
winding up, liquidation or reorganization of the Guarantor, whether voluntary or
involuntary, in bankruptcy, insolvency or receivership proceedings (each such
event, if any, herein sometimes referred to as a "Proceeding"), or upon an
assignment for the benefit of creditors or otherwise: (i) all Guarantor Secured
Indebtedness (including without limitation all interest accruing on or after the
filing of any petition in bankruptcy relating to the Guarantor at the relevant
contractual rate, whether or not such claim for post-petition interest is
allowed in such Proceeding) must be paid in full in cash before the Holders are
entitled to
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any payments or distributions of any kind or character on account of any
Guarantee Payments pursuant to this Guarantee Agreement, and (ii) any payment or
distribution of the Guarantor's assets of any kind or character, whether in
cash, securities or other property, which would otherwise (but for these
subordination provisions) be payable or deliverable in respect of the Guarantee
Payments shall be paid or delivered directly to the holders of such Guarantor
Secured Indebtedness (or their representative or trustee) in accordance with the
priorities then existing among such holders until all Guarantor Secured
Indebtedness shall have been paid in full in cash before any payment or
distribution is made to the Holders.
In the event that notwithstanding the subordination provisions set
forth herein, any payment or distribution of assets of any kind or character is
made at a time when the respective payment is not permitted to be made as a
result of the subordination provisions described above and before all Guarantor
Secured Indebtedness is paid in full in cash, the Guarantee Trustee or the
Holders receiving such payment will be required to pay over such payment or
distribution to the holders of such Guarantor Secured Indebtedness.
The consolidation of the Guarantor with, or the merger of the
Guarantor into, another Person or the liquida tion or dissolution of the
Guarantor following the sale of all or substantially all of its properties and
assets as an entirety to another Person upon the terms and conditions set forth
in Article 8 of the Indenture shall not be deemed a Proceeding for the purposes
of this Section if the Person formed by such consolidation or into which the
Guarantor is merged or the Person which acquires by sale such properties and
assets as an entirety, as the case may be, shall, as a part of such
consolidation, merger, or sale comply with the conditions set forth in Article
8.
SECTION 8.3. Payment Blockage Upon Acceleration of Designated Senior
Indebtedness, Etc. During the continuance of any event of default with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated, upon the occurrence of (a) receipt by the Guarantee Trustee of
written notice from the holders of a majority of the outstanding principal
amount of the Designated Senior Indebtedness or their representative, or (b) if
such event of default results from the enforcement of this Guarantee Agreement
or any action by the Holders to
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obtain Guarantee Payments, the date of such enforcement or action, no Guarantee
Payments may be made by the Guarantor for a period ("Payment Blockage Period")
commencing on the earlier of the date of receipt of such notice or the date of
such enforcement or action and ending 179 days thereafter (unless such Payment
Blockage Period shall be terminated by written notice to the Guarantee Trustee
from the holders of a majority of the outstanding principal amount of such
Designated Senior Indebtedness or their representative who delivered such
notice); provided, however, that notwithstanding anything herein to the
contrary, in no event will a Payment Blockage Period extend beyond 179 days from
the date on which such Payment Blockage Period was commenced; provided further,
that not more than one Payment Blockage Period may be commenced with respect to
the Guarantee Payments during any period of 360 consecutive days. For all
purposes of this Section, no event of default which existed or was continuing on
the date of the commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness initiating such Payment Blockage Period shall be,
or be made, the basis for the commencement of a second payment Blockage Period
by the holders of such Designated Senior Indebtedness or their representative
whether or not within a period of 360 consecutive days unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
In the event that, notwithstanding the foregoing, the Guarantor shall make
any payment to the Guarantee Trustee or any Holder prohibited by the foregoing
provisions of this Section, and if such fact shall, at or prior to the time of
such payment, have been made known, as set forth in Section 8.7, to the
Guarantee Trustee or, as the case may be, such Holder, then and in such event
such payment shall be paid over and delivered forthwith to the Guarantor.
The provisions of this Section shall not apply to any payment with respect
to which Section 8.2 would be applicable.
SECTION 8.4. No Payment When Guarantor Secured Indebtedness in
Default. In the event and during the continuation of any default in the payment
of principal of (or premium, if any) or interest on, or any other amounts owning
with respect to, any Guarantor Secured Indebtedness when the same becomes due
and payable or in the event any judicial proceeding shall be pending with
respect to any
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such default, then, unless and until such default shall have been cured or
waived or shall have ceased to exist, no payment or distribution of any kind or
character, whether in cash or properties shall be made by the Guarantor on
account of any Guarantee Payment.
The Guarantor shall give prompt written notice to the Guarantee
Trustee of any default in payment of principal of or interest on any Guarantor
Secured Indebtedness; provided that no failure to give such a notice shall have
any effect whatsoever on the subordination provisions described herein.
In the event that, notwithstanding the foregoing, the Guarantor
shall make any payment to the Guarantee Trustee or any Holder prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known as set forth in Section 8.7, to the
Guarantee Trustee or, as the case may be, such Holder, then and in such event
such payment shall be paid over and delivered forthwith to the Guarantor.
The provisions of this Section shall not apply to any payment with
respect to which Section 8.2 would be applicable.
SECTION 8.5. Guarantee Trustee to Effectuate Subordination. Each
Holder by his or her acceptance thereof authorizes and directs the Guarantee
Trustee on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination provided in this
Article and appoints the Guarantee Trustee as his or her attorney-in-fact for
any and all such purposes.
SECTION 8.6. No Waiver of Subordination Provisions. No right of any
present or future holder of any Guarantor Secured Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Guarantor with the terms, provisions and covenants of this Guarantee
Agreement, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
SECTION 8.7. Notice to Guarantee Trustee. The Guarantor shall give
written notice as soon as commercially
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practicable to the Guarantee Trustee of any fact actually known to the Guarantor
which would prohibit the making of any payment to or by the Guarantee Trustee in
respect of the Guarantee Payment. Notwithstanding the provisions of this Article
or any other provision of this Guarantee Agreement, the Guarantee 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 Guarantee Trustee in respect of the
Guarantee Payment, unless and until the Guarantee Trustee shall have received
written notice thereof from the Guarantor or a person representing itself as a
holder of Guarantor Secured Indebtedness or from any trustee, agent or
representative therefor (whether or not the facts contained in such notice are
true).
SECTION 8.8. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the Guarantor
referred to in this Article, the Guarantee Trustee, subject to the provisions of
Article 3, and the Holders shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which a Proceeding is pending,
or a certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Guarantee Trustee or to the
Holders, for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of the Guarantor Secured Indebtedness
and other indebtedness of the Guarantor, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
SECTION 8.9. Guarantee Trustee Not Fiduciary for Holders of
Guarantor Secured Indebtedness. With respect to the holders of the Guarantor
Secured Indebtedness, the Guarantee Trustee undertakes to perform or observe
only such of its obligations and covenants as are set forth in this Article 8,
and no implied covenants or obligations with respect to the holders of such
Guarantor Secured Indebtedness shall be read into this Guarantee Agreement
against The Bank of New York and/or the Guarantee Trustee. The Bank of New York
and/or the Guarantee Trustee shall not be deemed to owe any fiduciary duty to
the holders of such Guarantor Secured Indebtedness and, subject to the
provisions of Section 3.2, neither the Guarantee Trustee nor The Bank of New
York shall be liable to the holder of any Guarantor Secured Indebtedness if it
shall pay over or
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deliver to Holders, the Guarantor, or any other person, money or assets to which
any holder of such Guarantor Secured Indebtedness shall be entitled to by virtue
of this Article 8 or otherwise.
SECTION 8.10. Rights of Guarantee Trustee as Holder of Guarantor
Secured Indebtedness; Preservation of Guarantee Trustee's Rights. The Guarantee
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article with respect to any Guarantor Secured Indebtedness which may at
any time be held by it, to the same extent as any other holder of Guarantor
Secured Indebtedness, and, subject to the requirements of the Trust Indenture
Act, nothing in this Guaranty Agreement shall deprive the Guarantee Trustee of
any of its rights as such holder.
SECTION 8.11. Certain Conversions or Exchanges Deemed Payment. For
the purpose of this Article only, (a) the issuance and delivery of junior
securities upon conversion or exchange of Debentures shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest (including any Additional Interest) on the Debentures or on
account of the purchase or other acquisition of Debentures, and (b) the payment,
issuance or delivery of cash (including any payments for fractional shares),
property or securities (other than junior securities) upon conversion or
exchange of a Debenture shall be deemed to constitute payment on account of the
principal of such security. For the purpose of this Section, the term "junior
securities" means (i) shares of any stock of any class of the Guarantor and (ii)
securities of the Guarantor which are subordinated in right of payment to all
Guarantor Secured Indebtedness which may be outstanding at the time of issuance
or delivery of such securities to substantially the same extent as, or to a
greater extent than, the Debentures are so subordinated as provided in this
Article.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred
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Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article 8 of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder.
SECTION 9.2. Amendments. Except with respect to any changes which do
not adversely affect the rights of the Holders in any material respect (in which
case no consent of the Holders will be required), this Guarantee Agreement may
only be amended with the prior approval of the Holders of not less than a
Majority in Liquidation Preference of the Securities. The provisions of Article
6 of the Trust Agreement concerning meetings of the Holders shall apply to the
giving of such approval. The Guarantor shall furnish the Guarantee Trustee with
an Officers' Certificate and an Opinion of Counsel to the effect that any
amendment of this Agreement is authorized and permitted.
SECTION 9.3. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows: (a) if given to the Guarantor, to the address set forth below
or such other address as the Guarantor may give notice of to the Holders:
Big Flower Holdings, Inc.
3 East 54th Street
New York, NY 10022
Phone No.: (212) 521-1600
Facsimile No.: (212) 223-4074
Attention: General Counsel
(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such other
address as the Guarantee Trustee on behalf of the Issuer may give notice of to
the Holders:
Big Flower Trust I
c/o Big Flower Holdings, Inc.
3 East 54th Street
New York, NY 10022
Phone No.: (212) 521-1600
Facsimile No.: (212) 223-4074
Attention: General Counsel
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with a copy to:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Phone No.: (212) 815-5783
Facsimile No.: (212)815-5915
Attention: Corporate Trust Administration
(c) if given to any Holder, at the address set forth on the books
and records of the Issuer.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4. Benefit. This Guarantee Agreement is solely for the
benefit of the Holders and is not separately transferable from the Preferred
Securities.
SECTION 9.5. Interpretation. In this Guarantee Agreement, unless the
context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to them in
Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
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(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 9.6. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
BIG FLOWER HOLDINGS, INC.
By: ____________________________
Name:
Title:
THE BANK OF NEW YORK, as Guarantee
Trustee
By: ____________________________
Name:
Title:
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EXHIBIT 4.2(iii)
- --------------------------------------------------------------------------------
GUARANTEE AGREEMENT
Big Flower Holdings, Inc.
Relating to the Common Securities of
Big Flower Trust I
Dated as of October 20, 1997
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TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.......................................2
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee.........................................4
SECTION 2.2. Subordination.....................................5
SECTION 2.3. Waiver of Notice and Demand.......................5
SECTION 2.4. Obligations Not Affected..........................6
SECTION 2.5. Rights of Holders.................................6
SECTION 2.6. Guarantee of Payment..............................6
SECTION 2.7. Subrogation.......................................6
SECTION 2.8. Independent Obligations...........................7
SECTION 2.9. Acknowledgment by Guarantor.......................7
SECTION 2.10. Subordination.....................................7
ARTICLE III
LIMITATION OF TRANSACTIONS
SECTION 3.1. Limitation of Transactions........................7
ARTICLE IV
TERMINATION
SECTION 4.1. Termination.......................................8
ARTICLE V
SUBORDINATION OF GUARANTEE
SECTION 5.1. Guarantee Subordinate to Guarantor
Secured Indebtedness............................9
SECTION 5.2. Payment Over of Proceeds Upon
Dissolution, Etc................................9
SECTION 5.3. Payment Blockage Upon Acceleration
of Designated Senior
Indebtedness, Etc..............................10
SECTION 5.4. No Payment When Guarantor Secured
Indebtedness in Default........................11
SECTION 5.5. No Waiver of Subordination
Provisions.....................................12
SECTION 5.6. Reliance on Judicial Order or
Certificate of Liquidating
Agent..........................................12
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Page
----
SECTION 5.7. Certain Conversions or Exchanges
Deemed Payment.................................12
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Successors and Assigns...........................13
SECTION 6.2. Amendments.......................................13
SECTION 6.3. Notices..........................................13
SECTION 6.4. Benefit..........................................14
SECTION 6.5. Interpretation...................................14
SECTION 6.6. Governing Law....................................15
ii
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Guarantee Agreement"), dated as of
October 20, 1997, is executed and delivered by Big Flower Holdings, Inc., a
Delaware corporation (the "Guarantor") for the benefit of the Holders (as
defined herein) from time to time of the Common Securities (as defined herein)
of Big Flower Trust I, a Delaware statutory business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of October 14, 1997 among the Trustees named
therein, and the Guarantor, as Depositor, the Trust is issuing 72,000 of its 6%
Common Securities (liquidation preference $50 per common security) (the "Common
Securities") representing common undivided beneficial interests in the assets of
the Trust and having the terms set forth in the Trust Agreement;
WHEREAS, the Common Securities will be issued by the Trust and the
proceeds thereof, together with the proceeds from the issuance of the Trust's
Preferred Securities (as defined below), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which will be deposited
with The Bank of New York, a New York banking corporation, as Property Trustee
under the Trust Agreement, as trust assets;
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Preferred Securities Guarantee") in substantially identical
terms to this Guarantee Agreement for the benefit of the holders of the
Preferred Securities (as defined herein), except that if an Event of Default (as
defined in the Indenture), has occurred and is continuing, the rights of Holders
to receive Guarantee Payments (as defined herein) under this Guarantee Agreement
shall be subordinated to the rights of holders of Preferred Securities to
receive Guarantee Payments (as defined in the Preferred Securities Guarantee)
under the Preferred Securities Guarantee;
NOW, THEREFORE, in consideration of the purchase by each Holder,
which purchase the Guarantor hereby agrees
<PAGE>
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time.
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. As used in this Guarantee Agreement, the
terms set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Trust Agreement as in effect on the date hereof.
"Bank Credit Agreement" means the Credit Agreement dated as of June
12, 1997, among Big Flower Press Holdings, Inc., the lenders party thereto in
their capacities as lenders thereunder, Credit Suisse First Boston, as
documentation agent, and Bankers Trust Company, as administrative agent,
together with the related documents thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including,
without limitation, increasing the amount of available borrowings thereunder or
adding Subsidiaries of the Guarantor as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Designated Senior Indebtedness" means (x) all Guarantor Secured
Indebtedness under, or as a result of the Guarantor's guarantee of, indebtedness
pursuant to the Bank Credit Agreement and (y) at any time when no indebtedness
described in preceding clause (x) is outstanding, any issue of Guarantor Secured
Indebtedness with an aggregate principal amount in excess of $15.0 million that
is designated as "Designated Senior Indebtedness" by written notice from the
Guarantor to the Guarantee Trustee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Common Securities, to the extent not
paid or made by or on behalf of the Trust: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required
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to be paid on the Common Securities, to the extent the Trust shall have funds on
hand available therefor at such time, (ii) the redemption price set forth in the
Trust Agreement, including premium, if any, all accrued and unpaid Distributions
to the date of redemption (the "Redemption Price"), with respect to the Common
Securities called for redemption by the Trust to the extent the Trust shall have
funds on hand available therefor, and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Trust, unless Debentures are
distributed to the Holders, the lesser of (a) the aggregate of the liquidation
preference of $50 per Common Security plus accrued and unpaid Distributions on
the Common Securities to the date of payment to the extent the Trust shall have
funds on hand available to make such payment and (b) the amount of assets of the
Trust remaining available for distribution to Holders in liquidation of the
Trust (in either case, the "Liquidation Distribution").
"Guarantor Secured Indebtedness" means the principal (including
without limitation all unpaid drawings with respect to letters of credit) of and
premium, if any, and interest (including interest accruing on or after the
filing of any petition in bankruptcy relating to the Guarantor at the relevant
contractual rate whether or not such claim for post-petition interest is allowed
in such proceeding) on, and all other amounts owing with respect to, the
following, whether outstanding on the date of execution of this Indenture or
thereafter incurred, created or assumed, to the extent (but only to the extent)
the same is secured by a lien, charge, mortgage or other encumbrance on property
or assets of the Guarantor or its subsidiaries (which term, as used in this
paragraph, shall not refer to Big Flower Trust I): (i) indebtedness of the
Guarantor for money borrowed (including purchase money obligations, except
indebtedness to trade creditors) or evidenced by debentures (other than the
Debentures), notes, bankers' acceptances or other corporate debentures or
similar instruments; (ii) all capital lease obligations of the Guarantor; (iii)
all obligations with respect to letters of credit; (iv) all obligations with
respect to currency hedging agreements, interest rate protection agreements and
other similar agreements; (v) all indebtedness of others of the type referred to
in the preceding clauses (i) through (iv) assumed by or guaranteed in any manner
by the Guarantor or in effect guaranteed by the Guarantor; and (vi) renewals,
extensions or refundings of any of the indebtedness referred to in the preceding
clauses (i), (ii), (iii), (iv) and (v) and in this clause (vi). For purposes of
the foregoing definition, all indebtedness secured by a lien, charge, mortgage
or other encumbrance or property or assets of the
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Guarantor or its subsidiaries shall be deemed to be secured for purposes of said
definition, notwithstanding any determination that the amount of indebtedness so
secured exceeds the value of the assets serving as security therefor and
notwithstanding any determination in any bankruptcy or other proceeding that a
portion of such indebtedness shall be treated as unsecured because of any
insufficiency in the value of the collateral securing such indebtedness. Without
limiting the foregoing, in any event all obligations of the Guarantor with
respect to (including its guaranties of obligations under) the Bank Credit
Agreement shall constitute Guarantor Secured Indebtedness.
"Holder" means any holder, as registered on the books and records of
the Trust, of any Common Securities.
"Indenture" means the 6% Convertible Subordinated Indenture dated as
of October 20, 1997, as supplemented and amended between the Guarantor and The
Bank of New York, as trustee.
"Payment Blockage Period" has the meaning specified in Section 5.3.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities" means the Securities representing preferred
undivided beneficial interests in the assets of the Trust.
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee. The Guarantor irrevocably and
unconditionally agrees, subject to Section 2.2, 2.10 and Article 5, to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by or on behalf of the Trust), as and when due, regardless of
any defense, right of set-off or counterclaim which the Trust may have or assert
other than the defense of payment. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Trust to pay such amounts to the
Holders.
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SECTION 2.2. Subordination. Upon the occurrence and during the
continuation of an Event of Default (as defined in the Indenture), holders of
Preferred Securities shall have priority over Holders with respect to
distributions and payments on liquidation, redemption and otherwise.
SECTION 2.3. Waiver of Notice and Demand. The Guarantor hereby
waives notice of acceptance of this Guarantee Agreement and of any liability to
which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Trust or any other person before
proceeding against the Guarantor, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 2.4. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Common Securities to be performed or
observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures as so provided in the Indenture), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Common Securities
or the extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Common Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Common Securities, or any
action on the part of the Trust granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement,
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<PAGE>
composition or readjustment of debt of, or other similar proceedings affecting,
the Trust or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the Common
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 2.4 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or any other person to
give notice to, or obtain the consent of, the Guarantor with respect to the
happening of any of the foregoing.
SECTION 2.5. Rights of Holders. The Guarantor expressly acknowledges
that any Holder may institute a legal proceeding directly against the Guarantor
to enforce its rights under this Guarantee Agreement, without first instituting
a legal proceeding against the Trust or any other person or entity.
SECTION 2.6. Guarantee of Payment. This Guarantee Agreement creates
a guarantee of payment and not of collection. This Guarantee Agreement will not
be discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Trust) or upon distribution of
Debentures to Holders as provided in the Trust Agreement.
SECTION 2.7. Subrogation. The Guarantor shall be subrogated to all
(if any) rights of the Holders against the Trust in respect of any amounts paid
to the Holders by the Guarantor under this Guarantee Agreement and shall have
the right to waive payment by the Trust pursuant to Section 2.3; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the
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Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
SECTION 2.8. Independent Obligations. The Guarantor acknowledges
that its obligations hereunder are independent of the obligations of the Trust
with respect to the Common Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 2.4 hereof.
SECTION 2.9. Acknowledgment by Guarantor. The Guarantor acknowledges
its obligation to issue and deliver common stock of the Guarantor upon the
conversion of the Common Securities.
SECTION 2.10. Subordination. The Guarantee Agreement will constitute
an unsecured obligation of the Guarantor and will rank subordinate and subject
in right of payment to the prior payment in full in cash of all liabilities of
the Guarantor (including, without limitation, all Guarantor Secured Indebtedness
as provided in Article 5) and pari passu with any guarantee now or hereafter
entered into by the Guarantor in respect of any preferred or preference stock of
any affiliate of the Guarantor.
ARTICLE III
LIMITATION OF TRANSACTIONS AND SUBORDINATION
SECTION 3.1. Limitation of Transactions. So long as any Common
Securities remain outstanding, the Guarantor shall not, and shall not permit any
subsidiary of the Guarantor to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Guarantor's capital stock or (ii) make any payment
of principal, interest or premium, if any, on or repay or repurchase or redeem
any debt securities (including guarantees of indebtedness for money borrowed) of
the Guarantor that rank pari passu with or junior to the Debentures (other than
(a) any dividend, redemption, liquidation, interest, principal or guarantee
payment by Guarantor where the payment is made by way of securities (including
capital stock) that rank pari passu with or junior to the securities on which
such dividend, redemption, interest, principal or guarantee payment is being
made, (b) redemptions or
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purchases of any rights pursuant to the Shareholders Rights Plan (as defined in
the Indenture), or any successor to such Shareholders Rights Plan, and the
declaration of a dividend of such rights or the issuance of preferred stock
under such plans in the future, (c) payments under this Agreement, (d) purchases
of Common Stock related to the issuance of Common Stock under any of the
Guarantor's benefit plans for its directors, officers or employees, (e) as a
result of a reclassification of the Guarantor's capital stock or the exchange or
conversion of one series or class of the Guarantor's capital stock for another
series or class of the Guarantor's capital stock and (f) the purchase of
fractional interests in shares of the Guarantor's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) if at such time (x) there shall have occurred any event
of which the Guarantor has actual knowledge that (A) with the giving of notice
or the lapse of time, or both, would constitute an "Event of Default" under the
Indenture with respect to the Debentures and (B) in respect of which the
Guarantor shall not have taken reasonable steps to cure, (y) the Guarantor shall
be in default with respect to its payment of any obligations under the Guarantee
or (z) the Guarantor shall have given notice of its selection of an Extension
Period (as defined in the Indenture) with respect to the Debentures and shall
not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
ARTICLE IV
TERMINATION
SECTION 4.1. Termination. This Guarantee Agreement shall terminate
and be of no further force and effect upon (i) full payment of the Redemption
Price of the Common Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Common Securities, (iii) full payment of the
amounts payable in accordance with the Trust Agreement upon liquidation of the
Trust or (iv) upon the distribution, if any, of the Guarantor's common stock to
the Holders in respect of the conversion of all such Holders' Common Securities
into the Guarantor's common stock. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid with respect
to the Common Securities or this Guarantee Agreement.
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ARTICLE V
SUBORDINATION OF GUARANTEE
SECTION 5.1. Guarantee Subordinate to Guarantor Secured
Indebtedness. The Guarantor covenants and agrees, and each Holder, by its
acceptance thereof, likewise covenants and agrees, that the payment of the
Guarantee Payments pursuant to this Guarantee Agreement are hereby expressly
made subordinate and subject in right of payment to the prior payment in full in
cash of all amounts then due and payable in respect of all Guarantor Secured
Indebtedness (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Guarantor Secured Indebtedness and that no payment of the
Guarantee Payments pursuant to this Guarantee Agreement may be made unless full
payment of all amounts then due for principal, premium, if any, and interest
then due on all Guarantor Secured Indebtedness by reason of the maturity thereof
(by lapse of time, acceleration or otherwise) has been made or duly provided for
in cash or in a manner satisfactory to the holders of such Guarantor Secured
Indebtedness.
SECTION 5.2. Payment Over of Proceeds Upon Dissolution, Etc. Upon
any distribution of the Guarantor's assets in connection with any dissolution,
winding up, liquidation or reorganization of the Guarantor, whether voluntary or
involuntary, in bankruptcy, insolvency or receivership proceedings (each such
event, if any, herein sometimes referred to as a "Proceeding"), or upon an
assignment for the benefit of creditors or otherwise: (i) all Guarantor Secured
Indebtedness (including without limitation all interest accruing on or after the
filing of any petition in bankruptcy relating to the Guarantor at the relevant
contractual rate, whether or not such claim for post-petition interest is
allowed in such Proceeding) must be paid in full in cash before the Holders are
entitled to any payments or distributions of any kind or character on account of
any Guarantee Payments pursuant to this Guarantee Agreement, and (ii) any
payment or distribution of the Guarantor's assets of any kind or character,
whether in cash, securities or other property, which would otherwise (but for
these subordination provisions) be payable or deliverable in respect of the
Guarantee Payments shall be paid or delivered directly to the holders of such
Guarantor Secured Indebtedness (or their representative or trustee) in
accordance with the priorities then existing among such holders until all
Guarantor Secured Indebtedness shall have been paid in full in cash before any
payment or distribution is made to the Holders.
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In the event that notwithstanding the subordination provisions set
forth herein, any payment or distribution of assets of any kind or character is
made at a time when the respective payment is not permitted to be made as a
result of the subordination provisions described above and before all Guarantor
Secured Indebtedness is paid in full in cash, the Holders receiving such payment
will be required to pay over such payment or distribution to the holders of such
Guarantor Secured Indebtedness.
The consolidation of the Guarantor with, or the merger of the
Guarantor into, another Person or the liquida tion or dissolution of the
Guarantor following the sale of all or substantially all of its properties and
assets as an entirety to another Person upon the terms and conditions set forth
in Article 8 of the Indenture shall not be deemed a Proceeding for the purposes
of this Section if the Person formed by such consolidation or into which the
Guarantor is merged or the Person which acquires by sale such properties and
assets as an entirety, as the case may be, shall, as a part of such
consolidation, merger, or sale comply with the conditions set forth in Article
8.
SECTION 5.3. Payment Blockage Upon Acceleration of Designated Senior
Indebtedness, Etc. During the continuance of any event of default with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated, upon the occurrence of (a) receipt by the Guarantee Trustee of
written notice from the holders of a majority of the outstanding principal
amount of the Designated Senior Indebtedness or their representative, or (b) if
such event of default results from the enforcement of this Guarantee Agreement
or any action by the Holders to obtain Guarantee Payments, the date of such
enforcement or action, no Guarantee Payments may be made by the Guarantor for a
period ("Payment Blockage Period") commencing on the earlier of the date of
receipt of such notice or the date of such enforcement or action and ending 179
days thereafter (unless such Payment Blockage Period shall be terminated by
written notice to the Guarantee Trustee from the holders of a majority of the
outstanding principal amount of such Designated Senior Indebtedness or their
representative who delivered such notice); provided, however, that
notwithstanding anything herein to the contrary, in no event will a Payment
Blockage Period extend beyond 179 days from the date on which such Payment
Blockage Period was commenced; provided further, that not more than one Payment
Blockage Period may be commenced with respect to the Guarantee Payments during
any period of 360 consecutive days. For all purposes of this Section, no event
of default
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which existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period shall be, or be made, the basis for the
commencement of a second payment Blockage Period by the holders of such
Designated Senior Indebtedness or their representative whether or not within a
period of 360 consecutive days unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days.
In the event that, notwithstanding the foregoing, the Guarantor shall make
any payment to the Guarantee Trustee or any Holder prohibited by the foregoing
provisions of this Section, and if such fact shall, at or prior to the time of
such payment, have been made known, as set forth in Section 8.7, to the
Guarantee Trustee or, as the case may be, such Holder, then and in such event
such payment shall be paid over and delivered forthwith to the Guarantor.
The provisions of this Section shall not apply to any payment with respect
to which Section 8.2 would be applicable.
SECTION 5.4. No Payment When Guarantor Secured Indebtedness in
Default. In the event and during the continuation of any default in the payment
of principal of (or premium, if any) or interest on, or any other amounts owning
with respect to, any Guarantor Secured Indebtedness when the same becomes due
and payable or in the event any judicial proceeding shall be pending with
respect to any such default, then, unless and until such default shall have been
cured or waived or shall have ceased to exist, no payment or distribution of any
kind or character, whether in cash or properties shall be made by the Guarantor
on account of any Guarantee Payment.
In the event that, notwithstanding the foregoing, the Guarantor
shall make any payment to any Holder prohibited by the foregoing provisions of
this Section, and if such fact shall, at or prior to the time of such payment,
have been made known, to such Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Guarantor.
The provisions of this Section shall not apply to any payment with
respect to which Section 5.2 would be applicable.
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SECTION 5.5. No Waiver of Subordination Provisions. No right of any
present or future holder of any Guarantor Secured Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Guarantor with the terms, provisions and covenants of this Guarantee
Agreement, regardless of any knowledge thereof that any such Holder may have or
be otherwise charged with.
SECTION 5.6. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the Guarantor
referred to in this Article, the Holders shall be entitled to rely upon any
order or decree entered by any court of competent jurisdic tion in which a
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Holders, for
the purpose of ascertaining the Persons entitled to participate in such payment
or distribution, the holders of the Guarantor Secured Indebtedness and other
indebtedness of the Guarantor, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.
SECTION 5.7. Certain Conversions or Exchanges Deemed Payment. For
the purpose of this Article only, (a) the issuance and delivery of junior
securities upon conversion or exchange of Debentures shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest (including any Additional Interest) on the Debentures or on
account of the purchase or other acquisition of Debentures, and (b) the payment,
issuance or delivery of cash (including any payments for fractional shares),
property or securities (other than junior securities) upon conversion or
exchange of a Debenture shall be deemed to constitute payment on account of the
principal of such security. For the purpose of this Section, the term "junior
securities" means (i) shares of any stock of any class of the Guarantor and (ii)
securities of the Guarantor which are subordinated in right of payment to all
Guarantor Secured Indebtedness which may be outstanding at the time of issuance
or delivery of such securities to substantially the same extent as, or to a
greater extent than, the Debentures are so subordinated as provided in this
Article.
12
<PAGE>
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Common Securities then outstanding.
SECTION 6.2. Amendments. Except with respect to any changes which do
not adversely affect the rights of the Holders in any material respect (in which
case no consent of the Holders will be required), this Guarantee Agreement may
only be amended with the prior approval of the Holders of not less than a
majority in liquidation preference of all the outstanding Common Securities. The
provisions of Article 6 of the Trust Agreement concerning meetings of the
holders of Preferred Securities shall apply to the giving of such approval.
SECTION 6.3. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address set forth below or
such other address as the Guarantor may give notice of to the Holders:
Big Flower Holdings, Inc.
3 East 54th Street
New York, NY 10022
Phone No.: (212) 521-1600
Facsimile No.: (212) 223-4074
Attention: General Counsel
(b) if given to the Trust, in care of the Administrative Trustees
(as defined in the Trust Agreement), at the Trust's address set forth below or
such other address as the Trust may give notice of to the Holders:
Big Flower Trust I
c/o Big Flower Holdings, Inc.
3 East 54th Street
New York, NY 10022
Phone No.: (212) 521-1600
Facsimile No.: (212) 223-4074
13
<PAGE>
Attention: General Counsel
(c) if given to any Holder, at the address set forth on the books
and records of the Trust.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 6.4. Benefit. This Guarantee Agreement is solely for the
benefit of the Holders and is not separately transferable from the Common
Securities.
SECTION 6.5. Interpretation. In this Guarantee Agreement, unless the
context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to them in
Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
14
<PAGE>
SECTION 6.6. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
15
<PAGE>
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
BIG FLOWER HOLDINGS, INC.
as Guarantor
By:
--------------------------------
Name:
Title:
16
<PAGE>
EXHIBIT 4.2(iv)
---------------------------------------------------------------------
BIG FLOWER HOLDINGS, INC.
to
THE BANK OF NEW YORK
as Trustee
------------------------------------
INDENTURE
Dated as of October 20, 1997
------------------------------------
6% CONVERTIBLE SUBORDINATED DEBENTURES
DUE OCTOBER 15, 2027
---------------------------------------------------------------------
<PAGE>
Reconciliation and tie between the Trust Indenture Act of 1939 (including
cross-references to provisions of Sections 310 to and including 317 which,
pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by the
Trust Reform Act of 1990, are a part of and govern the Indenture whether or not
physically contained therein) and the Indenture, dated as of October 20, 1997.
Trust Indenture Indenture Section
Act Section
ss. 310(a)(1), (2) and (5)...........................................6.9
(a)(3)..............................................Not Applicable
(a)(4)..............................................Not Applicable
(b)............................................................6.8
........................................................6.10
(c).................................................Not Applicable
ss. 311(a)..........................................................6.13
(b)...........................................................6.13
(b)(2)......................................................7.3(a)
............................................................7.3(a)
ss. 312(a)...........................................................7.1
............................................................7.2(a)
(b).........................................................7.2(b)
(c).........................................................7.2(c)
ss. 313(a)................................................7.3(a), 7.3(b)
(b) ......................................................7.3(a)
(c).........................................................7.3(a)
(d).........................................................7.3(c)
ss. 314(a)(1), (2),(3) and (4).......................................7.4
(b).................................................Not Applicable
(c)(1).........................................................1.2
(c)(2).........................................................1.2
(c)(3)..............................................Not Applicable
(d).................................................Not Applicable
(e)............................................................1.2
(f).................................................Not Applicable
ss. 315(a)........................................................6.1(a)
(b)............................................................6.2
(c).........................................................6.1(b)
(d).........................................................6.1(c)
(d)(1)...................................................6.1(a)(1)
(d)(2)...................................................6.1(c)(2)
(d)(3)...................................................6.1(c)(3)
(e)...........................................................5.14
ss. 316(a)..........................................................5.12
(a)(1)(B).....................................................5.13
(a)(2)..............................................Not Applicable
(b)............................................................5.8
<PAGE>
(c).........................................................1.4(f)
ss. 317(a)(1)........................................................5.3
(a)(2).........................................................5.4
(b)...........................................................10.3
ss. 318(a)...........................................................1.7
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Convertible Subor dinated Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions.........................................1
SECTION 1.2. Compliance Certificate and
Opinions...........................................15
SECTION 1.3. Forms of Documents Delivered to
Trustee............................................15
SECTION 1.4. Acts of Holders....................................16
SECTION 1.5. Notices, Etc. to Trustee and
Company............................................17
SECTION 1.6. Notice to Holders; Waiver..........................18
SECTION 1.7. Conflict with Trust Indenture Act..................18
SECTION 1.8. Effect of Headings and Table of
Contents...........................................19
SECTION 1.9. Successors and Assigns.............................19
SECTION 1.10. Separability Clause................................19
SECTION 1.11. Benefits of Indenture..............................19
SECTION 1.12. Governing Law......................................19
SECTION 1.13. Non-Business Days..................................19
ARTICLE 2 DEBENTURE FORM
SECTION 2.1. Forms Generally....................................20
SECTION 2.2. Form of Face of Debenture..........................20
SECTION 2.3. Form of Reverse of Debenture.......................21
SECTION 2.4. Additional Provisions Required
in Global Debenture................................33
SECTION 2.5. Form of Trustee's Certificate of
Authentication.....................................33
SECTION 2.6. Initial Issuance to Property
Trustee............................................33
ARTICLE 3 THE DEBENTURES
SECTION 3.1. Amount of Debentures...............................34
SECTION 3.2. Denominations......................................34
SECTION 3.3. Execution, Authentication,
Delivery and Dating................................34
SECTION 3.4. Temporary Debentures...............................35
SECTION 3.5. Registration, Transfer and
Exchange...........................................36
SECTION 3.6. Mutilated, Destroyed, Lost and
Stolen Debentures..................................38
SECTION 3.7. Payment of Interest; Interest
Rights Preserved...................................39
SECTION 3.8. Persons Deemed Owners..............................40
i
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Page
----
SECTION 3.9. Cancellation.......................................40
SECTION 3.10. Computation of Interest............................41
SECTION 3.11. Deferrals of Interest Payment
Dates..............................................41
SECTION 3.12. Right of Set-off...................................42
SECTION 3.13. Agreed Tax Treatment...............................42
SECTION 3.14. CUSIP Numbers......................................43
SECTION 3.15. Global Security....................................43
ARTICLE 4 SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 4.1. Satisfaction and Discharge
of Indenture.......................................45
SECTION 4.2. Application by Trustee of Funds
Deposited for Payment of
Debentures.........................................49
SECTION 4.3. Repayment of Moneys Held by
Paying Agent.......................................49
SECTION 4.4. Return of Moneys Held by Trustee
and Paying Agent Unclaimed for
Three Years........................................49
SECTION 4.5. Indemnity for Government
Obligations........................................50
ARTICLE 5 REMEDIES
SECTION 5.1. Events of Default..................................50
SECTION 5.2. Acceleration of Maturity;
Rescission and Annulment...........................52
SECTION 5.3. Collection of Indebtedness and
Suits for Enforcement by
Trustee............................................53
SECTION 5.4. Trustee May File Proofs of
Claim..............................................54
SECTION 5.5. Trustee May Enforce Claim Without
Possession of Debentures...........................55
SECTION 5.6. Application of Money Collected.....................55
SECTION 5.7. Limitation on Suits................................56
SECTION 5.8. Unconditional Right of Holders
to Receive Principal, Premium
and Interest.......................................57
SECTION 5.9. Restoration of Rights and
Remedies...........................................58
SECTION 5.10. Rights and Remedies Cumulative.....................58
SECTION 5.11. Delay or Omission Not Waiver.......................58
SECTION 5.12. Control by Holders.................................58
SECTION 5.13. Waiver of Past Defaults............................59
SECTION 5.14. Undertaking for Costs..............................60
ii
<PAGE>
Page
----
SECTION 5.15. Waiver of Usury, Stay, or
Extension Laws.....................................61
ARTICLE 6 THE TRUSTEE
SECTION 6.1. Certain Duties and
Responsibilities...................................61
SECTION 6.2. Notice of Defaults.................................62
SECTION 6.3. Certain Rights of Trustee..........................63
SECTION 6.4. Not Responsible for Recitals or
Issuance of Debentures.............................64
SECTION 6.5. May Hold Debentures................................65
SECTION 6.6. Money Held in Trust................................65
SECTION 6.7. Compensation and Reimbursement.....................65
SECTION 6.8. Disqualification; Conflicting
Interests..........................................66
SECTION 6.9. Corporate Trustee Required;
Eligibility........................................66
SECTION 6.10. Resignation and Removal;
Appointment of Successor...........................67
SECTION 6.11. Acceptance of Appointment by
Successor..........................................69
SECTION 6.12. Merger, Conversion, Consolidation
or Succession to Business..........................69
SECTION 6.13. Preferential Collection of Claims
Against Company....................................70
SECTION 6.14. Appointment of Authenticating
Agent..............................................70
ARTICLE 7 HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Company to Furnish Names and
Addresses of Holders...............................72
SECTION 7.2. Preservation of Information;
Communications to Holders..........................72
SECTION 7.3. Reports by Trustee.................................72
SECTION 7.4. Reports by Company.................................73
ARTICLE 8 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc.,
Only on Certain Terms..............................73
SECTION 8.2. Successor Corporation
Substituted........................................75
ARTICLE 9 SUPPLEMENTAL INDENTURES
iii
<PAGE>
Page
----
SECTION 9.1. Supplemental Indentures Without
Consent of Holders.................................76
SECTION 9.2. Supplemental Indentures with
Consent of Holders.................................77
SECTION 9.3. Execution of Supplemental
Indentures.........................................78
SECTION 9.4. Effect of Supplemental
Indentures.........................................79
SECTION 9.5. Conformity with Trust Indenture
Act................................................79
SECTION 9.6. Reference in Debentures to
Supplemental Indentures............................79
ARTICLE 10 COVENANTS
SECTION 10.1. Payment of Principal, Premium and
Interest...........................................79
SECTION 10.2. Maintenance of Office or Agency....................79
SECTION 10.3. Money for Debenture Payments to
Be Held in Trust...................................80
SECTION 10.4. Payment of Taxes and Other
Claims.............................................82
SECTION 10.5. Statement as to Compliance.........................82
SECTION 10.6. Waiver of Certain Covenants........................82
SECTION 10.7. Additional Sums....................................82
SECTION 10.8. Additional Covenants...............................83
SECTION 10.9. Registration Rights................................84
SECTION 10.10. Payment of Expenses of the Trust...................85
ARTICLE 11 REDEMPTION OR EXCHANGE OF DEBENTURES
SECTION 11.1. Election to Redeem; Notice to
Trustee............................................85
SECTION 11.2. Selection of Debentures to Be
Redeemed...........................................86
SECTION 11.3. Notice of Redemption...............................86
SECTION 11.4. Deposit of Redemption Price........................87
SECTION 11.5. Debentures Payable on Redemption
Date...............................................88
SECTION 11.6. Debentures Redeemed in Part........................88
SECTION 11.7. Mandatory Redemption...............................89
SECTION 11.8. Optional Redemption................................89
SECTION 11.9. Exchange of Trust Securities
for Debentures.....................................90
ARTICLE 12 SUBORDINATION OF DEBENTURES
SECTION 12.1. Debentures Subordinate to Secured
Indebtedness.......................................90
iv
<PAGE>
Page
----
SECTION 12.2. Payment Over of Proceeds Upon
Dissolution, Etc...................................91
SECTION 12.3. Payment Blockage Upon Acceleration
of Designated Senior Indebtedness,
Etc................................................92
SECTION 12.4. No Payment When Secured
Indebtedness in Default............................93
SECTION 12.5. Payment Permitted If No Default....................94
SECTION 12.6. Subrogation to Rights of Holders
of Secured Indebtedness............................94
SECTION 12.7. Provisions Solely to Define
Relative Rights....................................95
SECTION 12.8. Trustee to Effectuate
Subordination......................................96
SECTION 12.9. No Waiver of Subordination
Provisions.........................................96
SECTION 12.10. Notice to Trustee..................................96
SECTION 12.11. Reliance on Judicial Order or
Certificate of Liquidating
Agent..............................................96
SECTION 12.12. Trustee Not Fiduciary for Holders
of Secured Indebtedness............................97
SECTION 12.13. Rights of Trustee as Holder of
Secured Indebtedness; Preservation
of Trustee's Rights................................97
SECTION 12.14. Article Applicable to Paying
Agents.............................................97
SECTION 12.15. Certain Conversions or Exchanges
Deemed Payment.....................................97
ARTICLE 13 CONVERSION OF DEBENTURES
SECTION 13.1. Conversion Rights..................................98
SECTION 13.2. Conversion Procedures..............................99
SECTION 13.3. Conversion Price Adjustments......................102
SECTION 13.4. Fundamental Change................................108
SECTION 13.5. Notice of Adjustments of Conversion
Price.............................................110
SECTION 13.6. Prior Notice of Certain Events....................110
SECTION 13.7. Dividend or Interest
Reinvestment Plans................................111
SECTION 13.8. Certain Additional Rights.........................112
SECTION 13.9. Restrictions on Common Stock
Issuable Upon Conversion..........................113
SECTION 13.10. Trustee Not Responsible for
Determining Conversion Price
or Adjustments....................................113
v
<PAGE>
CONVERTIBLE SUBORDINATED INDENTURE, dated as of October 20, 1997 between
BIG FLOWER HOLDINGS, INC., a Delaware corporation (hereinafter called the
"Company") hav ing its principal office at 3 East 54th Street, New York, New
York 10022, and THE BANK OF NEW YORK, a New York banking corporation, as Trustee
(hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its 6% Convertible Subordinated
Debentures (hereinafter called the "Debentures") of substantially the tenor
hereinafter provided which evidence loans made to the Company of the proceeds
from the issuance by Big Flower Trust I, a Delaware business trust (the
"Trust"), of preferred trust interests in the Trust (the "Preferred Securities")
and common interests in the Trust (the "Common Securities"), and to provide the
terms and conditions upon which the Debentures are to be authenticated, issued
and delivered.
All things necessary to make the Debentures, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Debentures by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Debentures, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by
<PAGE>
reference therein, have the meanings assigned to them
therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean such
accounting principles which are generally accepted at the date or time of
such computation; and
(d) the words "herein" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Debentures that is in arrears for more than one interest payment
period or not paid during any Extension Period, which in either case shall
accrue at the stated rate per annum specified or determined as specified in such
Debenture and compounded quarterly.
"Additional Sums" has the meaning specified in Section 10.7.
"Additional Taxes" means the sum of any additional taxes, duties and other
governmental charges to which the Trust has become subject from time to time as
a result of a Tax Event.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, that an Affiliate of the
Company shall not be deemed to include the Trust to which Debentures have been
issued. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applicable Price" means (i) in the case of a Non-Stock Fundamental Change
in which the holders of the Common Stock receive only cash, the amount of cash
received by the holder
2
<PAGE>
of one share of Common Stock and (ii) in the event of any other Non-Stock
Fundamental Change or any Common Stock Fundamental Change, the average of the
Closing Prices for the Common Stock during the ten trading days prior to and
including the record date for the determination of the holders of Common Stock
entitled to receive such securities, cash, or other property in connection with
such Non-Stock Fundamental Change or Common Stock Fundamental Change or, if
there is no such record date, the date upon which the holders of the Common
Stock shall have the right to receive such securities, cash, or other property,
in each case as adjusted in good faith by the Company to appropriately reflect
any of the events referred to in Section 13.4.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Debentures.
"Bank Credit Agreement" means the Credit Agreement dated as of June 12,
1997, among Big Flower Press Holdings, Inc., the lenders party thereto in their
capacities as lenders thereunder, Credit Suisse First Boston, as documentation
agent, and Bankers Trust Company, as administrative agent, together with the
related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including,
without limitation, increasing the amount of available borrowings thereunder or
adding Subsidiaries of the Company as additional borrowers or guarantors
thereunder) all or any portion of the indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Board of Directors" means either the board of directors of the Company or
any committee of that board duly authorized to act hereunder.
"Board Resolution" means a copy of the resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors, or such committee of the Board of Directors or officers
of the Company to which authority to act on behalf of the Board of Directors has
been delegated, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
3
<PAGE>
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in the City of New York are authorized or required by
law or executive order to remain closed or a day on which the Corporate Trust
Office of the Trustee, or the principal office of the Property Trustee under the
Trust Agreement, is closed for business.
"Closing Price" means on any day the reported last sale price on such day
or, in case no sale takes place on such day, the average of the reported closing
bid and asked prices in each case on the NYSE Consolidated Transactions Tape or,
if the stock is not listed or admitted to trading on such Exchange, on the
principal national securities exchange on which such stock is listed or admitted
to trading or, if not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices as furnished by any
NYSE member firm, selected by the Trustee for that purpose.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of this
Indenture.
"Common Stock" means common stock, par value $0.01, of the Company.
"Common Stock Fundamental Change" means any Fundamental Change in which
more than 50% of the value (as determined in good faith by the Board of
Directors) of the consideration received by holders of Common Stock consists of
common stock that for each of the ten consecutive trading days prior to the
record date for the determination of the holders of Common Stock entitled to
receive such common stock or, if there is no such record date, the date on which
the holders of the Common Stock shall have the right to receive such Common
Stock, has been admitted for listing or admitted for listing subject to notice
of issuance on a national securities exchange or quoted on the Nasdaq National
Market; provided, however, that a Fundamental Change shall not be a Common Stock
Fundamental Change unless either (i) the Company continues to exist after the
occurrence of such Fundamental Change and the outstanding Preferred Securities
continue to exist as outstanding Preferred Securities or
4
<PAGE>
(ii) not later than the occurrence of such Fundamental Change, the outstanding
Preferred Securities are converted into or exchanged for shares of convertible
preferred stock of an entity succeeding to the business of the Company or a
subsidiary thereof, which convertible preferred stock has powers, preferences,
and relative, participating, optional, or other rights, and qualifications,
limitations, and restrictions, substantially similar to those of the Preferred
Securities.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by its Chairman of the Board,
its Vice Chairman, its President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Controller, its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"Conversion Agent" has the meaning specified in Section 13.2.
"Conversion Date" has the meaning specified in Section 13.2.
"Conversion Price" has the meaning specified in Section 13.1.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at the date hereof is located at 101 Barclay Street, Floor 21 West,
New York, New York 10286, Attention: Corporate Trust Administration.
"Current Market Price" means for any day the last reported sale price,
regular way, on such day of Common Stock, or, if no sale takes place on such
day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE Composite Transactions Tape,
or, if the Common Stock is not listed or admitted to trading on the NYSE on such
day, on the principal national securities exchange on which the Common Stock is
listed or admitted to trading, if the Common Stock is listed on a national
securities exchange, or the Nasdaq National Market, or, if the Common Stock is
not
5
<PAGE>
quoted or admitted to trading on such quotation system, on the principal
quotation system on which the Common Stock may be listed or admitted to trading
or quoted, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of the Common Stock in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or, if not so available in such manner, as
furnished by any NYSE member firm selected from time to time by the Board of
Directors for that purpose or, if not so available in such manner, as otherwise
determined in good faith by the Board of Directors.
"Debentures" or "Debenture" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person, and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible for or liable, directly or indirectly,
as obligor or otherwise.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depositary" means, with respect to the Debentures issuable or issued in
whole or in part in the form of one or more Global Debentures, the Person
designated as Depositary by the Company (or any successor thereto).
"Designated Senior Indebtedness" means (x) all Secured Indebtedness of the
Company under, or as a result of its guarantee of, Indebtedness pursuant to the
Bank Credit
6
<PAGE>
Agreement and (y) at any time when no Indebtedness described in preceding clause
(x) is outstanding, any issue of Secured Indebtedness with an aggregate
principal amount in excess of $15.0 million that is designated as "Designated
Senior Indebtedness" by written notice from the Company to the Trustee.
"Dollar" means the currency of the United States of America as at the time
of payment is legal tender for the payment of public and private debts.
"Events of Default" has the meaning specified in Article 5.
"Expiration Time" has the meaning specified in Section 13.3(e).
"Extension Period" has the meaning specified in Section 3.11.
"Fundamental Change" means the occurrence of any Transaction or event in
connection with a plan pursuant to which all or substantially all of the Common
Stock shall be exchanged for, converted into, acquired for, or constitute solely
the right to receive securities, cash, or other property (whether by means of an
exchange offer, liquida tion, tender offer, consolidation, merger, combination,
reclassification, recapitalization, or otherwise), provided, that, in the case
of a plan involving more than one such Transaction or event, for purposes of
adjustment of the conversion price, such Fundamental Change shall be deemed to
have occurred when substantially all of the Common Stock shall be exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash, or other property, but the adjustment shall be based upon
consideration that a holder of Common Stock received in such Transaction or
event as a result of which more than 50% of the Common Stock shall have been
exchanged for, converted into, or acquired for or constitute solely the right to
receive securities, cash, or other property.
"Global Debenture" means a Debenture in the form prescribed in Section 2.4
evidencing all or part of the Debentures, issued to the Depositary or its
nominee, and registered in the name of such Depositary or its nominee.
"Guarantee" means the guarantee by the Company of distributions on the
Preferred Securities of the Trust to the extent provided in the Guarantee
Agreement, substan tially in the form attached hereto as Annex C, as amended
from time to time.
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"Holder" means a Person in whose name a Debenture is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" means as to the Debentures the Stated Maturity of
an installment of interest on such Debentures.
"Interest Rate" means the rate of interest specified or determined as
specified in each Debenture as being the rate of interest payable on such
Debenture.
"Investment Company Event" means, in respect of the Trust, the receipt by
the Property Trustee on behalf of the Trust of an Opinion of Counsel, rendered
by a law firm having a recognized national tax and securities practice, to the
effect that, as a result of the occurrence of a change in law or regulation or a
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), that there is more than an insubstantial risk that the Trust is or will
be considered an "investment company" that is required to be registered under
the 1940 Act, which Change in 1940 Act Law becomes effective on or after the
date of original issuance of the Preferred Securities of the Trust.
"Liquidated Damages" has the meaning specified in the form of reverse of
Debenture set forth in Section 2.3.
"Maturity" when used with respect to the Debentures, means the date on
which the principal of the Debentures become due and payable as herein provided,
whether at the Stated Maturity or by declaration of acceleration, call or
redemption or otherwise.
"1940 Act" means the Investment Company Act of 1940, as amended.
"Non Book-Entry Preferred Securities" has the meaning specified in Section
3.15.
"Non-Stock Fundamental Change" means any Fundamental Change other than a
Common Stock Fundamental Change.
"Notice of Conversion" means the notice given by a holder of Preferred
Securities to the Conversion Agent
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directing the Conversion Agent to exchange such Preferred Securities for
Debentures and to convert such Debentures into Common Stock on behalf of such
holder.
"Notice of Default" has the meaning specified in Section 5.1(c).
"NYSE" means the New York Stock Exchange.
"Officers' Certificate" means a certificate signed by (i) the Chairman,
Chief Executive Officer, President or a Vice President, and by (ii) the
Treasurer, an Assistant Treasurer, the Controller, the Secretary or an Assistant
Secretary of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, the Trust, or the Trustee, but who may be an employee
thereof, and who shall be reasonably acceptable to the Trustee.
"Outstanding" means, as of the date of determination, all Debentures
theretofore authenticated and delivered under this Indenture, except:
(i) Debentures theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Debentures for the payment of which money in the necessary
amount has been theretofore irrevocably deposited with the Trustee or any
Paying Agent in trust for the Holders of such Debentures; and
(iii) Debentures in substitution for or in lieu of which other
Debentures have been authenticated and delivered or which have been paid
pursuant to Sec tion 3.6, or which have been converted into Common Stock
pursuant to Section 13.1, unless proof satisfactory to the Trustee is
presented that any Debentures are held by Holders in whose hands such
Debentures are valid, binding and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Debentures have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debentures owned
by the Company or any other obligor upon the Debentures or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Debentures which
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the Trustee actually knows to be so owned shall be so disregarded. Debentures so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Debentures and that the pledgee is not the
Company or any other obligor upon the Debentures or any Affiliate of the Company
or such other obligor. Upon request of the Trustee, the Company shall furnish to
the Trustee promptly an Officers' Certificate listing and identifying all
Debentures, if any, known by the Company to be owned or held by or for the
account of the Company, or any other obligor on the Debentures or any Affiliate
of the Company or such obligor, and, subject to the provisions of Section 6.1,
the Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Debentures not
listed therein are Outstanding for the purpose of any such determination.
"Paying Agent" means the Trustee or any Person authorized by the Company
to pay the principal of or interest on any Debentures on behalf of the Company.
"Payment Blockage Period" has the meaning specified in Section 12.3.
"Person" means any individual, corporation, partner ship, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Debenture" of any particular Debenture means every previous
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular Debenture, and, for the purposes of this definition, any Debenture
authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or
stolen Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Debenture.
"Preferred Securities" has the meaning specified in the first recital of
this Indenture.
"Proceeding" has the meaning specified in Section 12.2.
"Property Trustee" means, in respect of the Trust, the commercial bank or
trust company identified as the "Property Trustee" in the Trust Agreement,
solely in its capacity as Property Trustee of the Trust under the Trust
Agreement and not in its individual capacity, or its successor in interest
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in such capacity, or any successor property trustee appointed as therein
provided.
"Purchase Agreement" means the Purchase Agreement dated October 14, 1997
by and among the Trust, the Company, Big Flower Press Holdings, Inc. and the
Purchasers.
"Purchased Shares" has the meaning specified in Section 13.4(e).
"Purchasers" with respect to the Preferred Securities, means Goldman,
Sachs & Co., Bear Stearns & Co. Inc., BT Alex. Brown Incorporated, Credit Suisse
First Boston Corporation and J.P. Morgan Securities Inc.
"Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change the average of the Closing Prices for the common stock
received in such Common Stock Fundamental Change for the ten consecutive trading
days prior to and including the record date for the determination of the holders
of Common Stock entitled to receive such common stock or if there is no such
record date, the date on which the holders of Common Stock shall have the right
to receive such common stock, as adjusted in good faith by the Company to
appropriately reflect any of the events referred to in Section 13.4.
"Redemption Date", when used with respect to any Debenture to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" has the meaning specified in Section 11.3.
"Reference Date" has the meaning specified in Section 13.4(c).
"Reference Market Price" initially means $15.375 (which is an amount equal
to 66 2/3% of the reported last sale price for the Common Stock on the NYSE
Consolidated Transactions Tape on October 14, 1997), and in the event of any
adjustment of the Conversion Price other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the Conversion Price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial Conversion Price of the
Debentures.
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"Regular Record Date" means for the interest payable on any Interest
Payment Date the Business Day next preceding such Interest Payment Date.
"Responsible Officer" when used with respect to the Trustee means any
officer of the Trustee assigned by the Trustee from time to time to administer
its corporate trust matters, or any other officer to whom such matters may be
referred.
"Restricted Preferred Securities" means all Preferred Securities required
to bear any restricted securities legend pursuant to the Trust Agreement.
"Restricted Securities" means all the Debentures required pursuant to
Section 2.6 to bear a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning specified in Section 2.6.
"Rights" has the meaning specified in Section 13.2(g).
"Secured Indebtedness" means the principal (including without limitation
all unpaid drawings with respect to letters of credit) of and premium, if any,
and interest (including interest accruing on or after the filing of any petition
in bankruptcy relating to the Company at the relevant contractual rate whether
or not such claim for post-petition interest is allowed in such proceeding) on,
and all other amounts owing with respect to, the following, whether outstanding
on the date of execution of this Indenture or thereafter incurred, created or
assumed, to the extent (but only to the extent) the same is secured by a lien,
charge, mortgage or other encumbrance on property or assets of the Company or
its subsidiaries: (i) indebtedness of the Company for money borrowed (including
purchase money obligations, except indebtedness to trade creditors) or evidenced
by debentures (other than the Debentures), notes, bankers' acceptances or other
corporate debentures or similar instruments; (ii) all capital lease obligations
of the Company; (iii) all obligations with respect to letters of credit; (iv)
all obligations with respect to currency hedging agreements, interest rate
protection agreements and other similar agreements; (v) all indebtedness of
others of the type referred to in the preceding clauses (i) through (iv) assumed
by or guaranteed in any manner by the Company or in effect guaranteed by the
Company; and (vi) renewals, extensions or refundings of any of the indebtedness
referred to in the preceding clauses (i), (ii), (iii), (iv) and (v) and in this
clause (vi). For purposes of the foregoing
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definition, all indebtedness secured by a lien, charge, mortgage or other
encumbrance on property or assets of the Company or its Subsidiaries shall be
deemed to be secured for purposes of said definition, notwithstanding any
determination that the amount of indebtedness so secured exceeds the value of
the assets serving as security therefor and notwithstanding any determination in
any bankruptcy or other proceeding that a portion of such indebtedness shall be
treated as unsecured because of any insufficiency in the value of the collateral
securing such indebtedness. Without limiting the foregoing, in any event all
obligations of the Company with respect to (including its guaranties of
obligations under) the Bank Credit Agreement shall constitute Secured
Indebtedness.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.5.
"Shareholders Rights Plan" means the Rights Agreement dated as of October
17, 1997 by and between Big Flower Holdings, Inc. and The Bank of New York as
Rights Agent, as amended from time to time.
"Special Event" means a Tax Event or an Investment Company Event.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity" when used with respect to the Deben tures or any
installment of principal thereof or interest thereon means the date specified in
the Debentures as the fixed date on which the principal of the Debentures or
such installment of interest is due and payable.
"Subsidiary" means any corporation of which at the time of determination
the Company and/or one or more Subsidiaries owns or controls directly or
indirectly more than 50% of the outstanding shares of voting stock. For purposes
of this definition, "voting stock" means stock which has voting power for the
election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.
"Tax Event" means the receipt by the Property Trustee on behalf of the
Trust of an Opinion of Counsel, rendered by a law firm having a recognized
national tax and securities practice (which opinion shall not have been
rescinded by such law firm), to the effect that, as a result of any amendment
to, or change (including any announced prospective
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change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein affecting taxation,
or as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such pronouncement or decision is announced on or after the date of
issuance of the Preferred Securities under the Trust Agreement, there is more
than an insubstantial risk in each case after the date hereof that (i) the Trust
is, or will be within 90 days of the date thereof, subject to United States
Federal income tax with respect to income received or accrued on the Debentures,
(ii) interest payable by the Company on the Debentures is not, or within 90 days
of the date thereof will not be, deductible by the Company, in whole or in part,
for United States Federal income tax purposes or (iii) the Trust is, or will be
within 90 days of the date thereof, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
"Transaction" has the meaning specified in Sec tion 13.5(a).
"Trust" has the meaning specified in the first recital of this Indenture.
"Trust Agreement" means the Trust Agreement substan tially in the form
attached hereto as Annex A, as amended by the Amended and Restated Trust
Agreement substantially in the form attached hereto as Annex B, as amended from
time to time.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder if at any time there is
more than one such Person.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture.
"Trust Securities" means the Common Securities and Preferred Securities.
"Vice President" when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president."
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SECTION 1.2. Compliance Certificate and Opinions. Upon any application or
request by the Company to the Trustee to take any action under any provision of
this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent (including covenants,
compliance with which constitutes a condition precedent), if any, provided for
in this Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent (including covenants compliance with which constitutes a
condition precedent), if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.5) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) 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;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3. Forms of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
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other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given to or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
is or are delivered to the Trustee, and, where it is hereby expressly required,
to the Company. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Trustee and the Company and any agent of the Trustee or the Company, if made
in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged
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to him the execution thereof. Where such execution is by a Person acting in
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Debentures shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Debenture shall bind every future
Holder of the same Debenture and the Holder of every Debenture issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Debenture.
(f) The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to take any action
under this Indenture by vote or consent. Except as otherwise provided herein,
such record date shall be the later of 30 days prior to the first solicitation
of such consent or vote or the date of the most recent list of Holders furnished
to the Trustee pursuant to Section 7.1 prior to such solicitation. If a record
date is fixed, those persons who were Holders at such record date (or their duly
designated proxies), and only those persons, shall be entitled to take such
action by vote or consent or to revoke any vote or consent previously given,
whether or not such persons continue to be Holders after such record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to
give or take any such action with regard to any particular Debenture may do so
with regard to all or any part of the principal amount of such Debenture or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any different part of such principal amount.
SECTION 1.5. Notices, Etc. to Trustee and Company. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided
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or permitted by this Indenture to be made upon, given or furnished to, or filed
with
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose (except as otherwise provided in Section 5.1 hereof)
hereunder if in writing and mailed, first class, postage prepaid, to the
Company addressed to it at the address of its principal office specified
in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 1.6. Notice to Holders; Waiver. Where this Indenture provides for
notice to Holders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first class
postage prepaid, to each Holder affected by such event, at the address of such
Holder as it appears in the Securities Register on the date such notice is
mailed, which shall be not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.7. Conflict with Trust Indenture Act. If any provision of this
Indenture limits, qualifies or conflicts with a provision of the Trust Indenture
Act that is required under such act to be a part of and govern this Indenture,
the latter provision shall control. If any provision of this Indenture modifies
or excludes any
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provision of the Trust Indenture Act that may be so modified or excluded, the
former provision shall be deemed to apply.
SECTION 1.8. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns. All covenants and agreements in this
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 1.10. Separability Clause. In case any provision in this Indenture
or in the Debentures shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in the
Debentures, express or implied, shall give to any Person, other than the parties
thereto, any Paying Agent and their successors and assigns and the Holders of
the Debentures, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 1.12. Governing Law. This Indenture and the Debentures shall be
governed by and construed in accordance with the laws of the State of New York
without regard to its principles of conflicts of laws.
SECTION 1.13. Non-Business Days. In any case where any Interest Payment
Date, Redemption Date, or Stated Maturity of any Debenture shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or the
Debentures) payment of interest or principal payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) with the same force and effect as if
made on the Interest Payment Date or Redemption Date or at the Stated Maturity.
ARTICLE 2
DEBENTURE FORM
SECTION 2.1. Forms Generally. The Debentures and the Trustee's certificate
of authentication shall be in substantially the forms set forth in this Article
and may have such letters, numbers or other marks of identification and such
legends or endorsements placed thereon as may be
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required to comply with applicable tax laws or the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Debentures, as evidenced by their execution of the Debentures.
The definitive Debentures shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, if required by any
securities exchange on which the Debentures may be listed, on a steel engraved
border or steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Debentures may be
listed, all as determined by the officers executing such Debentures, as
evidenced by their execution of such Debentures.
SECTION 2.2. Form of Face of Debenture.
6% Convertible Subordinated Debenture due October 15, 2027
No. $
Big Flower Holdings, Inc., a corporation organized and existing under the
laws of Delaware (hereinafter called the "Company", which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ___________________________________________
__, or registered assigns, the principal sum of ________________________________
____________________________________________________ on October 15, 2027 and to
pay interest on said principal sum from October 20, 1997 or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, at the rate of 6% per annum
together with subject to deferral as set forth herein, on January 15, April 15,
July 15 and October 15 of each year, commencing January 15, 1998 until the
principal hereof is paid or duly provided for or made available for payment.
Reference is hereby made to the further provisions of this Debenture set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Debenture
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instru ment to be duly
executed.
Dated:
By:
---------------------------------
SECTION 2.3. Form of Reverse of Debenture. This Debenture is one of a duly
authorized issue of Debentures of the Company (herein called the "Debentures")
limited to the aggregate principal amount of $118,600,000, issued under an
Indenture, dated as of October 20, 1997 (herein called the "Indenture"), between
the Company and The Bank of New York, as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), to which the
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Trustee, the Company and the Holders of the Debentures, and of
the terms upon which the Debentures are, and are to be, authenticated and
delivered. All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. For periods less than a full
month, interest shall be computed on the actual number of elapsed days over 360
days. In the event that any date on which interest is payable on this Debenture
is not a Business Day, then a payment of the interest on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) with the same force and effect as if
made on the date the payment was originally payable. A "Business Day" shall mean
any day other than a Saturday or a Sunday or a day on which banking institutions
in the City of New York are authorized or required by law or executive order to
remain closed or a day on which the Corporate Trust Office of the Trustee, or
the principal office of the Property Trustee under the Trust Agreement is closed
for business. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Debenture (or one or more Predecessor
Debentures, as defined in the Indenture) is registered at the close of business
on the Regular Record Date, for such interest installment which shall be the
date which is the Business Day next preceding such Interest Pay ment Date. Any
such interest installment not so punctually
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<PAGE>
paid or duly provided for shall forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Debentures
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in the
Indenture.
The Company shall have the right at any time during the term of this
Debenture, from time to time, to extend the interest payment period of such
Debenture for up to 20 consecutive quarters with respect to each deferral period
(each such deferral period an "Extension Period"), during which periods the
Company shall have the right not to make payments of interest on any Interest
Payment Date, and at the end of which the Company shall pay all interest then
accrued and unpaid (together with Additional Interest and Liquidated Damages, if
any, thereon to the extent permitted by applicable law); provided that during
any such Extension Period, the Company will not, and will not permit any Sub
sidiary to (a) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any shares of
the Company's capital stock or (b) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees of indebtedness for money borrowed) of the Company that
rank pari passu with or junior to the Debentures (other than (i) any dividend,
redemption, liquidation, interest, principal or guarantee payment by the Company
where the payment is made by way of securities (including capital stock) that
rank pari passu with or junior to the securities on which such dividend,
redemption, interest, principal or guarantee payment is being made, (ii)
redemptions or purchases of any rights pursuant to the Company's Shareholders
Rights Plan, or any successor to such Shareholders Rights Plan, and the
declaration of a dividend of such rights or the issuance of preferred stock
under such plans in the future, (iii) payments under the Guarantee, (iv)
purchases of Common Stock related to the issuance of Common Stock under any of
the Company's benefit plans for its directors, officers or employees, (v) as a
result of a reclassification of the Company's capital stock or the ex change or
conversion of one series or class of the Company's capital stock for another
series or class of the Company's capital stock and (vi) the purchase of
fractional interests
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<PAGE>
in shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged).
Prior to the termination of any such Extension Period, the Company may further
extend the interest payment period, provided that no Extension Period shall
exceed 20 consecutive quarters or extend beyond the Stated Maturity of this
Debenture. Upon the termination of any such Extension Period and upon the
payment of all accrued and unpaid interest and any Additional Interest then due,
the Company may elect to begin a new Extension Period, subject to the above
requirements. No interest shall be due and payable during an Extension Period
except at the end thereof. The Company shall give the Trustee, the Property
Trustee and the Administrative Trustees (as defined in the Trust Agreement)
notice of its selection of an Extension Period at least one Business Day prior
to the earlier of (i) the record date for the date the distributions on the
Preferred Securities (or if no Preferred Securities are outstanding, for the
date interest on the Debentures) would have been payable except for the election
to begin such Extension Period and (ii) the date the Property Trustee (or if no
Preferred Securities are outstanding, the Debenture Trustee) is required to give
notice to the NYSE or other applicable self-regulatory organizations or to
holders of such Preferred Securities (or, if no Preferred Securities are
outstanding, to the holders of such Debentures) of the record date.
Payment of the principal of (and premium, if any) and interest on this
Debenture will be made [Insert, if a global security is issued - to the
Depositary Trust Company or its nominee] [Insert if securities in definitive
form are issued - at the office or agency of the Paying Agent maintained for
that purpose in the United States], in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts provided, however, that at the option of the Company
payment of interest may be made (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Securities Register or (ii)
by wire transfer in immediately available funds at such place and to such
account as may be designated by the Person entitled thereto as specified in the
Securities Register.
The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and subject in right of payments to the prior payment
in full of all Secured Indebtedness (as defined in the Indenture), and this
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to and
shall be
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<PAGE>
bound by such provisions, (b) authorizes and directs the Trustee on his behalf
to take such actions as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof, waives
all notice of the acceptance of the subordination provisions contained herein
and in the Indenture by each holder of Secured Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
At any time on or after October 15, 2000, the Company may, at its option,
subject to the terms and conditions of Article 11 of the Indenture, redeem this
Debenture in whole at any time or in part from time to time, at the Redemption
Prices set forth in Section 11.8 of the Indenture.
In the event of redemption of this Debenture in part only, a new Debenture
or Debentures for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
If a Special Event shall occur and be continuing, this Debenture shall be
exchangeable for Preferred Securities in accordance with Section 11.9 of the
Indenture or, in certain circumstances, redeemable by the Company in accordance
with Section 11.8 of the Indenture.
Subject to the terms and conditions set forth in Article 13 of the
Indenture, this Debenture is convertible, at the option of the Holder hereof,
into shares of Common Stock.
If an Event of Default shall occur and be continuing, the principal of the
Debentures may be declared due and payable in the manner, with the effect and
subject to the conditions provided in the Indenture.
The Indenture contains provisions for satisfaction, discharge and
defeasance of the entire indebtedness of this Debenture upon compliance by the
Company with certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debentures to be affected under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in principal amount of the Debentures. The Indenture also
contains provisions permitting Holders of specified percentages in principal
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<PAGE>
amount of the Debentures at the time Outstanding, on behalf of the Holders of
all Debentures, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver shall be conclusive and binding upon
the Holder of this Debenture and upon all future Holders of this Debenture and
of any Debenture issued upon the registration of transfer hereof or in exchange
therefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Debenture.
As provided in and subject to the provisions of the Indenture, if an Event
of Default occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Debentures may declare the principal amount of all the Debentures to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), provided that, if upon an Event of Default, the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Debentures fail to declare the principal of all the Debentures to be immediately
due and payable, the holders of at least 25% in aggregate liquida tion amount of
the Preferred Securities then outstanding shall have such right by a notice in
writing to the Company and the Trustee; and upon any such declaration such
princi pal amount (or specified amount) of and the accrued interest (including
any Additional Interest) on all the Debentures shall become immediately due and
payable, provided that the payment of principal and interest (including any
Additional Interest) on such Debentures shall remain subordinated to the extent
provided in Article 12 of the Indenture.
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and uncon ditional, to pay the principal of (and premium, if any) and
interest on this Debenture at the times, place and rate, and in the coin or
currency, herein prescribed.
The holders of the Preferred Securities, the Deben tures, the Guarantee
and the shares of Common Stock of the Company issuable upon conversion of the
Securities (collectively, the "Registrable Securities") are entitled to the
benefits of a Registration Rights Agreement, dated as of October 20, 1997, among
Big Flower Trust I, the Company and the Purchasers (the "Registration Rights
Agreement"). Pursuant to the Registration Rights Agreement, the Company has
agreed for the benefit of the holders of Registrable Securities that (i) it
will, at its cost, within 90 days after the date of issuance of the Registrable
Securities,
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<PAGE>
file a shelf registration statement (the "Shelf Registration Statement") with
the Commission with respect to the resales of the Registrable Securities, (ii)
it will use its best efforts to cause such Shelf Registration Statement to be
declared effective by the Commission as promptly as practicable and in no event
later than 180 days after the date of issuance of the Registrable Securities and
(iii) the Depositor (as defined in the Trust Agreement) will use its best
efforts to maintain such Shelf Registration Statement continuously effective
under the Securities Act until the third anniversary of the date of issuance of
the Registrable Securities or such earlier date as is provided in the
Registration Rights Agreement (the "Effectiveness Period".) The Company will be
permitted to suspend the use of the prospectus (which is a part of the Shelf
Registration Statement) in connection with sales of Registrable Securi ties by
holders during certain periods of time under certain circumstances relating to
pending corporate developments relating to the Company and public filings with
the Commission and similar events.
If (i) on or prior to 90 days following the date of original issuance of
the Registrable Securities, a Shelf Registration Statement has not been filed
with the Commis sion, or (ii) on or prior to the 180th day following the issuing
of the Registrable Securities, such Shelf Registra tion Statement is not
declared effective (each such event a "Registration Default"), additional
interest ("Liquidated Damages") will accrue on the Debentures and, accordingly,
additional distributions will accrue on the Preferred Securities, from and
including the day following such Regis tration Default until such time as such
Shelf Registration Statement is filed or such Shelf Registration Statement is
declared effective, as the case may be. Liquidated Damages will be paid
quarterly in arrears (subject to the Company's ability to defer payment of
Liquidated Damages during any Extension Period), with the first quarterly
payment due on the first Interest Payment Date following the date on which such
Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to
an additional 0.25% of the principal amount, to and including the 90th day
following such Registration Default and 0.50% thereof from and after the 91st
day following such Registration Default. In the event that during the
Effectiveness Period the Shelf Regis tration Statement ceases to be effective,
or the Company suspends the use of the prospectus which is a part thereof, for
more than 90 days, whether or not consecutive, during any 12-month period then
the interest rate borne by the Debentures and the distribution rate borne by the
Preferred Securities will each increase by an additional 0.50% per annum from
the 91st day of the applicable 12-month period
26
<PAGE>
such Shelf Registration Statement ceases to be effective or the Company suspends
the use of the prospectus which is a part thereof, as the case may be, until the
earlier of such time as (i) the Shelf Registration Statement again becomes
effective, (ii) the use of the related prospectuses ceases to be suspended or
(iii) the Effectiveness Period expires.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Debenture is registrable in the Securities
Register, upon surrender of this Debenture for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Debentures, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees. No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Prior to due presentment of this Debenture for regis tration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Debenture is registered as the owner hereof for
all purposes, whether or not this Debenture be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
The Debentures are issuable only in registered form without coupons in
denominations of $50 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Debentures are
exchangeable for a like aggregate principal amount of Debentures of a different
authorized denomination, as requested by the Holder surrendering the same.
The Company and, by its acceptance of this Debenture or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Debenture agree that for United States Federal, state and
local tax purposes it is intended that this Debenture constitute indebtedness.
THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAW PRINCIPLES THEREOF.
27
<PAGE>
28
<PAGE>
ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
(I) or (we) assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's social security or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________ agent to
transfer this Debenture on the books of the Company. The agent may substitute
another to act for him.
Your Signature: ___________________________________________
(Sign exactly as your name appears on
the other side of this Security)
Date: _____________
Signature Guarantee:* __________________________________________
[Include the following if the Debenture bears a Restricted
Securities Legend --
In connection with any transfer of any of the Securities evidenced by this
certificate, the undersigned confirms that such Debentures are being:
CHECK ONE BOX BELOW
(1) |_| exchanged for the undersigned's own account
without transfer; or
- ----------
* Signature must be guaranteed by an institution which is a member of one of
the following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) in such other guarantee programs acceptable to the
Trustee.
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<PAGE>
(2) |_| transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
(3) |_| transferred pursuant to and in compliance with Regulation
S under the Securities Act of 1933; or
(4) |_| transferred pursuant to another available exemption from
the registration requirements of the Securities Act of 1933;
or
(5) |_| transferred pursuant to an effective Registration
Statement under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Debentures evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (3) or (4) is
checked, the Trustee may require, prior to registering any such transfer of the
Securities, such legal opinions, certifications and other information as the
Company has reasonably requested in writing and directed the Trustee to require
confirmation that such transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act;
provided, further, that after the date that a shelf Registration Statement under
the Securities Act of 1933 has been filed and so long as such shelf Registration
Statement continues to be effective, the Trustee may only permit transfers for
which box (4) or (5) has been checked.
----------------------------------
Signature
Signature Guarantee:*
____________________________________ __________________________________]
Signature must be guaranteed Signature
- ----------
* Signature must be guaranteed by an institution which is a member of one of
the following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) in such other guarantee programs acceptable to the
Trustee.
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<PAGE>
________________________________________________________________________________
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Debenture for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: __________________________ _____________________________________
NOTICE: To be executed by
an executive
officer]
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<PAGE>
NOTICE OF CONVERSION
To: Big Flower Holdings, Inc.
The undersigned owner of this Debenture hereby irrevocably exercises
the option to convert this Debenture, or the portion below designated, into
Common Stock of BIG FLOWER HOLDINGS, INC. in accordance with the terms of the
Indenture referred to in this Debenture, and directs that the shares issuable
and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Any Holder, upon the exercise of its conversion rights in accordance
with the terms of the Indenture and the Debenture, agrees to be bound by the
terms of the Registration Rights Agreement relating to the Common Stock issuable
upon conversion of the Debenture.
Date: ____________, ____
in whole __
Portions of Debenture to be
in part __ converted ($50 or integral
multiples thereof):
$_________________________
__________________________________________
Signature (for conversion only)
Please Print or Typewrite Name
and Address, Including Zip
Code, and Social Security or
Other Identifying Number
__________________________________________
__________________________________________
__________________________________________
Signature Guarantee:* ________________________
- ----------
* Signature must be guaranteed by an institution which is a member of one of
the following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock
(continued...)
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<PAGE>
SECTION 2.4. Additional Provisions Required in Global Debenture. Any
Global Debenture issued hereunder shall, in addition to the provisions contained
in Sections 2.2 and 2.3 bear a legend in substantially the following form:
"This Debenture is a Global Debenture within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This Debenture is exchangeable for Debentures
registered in the name of a person other than the Depositary or its nominee only
in the limited circumstances described in the Indenture and may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary."
SECTION 2.5. Form of Trustee's Certificate of Authentication. The form of
Trustee's Certificate of Authentication shall be as follows:**
"This is one of the Debentures designated therein referred to in the within
mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
Authorized Signatory
Dated: "
SECTION 2.6. Initial Issuance to Property Trustee. The Debentures
initially issued to the Property Trustee of the Trust shall be in the form of
one or more individual certificates in definitive, fully registered form without
distribution coupons and shall bear the following legend (the "Restricted
Securities Legend") unless the Company determines otherwise in accordance with
applicable law:
- --------
* (...continued)
Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee programs acceptable to the
Trustee.
** Or in the form provided in Section 6.14 in the event that a separate
Authenticating Agent is appointed pursuant thereto.
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<PAGE>
"THE SECURITIES EVIDENCED HEREBY AND THE COMMON STOCK ISSUABLE UPON THEIR
CONVERSION HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (1) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION COMPLYING WITH RULE 144A, (2) IN AN
OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER
THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT OR, IN EACH CASE, IN COMPLIANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS.
ARTICLE 3
THE DEBENTURES
SECTION 3.1. Amount of Debentures. The aggregate principal amount of
Debentures which may be authenticated and delivered under this Indenture is
$118,600,000 except for Debentures authenticated and delivered upon registration
of, transfer of, or in exchange for, or in lieu of, other Debentures pursuant to
Sections 3.4, 3.5 or 3.6.
SECTION 3.2. Denominations. The Debentures shall be in registered form
without coupons and shall be issuable in denominations of $50 and any integral
multiple thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating. The
Debentures shall be executed on behalf of the Company by two duly authorized
officers on behalf of the Company. The signature of any of these officers on the
Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures. Upon the execution and
delivery of this Indenture, or from time to time thereafter, Debentures may be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and make available for delivery said
Securities to or upon
34
<PAGE>
Company Order without any further action by the Company. Debentures may be
authenticated on original issuance from time to time and delivered pursuant to
such procedures acceptable to the Trustee ("Procedures") as may be specified
from time to time by Company Order. Procedures may authorize authentication and
delivery pursuant to oral instructions of the Company or a duly authorized
agent, which instructions shall be promptly confirmed in writing.
Each Debenture shall be dated the date of its authentication.
No Debenture shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Debenture a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Debenture shall be conclusive evidence,
and the only evidence, that such Debenture has been duly authenticated and
delivered hereunder.
SECTION 3.4. Temporary Debentures. Pending the preparation of definitive
Debentures, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Debentures which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Debentures in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Debentures may determine, as
evidenced by their execution of such Debentures.
If temporary Debentures are issued, the Company will cause definitive
Debentures to be prepared without unreasonable delay. After the preparation of
definitive Debentures, the temporary Debentures shall be exchangeable for
definitive Debentures upon surrender of the temporary Debentures at the office
or agency of the Company designated for the purpose without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Debentures,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Debentures of authorized
denominations. Until so exchanged, the temporary Debentures shall in all
respects be entitled to the same benefits under this Indenture as definitive
Debentures.
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<PAGE>
SECTION 3.5. Registration, Transfer and Exchange. The Company shall cause
to be kept at the Corporate Trust Office of the Trustee a register in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Debentures and of transfers of Debentures. Such
register is herein sometimes referred to as the "Securities Register." The
Trustee is hereby appointed "Securities Registrar" for the purpose of
registering Debentures and transfers of Debentures as herein provided.
Upon surrender for registration of transfer of any Debenture at the office
or agency of the Company designated for that purpose the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the desig nated
transferee or transferees, one or more new Debentures of any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Debentures may be exchanged for other
Debentures of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Debentures to be exchanged at such office or
agency. Whenever any Debentures are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Debentures
which the Holder making the exchange is entitled to receive.
All Debentures issued upon any transfer or exchange of Debentures shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Debentures surrendered upon such
transfer or exchange.
Every Debenture presented or surrendered for transfer or exchange shall
(if so required by the Company or the Securities Registrar) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
36
<PAGE>
No service charge shall be made to a Holder for any transfer or exchange
of Debentures, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Debentures.
Notwithstanding any of the foregoing, the Global Debenture shall be
exchangeable pursuant to this Section 3.5 for Debentures registered in the names
of Persons other than the Depositary for such Debenture or its nominee only if
(a) such Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the Global Debenture and the Company shall not have
appointed a successor depositary within 90 days after such notice, or if at any
time such Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, (b) the Company executes and
delivers to the Trustee a Company Order that the Global Debenture shall be so
exchangeable or (c) there shall have occurred and be continuing an Event of
Default. The Global Debenture shall be exchangeable for Debentures registered in
such names as such Depositary shall direct.
Notwithstanding any other provisions in this Indenture, the Global
Debenture may not be transferred except as a whole by the Depositary with
respect to the Global Debenture to a nominee of such Depositary or by a nominee
of such Depositary to such Depositary or another nominee of such Depositary.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Debenture
during a period beginning at the opening of business 15 days before the day of
selection for redemption of Debentures pursuant to Article 11 and ending at the
close of business on the day of mailing of notice of redemption or (b) to
transfer or exchange any Debenture so selected for redemption in whole or in
part, except, in the case of any Debenture to be redeemed in part, any portion
thereof not to be redeemed.
The Debentures may not be transferred except in compliance with the
Restricted Securities Legend unless otherwise determined by the Company in
accordance with applicable law. Upon any distribution of the Debentures to the
holders of the Preferred Securities in accordance with the Trust Agreement, the
Company and the Trustee shall enter into a supplemental indenture pursuant to
Section 9.1(h) to provide for transfer procedures and restrictions with respect
to the Debentures substantially similar to those
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contained in the Trust Agreement to the extent applicable in the circumstances
existing at the time of such distribution.
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Debentures. If any
mutilated Debenture is surrendered to the Trustee together with such security or
indemnity as may be required by the Company or the Trustee to save each of them
harmless, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Debenture and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (a) evidence
to their satisfaction of the destruc tion, loss or theft of any Debenture, and
(b) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of actual notice to the Company or the Trustee
that such Debenture has been acquired by a bona fide purchaser, the Company
shall execute and upon a Company Order the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Debenture, a new
Debenture bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Debenture has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Debenture issued pursuant to this Section in lieu of any
destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures.
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SECTION 3.7. Payment of Interest; Interest Rights Preserved. Interest on
any Debenture which is payable, and is punctually paid or duly provided for, on
any Interest Payment Date, shall be paid to the Person in whose name that
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on the Regular Record Date, except that interest payable on the Stated
Maturity of the Debentures shall be paid to the Person to whom principal is
paid.
Any interest on the Debentures which is payable, but is not timely paid or
duly provided for, on an Interest Payment Date (herein called "Defaulted
Interest"), shall forthwith cease to be payable to the registered Holder on the
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Debentures (or their respective
Predecessors Debentures) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on the Debentures and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date and, in the
name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be mailed, first class, postage prepaid, to each Holder of the Debentures
at the address of such Holder as it appears in the Securities Register not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the
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Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Debentures (or their respective Predecessor Debentures) are registered on
such Special Record Date and shall no longer be payable pursuant to the
following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed and, upon such
notice as may be required by such exchange (or by the Trustee if the
Debentures are not listed), if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this Clause, such payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Debenture
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Debenture shall carry the rights to interest accrued and unpaid, and
to accrue, which were carried by such other Debenture.
SECTION 3.8. Persons Deemed Owners. The Company, the Trustee, the Paying
Agent and any agent of the Company or the Trustee or the Paying Agent may treat
the Person in whose name any Debenture is registered as the owner of such
Debenture for the purpose of receiving payment of principal of and (subject to
Section 3.7) interest on such Debenture and for all other purposes whatsoever,
whether or not such Debenture be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 3.9. Cancellation. All Debentures surrendered for payment,
redemption, conversion transfer or exchange shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee, and any such Debentures and
Debentures surrendered directly to the Trustee for any such purpose shall be
promptly canceled by it. The Company may at any time deliver or cause to be
delivered to the Trustee for cancellation any Debentures previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Debentures so delivered shall be promptly canceled by
the Trustee. No Debentures shall be authenticated in lieu of or in exchange for
any Debentures canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Debentures shall be destroyed by the
Trustee and upon request, the Trustee
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shall deliver to the Company a certificate of such destruction.
SECTION 3.10. Computation of Interest. Interest on the Debentures shall be
computed on the basis of a 360-day year of twelve 30-day months.
SECTION 3.11. Deferrals of Interest Payment Dates. The Company shall have
the right, at any time during the term of the Debentures, so long as no Event of
Default has occurred and is continuing, from time to time to extend the interest
payment period for the Debentures for up to 20 consecutive quarters with respect
to each deferral period (each, an "Extension Period") during which periods the
Com pany shall have the right to not make payments of interest (including any
Liquidated Damages) on any Interest Payment Date, and at the end of such
Extension Period the Company shall pay all interest then accrued and unpaid
thereon (together with Additional Interest thereon, if any, at the rate
specified for the Debentures to the extent permitted by applicable law),
provided, however, that during any such Extension Period, the Company shall not,
and shall cause any Subsidiary not to, (a) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any shares of the Company's capital stock or (b) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees of indebtedness for money
borrowed) of the Company that rank pari passu with or junior to the Debentures
(other than (i) any dividend, redemption, liquidation, interest, principal or
guarantee payment by the Company where the payment is made by way of securities
(including capital stock) that rank pari passu with or junior to the securities
on which such dividend, redemption, interest, principal or guarantee payment is
being made, (ii) redemptions or purchases of any rights pursuant to the
Company's Shareholders Rights Plan, or any successor to such Shareholders Rights
Plan, and the declaration of a dividend of such rights or the issuance of
preferred stock under such plans in the future, (iii) payments under the
Guarantee, (iv) purchases of Common Stock related to the issuance of Common
Stock under any of the Company's benefit plans for its directors, officers or
employees, (v) as a result of a reclassification of the Company's capital stock
or the exchange or conversion of one series or class of the Company's capital
stock for another series or class of the Company's capital stock and (vi) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security
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being converted or exchanged). Prior to the termination of any such Extension
Period, the Company may further extend the interest payment period, provided
that no such Extension Period shall exceed 20 consecutive quarters or extend
beyond the Stated Maturity of the Debentures. Upon termination of any Extension
Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due, the Company may select a new Extension Period,
subject to the above requirements. No interest including Additional Interest
and Liquidated Damages, if any, shall be due and payable during an Extension
Period, except at the end thereof. The Company shall give the Trustee, the
Property Trustee and the Administrative Trustees notice of its selection of such
Extension Period at least one Business Day prior to the earlier of (i) the
record date for the date the distribu tions on the Preferred Securities of the
Trust (or if no Preferred Securities are outstanding, for the date interest on
the Debentures) would have been payable except for the election to begin such
Extension Period and (ii) the date the Property Trustee (or, if no Preferred
Securities are outstanding, the Trustee) is required to give notice to the NYSE
or other applicable self-regulatory organization or to holders of such Preferred
Securities (or, if no Preferred Securities are outstanding, to the holders of
such Debentures) of such record date, but in any event not less than one
Business Day prior to such record date. Such notice shall specify the period
selected.
The Trustee shall promptly give notice of the Company's selection of such
Extension Period to the Holders of the outstanding Debentures.
SECTION 3.12. Right of Set-off. Notwithstanding anything to the contrary
in the Indenture, the Company shall have the right to set-off any payment it is
otherwise required to make thereunder in respect of the Debenture to the extent
the Company has theretofore made, or is concurrently on the date of such payment
making, a payment relating to the Debentures under the Guarantee.
SECTION 3.13. Agreed Tax Treatment. Each Debenture issued hereunder shall
provide that the Company and, by its acceptance of a Debenture or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, such Debenture agree that for United States Federal, state and
local tax purposes it is intended that such Debenture constitute indebtedness.
SECTION 3.14. CUSIP Numbers. The Company in issuing the Debentures may use
"CUSIP" numbers (if then generally in
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use), and, if so, the Trustee shall use such "CUSIP" number in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such number either as
printed on the Debentures or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Debentures, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 3.15. Global Security. (a) In connection with distribution of
Debentures to holders of the Preferred Securities in connection with the
involuntary or voluntary dissolution, winding up or liquidation of the Trust,
(i) the Debentures in certificated form may be presented to
the Trustee by the Property Trustee in exchange for one or more global
certificates in an aggregate principal amount equal to the aggregate principal
amount of all outstanding Debentures (each a "Global Debenture"), to be
registered in the name of the Depositary, or its nominee, and delivered by the
Trustee to the Depositary, or its custodian, for crediting to the accounts of
its participants pursuant to the procedures of the Depositary. The Company upon
any such presentation shall execute a Global Debenture in such aggregate
principal amount and deliver the same to the Trustee for authentication and
delivery in accordance with this Indenture; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, the Debentures in certificated form may be presented to the
Trustee by the Property Trustee and any Preferred Security certificate which
repre sents Preferred Securities other than Preferred Securities held by the
Depositary or its nominee ("Non Book-Entry Preferred Securities") will be
deemed to represent beneficial interests in Debentures presented to the Trustee
by the Property Trustee having an aggregate principal amount equal to the
aggregate liquidation amount of the Non Book-Entry Preferred Securities until
such Preferred Security certificates are presented to the Securities Registrar
for transfer or reissuance at which time such Non-Book Entry Preferred Security
certificates will be canceled and a Debenture, registered in the name of the
holder of the Preferred Security certificate or the transferee of the holder of
such Preferred Security certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Security certificate canceled, will be executed by the Company and delivered to
the Trustee for authentication and delivery in
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accordance with this Indenture. On issue of such Deben tures, Debentures with an
equivalent aggregate principal amount that were presented by the Property
Trustee to the Trustee will be deemed to have been canceled.
(b) A Global Debenture may be transferred, in whole but not in part,
only to another nominee of the Depositary, or to a nominee of such successor
Depositary.
(c) If (i) the Depositary notifies the Company that it is unwilling
or unable to continue as a depositary for such Global Debenture and no successor
depositary shall have been appointed within 90 days by the Company, (ii) the
Depositary, at any time, ceases to be a clearing agency registered under the
Exchange Act at which time the Depositary is required to be so registered to act
as such depositary and no successor depositary shall have been appointed within
90 days by the Company, (iii) the Company, in its sole discretion, determines
that such Global Debenture shall be so exchangeable or (iv) there shall have
occurred an Event of Default with respect to such Debentures, as the case may
be, the Company will execute, and, subject to Article 3 of this Indenture, the
Trustee, upon written notice from the Company and receipt of a Company Order,
will authenticate and deliver the Debentures in definitive registered form
without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Debenture in exchange for
such Global Debenture. In addition, upon an Event of Default or if the Company
may at any time determine that the Debenture shall no longer be represented by a
Global Debenture, in such event the Company will execute, and subject to
Section 3.5 of this Indenture, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company and a Company Order,
will authenticate and make available for delivery the Debentures in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Debenture
in exchange for such Global Debenture. Upon the exchange of the Global Debenture
for such Debentures in definitive registered form without coupons, in authorized
denominations, the Global Debenture shall be canceled by the Trustee. Such
Debentures in definitive registered form issued in exchange for the Global
Debenture shall be registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
such Debentures to the Depositary for delivery to
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the Persons in whose names such Debentures are so registered.
ARTICLE 4
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 4.1. Satisfaction and Discharge of Indenture. (A) If at any
time (a) the Company shall have paid or caused to be paid the principal of, and
interest, if any, on all the Debentures theretofore authenticated (other than
Debentures which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.6), in accordance with the terms of
this Indenture and such Debentures or (b) as to Debentures not so paid, the
Company shall have delivered to the Trustee for cancellation all Debentures
theretofore authenticated (other than any Debentures which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 3.6) or (c) as to Debentures not so paid or delivered for
cancellation, (i) all the Debentures shall have become due and payable, or are
by their terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and (ii) the Company shall have irrevocably
deposited or caused to be deposited with the Trustee as trust funds money in an
amount (other than moneys repaid by the Trustee or any paying agent to the
Company in accordance with Section 4.4) or Government Obligations, maturing as
to principal and interest at such times and in such amounts as will insure the
availability of money, or 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 (A) the principal
and interest, if any, on all Debentures of such series on each date that such
principal or interest, if any, is due and payable and (B) any mandatory sinking
fund or analogous payments on the dates on which such payments are due and
payable in accordance with the terms of this Indenture and the Debentures; and
if, in any such case, the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company then this Indenture shall cease to be of
further effect (except as to (i) rights of registration of transfer and exchange
of Debentures and the Company's right of optional redemption, if any, (ii)
substitution of mutilated, defaced, destroyed, lost or
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stolen Debentures, (iii) the rights of Holders to receive Debentures, payments
of principal thereof, and interest, if any, thereon, upon the original stated
due dates therefor or any date of redemption (but not upon acceleration), and
remaining rights of such Holders to receive mandatory sinking fund or analogous
payments, if any, (iv) the rights, obligations, duties and immunities of the
Trustee hereunder, (v) the rights of Holders as beneficiaries hereof with
respect to the property so deposited with the Trustee and payable to all or any
of them, (vi) conversion of the Debentures under Article 13, (vii) maintenance
of the Trust as a grantor trust under Section 10.8 and (viii) the obligations of
the Company under Section 10.2) and the Trustee, on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with, and at the cost and
expense of the Company, shall execute proper instruments acknowledging such
satisfaction and discharge of this Indenture. The Company agrees to reimburse
the Trustee for any costs or expenses thereafter reasonably and properly
incurred and to compensate the Trustee for any services thereafter reasonably
and properly rendered by the Trustee in connection with this Indenture or the
Debentures.
(B) In addition to discharge of this Indenture pursuant to the next
preceding paragraph (A) the Company shall be deemed to have paid and discharged
the entire indebtedness on all the Debentures on the 123rd day after the date of
making the deposit referred to in clause (a), and the provisions of this
Indenture with respect to the Debentures shall no longer be in effect (except as
to (i) rights of registration of transfer and exchange of Debentures and the
Company's right of optional redemption, if any, (ii) substitution of mutilated,
defaced, destroyed, lost or stolen Debentures, (iii) the rights of Holders of
Debentures to receive payments of principal thereof and interest, if any,
thereon upon the original stated due dates therefor or any date of redemption
(but not upon acceleration), and remaining rights of such Holders to receive
mandatory sinking fund or analogous payments, if any, solely from the trust fund
referred to in subparagraph (a) below, (iv) the rights, obligations, duties and
immunities of the Trustee hereunder, (v) the rights of Holders as beneficiaries
hereof with respect to the property so deposited with the Trustee and payable to
all or any of them, (vi) conversion of the Debentures under Article 13, (vii)
maintenance of the Trust as a grantor trust under Section 10.8 and (viii) the
obligations of the Company under
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Section 10.2), and the Trustee, at the cost and expense of the Company, shall,
at the Company's written request, execute proper instruments acknowledging the
same, if:
(a) the Company shall have irrevocably deposited or caused to be
irrevocably deposited with the Trustee as a trust fund specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the
Debentures of such series (i) money in an amount, or (ii) Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of money, or (iii) a combination
thereof, sufficient in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification therefor
delivered to the Trustee, to pay (A) the principal and interest, if any, on all
Debentures of such series on each date that such principal or interest, if any,
is due and payable and (B) any mandatory sinking fund or analogous payments on
the dates on which such payments are due and payable in accordance with the
terms of this Indenture and the Debentures;
(b) no Event of Default or event which, with notice or lapse of time
or both, would become an Event of Default with respect to the Debentures shall
have occurred and be continuing on the date of such deposit or at any time
during the period ending on the 123rd day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until the
expiration of such period);
(c) such deposit shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other material agreement or
instrument to which the Company is a party or by which it is bound;
(d) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) if such deposits shall include Government
Obligations in respect of any government other than the United States of
America, such deposit shall not result in the Company, the Trustee or such trust
constituting an 'investment company' under the Investment Company Act of 1940,
as amended, and (ii) if any such deposit occurs more than one year prior to the
stated maturity or redemption date of the Debentures, the Holders will not
recognize income, gain or loss for Federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to Federal income tax
on the same amounts, in the same manner and at the same times as
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would have been the case if such deposit, defeasance and discharge had not
occurred; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the defeasance contemplated by this
paragraph have been complied with.
(C) The Company shall be released from its obligations under Article
Eight and Article Ten (except with respect to maintenance of the Trust as a
grantor trust under Section 10.8) with respect to the Debentures Outstanding on
and after the date the conditions set forth below are satisfied (hereinafter,
'covenant defeasance'). Covenant defeasance means that, with respect to the
Outstanding Debentures, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in Article
Ten, whether directly or indirectly by reason of any reference elsewhere herein
to such Article by reason of any reference in such Article to any other
provision herein or by reason of any reference to such Article in any other
document, and such omission to comply shall not constitute an Event of Default
under Section 5.1. The following shall be the conditions to application of this
paragraph (C):
(a) the Company shall have irrevocably deposited or caused to be
irrevocably deposited with the Trustee as a trust fund specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the
Debentures, (i) money in an amount, or (ii) Government Obligations, maturing as
to principal and interest at such times and in such amounts as will insure the
availability of nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
(A) the principal and interest, if any, on all Debentures of such series on each
date that such principal or interest, if any, is due and payable and (B) any
mandatory sinking fund or analogous payments on the dates on which such payments
are due and payable in accordance with the terms of this Indenture and the
Debentures;
(b) no Event of Default or event which, with notice or lapse of time
or both, would become an Event of Default shall have occurred and be continuing
on the date of such deposit or at any time during the period ending on the 123rd
day after the date of such deposit (it being
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understood that this condition shall be deemed satisfied until the expiration of
such period);
(c) such covenant defeasance shall not result in a breach or
violation of, or constitute of a default under, this Indenture or any other
material agreement or instrument to which the Company is a party or by which it
is bound;
(d) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) if such deposits shall include Government
Obligations in respect of any government other than the United States of
America, such deposit shall not result in the Company, the Trustee or such trust
constituting an 'investment company' under the Investment Company Act of 1940,
as amended, and (ii) the Holders 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; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to such covenant defeasance have been
complied with.
SECTION 4.2. Application by Trustee of Funds Deposited for Payment
of Debentures. Subject to Section 4.4, all moneys and Government Obligations
deposited with the Trustee (or other trustee), and all money received by the
Trustee in respect of Government Obligations deposited with the Trustee,
pursuant to Section 4.1 shall be held in trust and applied by it to the payment,
either directly or through any paying agent (including the Company acting as its
own paying agent), to the Holders of all sums due and to become due thereon for
principal and interest, if any; but such money need not be segregated from other
funds except to the extent required by law.
SECTION 4.3. Repayment of 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 repaid to it or paid to the Trustee and thereupon such paying
agent shall be released from all further liability with respect to such moneys.
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SECTION 4.4. Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Three Years. Any moneys deposited with or paid to the Trustee or
any paying agent for the payment of principal or interest, and not applied but
remaining unclaimed for three years after the date upon which such principal or
interest shall have become due and payable, shall, upon the written request of
the Company and unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property law, be repaid to the Company by the
Trustee or such paying agent, and any Holder shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
laws, thereafter look only to the Company for any payment which such Holder may
be entitled to collect, and all liability of the Trustee or any paying agent
with respect to such moneys shall thereupon cease; provided, however, that the
Trustee or such paying agent, before being required to make any such repayment
with respect to moneys deposited with it for any payment shall at the expense of
the Company, mail by first-class mail to Holders Debentures at their addresses
as they shall appear on the Security Register for the Debentures of such series,
notice that such moneys remain and that, after a date specified therein, which
shall not be less than 30 days from the date of such mailing any unclaimed
balance of such moneys then remaining will be repaid to the Company.
SECTION 4.5. Indemnity for Government Obligations. The Company shall
pay and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the Government Obligations deposited pursuant to Section 4.1 or
the principal or interest received in respect of such Government Obligations,
other than any such tax, fee or other charge which by law is for the account of
the Holders for whose benefit such Government Obligations are held.
ARTICLE 5
REMEDIES
SECTION 5.1. Events of Default. "Event of Default", wherever used herein
with respect to the Debentures, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
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(a) default in the payment of any interest upon the Debenture,
including any Additional Interest in respect thereof, when it becomes due
and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension
Period); or
(b) default in the payment of the principal of (or premium, if any,
on) the Debentures when due whether at Stated Maturity, upon redemption by
declaration or otherwise; or
(c) failure on the part of the Company duly to observe or perform in
any material respect any other of the covenants or agreements on the part
of the Company contained in the Debentures or contained in this Indenture
(other than a covenant or agreement which has been expressly included in
this Indenture solely for the benefit of the Company) and continuance for
such failure for a period of 90 days after the date on which written
notice of such failure, requiring the same to be remedied and stating that
such notice is a "Notice of Default" hereunder, shall have been given to
the Company by the Trustee, by registered or certified mail, or to the
Company and the Trustee by a Holder or Holders of at least 25% in
aggregate principal amount of the Debentures at the time Outstanding or
the holder or holders of at least 25% in aggregate liquidation preference
of the Preferred Securities;
(d) failure by the Company to issue the Common Stock upon an
appropriate election by the Holder or Holders of the Debentures to convert
the Debentures into shares of Common Stock;
(e) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjudication or composition of or in respect of the Company under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or of any
substantial part of its property or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days; or
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(f) the institution by the Company of proceedings to be adjudicated
as bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law, or the consent by it to the filing of any such petition
or to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or of any
substantial part of its property or the making by it of an assignment for
the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due and its
willingness to be adjudicated as bankrupt, or the taking of corporate
action by the Company in furtherance of any such action.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debentures may declare the principal amount of all the Debentures to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), provided that, if upon an Event of Default,
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debentures fail to declare the principal of all the Debentures to be
immediately due and payable, the holders of at least 25% in aggregate
liquidation amount of the Preferred Securities then outstanding shall have such
right by a notice in writing to the Company and the Trustee, and upon any such
declaration such principal amount (or specified amount) of and the accrued
interest (including any Additional Interest) on all the Debentures shall become
immediately due and payable, provided that the payment of principal and
interest (including any Additional Interest) on the Debentures shall remain
subordinated to the extent provided in Article 12.
At any time after such a declaration of acceleration with respect to
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in principal amount of the Outstanding
Debentures, by written notice to the Company and the Trustee may rescind and
annul such declaration and its consequences if:
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(i) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue installments of interest (including any
Additional Interest) on the Debentures;
(B) the principal of (and premium, if any, on) the Debentures
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the
Debentures;
(C) to the extent that payment of such interest is lawful,
interest (including any Additional Interest) upon overdue
installments of interest at the rate borne by the Debentures;
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(ii) all Events of Default with respect to Debentures, other than the
non-payment of the principal of the Debentures which has become due solely
by such acceleration, have been cured or waived as provided in Section
5.13. If the holders of a majority in principal amount of the Outstanding
Debentures fail to rescind and annul such declaration and its
consequences, the holders of a majority in liquidation amount of the
Preferred Securities then outstanding shall have such right.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(a) default is made in the payment of any installment of interest
(including any Additional Interest) on the Debentures when such interest becomes
due and payable and such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of (and premium, if
any, on) the Debentures whether at the Stated Maturity thereof upon redemption
by declaration or otherwise, the Company will, upon demand of the Trustee, pay
to it, for the benefit of the Holders of the Debentures, the whole amount then
due and payable on the Debentures for
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principal (and premium, if any) and interest (including any Additional
Interest), including, to the extent that payment of such interest shall be
lawful, interest on any overdue principal (and premium, if any) and on any
overdue installments of interest (including any Additional Interest) at the
rate borne by the Debentures, and, in addition thereto, all amounts owing the
Trustee under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgement or final decree, and may enforce the same
against the Company or any other obligor upon the Debentures and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Debentures, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of the Debentures by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Debentures or the property of the
Company or of such other obligor or their creditors:
(a) the Trustee (irrespective of whether the principal of the Debentures
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal (and premium, if any) or
interest (including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (including any Additional Interest) owing
and unpaid in respect to the Debentures and to file such other papers
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or documents as may be necessary or advisable and to take any and all
actions as are authorized under the Trust Indenture Act in order to have
the claims of the Holders and any predecessor to the Trustee under Section
6.7 allowed in any such judicial proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such
claims and to distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator, sequestrator
(or other similar official) in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee for distribution in
accordance with Section 5.6, and in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it and any predecessor Trustee under Section 6.7;
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrange ment, adjustment or composition affecting the Debentures
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5. Trustee May Enforce Claim Without Possession of Debentures.
All rights of action and claims under this Indenture or the Debentures may be
prosecuted and enforced by the Trustee without the possession of any of the
Debentures or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgement shall, after
provision for the payment of all the amounts owing the Trustee and any
predecessor Trustee under Section 6.7, its agents and counsel, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgement has been recovered.
SECTION 5.6. Application of Money Collected. Any money or property
collected or to be applied by the Trustee with respect to the Debentures
pursuant to this Article
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shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money or property on account of
principal (or premium, if any) or interest (including any Additional Interest),
upon presentation of the Debentures and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7;
SECOND: To the payment of the amounts then due and unpaid upon the
Debentures for principal (and premium, if any) and interest (including any
Additional Interest), in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Debentures for principal (and
premium, if any) and interest (including any Additional Interest), respectively;
THIRD: The balance, if any, to the Person or Persons
entitled thereto; and
FOURTH: To the Company.
SECTION 5.7. Limitation on Suits. No Holder of the Debentures, including a
holder of Preferred Securities acting to enforce the rights of the Property
Trustee as a Holder of the Debentures pursuant to Section 6.8 of the Trust
Agreement, shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture or for the appointment of a receiver,
assignee, trustee, liquidator, sequestrator (or other similar official) or for
any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(b) if the Trust is not the sole holder of the Outstanding
Debentures, the Holders of not less than 25% in principal amount of the
Outstanding Debentures shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
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(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60- day period by the Holders of a
majority in principal amount of the Outstanding Debentures;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of the Debentures, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest. Notwithstanding any other provision in this Indenture, the Holder
of any Debenture shall have the right which is absolute and unconditional to
receive payment of the principal of (and premium, if any) and (subject to
Section 3.7) interest (including any Additional Interest) on such Debenture on
the Maturity or to convert such Debenture in accordance with Article 13 and to
institute suit for the enforcement of any such payment and right to convert, and
such right shall not be impaired without the consent of such Holder. For so long
as any Preferred Securities remain Outstanding, to the fullest extent permitted
by law and subject to the terms of this Indenture and the Trust Agreement, upon
an Event of Default specified in Sections 5.1(a) or 5.1(b), any holder of
Preferred Securities shall have the right to institute a proceeding directly
against the Company, for enforcement of payment to such holder of the principal
amount of or interest on Debentures having a principal amount equal to the
liquidation preference of the Preferred Securities of such holder (a "Direct
Action"). Notwithstanding any payment made to such holder of Preferred
Securities by the Company in connection with a Direct Action, the Company shall
remain obligated to pay the principal of or interest on the Debentures held by
the Trust or the Property Trustee.
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In connection with any such Direct Action, the rights of the Company will be
subrogated to the rights of any holder of the Preferred Securities to the extent
of any payment made by the Company to such holder of Preferred Securities as a
result of such Direct Action. Except as set forth in this Section, the holders
of Preferred Securities shall have no right to execute any right or remedy
available to the Holders of or in respect of, the Debentures.
SECTION 5.9. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every such case the Company, the Trustee and the Holder shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 5.10. Rights and Remedies Cumulative. Except as otherwise provided
in the last paragraph of Section 3.6, no right or remedy herein conferred upon
or reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 5.11. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder of the Deben tures to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy, or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or
to the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders. The Holders of a majority in principal
amount of the Outstanding Debentures shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
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Trustee or exercising any trust or power conferred on the Trustee, with respect
to the Debentures, provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that
the proceeding so directed would be unjustly prejudicial to the Holders
not joining in any such direction or would involve the Trustee in personal
liability.
Upon receipt by the Trustee of any written notice directing the time,
method or place of conducting any such proceeding or exercising any such trust
or power, with respect to the Debentures and, if all or part of the Debentures
is represented by a Global Security, a record date shall be established for
determining Holders of Outstanding Debentures entitled to join in such notice,
which record date shall be at the close of business on the day the Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such notice,
whether or not such Holders remain Holders after such record date, provided,
that, unless the Holders of a majority in principal amount of the Outstanding
Debentures shall have joined in such notice prior to the day which is 90 days
after such record date, such notice shall automatically and without further
action by any Holder be canceled and of no further effect. Nothing in this
paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after
expiration of such 90-day period, a new notice identical to a notice which has
been canceled pursuant to the proviso to the preceding sentence, in which event
a new record date shall be established pursuant to the provisions of this
Section 5.12.
SECTION 5.13. Waiver of Past Defaults. Subject to Section 9.2 hereof, the
Holders of not less than a majority in principal amount of the Outstanding
Debentures may on behalf of the Holders of all the Debentures waive any past
default hereunder with respect to Debentures and its consequences, except a
default:
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(a) in the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on the Debentures (unless
such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration
has been deposited with the Trustee), or
(b) in respect of a covenant or provision hereof which under Article
9 cannot be modified or amended without the consent of the Holder of each
Outstanding Debenture; provided, however, that if the Debentures are held
by the Trust or a trustee of the Trust, such waiver shall not be effective
until the holders of a majority in liquidation amount of Preferred
Securities shall have consented to such waiver; provided, further, that if
the consent of the Holder of each outstanding Debenture is required, such
waiver shall not be effective until each holder of the Trust Securities
shall have consented to such waiver.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon. If the Holders of a majority in
aggregate principal amount of the Outstanding Debentures fail to waive such
Event of Default, the holders of a majority in aggregate liquidation amount of
Preferred Securities shall have such right. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Debenture by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, 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 the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Debentures, or to any suit instituted by any
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Holder for the enforcement of the payment of the principal of (or premium, if
any) or interest (including any Additional Interest) on the Debentures on or
after the Maturity of the Debentures or to convert a Debenture in accordance
with Article 13.
SECTION 5.15. Waiver of Usury, Stay, or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 6
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities. (a)
Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) 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, but in the case of any such certificates or
opinions which by any provisions hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case 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
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use the same degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct except that
(i) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direc tion of Holders pursuant to Section 5.12
relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or
power con ferred upon the Trustee, under this Indenture.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or other wise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 6.2. Notice of Defaults. Within 90 days after actual knowledge by
a Responsible Officer of the Trustee of the occurrence of any default hereunder,
the Trustee shall transmit by mail to all Holders of Debentures, as their names
and addresses appear in the Securities Register, notice of such default
hereunder known to the Trustee, unless such default shall have been cured or
waived;
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provided, however, that, except in the case of a default in the payment of the
principal of (or premium, if any) or interest (including any Additional
Interest) on Debenture, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of Debentures; and provided, further, that, except in the case of any
default of the character specified in Section 5.1(c), no such notice to Holders
of the Debentures shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default.
SECTION 6.3. Certain Rights of Trustee. Subject to the provisions of
Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, Debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate and an Opinion
of Counsel;
(d) the Trustee may consult with counsel of its selection, and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(f) the Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its
duties if the Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
(g) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, indenture, Debenture or other paper or document, but the Trustee in
its discretion may make such inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make
such inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
and
(h) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on any part of any agent or attorney appointed with due care by
it hereunder.
SECTION 6.4. Not Responsible for Recitals or Issuance of Debentures. The
recitals contained herein and in the Debentures, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Debentures. The Trustee shall not be accountable for the use
or application by the Company of the Debentures or the proceeds thereof.
SECTION 6.5. May Hold Debentures. The Trustee, any Paying Agent,
Securities Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Debentures and, subject to
Sections 6.8 and 6.13, may otherwise deal with the Company with the
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same rights it would have if it were not Trustee, Paying Agent, Securities
Registrar or such other agent.
SECTION 6.6. Money Held in Trust. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability of interest on any money
received by it hereunder except as otherwise agreed with the Company.
SECTION 6.7. Compensation and Reimbursement. The Company agrees
(a) to pay to the Trustee from time to time such compensation for
all services rendered by it hereunder in such amounts as the Company and
the Trustee shall agree from time to time (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursements of its agents and
counsel); and
(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense (including the reasonable compensation and
the expenses and disbursements of its agents and counsel) incurred without
negligence or bad faith, arising out of or in connection with the
acceptance or administration of this trust or the performance of its
duties hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. This Indemnification
shall survive the termination of this Agreement.
To secure the Company's payment obligations in this Section, the Company
and the Holders agree that the Trustee shall have a lien prior to the Debentures
on all money or property held or collected by the Trustee except assets held in
trust to pay principal and premium, if any, or interest on particular Debentures
pursuant to the discharge and defeasance provisions pursuant to Article 4, or
pursuant to any redemption pursuant to Article 11 hereof if monies have been
deposited for such redemption and notice has been given
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and the Redemption Date has passed. Such lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Reform Act of 1978 or a successor statute.
SECTION 6.8. Disqualification; Conflicting Interests. The Trustee shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing
herein shall prevent the Trustee from filing with the Commission the application
referred to in the second to last paragraph of Section 310(b) of the Trustee
Indenture Act. The Trust Agreement and the Guarantee shall be deemed to be
specifically described in this Indenture for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 6.9. Corporate Trustee Required; Eligibility. There shall at all
times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws of the
United States of America or of any State, Territory or the District of
Columbia, authorized under such laws to exercise corporate trust powers
and subject to supervision or examination by Federal, State, Territorial
or District of Columbia authority, or
(b) a corporation or other Person organized and doing business under
the laws of a foreign government that is permitted to act as Trustee
pursuant to a rule, regulation or order of the Commission, authorized
under such laws to exercise corporate trust powers, and subject to
supervision or examination by authority of such foreign government or a
political subdivision thereof substantially equivalent to supervision or
examination applicable to United States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
to the purposes of this Section, the combined capital and surplus of such
corporation shall be
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deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article. Neither the Company nor any Person directly or indirectly controlling,
controlled by or under common control with the Company shall serve as Trustee
hereunder.
SECTION 6.10. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
a majority in principal amount of the Outstanding Debentures, delivered to
the Trustee and to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Debenture for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 6.9
and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged as bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer
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shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (A) the Company by Board Resolution may remove the
Trustee, or (B) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Debenture for at least six months may, on behalf of himself and all
other similarly situated Holders, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause
with respect to the Debentures, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after such
resignation, removal or incapabili ty, or the occurrence of such vacancy,
a successor Trustee with respect to the Debentures shall be appointed by
Act of the Holders of a majority in principal amount of the Outstanding
Debentures delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment, become the successor Trustee and supersede the successor
Trustee appointed by the Company. If no successor Trustee shall have been
appointed by the Company or the Holders and accepted appointment in the
manner hereinafter provided, any Holder who has been a bona fide Holder of
a Debenture for at least six months may, subject to Section 5.14, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by
mailing written notice of such event by first-class mail, postage prepaid,
to the Holders of the Debentures as their name and addresses appear in the
Securities Register. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor. (a) In case of the
appointment hereunder of a successor Trustee, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment,
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and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee, but, on the request of the Company or the Successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transfer ring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, power and trusts referred to in paragraph
(a) of this Section.
(c) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Debentures shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Debentures so authenticated, and in case any
Debentures shall not have been authenticated, any successor to the Trustee may
authenticate such Debentures either in the name of any predecessor Trustee or in
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Debentures or in this Indenture that the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against Company. If and
when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Debentures), the Trustee shall be subject to the provisions
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of the Trust Indenture Act regarding the collection of claims against the
Company (or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent. The Trustee may appoint
an Authenticating Agent or Agents with respect to the Debentures which shall be
authorized to act on behalf of the Trustee to authenticate the Debentures issued
upon exchange, registration of transfer or partial redemption thereof, and
Debentures so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Debentures by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, or of any State, Territory or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the
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Company. The Trustee may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a termination,
or in case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
shall give notice of such appointment in the manner provided in Section 1.6 to
all Holders of the Debentures. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provision of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 6.7.
If an appointment is made pursuant to this Section, the Debentures may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Debentures referred to in the within mentioned
indenture.
Dated:_________________ THE BANK OF NEW YORK
As Trustee
By: _______________________
As Authenticating Agent
By: _______________________
Authorized Officer
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ARTICLE 7
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Company to Furnish Names and Addresses of Holders. The
Company will furnish or cause to be furnished to the Trustee (unless the Trustee
is acting as the Securities Registrar).
(a) quarterly at least 5 Business Days before each Interest Payment
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of each such date.
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished.
SECTION 7.2. Preservation of Information; Communica tions to Holders. (a)
The Trustee shall preserve, in as current a form as is reasonably practicable,
the names and addresses of Holders contained in the most recent list furnished
to the Trustee as provided in Section 7.1 and the names and addresses of Holders
received by the Trustee in its capacity as Securities Registrar. The Trustee may
destroy any list furnished to it as provided in Section 7.1 upon receipt of a
new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Debentures, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Debentures, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee. (a) The Trustee shall transmit to Holders
such reports concerning the Trustee and its actions under this Indenture as may
be required pursuant to the Trust Indenture Act, at the times and in the manner
provided pursuant thereto.
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(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted no later than July 15 in each
calendar year, commencing with the first July 15 after the first issuance
of Debentures under this Indenture.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange
or self regulatory organization of which the Trustee has received notice
by the Company upon which the Debentures are listed and also with the
Commission. The Company will notify the Trustee whenever the Debentures
are listed on any stock exchange or self-regulatory organization.
SECTION 7.4. Reports by Company. The Company shall file with the Trustee
and with the Commission, and transmit to Holders, such information, documents
and other reports, and such summaries thereof, as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided in the Trust
Indenture Act, provided that any such information, documents or reports required
to be filed with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 shall be filed with the Trustee within 15 days
after the same is required to be filed with the Commission. Notwithstanding that
the Company may not be required to remain subject to the reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company shall
continue to file with the Commission and provide the Trustee and Holders with
the annual reports and the information, documents and other reports which are
specified in Sections 13 and 15(d) of the Securities Exchange Act of 1934. The
Company also shall comply with the other provisions of Trust Indenture Act
Section 314(a).
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms. The
Company shall not consolidate with or merge into any other corporation or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
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(a) in case the Company shall consolidate with or merge into another
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a corporation
organized and existing under the laws of the United States of America or
any State or the District of Columbia, and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest (including any Additional
Interest) on all the Debentures and the performance of every covenant of
this Indenture on the part of the Company to be performed or observed and
shall have provided for conversion rights in accordance with Article 13;
(b) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing;
(c) such consolidation, merger, conveyance, transfer or lease is
permitted under the Trust Agreement and Guarantee and does not give rise
to any breach or violation of the Trust Agreement or Guarantee; and
(d) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance, transfer or lease and any such
supplemental indenture complies with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with, and the Trustee, subject to Section 6.1, may rely upon such
Officers' Certificate and Opinion of Counsel as conclusive evidence that
such transaction complies with this Section 8.1.
SECTION 8.2. Successor Corporation Substituted. Upon any consolidation or
merger by the Company with or into any other corporation, or any conveyance,
transfer or lease by the Company of its properties and assets substantially as
an entirety to any Person in accordance with Section 8.1, the
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successor corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease 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 in the event of any such conveyance,
transfer or lease the Company shall be discharged from all obligations and
covenants under the Indenture and the Debentures and may be dissolved and
liquidated.
Such successor corporation may cause to be signed, and may issue either in
its own name or in the name of the Company, any or all of the Debentures
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee, and, upon the Company Order of such successor
corporation instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Debentures which previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication
pursuant to such provisions and any Debentures which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee on its behalf
for the purpose pursuant to such provisions. All the Debentures so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Debentures theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Debentures had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Debentures thereafter to be
issued as may be appropriate.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Holders. Without
the consent of or notice to any Holder, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satis factory to the
Trustee, for any of the following purposes:
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(a) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company
herein and in the Debentures contained; or
(b) to convey, transfer, assign, mortgage or pledge any property to
or with the Trustee or to surrender any right or power herein conferred
upon the Company; or
(c) to add to covenants of the Company for the benefit of the
Holders of the Debentures or to surrender any right or power herein
conferred upon the Company; or
(d) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article 13; or
(e) to add any additional Events of Default; or
(f) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this clause
shall not materially adversely affect the interest of the Holders of
Debentures and for so long as any of the Preferred Securities shall remain
outstanding, the holders of such Preferred Securities; or
(g) to evidence and provide for the acceptance of appointment
hereunder by successor Trustee and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the Trust hereunder by more than one
Trustee, pursuant to the requirements of Sec tion 6.11(b); or
(h) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(i) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if any,
to be placed on Debentures, and all other matters required pursuant to
Section 3.5 or otherwise necessary, desirable or appro-
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priate in connection with the issuance of Debentures to holders of
Preferred Securities in the event of a distribution of Debentures by the
Trust if a Special Event occurs and is continuing.
SECTION 9.2. Supplemental Indentures with Consent of Holders. With the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Debentures, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of the Debentures under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Debenture affected thereby,
(a) except to the extent permitted by Sec tion 3.11 with respect to
the extension of the interest payment period of the Debentures, change the
Stated Maturity of the principal of, or any installment of interest
(including any Additional Interest) on, the Debentures, or reduce the
principal amount thereof or the rate of interest thereon or reduce any
premium payable upon the redemption thereof, or change the place of
payment where, or the coin or currency in which, any Debenture or interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Maturity thereof (or, in
the case of redemption, on or after the date fixed for redemption
thereof), or
(b) adversely affect any right to convert or exchange any Debenture
or modify the provisions of this Indenture with respect to the
subordination of the Debentures in a manner adverse to such Holder; or
(c) reduce the percentage in principal amount of the Outstanding
Debentures, the consent of whose Holders is required for any such
supplemental inden ture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture; or
(d) modify any of the provisions of this Section, Article 4, Section
5.8, Section 5.13 or Section 10.6, except to increase any such percentage
or to provide
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that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Debenture affected
thereby, or the consent of the holders of all the Preferred Securities as
the case may be; or
provided that, so long as any Preferred Securities remain outstanding no
termination of this Indenture shall occur, and no waiver of any Event of Default
or compliance with any covenant under this Indenture shall be effective, without
the prior consent of the holders of at least a majority of the aggregate
liquidation preference of such Preferred Securities then outstanding unless and
until the principal (and premium, if any) of the Debentures and all accrued and
unpaid interest (including any Additional Interest) thereon have been paid in
full.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Execution of Supplemental Indentures. In executing or
accepting the additional trusts created by any supplemental indenture permitted
by this Article or the modifications thereby of the trust created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
6.1) shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture, and that all conditions precedent
have been complied with. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes, and every Holder of the Debentures theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
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SECTION 9.6. Reference in Debentures to Supplemental Indentures.
Debentures authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Debentures
so modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Debentures presented to the Trustee.
ARTICLE 10
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest. The Company
covenants and agrees for the benefit of the Debentures that it will duly and
punctually pay the principal of (and premium, if any) and interest (including
Additional Interest and Liquidated Damages) on the Debentures in accordance with
the terms of the Debentures and this Indenture.
SECTION 10.2. Maintenance of Office or Agency. The Company will maintain
in the United States, an office or agency where Debentures may be presented or
surrendered for payment and an office or agency where Debentures may be
surrendered for transfer or exchange and where notices and demands to or upon
the Company in respect of the Debentures and this Indenture may be served. The
Company initially appoints the Trustee, acting through its Corporate Trust
Office, as its agent for said purposes. The Company will give prompt written
notice to the Trustee of any change in the location of any such office or
agency. If at any time the Company shall fail to maintain such office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other offices
or agencies where the Debentures may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations; provided,
however, that no such designation or rescission
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shall in any manner relieve the Company of its obligation to maintain an office
or agency in the United States for such purposes. The Company will give prompt
written notice to the Trustee of any such designation and any change in the
location of any such office or agency.
SECTION 10.3. Money for Debenture Payments to Be Held in Trust. If the
Company shall at any time act as its own Paying Agent with respect to the
Debentures, it will, on or before each due date of the principal of (and
premium, if any) or interest on any of the Debentures, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided, and
will promptly notify the Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, on or
before each due date of the principal of or interest on the Debentures, deposit
with a Paying Agent a sum sufficient to pay the principal (and premium, if any)
or interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal and premium (if any) or interest, and (unless
such Paying Agent is the Trustee) the Company will promptly notify the Trustee
of its failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(a) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest on Debentures in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Debentures) in the making of any payment of
principal (and premium, if any) or interest;
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
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(d) comply with the provisions of the Trust Indenture Act applicable
to it as a Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent, and, upon such payment by the Company or any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Debenture and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Company Request, after all
payments owing the Trustee have been paid, to the Company, or (if then held by
the Company) shall (unless otherwise required by mandatory provision of
applicable escheat or abandoned or unclaimed property law) be discharged from
such trust; and the Holder of such Debenture shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease.
SECTION 10.4. Payment of Taxes and Other Claims. The Company will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or im
posed upon the Company or any Subsidiary or upon the income, profits or property
of the Company or any Subsidiary, and (b) all lawful claims for labor, materials
and supplies which, if unpaid, might by law become a lien upon the property of
the Company or any Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 10.5. Statement as to Compliance. The Company shall deliver to the
Trustee, within 120 days after the end of each calendar year of the Company
ending after the date
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hereof an Officers' Certificate (signed by at least one of the officers referred
to in Section 314(a)(4) of the Trust Indenture Act) covering the preceding
calendar year, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance, observance or fulfillment
of or compliance with any of the terms, provisions, covenants and conditions of
this Indenture, and if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge. For
the purpose of this Section 10.5, compliance shall be determined without regard
to any grace period or requirement of notice provided pursuant to the terms of
this Indenture.
SECTION 10.6. Waiver of Certain Covenants. The Company may omit in any
particular instance to comply with any covenant or condition set forth in this
Article 10, if before or after the time for such compliance the Holders of at
least a majority in principal amount of the Outstanding Debentures, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company in
respect of any such covenant or condition shall remain in full force and effect.
SECTION 10.7. Additional Sums. In the event that (a) the Property Trustee
is the Holder of all of the Outstanding Debentures, (b) a Tax Event in respect
of the Trust shall have occurred and be continuing and (c) the Company shall not
have (i) redeemed the Debentures pursuant to Section 11.7 or 11.8 or (ii)
terminated the Trust pursu ant to Section 9.2(b) of the Trust Agreement, the
Company shall pay to the Trust (and its permitted successors or assigns under
the Trust Agreement) for so long as the Trust (or its permitted successor or
assignee) is the registered holder of the Debentures, such additional amounts as
may be necessary in order that the amount of distributions (including any
Additional Amounts (as defined in the Trust Agreement)) then due and payable by
the Trust on the Preferred Securities and Common Securities that at any time
remain outstanding in accord with the terms thereof shall not be reduced as a
result of any Additional Taxes (the "Additional Sums"). Whenever in this
Indenture or the Debentures there is a reference in any context to the payment
of principal of or interest on the Debentures, such mention shall be deemed to
include mention of the payments of the Additional Sums provided for in this
paragraph to the
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extent that, in such context, Additional Sums are, were or would be payable in
respect thereof pursuant to the provisions of this paragraph and express
mention of the payment of Additional Sums (if applicable) in any provisions
hereof shall not be construed as excluding Additional Sums in those provisions
hereof where such express mention is not made, provided, however, that the
extension of an interest payment period pursuant to Section 3.11 or the
Debentures shall not extend the payment of any Additional Sums that may be due
and payable during such interest payment period.
SECTION 10.8. Additional Covenants. The Company covenants and agrees with
each Holder of Debentures that so long as the Debentures are outstanding, if (i)
there shall have occurred any event of which the Company has actual knowledge
that (A) with the giving of notice or the lapse of time or both, would
constitute an Event of Default hereunder and (B) in respect of which the Company
shall not have taken reasonable steps to cure, (ii) the Company shall be in
default with respect to its payment of any obligations under the Guarantee or
(iii) the Company shall have given notice of its selection of an Extension
Period as provided herein and shall not have rescinded such notice, or such
period, or any extension thereof, shall be continuing, then the Company shall
not, and shall cause any Subsidiary not to, (x) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any shares of the Company's capital stock or (y) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees of indebtedness for money
borrowed) of the Com pany that rank pari passu with or junior to the Debentures
(other than (1) any dividend, redemption, liquidation, interest, principal or
guarantee payment by the Company where the payment is made by way of securities
(including capital stock) that rank pari passu with or junior to the securities
on which such dividend, redemption, interest, principal or guarantee payment is
being made, (2) redemp tions or purchases of any rights pursuant to the
Company's Shareholders Rights Plan, or any successor to such Shareholders Rights
Plan, and the declaration of a dividend of such rights or the issuance of
preferred stock under such plans in the future, (3) payments under the
Guarantee, (4) purchases of Common Stock related to the issuance of Common Stock
under any of the Company's benefit plans for its directors, officers or
employees, (5) as a result of a reclassification of the Company's capital stock
or the exchange or conversion of one series or class of the Company's capital
stock for another series or class of the Company's capital stock and (6) the
purchase of fractional
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interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged).
The Company also covenants with each Holder of the Debentures (i) that for
so long as Preferred Securities are outstanding not to convert the Debentures
except pursuant to a notice of conversion delivered to the Conversion Agent by a
holder of Preferred Securities and (ii) to maintain directly or indirectly 100%
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of the Company hereunder may succeed to the Company's
ownership of such Common Securities, (iii) not to voluntarily terminate, wind-up
or liquidate the Trust, except (a) in connection with a distribution of the
Debentures to the holders of Preferred Securities in liquidation of the Trust
or (b) in connection with certain mergers, consolidations or amalgamations
permitted by the Trust Agreement and (iv) to use its reasonable efforts,
consistent with the terms and provisions of the Trust Agreement to cause the
Trust to remain a grantor trust and not to be classified as an association
taxable as a corporation for United States Federal income tax purposes.
SECTION 10.9. Registration Rights. The holders of the Preferred
Securities, the Holders, the holders of the Guarantee and the shares of Common
Stock of the Company issuable upon conversion of the Preferred Securities are
entitled to the benefits of a Registration Rights Agreement, dated as of October
20, 1997, among the Company and the Purchasers (the "Registration Rights
Agreement").
SECTION 10.10. Payment of Expenses of the Trust. In connection with the
offering, sale and issuance of the Debentures to the Property Trustee and in
connection with the sale of the Preferred Securities by the Trust, the Company
shall:
(a) pay for all costs, fees and expenses relating to the offering,
sale and issuance of the Preferred Securities (as defined in the Purchase
Agreement), including commissions, discounts and expenses payable pursuant to
the Purchase Agreement and compensation of the Trustee under the Indenture in
accordance with the provisions of Section 6.7 of the Indenture;
(b) be responsible for and pay for all debts and obligations (other
than with respect to the Preferred Securities) of the Trust, pay for all costs
and expenses of the Trust (including, but not limited to, costs and expenses
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relating to the organization of the Trust, the offering, sale and issuance of
the Preferred Securities (including commissions, discounts and expenses in
connection there with), the fees and expenses of the Property Trustee and the
Delaware Trustee, the costs and expenses relating to the operation of the Trust,
including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets); and
(c) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
ARTICLE 11
REDEMPTION OR EXCHANGE OF DEBENTURES
SECTION 11.1. Election to Redeem; Notice to Trustee. The election of the
Company to redeem any Debentures shall be evidenced by or pursuant to a Board
Resolution. In case of any redemption at the election of the Company, the
Company shall, not less than 45 days prior to the date fixed for redemption
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee in writing of such date and of the principal amount of Debentures to be
redeemed.
SECTION 11.2. Selection of Debentures to Be Redeemed. If less than all the
Debentures are to be redeemed, the particular Debentures to be redeemed shall be
selected not more than 45 days prior to the Redemption Date by the Trustee from
the Outstanding Debentures not previously called for redemption, by lot or by
such other method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of a portion of the principal amount of
the Debentures Outstanding, provided that the unredeemed portion of the
principal amount of the Debentures be in an authorized denomination (which shall
not be less than the minimum authorized denomination) for the Debentures.
The Trustee shall promptly notify the Company in writing of the Debentures
selected for partial redemption
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and the principal amount thereof to be redeemed. For all purposes of this
Indenture, unless the context otherwise requires, all provisions relating to the
redemption of Debentures shall relate, in the case of any Debenture redeemed or
to be redeemed only in part, to the portion of the principal amount of such
Debenture which has been or is to be redeemed. If the Company shall so direct,
Debentures registered in the name of the Company, any Affiliate or any
Subsidiary thereof shall not be included in the Debentures selected for
redemption.
SECTION 11.3. Notice of Redemption. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not later than the thirtieth day, and
not earlier than the sixtieth day, prior to the date fixed for redemption, to
each Holder of Debentures to be redeemed, at the address of such Holder as it
appears in the Securities Register.
With respect to Debentures to be redeemed, each notice of redemption shall
state:
(a) the Redemption Date;
(b) the redemption price at which the Debentures are to be redeemed
(the "Redemption Price");
(c) if less than all Outstanding Debentures are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principal amounts) of the particular Debentures to be redeemed (including,
if relevant, the CUSIP or ISIN number);
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Debenture or portion thereof, and that upon
deposit with the Paying Agent interest thereon, if any, shall cease to
accrue on and after the Redemption Date;
(e) the place or places where the Debentures are to be surrendered
for payment of the redemption price at which the Debentures are to be
redeemed; and
(f) that a Holder of Debentures who desires to convert Debentures
called for redemption must satisfy the requirements for conversion
contained in the Debentures, the then existing conversion price or rate,
and the date and time when the option to convert shall expire.
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Notice of redemption of Debentures to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, a failure to give such notice by mail or any defect in the
notice to the Holder of any Debenture designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Debenture.
SECTION 11.4. Deposit of Redemption Price. Prior to 10:00 a.m., New York
City time, on the Redemption Date specified in the notice of redemption given as
provided in Section 11.3, the Company will deposit with the Trustee or with one
or more Paying Agents (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Article 4) an amount of money
sufficient to redeem on the Redemption Date all the Debentures so called for
redemption at the applicable Redemption Price.
If any Debenture called for redemption has been converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Debenture shall (subject to any right of the
Holder of such Debenture or any Predecessor Debenture to receive interest as
provided in the last paragraph of Section 3.7) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 11.5. Debentures Payable on Redemption Date. If notice of
redemption has been given as provided in Section 11.3, the Debentures so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, including any accrued interest (and any Additional
Interest) thereon, and from and after such date (unless the Company shall
default in the payment of the Redemption Price or any accrued interest on
(including any Additional Interest)) such Debentures shall cease to bear
interest. Upon surrender of any such Debenture for redemp tion in accordance
with said notice, such Debenture shall be paid by the Company at the Redemption
Price, including any accrued interest (and any Additional Interest) to the
Redemption Date, provided, however, that installments of interest on Debentures
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Debentures, or one of more Predecessor Debentures,
registered as such at the close of business on the relevant
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Regular Record Dates or Special Record Dates, as the case may be, according to
their terms and the provisions of Section 3.7.
If any Debenture called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Debenture.
SECTION 11.6. Debentures Redeemed in Part. In the event of any redemption
in part, the Company shall not be required to (i) issue, register the transfer
of or exchange any Debenture during a period beginning at 9:00 a.m. (New York
City time) 15 Business Days before any selection for redemption of Debentures
and ending at 5:00 p.m. (New York City time) on the earliest date in which the
relevant notice of redemption is deemed to have been given to all holders of
Debentures to be so redeemed and (ii) register the transfer of or exchange any
Debentures so selected for redemption, in whole or in part, except for the
unredeemed portion of any Debentures being redeemed in part.
Any Debenture which is to be redeemed only in part shall be surrendered at
the place of payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Debenture without service charge, a new Debenture or Debentures, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debenture so surrendered. Each Debenture shall be subject to partial
redemption only in the amount of $50 or integral multiples thereof.
The Debentures are not entitled to the benefit of any sinking or like
fund.
SECTION 11.7. Mandatory Redemption. Upon (i) repay ment at maturity or
(ii) as a result of acceleration upon the occurrence of an Event of Default, the
Company shall redeem all the Outstanding Debentures at a redemption price equal
to 100% of the principal amount of such Debentures plus any accrued and unpaid
interest, including any Additional Interest, to the date fixed for redemption.
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SECTION 11.8. Optional Redemption. Except as set forth below, on and after
October 15, 2000 and subject to the next succeeding sentence, the Company shall
have the right, at any time and from time to time, to redeem the Debentures, in
whole or in part, upon notice given as set forth in Section 11.3 during the
twelve-month periods beginning on October 15 in each of the following years at
the indicated Redemption Price (expressed as a percentage of the principal
amount of the Debentures being redeemed), together with any accrued but unpaid
interest on the portion being redeemed:
Redemption Price Redemption Price
Year (% of principal amount) Year (% of principal amount)
- ---- ----------------------- ---- -----------------------
2000......... 104.2% 2004............. 101.8%
2001......... 103.6% 2005............. 101.2%
2002......... 103.0% 2006............. 100.6%
2003......... 102.4% 2007 and thereafter 100.0%
The Company may not redeem the Debentures in whole or in part unless all
accrued and unpaid interest has been paid in full on all outstanding Debentures
for all quarterly interest periods terminating on or prior to the Redemption
Date.
Upon the occurrence of a Tax Event, the Company shall have the right, upon
not less than 30 nor more than 60 days' notice, to redeem the Debentures in
whole or in part, for cash upon the later of (i) 90 days following the
occurrence of such Tax Event or (ii) October 15, 2000, at a Redemption Price
equal to the principal amount of such Debentures plus any accrued and unpaid
interest, including Additional Interest, to the date fixed for such redemption.
SECTION 11.9. Exchange of Trust Securities for Debentures. (a) At any
time, the Company shall have the right to terminate the Trust and cause the
Debentures to be distributed to the holders of the Preferred Securities in
liquidation of the Trust after satisfaction of liabilities to creditors of the
Trust as provided by applicable law.
(b) If a Special Event in respect of the Trust shall occur, the
Company shall give the Property Trustee notice of the same. If a Special Event
in respect of the Trust shall occur and be continuing, the Trust Agreement
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requires the Property Trustee to direct the Conversion Agent (as defined in the
Trust Agreement) to exchange all outstanding Trust Securities for the Debentures
having a principal amount equal to the aggregate liquidation amount of the Trust
Securities to be exchanged with accrued interest in an amount equal to any
unpaid distributions (including any Additional Amounts) on the Trust Securities
provided that, in the case of a Tax Event, the Company shall have the right to
direct the Property Trustee that less than all, or none of the Trust Securities
be so exchanged (i) if and for so long as the Company shall have elected to pay
any Additional Sums such that the net amounts received by holders of the Trust
Securities not so exchanged in respect of distributions are not reduced as a
result of such Tax Event, and shall not have revoked any such election or failed
to make such payments or (ii) if the Company shall instead elect to redeem the
Debentures, in whole or in part, in the manner set forth in Section 11.8.
ARTICLE 12
SUBORDINATION OF DEBENTURES
SECTION 12.1. Debentures Subordinate to Secured Indebtedness. The Company
covenants and agrees, and each Holder of a Debenture, by its acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Article, the payment of the principal of (and premium, if any)
and interest (including any Additional Interest) on each and all of the
Debentures are hereby expressly made subordinate and subject in right of payment
to the prior payment in full in cash of all amounts then due and payable in
respect of all Secured Indebtedness (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Secured Indebtedness and that no payment on
account of principal of, premium, if any, or interest on the Debentures and no
acquisition of, or payment on account of any sinking fund for, the Debentures
may be made unless full payment of all amounts then due for principal, premium,
if any, and interest then due on all Secured Indebtedness by reason of the
maturity thereof (by lapse of time, acceleration or otherwise) has been made or
duly provided for in cash or in a manner satisfactory to the holders of such
Secured Indebtedness.
SECTION 12.2. Payment Over of Proceeds Upon Dissolution, Etc. Upon any
distribution of the Company's assets in
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connection with any dissolution, winding up, liquidation or reorganization of
the Company, whether voluntary or involuntary, in bankruptcy, insolvency or
receivership proceedings (each such event, if any, herein sometimes referred to
as a "Proceeding"), or upon an assignment for the benefit of creditors or
otherwise: (i) all Secured Indebtedness (including without limitation all
interest accruing on or after the filing of any petition in bankruptcy relating
to the Company at the relevant contractual rate, whether or not such claim for
post-petition interest is allowed in such proceeding) must be paid in full in
cash before the Holders of the Debentures are entitled to any payments or
distributions of any kind or character (including any payment or distribution
which may be payable or deliverable by reason of the payment of any other Debt
of the Company (including the Debentures) subordinated to the payment of the
Debentures), and (ii) any payment or distribution of the Company's assets of any
kind or character, whether in cash, securities or other property, which would
otherwise (but for these subordination provisions) be payable or deliverable in
respect of the Debentures shall be paid or delivered directly to the holders of
such Secured Indebtedness (or their representative or trustee) in accordance
with the priorities then existing among such holders until all Secured
Indebtedness shall have been paid in full in cash before any payment or
distribution is made to the Holders of the Debentures.
In the event that notwithstanding the subordination provisions set
forth herein, any payment or distribution of assets of any kind or character is
made on the Debentures at a time when the respective payment is not permitted to
be made as a result of the subordination provisions described above and before
all Secured Indebtedness is paid in full in cash, the Trustee or the holders of
the Debentures receiving such payment will be required to pay over such payment
or distribution to the holders of such Secured Indebtedness.
For the purposes of this Article only, the words "any payment or
distribution of any kind or character" shall not be deemed to include shares of
stock of the Company as reorganized or readjusted, or securities of the Company
or any other corporation provided for by a plan of reorganization or
readjustment which securities are subordinated in right of payment to all then
outstanding Secured Indebtedness to substantially the same extent as the
Debentures are so subordinated as provided in this Article. The consolidation of
the Company with, or the merger of the
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Company into, another Person or the liquidation or dissolution of the Company
following the sale of all or substantially all of its properties and assets as
an entirety to another Person upon the terms and conditions set forth in Article
8 shall not be deemed a Proceeding for the purposes of this Section if the
Person formed by such consolidation or into which the Company is merged or the
Person which acquires by sale such properties and assets as an entirety, as the
case may be, shall, as a part of such consolidation, merger, or sale comply with
the conditions set forth in Article Eight.
SECTION 12.3. Payment Blockage Upon Acceleration of Designated Senior
Indebtedness, Etc. During the continuance of any event of default with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated, upon the occurrence of (a) receipt by the Trustee of written
notice from the holders of a majority of the outstanding principal amount of the
Designated Senior Indebtedness or their representative, or (b) if such event of
default results from the acceleration of the Debentures, the date of such
acceleration, no such payment may be made by the Company upon or in respect of
the Debentures for a period ("Payment Blockage Period") commencing on the
earlier of the date of receipt of such notice or the date of such acceleration
and ending 179 days thereafter (unless such Payment Blockage Period shall be
terminated by written notice to the Trustee from the holders of a majority of
the outstanding principal amount of such Designated Senior Indebtedness or their
representative who delivered such notice); provided, however, that
notwithstanding anything herein to the contrary, in no event will a Payment
Blockage Period extend beyond 179 days from the date on which such Payment
Blockage Period was commenced; provided further, that not more than one Payment
Blockage Period may be commenced with respect to the Debentures during any
period of 360 consecutive days. For all purposes of this Section, no event of
default which existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period shall be, or be made, the basis for the
commencement of a second payment Blockage Period by the holders of such
Designated Senior Indebtedness or their representative whether or not within a
period of 360 consecutive days unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or any Holder
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of the Debentures prohibited by the foregoing provisions of this Section, and if
such fact shall, at or prior to the time of such payment, have been made known,
as set forth in Section 12.10, to the Trustee or, as the case may be, such
Holder, then and in such event such payment shall be paid over and delivered
forthwith to the Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 12.2 would be applicable.
SECTION 12.4. No Payment When Secured Indebtedness in Default. In the
event and during the continuation of any default in the payment of principal of
(or premium, if any) or interest on, or any other amounts owing with respect to,
any Secured Indebtedness when the same becomes due and payable or in the event
any judicial proceeding shall be pending with respect to any such default, then,
unless and until such default shall have been cured or waived or shall have
ceased to exist, no payment or distribution of any kind or character, whether in
cash, properties or Debentures shall be made by the Company on account of
principal of (or premium, if any) or interest (including any Additional
Interest), if any, on the Debentures or on account of the purchase or other
acquisition of Debentures by the Company or any Subsidiary.
The Company shall give prompt written notice to the Trustee of any
default in payment of principal of or interest on any Secured Indebtedness;
provided that no failure to give such a notice shall have any effect whatsoever
on the subordination provisions described herein.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of the Debentures prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known as set forth in Section 12.10, to the
Trustee or, as the case may be, such Holder, then and in such event such payment
shall be paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 12.2 would be applicable.
SECTION 12.5. Payment Permitted If No Default. Nothing contained in this
Article or elsewhere in this Indenture or in any of the Debentures shall prevent
(a) the Company, at any time except during the pendency of any
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Proceeding referred to in Section 12.2 or under the conditions described in
Sections 12.3 and 12.4, from making payments at any time of principal of (and
premium, if any) or interest on the Debentures, or (b) except with respect to
the payment over provisions of this Article 12, the application by the Trustee
of any money deposited with it hereunder to the payment of or on account of the
principal of (and premium, if any) or interest (including any Additional
Interest) on the Debentures or the retention of such payment by the Holders, if,
at the time of such application by the Trustee, the Trustee did not have actual
knowledge that such payment would have been prohibited by the provisions of this
Article.
SECTION 12.6. Subrogation to Rights of Holders of Secured Indebtedness.
Subject to the payment in full in cash of all Secured Indebtedness, or the
provision for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Secured Indebtedness, the Holders of the
Debentures shall be subrogated to the extent of the payments or distributions
made to the holders of such Secured Indebtedness pursuant to the provisions of
this Article (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to Secured Indebtedness of
the Company to substantially the same extent as the Debentures are subordinated
to the Secured Indebtedness and is entitled to like rights of subrogation by
reason of any payments or distributions made to holders of such Secured
Indebtedness) to the rights of the holders of such Secured Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Secured Indebtedness until the principal of (and premium, if any) and
interest on the Debentures shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Secured
Indebtedness of any cash, property or securities to which the Holders of the
Debentures or the Trustee would be entitled except for the provisions of this
Article, and no payments pursuant to the provisions of this Article to the
holders of Secured Indebtedness by Holders of the Debentures or the Trustee,
shall, as among the Company, its creditors other than holders of Secured
Indebtedness, and the Holders of the Debentures, be deemed to be a payment or
distribution by the Company to or on account of the Secured Indebtedness.
SECTION 12.7. Provisions Solely to Define Relative Rights. The provisions
of this Article are and are intended solely for the purpose of defining the
relative rights of the Holders of the Debentures on the one hand and the
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holders of Secured Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Debentures is intended to or
shall (a) impair, as between the Company and the Holders of the Debentures, the
obligations of the Company, which are absolute and unconditional, to pay to the
Holders of the Debentures the principal of (and premium, if any) and interest
(including any Additional Interest) on the Debentures 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 Debentures and
creditors of the Company other than their rights in relation to the holders of
Secured Indebtedness, or (c) prevent the Trustee or the Holder of any Debenture
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture including, without limitation, filing and voting claims in
any Proceeding, subject to the rights, if any, under this Article of the holders
of Secured Indebtedness to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION 12.8. Trustee to Effectuate Subordination. Each Holder of a
Debenture by his or her acceptance thereof authorizes and directs the Trustee on
his or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination provided in this Article and
appoints the Trustee his or her attorney-in-fact for any and all such purposes.
SECTION 12.9. No Waiver of Subordination Provisions. No right of any
present or future holder of any Secured Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof that any such holder may have or be otherwise charged with.
SECTION 12.10. Notice to Trustee. The Company shall give prompt written
notice to the Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the Debentures.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Debentures, unless and until the
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Trustee shall have received written notice thereof from the Company or a person
representing itself as a holder of Secured Indebtedness or from any trustee,
agent or representative therefor (whether or not the facts contained in such
notice are true).
SECTION 12.11. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Article 6, and the
Holders of the Debentures shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which a Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Debentures, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Secured
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.
SECTION 12.12. Trustee Not Fiduciary for Holders of Secured Indebtedness.
With respect to the holders of the Secured Indebtedness of the Company, the
Trustee undertakes to perform or observe only such of its obligations and
covenants as are set forth in this Article 12, and no implied covenants or
obligations with respect to the holders of such Secured Indebtedness shall be
read into this Indenture against The Bank of New York and/or the Trustee. The
Bank of New York and/or the Trustee shall not be deemed to owe any fiduciary
duty to the holders of such Secured Indebtedness and, subject to the provisions
of Section 6.3, neither the Trustee (nor The Bank of New York) shall be liable
to the holder of any Secured Indebtedness if it shall pay over or deliver to
Holders, the Company, or any other person, money or assets to which any holder
of such Secured Indebtedness shall be entitled to by virtue of this Article 12
or otherwise.
SECTION 12.13. Rights of Trustee as Holder of Secured Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article with respect to any
Secured Indebtedness which may at any time be held by it, to the same extent as
any other holder of Secured Indebtedness, and, subject to the requirements of
the Trust Indenture Act,
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nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
SECTION 12.14. Article Applicable to Paying Agents. In case at any time
any Paying Agent other than the Trustee shall have been appointed by the Company
and be then acting hereunder, the term "Trustee" as used in this Article shall
in such case (unless the context otherwise requires) be construed as extending
to and including such Paying Agent within its meaning as fully for all intent
and purposes as if such Paying Agent were named in this Article in addition to
or in place of the Trustee.
SECTION 12.15. Certain Conversions or Exchanges Deemed Payment. For the
purpose of this Article only, (a) the issuance and delivery of junior securities
upon conversion or exchange of Debentures shall not be deemed to constitute a
payment or distribution on account of the principal of (or premium, if any) or
interest (including any Additional Interest) on the Debentures or on account of
the purchase or other acquisition of Debentures, and (b) the payment, issuance
or delivery of cash (including any payments for fractional shares), property or
securities (other than junior securities) upon conversion or exchange of a
Debenture shall be deemed to constitute payment on account of the principal of
such Debenture. For the purpose of this Section, the term "junior securities"
means (i) shares of any stock of any class of the Company and (ii) securities of
the Company which are subordinated in right of payment to all Secured
Indebtedness which may be outstanding at the time of issuance or delivery of
such securities to substantially the same extent as, or to a greater extent
than, the Debentures are so subordinated as provided in this Article.
SECTION 12.16. Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary (provided that at the time deposited, such
deposit did not violate any then outstanding Secured Indebtedness), payments
from money or the proceeds of Government Obligations held in trust under Article
4 by the Trustee for the payment of principal of and interest on the Debentures
shall not be subordinated to the prior payment of any Secured Indebtedness or
subject to the restrictions set forth in this Article 12, and none of the
Holders shall be obligated to pay over any such amount to the Company or any
holder of Secured Indebtedness of the Company or any other creditor of the
Company.
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ARTICLE 13
CONVERSION OF DEBENTURES
SECTION 13.1. Conversion Rights. Subject to and upon compliance with the
provisions of this Article, the Deben tures are convertible, at the option of
the Holder, at any time prior to redemption or Maturity, into fully paid and
nonassessable shares of Common Stock of the Company at an initial conversion
rate of 1.7344 shares of Common Stock for each $50 in aggregate principal amount
of Debentures (equal to a conversion price of $28.828 per share of Common
Stock), subject to adjustment as described in this Article 13 (as adjusted the
"Conversion Price"). A Holder of Debentures may convert any portion of the
principal amount of the Debentures into that number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) obtained by dividing the principal amount of the
Debentures to be converted by the Conversion Price. In case a Debenture or
portion thereof is called for redemption, such conversion right in respect of
the Debenture or portion so called shall expire at the close of business on the
Business Day immediately preceding the corresponding Redemption Date, unless the
Company defaults in making the payment due upon redemption.
SECTION 13.2. Conversion Procedures. (a) In order to convert all or a
portion of the Debentures, the Holder thereof shall deliver to the Property
Trustee, as conversion agent or to such other agent appointed for such purposes
(the "Conversion Agent") an irrevocable Notice of Conversion setting forth the
principal amount of Debentures to be converted, together with the name or names,
if other than the Holder, in which the shares of Common Stock should be issued
upon conversion and, if such Debentures are definitive Debentures, surrender to
the Conversion Agent the Debentures to be converted, duly endorsed or assigned
to the Company or in blank. In addition, a holder of Preferred Securities may
exercise its right under the Trust Agreement to convert such Preferred
Securities into Common Stock by delivering to the Conversion Agent an
irrevocable Notice of Conversion setting forth the information called for by the
preceding sentence and directing the Conversion Agent (i) to exchange such
Preferred Security for a portion of the Debentures held by the Trust (at an
exchange rate of $50 principal amount of Debentures for each Preferred Security)
and (ii) to immediately convert such Debentures, on behalf of such holder, into
Common Stock of the Company pursuant to this Article 13 and, if such Preferred
Securities are in definitive form, surrendering such Preferred Securities,
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duly endorsed or assigned to the Company or in blank. So long as any Preferred
Securities are outstanding, the Trust shall not convert any Debentures except
pursuant to a Notice of Conversion delivered to the Conversion Agent by a holder
of Preferred Securities.
If a Notice of Conversion is delivered on or after the Regular Record Date
and prior to the subsequent Interest Payment Date, the Holder of record on the
Regular Record Date will be entitled to receive the interest paid on the
subsequent Interest Payment Date on the portion of Debentures to be converted
notwithstanding the conversion thereof prior to such Interest Payment Date.
Except as otherwise provided in the immediately preceding sentence, in the case
of any Debenture which is converted, interest whose Stated Maturity is on or
after the date of conversion of such Debenture shall not be payable, and the
Company shall not make nor be required to make any other payment, adjustment or
allowance with respect to accrued but unpaid interest on the Debentures being
converted, which shall be deemed to be paid in full. Each conversion shall be
deemed to have been effected immediately prior to the close of business on the
day on which the Notice of Conversion was received (the "Conversion Date") by
the Conversion Agent from the Holder or from a holder of the Preferred
Securities effecting a conversion thereof pursuant to its conversion rights
under the Trust Agreement, as the case may be. The Person or Persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Stock as of the
Conversion Date and such Person or Persons will cease to be a record Holder or
record Holders of the Debentures on that date. As promptly as practicable on or
after the Conversion Date, the Company shall issue and deliver at the office of
the Conversion Agent, unless otherwise directed by the Holder or holder in the
Notice of Conversion, a certificate or certificates for the number of full
shares of Common Stock issuable upon such conversion, together with the cash
payment, if any, in lieu of any fraction of any share to the Person or Persons
entitled to receive the same. The Conversion Agent shall deliver such
certificate or certificates to such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Debentures are convertible (together with
the cash payment, if any, in lieu of fractional shares) shall be deemed to
satisfy the Company's obligation to pay the principal amount at Maturity of the
portion of Debentures so converted and any unpaid interest (including Additional
Interest and
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Liquidated Damages) accrued on such Debentures at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a result
of conversion, but in lieu thereof, the Company shall pay to the Conversion
Agent a cash adjustment in an amount equal to the same fraction of the Current
Market Price with respect to such fractional interest on the date on which the
Debentures or Preferred Securities, as the case may be, were duly surrendered to
the Conversion Agent for conversion, and the Conversion Agent in turn will make
such payment, if any, to the Holder of the Debentures or the holder of the
Preferred Securities so converted.
(d) In the event of the conversion of any Debenture in part only, a
new Debenture or Debentures for the unconverted portion thereof will be issued
in the name of the Holder thereof upon the cancellation of the Debenture
converted in part in accordance with Section 3.5.
(e) In effecting the conversion transactions described in this
Section, the Conversion Agent is acting as agent of the holders of Preferred
Securities (in the exchange of Preferred Securities for Debentures) and as agent
of the Holders of Debentures (in the conversion of Debentures into Common
Stock), as the case may be, directing it to effect such conversion transactions.
The Conversion Agent is hereby authorized (i) to exchange Debentures held by the
Trust from time to time for Preferred Securities in connection with the
conversion of such Preferred Securities in accordance with this Article 13 and
(ii) to convert all or a portion of the Debentures into Common Stock and
thereupon to deliver such shares of Common Stock in accordance with the
provisions of this Article 13 and to deliver to the Trust a new Debenture or
Debentures for any resulting unconverted principal amount.
(f) All shares of Common Stock delivered upon any conversion of
Restricted Securities shall bear a Restrictive Securities Legend substantially
in the form of the legend required to be set forth on such Debentures and shall
be subject to the restrictions on transfer provided in such legend and in
Section 3.5 hereof. Neither the Trustee nor the Conversion Agent shall have any
responsibility for the inclusion or content of any such Restrictive Securities
Legend on such Common Stock; provided, however, that the Trustee or the
Conversion Agent shall have provided to the Company or to the Company's transfer
agent for such Common Stock, prior to or concurrently with a request to the
Company to deliver to such Conversion Agent certificates for
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such Common Stock, written notice that the Debentures delivered for conversion
are Restricted Securities.
(g) The Company shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, such number of shares of Common Stock as shall
from time to time be issuable upon the conversion of all the Debentures then
outstanding. Notwithstanding the foregoing, the Company shall be entitled to
deliver upon conversion of Debentures shares of Common Stock reacquired and held
in the treasury of the Company (in lieu of the issuance of authorized and
unissued shares of Common Stock) so long as any such treasury shares are free
and clear of all liens, charges, security interests or encumbrances. Whenever
the Company issues shares of Common Stock upon conversion of Debentures and the
Company has in effect at such time a share purchase rights agreement under which
holders of Common Stock are issued rights ("Rights") entitling the holders under
certain circumstances to purchase an additional share or shares of stock, the
Company will issue, together with each such share of Common Stock, such number
of Rights (which number may be a fraction) as shall at that time be issuable
with a share of Common Stock pursuant to such share purchase rights agreement.
Any shares of Common Stock issued upon conversion of the Debentures shall be
duly authorized, validly issued and fully paid and nonassessable. The Conversion
Agent shall deliver the shares of Common Stock received upon conversion of the
Debentures to the converting Holder free and clear of all liens, charges,
security interests and encumbrances, except for United States withholding taxes.
The Company shall use its best efforts to obtain and keep in force such
governmental or regulatory permits or other authorizations as may be required by
law, and shall comply with all applicable requirements as to registration or
qualification of the Common Stock (and all requirements to list the Common Stock
issuable upon conversion of Debentures that are at the time applicable), in
order to enable the Company to lawfully issue Common Stock upon conversion of
the Debentures and to lawfully deliver the Common Stock to each Holder upon
conversion of the Debentures.
(h) The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Debentures. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which the Debentures so
converted were registered, and no
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such issue or delivery shall be made unless and until the Person requesting such
issue has paid to the Conversion Agent the amount of any such tax, or has
established to the satisfaction of the Conversion Agent that such tax has been
paid.
(i) Nothing in this Article 13 shall limit the requirement of the
Company to withhold taxes pursuant to the terms of the Debentures or as set
forth in this Agreement or otherwise require the Trustee or the Company to pay
any amounts on account of such withholdings.
SECTION 13.3. Conversion Price Adjustments. The conversion price shall be
subject to adjustment (without duplication) from time to time as follows:
(a) In case the Company shall, while any of the Debentures are
outstanding, (i) pay a dividend or make a distribution with respect to its
Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its shares of
Common Stock any shares of capital stock of the Company, the conversion
privilege and the Conversion Price in effect immediately prior to such action
shall be adjusted so that the Holder of any Debentures thereafter surrendered
for conversion shall be entitled to receive the number of shares of capital
stock of the Company which he would have owned immediately following such action
had such Debentures been converted immediately prior thereto. An adjustment made
pursuant to this subsection (a) shall become effective immediately after the
record date in the case of a dividend or other distribution and shall become
effective immediately after the effective date in case of a subdivision,
combination or reclassifica tion (or immediately after the record date if a
record date shall have been established for such event). If, as a result of an
adjustment made pursuant to this subsection (a), the Holder of any Debenture
thereafter surrendered for conversion shall become entitled to receive shares of
two or more classes or series of capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be described in a
Board Resolution filed with the Trustee) shall determine the allocation of the
adjusted Conversion Price between or among shares of such classes or series of
capital stock. In the event that such dividend, distribution, subdivision,
combination or issuance is not so paid or made, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if such
record date had not been fixed.
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(b) In case the Company shall, while any of the Debentures are
Outstanding, issue rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock at a price
per share less than the Current Market Price per share of Common Stock on the
record date mentioned below, the Conversion Price for the Debentures shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of issuance of such
rights or warrants by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered for subscription or purchase would purchase at
such Current Market Price, and the denominator of which shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such rights or warrants. For the purposes of this subsection, the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company. The Company shall not issue any rights or warrants
in respect of shares of Common Stock held in the treasury of the Company. In
case any rights or warrants referred to in this subsection in respect of which
an adjustment shall have been made shall expire unexercised within 45 days after
the same shall have been distributed or issued by the Company, the Conversion
Price shall be readjusted at the time of such expiration to the Conversion Price
that would have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(c) Subject to the last sentence of this subpara graph, in case the
Company shall, by dividend or otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness, shares of any class or series of capital
stock, cash or assets (including securities, but excluding any rights or
warrants referred to in subparagraph (b), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in subparagraph
(a) of this Section 13.4), the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this subparagraph (c) by a fraction, the numerator of
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which shall be the Current Market Price per share of the Common Stock on the
date fixed for the payment of such distribution (the "Reference Date") less the
fair market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock, and the denominator of which shall be such current
market price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the Reference
Date. In the event that such dividend or distribution is not so paid or made,
the Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such dividend or distribution had not occurred. For
purposes of this subparagraph (c), any dividend or distribution that includes
shares of Common Stock or rights or warrants to subscribe for or purchase shares
of Common Stock shall be deemed instead to be (i) a dividend or distribution of
the evidences of indebtedness, shares of capital stock, cash or assets other
than such shares of Common Stock or such rights or warrants (making any
Conversion Price reduction required by this subparagraph (c)) immediately
followed by (ii) a dividend or distribution of such shares of Common Stock or
such rights or warrants (making any further conversion price reduction required
by subparagraph (a) or (b)), except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph shall be substituted as (x) "the
record date in the case of a dividend or other distribution," and (y) "the
record date for the determination of stockholders entitled to receive such
rights or warrants" and (z) "the date fixed for such determination" within the
meaning of subparagraphs (a) and (b) and (B) any shares of Common Stock included
in such dividend or distribution shall not be deemed outstand ing for purposes
of computing any adjustment of the conversion price in subparagraph (a).
(d) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding all regular
cash dividends, if the annualized amount thereof per share of Common Stock does
not exceed 12.5% of the current market price per share of the Common Stock on
the trading day immediately preceding the date of declaration of such dividend),
the Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subparagraph (d) by a
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fraction, the numerator of which shall be the Current Market Price per share of
the Common Stock on the date fixed for the payment of such distribution less the
amount of cash so distributed (excluding that portion of such distribution that
does not exceed 12.5% of the Current Market Price per share, determined as
provided above) applicable to one share of Common Stock and the denominator of
which shall be such Current Market Price per share of the Common Stock, such
reduction to become effective immediately prior to the opening of business on
the day following the date fixed for the payment of such distribution; provided,
however, that in the event the portion of the cash so distributed applicable to
one share of Common Stock is equal to or greater than the Current Market Price
per share of the Common Stock on the record date mentioned above (excluding that
portion of such distribution that does not exceed 12.5% of the Current Market
Price per share, determined as provided above), in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder of shares of
Debentures shall have the right to receive upon conversion the amount of cash
such Holder would have received had such Holder converted each share of the
Debentures immediately prior to the record date for the distribution of the cash
(less that portion of such distribution that does not exceed 12.5% of the
Current Market Price per share, determined as provided above). In the event that
such dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the conversion price which would then be in effect if
such record date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot offer)
made by the Company or any Subsidiary of the Company for all or any portion of
the Common Stock shall expire and such tender or exchange offer shall involve
the payment by the Company or such Subsidiary of consideration per share of
Common Stock having a fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange offer (as
it shall have been amended) that exceeds 110% of the Current Market Price per
share of the Common Stock on the trading day next succeeding the Expiration
Time, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction contemplated by this
subparagraph (e) by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged
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shares) at the Expiration Time (including the Purchased Shares) (as defined
below) multiplied by the Current Market Price per share of the Common Stock on
the Trading Day next succeeding the Expiration Time and the denominator of which
shall be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration Time
(the shares deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") (excluding that portion of such consideration in excess of
the Current Market Price per share that does not exceed 110% of the Current
Market Price per share) and (y) the product of the number of shares of Common
Stock outstanding (less any Purchased Shares) at the Expiration Time and the
Current Market Price per share of the Common Stock on the trading day next
succeeding the Expiration Time, such reduction to become effective immediately
prior to the opening of business on the day following the Expiration Time. In
the event that such tender or exchange offer is not so made, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such record date had not been fixed.
(f) If the distribution date for the Rights of the Company provided
in the Shareholders Rights Plan, as presented constituted or under any similar
plan occurs prior to the Conversion Date, and a Holder of the Debentures who
converts such Debentures after such distribution date is not entitled to receive
the Rights that would otherwise be attached (but for the date of conversion) to
the shares of Common Stock received upon such conversion, then an adjustment
shall be made to the Conversion Price pursuant to clause (ii) of Section 13.4(a)
as if the Rights were being distributed to the common stockholders of the
Company immediately prior to such conversion. If such an adjustment is made and
the Rights are later redeemed, invalidated or terminated, then a corresponding
reversing adjustment shall be made to the Conversion Price, on an equitable
basis, to take account of such event.
(g) The Company shall have the right to reduce from time to time the
Conversion Price by any amount selected by the Company for any period of at
least 30 days, provided, that the Company shall give at least 15 days' notice of
such reduction to the Trustee and the Property Trustee. The Company may, at its
option, make such reductions in the Conversion Price, in addition to those set
forth above in Section 13.4(a), as the Board of Directors
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deems advisable to avoid or diminish any income tax to holders of Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. No adjustment
of the Conversion Price will be made upon the issuance of any shares of Common
Stock pursuant to any present or future plan providing for the reinvestment of
dividends or interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under any such plan, or
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any present or future employee benefit plan or program of the
Company or pursuant to any option, warrant, right, or exercisable, exchangeable
or convertible security which does not constitute an issuance to all holders of
Common Stock of rights or warrants entitling holders of such rights or warrants
to subscribe for or purchase Common Stock at less than the Current Market Price.
There shall also be no adjustment of the Conversion Price in case of the
issuance of any Common Stock (or securities convertible into or exchangeable for
Common Stock), except as specifically described above.
(h) If any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described above, only one adjustment
shall be made and such adjustment shall be the amount of adjustment that has the
highest absolute value to the Holder of the Debentures.
SECTION 13.4. Fundamental Change. (a) In the event that the Company is a
party to any transaction (including, without limitation, a merger other than a
merger that does not result in a reclassification, conversion, exchange or
cancellation of Common Stock), consolidation, sale of all or substantially all
of the assets of the Company, recapitalization or reclassification of Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision or combination
of Common Stock) or any compulsory share exchange (each of the foregoing being
referred to as a "Transaction"), in each case, as a result of which shares of
Common Stock shall be converted into the right to receive, or shall be exchanged
for, (i) in the case of any Transaction other than a Transaction involving a
Common Stock Fundamental Change (and subject to funds being legally available
for such purpose under applicable law at the time of such conversion),
securities, cash or other property, each Debenture shall thereafter be
convertible into the kind and, in the case of a Transaction which does not
involve a Fundamental Change, amount of securities, cash and other
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property receivable upon the consummation of such Transaction by a holder of
that number of shares of Common Stock into which a Debenture was convertible
immediately prior to such Transaction, or (ii) in the case of a Transaction
involving a Common Stock Fundamental Change, common stock, each Debenture shall
thereafter be convertible (in the manner described herein) into common stock of
the kind received by holders of Common Stock (but in each case after giving
effect to any adjustment discussed in paragraphs (b) and (c) relating to a
Fundamental Change if such Transaction constitutes a Fundamental Change). The
holders of Debentures or Preferred Securities will have no voting rights with
respect to any Transaction described in this section.
(b) If any Fundamental Change occurs, then the Conversion Price in
effect will be adjusted immediately after such Fundamental Change as described
in paragraph (c) below. In addition, in the event of a Common Stock Fundamental
Change, each Debenture shall be convertible solely into common stock of the kind
received by holders of Common Stock as a result of such Common Stock Fundamental
Change.
(c) The Conversion Price in the case of any Transaction involving a
Fundamental Change will be adjusted immediately after such Fundamental Change:
(1) in the case of a Non-Stock Fundamental Change, the
Conversion Price of the Debentures will thereupon become the lower
of (A) the Conversion Price in effect immediately prior to such
Non-Stock Fundamental Change, but after giving effect to any other
prior adjustments, and (B) the result obtained by multiplying the
greater of the Applicable Price or the then applicable Reference
Market Price by a fraction, the numerator of which will be $50 and
the denominator of which will be (x) the amount of the redemption
price for the Debenture if the redemption date were the date of such
Non-Stock Fundamental Change (or, for the period commencing on the
first date of original issuance of the Debentures and through
October 15, 1998, and the twelve-month periods commencing October
15, 1999 and October 15, 2000, the product of 106.0, 105.4 and
104.8, respectively, multiplied by $50) plus (y) any then-accrued
and unpaid interest on the Debentures; and
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(2) in the case of a Common Stock Fundamental Change, the
Conversion Price of the Debentures in effect immediately prior to
such Common Stock Fundamental Change, but after giving effect to any
other prior adjustments, will thereupon be adjusted by multiplying
such Conversion Price by a fraction, the numerator of which will be
the Purchaser Stock Price and the denominator will be the Applicable
Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Common Stock is common stock
of the successor, acquiror, or other third party (and cash, if any,
is paid only with respect to any fractional interests in such common
stock resulting from such Common Stock Fundamental Change) and (B)
all of the Common Stock will have been exchanged for, converted
into, or acquired for common stock (and cash with respect to
fractional interests) of the successor, acquiror, or other third
party, the Conversion Price of the Debentures in effect immediately
prior to such Common Stock Fundamental Change will thereupon be
adjusted by multiplying such Conversion Price by a fraction, the
numerator of which will be one and the denominator of which will be
the number of shares of common stock of the successor, acquiror, or
other third party received by a holder of one share of Common Stock
as a result of such Common Stock Fundamental Change.
SECTION 13.5. Notice of Adjustments of Conversion Price. Whenever the
Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price and
shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted conversion price and showing
in reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Trustee, the Conversion Agent and
the transfer agent for the Preferred Securities and the Debentures; and
(b) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Company to all record holders of Preferred Securities and the
Debentures at their last addresses as they appear upon the
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stock transfer books of the Company and the Trust and the Securities Registrar.
SECTION 13.6. Prior Notice of Certain Events.
In case:
(i) the Company shall (A) declare any dividend (or any other
distribution) on its Common Stock, other than (x) a dividend payable in
shares of Common Stock or (y) a dividend payable in cash that would not
require an adjustment pursuant to Section 13.4(c) or (d) or (B) authorize
a tender or exchange offer that would require an adjustment pursuant to
Section 13.4(e);
(ii) the Company shall authorize the granting to all holders
of Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or series or of any other rights or warrants;
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in
par value, or from par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the Company is a party
and for which approval of stockholders of the Company shall be required,
or of the sale or transfer of all or substantially all of the assets of
the Company or of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall (A) if any Preferred Securities are outstanding under the
Trust Agreement, cause to be filed with the transfer agent for the Preferred
Securities, and shall cause to be mailed to the holders of record of the
Preferred Securities, at their last addresses as they shall appear upon the
stock transfer books of the Trust or (B) cause to be mailed to all Holders at
their last addresses as they shall appear in the Security Register, at least 15
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend,
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distribution, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
SECTION 13.7. Dividend or Interest Reinvestment Plans. Notwithstanding
anything to the contrary in this Article 13, the issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of additional
optional amounts in shares of Common Stock under any such plan, and the issuance
of any shares of Common Stock or options or rights to purchase such shares
pursuant to any employee benefit plan or program of the Company or pursuant to
any option, warrant, right or exercisable, exchangeable or convertible security
outstanding as of the date the Debentures were first issued, shall not be deemed
to constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment provisions
described above applies. There shall also be no adjustment of the Conversion
Price in case of the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically described in this
Article 13.
SECTION 13.8. Certain Additional Rights. In case the Company shall, by
dividend or otherwise, declare or make a distribution on its Common Stock
referred to in Sec tion 13.4(c) or 13.4(d) (including, without limitation,
dividends or distributions referred to in the last sentence of Section 13.4(c)),
the Holders of the Debentures, upon the conversion thereof subsequent to the
close of business on the date fixed for the determination of stockholders
entitled to receive such distribution and prior to the effectiveness of the
Conversion Price adjustment in respect of such distribution, shall also be
entitled to receive for each share of Common Stock into which the Debentures are
converted, the portion of the shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock; provided, however, that, at
the
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election of the Company (whose election shall be evidenced by a resolution
of the Board of Directors) with respect to all Holders so converting, the
Company may, in lieu of distributing to such Holder any portion of such
distribution not consisting of cash or securities of the Company, pay such
Holder an amount in cash equal to the fair market value thereof (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors). If any conversion of
Debentures described in the immediately preceding sentence occurs prior to the
payment date for a distribution to holders of Common Stock which the Holder of
Debentures so converted is entitled to receive in accordance with the
immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
Holder a due bill for the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets to which such Holder is so
entitled, provided, that such due bill (i) meets any applicable requirements of
the principal national securities exchange or other market on which the Common
Stock is then traded and (ii) requires payment or delivery of such shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of capital
stock, cash or assets no later than the date of payment or delivery thereof to
holders of shares of Common Stock receiving such distribution.
SECTION 13.9. Restrictions on Common Stock Issuable Upon Conversion. (a)
Shares of Common Stock to be issued upon conversion of a Debenture in respect of
Restricted Preferred Securities shall bear such restrictive legends as the
Company may provide in accordance with applicable law.
(b) If shares of Common Stock to be issued upon conversion of a
Debenture in respect of Restricted Preferred Securities are to be registered in
a name other than that of the Holder of such Preferred Security, then the Person
in whose name such shares of Common Stock are to be registered must deliver to
the Conversion Agent a certificate satis factory to the Company and signed by
such Person, as to compliance with the restrictions on transfer applicable to
such Preferred Security. Neither the Trustee nor any Conversion Agent or
Registrar shall be required to register in a name other than that of the Holder
shares of Common Stock issued upon conversion of any such Debenture in respect
of such Preferred Securities not so accompanied by a properly completed
certificate.
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SECTION 13.10. Trustee Not Responsible for Determining Conversion Price or
Adjustments. Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder of any Debenture or to any holder
of a Preferred Security to determine whether any facts exist which may require
any adjustment of the Conversion Price, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the
same. Neither the Trustee nor any Conversion Agent shall be accountable with
respect to the validity or value (or the kind of account) of any shares of
Common Stock or of any securities or property, which may at any time be issued
or delivered upon the conversion of any Debenture; and neither the Trustee nor
any Conversion Agent makes any representation with respect thereto. Neither the
Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates or other securities or property upon the
surrender of any Debenture for the purpose of conversion, or, except as
expressly herein provided, to comply with any of the covenants of the Company
contained in Article 10 or this Article 13.
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
BIG FLOWER HOLDINGS, INC.
By:
-----------------------------------------
THE BANK OF NEW YORK,
as Trustee
By:
-----------------------------------------
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EXHIBIT 4.2(v)
BIG FLOWER TRUST I
2,300,000
6% Convertible Quarterly Income Preferred Securities ("QUIPS(SM)*")
(Liquidation Amount $50 Per Preferred Security)
---------------------------------------------------
October 20, 1997
Registration Rights Agreement
Goldman, Sachs & Co.,
Bear, Stearns & Co. Inc.
BT Alex. Brown Incorporated
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Ladies and Gentlemen:
Big Flower Trust I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), and Big Flower Holdings, Inc., a Delaware
corporation, as depositor of the Trust and as guarantor (the "Company"),
proposes to issue and sell to the Purchasers (as defined herein), upon the terms
set forth in the Purchase Agreement (as defined herein) an aggregate of
2,300,000 shares of 6% Convertible Quarterly Income Preferred Securities
(liquida tion amount $50 per preferred security) (the "Preferred Securities") of
the Trust. The Preferred Securities are guaranteed on a subordinated basis by
the Company as to the payment of distributions, and as to payments on
liquidation or redemption, to the extent set forth in a guarantee agreement (the
"Guarantee") between the Company and The Bank of New York, as trustee, and may
be converted or exchanged under certain circumstances into the 6% Convertible
Subordinated Debentures due 2027 of the Company (the "Debentures") held by the
Trust and then into common stock, $.01 par value per share ("Common Stock"), of
the Company. The Preferred Securities, the Debentures, the Guarantee and the
Common Stock issuable upon conversion or exchange of the Preferred Securities
and/or the Debentures are referred to collectively as the "Securities." As an
inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to the obligations of the Purchasers thereunder, the
Trust and the Company each agree with the Purchasers for the benefit of Holders
(as defined herein) from time to time of the Registrable Securities (as defined
herein) as follows:
- --------
*QUIPS is a servicemark of Goldman, Sachs & Co.
<PAGE>
1. Definitions. (a) Capitalized terms used herein without definition
shall have the meanings ascribed thereto in the Purchase Agreement. As used in
this Registration Rights Agreement, the following defined terms shall have the
following meanings:
"Act" or "Securities Act" means the Securities Act of 1933, as amended.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Commission" means the Securities and Exchange Commission.
"DTC" means The Depository Trust Company.
"Effectiveness Period" has the meaning assigned thereto in Section
2(b)(i) hereof.
"Effective Time" means the date on which the Commission declares the
Shelf Registration Statement effective or on which the Shelf Registration
Statement otherwise becomes effective.
"Electing Holder" has the meaning assigned thereto in Section 3(a)(3)
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"First Time of Delivery" has the meaning assigned thereto in the
Purchase Agreement.
"Holder" means, when used with respect to any Security, the holder of
such Security. For all purposes of this Agreement, the Company shall be entitled
to treat the record owner of a Security as the beneficial owner of such Security
unless the Company has been given written notice of the existence and identity
of a different beneficial owner.
"Indenture" means the Indenture, dated as of October 20, 1997, between
the Company and The Bank of New York, as indenture trustee, as amended and
supplemented from time to time in accordance with its terms.
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten offering,
if any, conducted pursuant to Section 6 hereof.
"NASD Rules" means the Rules of the National Association of Securities
Dealers, Inc., as amended.
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"Notice and Questionnaire" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Annex A
hereto, including the Notice of Transfer attached as Appendix 1 thereto.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" means the prospectus (including, without limitation, any
preliminary prospectus, any final prospectus and any prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act) included in the
Shelf Registration Statement, as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Shelf Registration Statement and by all
other amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.
"Purchase Agreement" means the purchase agreement dated October 14, 1997
among the Purchasers, the Trust and the Company.
"Purchasers" means the Purchasers named in Schedule I to the Purchase
Agreement.
"Registrable Securities" means all or any portion of the Securities
issued from time to time; provided, however, that a security ceases to be a
Registrable Security when it is no longer a Restricted Security.
"Restricted Security" means any Security except any such Security which
(i) has been effectively registered under the Securities Act and sold in a
manner contemplated by the Shelf Registration Statement, (ii) has been
transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or is transferable pursuant to paragraph (k) of
such Rule 144 (or any successor provision thereto), (iii) has been sold in
compliance with Regulation S under the Securities Act (or any successor thereto)
and does not constitute the unsold allotment of a distributor within the meaning
of Regulation S under the Securities Act, or (iv) has otherwise been transferred
and a new Security not subject to transfer restrictions under the Securities Act
has been delivered by or on behalf of the Company in accordance with the terms
of the Trust Agreement or the Indenture, as the case may be.
"Rules and Regulations" means the published rules and regulations of the
Commission promulgated under the Securities Act or the Exchange Act, as in
effect at any relevant time.
"Securities" has the meaning assigned thereto in the first paragraph
hereof.
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"Shelf Registration" means a registration effected pursuant to Section 2
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
filed under the Securities Act providing for the registration of, and the resale
on a continuous or delayed basis by the Holders of, all of the Registrable
Securities pursuant to Rule 415 under the Securities Act and/or any similar rule
that may be adopted by the Commission, filed by the Company and the Trust
pursuant to the provisions of Section 2 hereof, including the Prospectus
contained therein, any amendments and supplements to such registration
statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such registration statement.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
as of October 14, 1997, among Big Flower Holdings, Inc. as Depositor, The Bank
of New York, as Property Trustee, The Bank of New York (Delaware), as Delaware
Trustee and the Administrative Trustees named therein, relating, among other
things, to the Preferred Securities, as amended and supplemented from time to
time in accordance with its terms.
"Trust Indenture Act" means the Trust Indenture Act of 1939, or any
successor thereto, and the rules, regulations and forms promulgated thereunder,
as the same shall be amended.
"Underwriter" means any underwriter of Registrable Securities in
connection with an offering thereof under a Shelf Registration Statement.
(b) Wherever there is a reference in this Agreement to a percentage of
the "principal amount" of Registrable Securities or to a percentage of
Registrable Securities, the Preferred Securities and the Debentures issuable
upon conversion or exchange of the Preferred Securities will be treated as the
same class of Securities and Common Stock shall be treated as representing the
liquidation amount of Preferred Securities or the principal amount of Debentures
which was surrendered for conversion or exchange in order to receive such number
of shares of Common Stock.
2. Shelf Registration. (a) The Company and the Trust shall, within 90
calendar days following the First Time of Delivery (as defined in the Purchase
Agreement), file with the Commission a Shelf Registration Statement on such form
as the Company deems appropriate covering the resale of the Registrable
Securities and, thereafter, shall use their reasonable best efforts to cause
such Shelf Registration Statement to be declared effective under the Act within
180 calendar days after the First Time of Delivery; provided, however, that no
Holder shall be entitled to be named as a selling securityholder in the Shelf
Registration Statement or to use the Prospectus forming a part thereof for
resales of Registrable Securities unless such Holder is an Electing Holder.
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(b) The Company and the Trust shall each use its best efforts:
(i) To keep the Shelf Registration Statement continuously
effective (subject to any Suspension Period (as defined below)) in order
to permit the Prospectus forming a part thereof to be usable by Electing
Holders for resales of Registrable Securities for a period of two years
from the First Time of Delivery, or such shorter period that will
terminate upon the earliest of the following: (A) when all the Preferred
Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement; (B) when all Debentures
issued to Holders in respect of Preferred Securities that had not been
sold pursuant to the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement; (C) when all shares of
Common Stock issued upon conversion of any such Preferred Securities or
any such Debentures that have not been sold pursuant to the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement; and (D) when all outstanding Registrable Securities held by
persons which are not affiliates of the Trust or the Company may be
resold without registration under the Act pursuant to Rule 144(k) under
the Act or any successor provision thereto (in any such case, such
period being called the "Effectiveness Period").
(ii) After the Effective Time of the Shelf Registration
Statement, as promptly as practicable upon the request of any Holder
that is not then an Electing Holder identified as a selling
securityholder in the Prospectus at the Effective Time, to take any
action reasonably necessary to enable such Holder to use the Prospectus
forming a part thereof for resales of Registrable Securities, including,
without limitation, any action necessary to identify such Holder as a
selling securityholder in the Shelf Registration Statement; provided,
however, that nothing in this subparagraph shall relieve such Holder of
the obligation to return a completed and signed Notice and Questionnaire
to the Company and the Trust in accordance with Section 3(a)(2) hereof
and to provide to the Trust and the Company, in writing, any information
with respect to such Holder or the Registrable Securities held by such
Holder as is, in the reasonable opinion of counsel to the Trust or the
Company, required under applicable law to enable such Holder to use such
Prospectus for resales of such Registrable Securities; and
(iii) If at any time prior to the end of the Effectiveness
Period, the Preferred Securities are convertible into securities other
than Common Stock, the Company and the Trust shall, or shall cause any
successor under the Trust Agreement to, use its reasonable best efforts
to cause such securities to be included in the Shelf Registration
Statement as promptly as practicable.
(c) If (i) on or prior to the date 90 days after the First Time of
Delivery a Shelf Registration Statement has not been filed with the Commission
or (ii) on or prior to the date 180 days after the First Time of Delivery such
Shelf Registration Statement has not been declared
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<PAGE>
effective (each such event, a "Registration Default"), additional interest
("Liquidated Damages") will accrue on the Debentures, and, accordingly,
additional distributions will accrue on the Preferred Securities, from and
including the day following such Registration Default until such date as the
Shelf Registration Statement is filed or declared effective, as the case may be.
Liquidated Damages will be paid quarterly in arrears (subject to the Company's
right to defer the payment of Liquidated Damages during any Extension Period (as
defined in the Indenture)), with the first quarterly payment due on the first
interest or distribution payment date, as applicable, following the date on
which such Liquidated Damages begin to accrue, and will accrue at a rate per
annum equal to an additional one-quarter of one percent (0.25%) of the principal
amount or liquidation amount, as applicable, to and including the 90th day
following such Registration Default and one-half of one percent (0.50%) thereof
from and after the 91st day following such Registration Default. In the event
that the Shelf Registration Statement ceases to be effective during the
Effectiveness Period for more than 90 days, whether or not consecutive, during
any 12-month period, then the interest rate borne by the Debentures and the
distribution rate borne by the Preferred Securities will each increase by an
additional one-half of one percent (0.50%) per annum from the 91st day of the
applicable 12-month period such Shelf Registration Statement ceases to be
effective until such time as the earlier to occur of the Shelf Registration
Statement again becoming effective and the end of the Effectiveness Period.
(d) The Company and the Trust shall each be deemed not to have used its
best efforts to keep the Shelf Registration Statement effective during the
Effectiveness Period if either the Trust or the Company voluntarily takes any
action that would result in Electing Holders not being able to offer and sell
any of their Registrable Securities during such period, unless (i) such action
is required by applicable law, (ii) upon the occurrence of any event
contemplated by paragraph 3(d)(2)(iii) below, and such action is taken by the
Trust or the Company in good faith and for valid business reasons or (iii) the
continued effectiveness of the Shelf Registration Statement would require the
Trust to disclose a material financing, acquisition or other corporate
development, and the proper officers of the Company shall have determined in
good faith that such disclosure is not in the best interest of the Company and,
in the case of clause (ii) above, the Company and the Trust thereafter as
promptly as practicable comply with the requirements of paragraph 3(j) below.
Any such period during which the Company and the Trust are permitted to suspend
the effectiveness of the Shelf Registration Statement is referred to herein as
the "Suspension Period."
3. Registration Procedures. In connection with the Shelf Registration
Statement, the following provisions shall apply:
(a) (1) The Company shall not be required to take any action to
name any Holder as a selling securityholder in the Shelf Registration
Statement or to enable such Holder to use the Prospectus forming a part
thereof for resales of Registrable Securities until such Holder has
returned a completed and signed Notice and Questionnaire to the
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Company and the Trust and provided to the Trust and the Company such
information with respect to such Holder or the Registrable Securities
held by such Holder as is, in the reasonable opinion of counsel to the
Trust or the Company, required to enable such Holder to use the
Prospectus for resales of Registrable Securities.
(2) Not less than 30 calendar days prior to the Effective Time of
the Shelf Registration Statement, the Company or the Trust shall mail
the Notice and Questionnaire to each Holder. No Holder shall be entitled
to be named as a selling securityholder in the Shelf Registration
Statement as of the Effective Time, and no Holder shall be entitled to
use the Prospectus forming a part thereof for resales of Registrable
Securities at any time, unless such Holder has returned a completed and
signed Notice and Questionnaire to the Company and the Trust and
provided to the Trust and the Company such information with respect to
such Holder of the Registrable Securities held by such Holder as is, in
the reasonable opinion of counsel to the Trust or the Company, required
to enable such Holder to use the Prospectus for resales of Registrable
Securities provided, however, that only Holders who have completed and
returned the Notice and Questionnaire and any such additional
information requested of such Holder to the Company on or before the day
that is ten days prior to the Effective Time shall be entitled to be
named as a selling securityholder in the Shelf Registration Statement as
of the Effective Time.
(3) The term "Electing Holder" shall mean any Holder that has
returned a completed and signed Notice and Questionnaire to the Company
and the Trust in accordance with Section 3(a)(1) or 3(a)(2) hereof and
provided to the Trust and the Company such information with respect to
such Holder or the Registrable Securities held by such Holder as is, in
the reasonable opinion of counsel to the Trust or the Company, required
to enable such Holder to use the Prospectus for resales of Registrable
Securities.
(b) The Company and the Trust shall furnish to each Electing
Holder, prior to the Effective Time, a copy of the Shelf Registration
Statement initially filed with the Commission, and shall reasonably
promptly furnish to such Holders copies of each amendment thereto and
each amendment or supplement, if any, to the Prospectus included
therein, and shall consider in good faith for inclusion in each such
document, at the Effective Time such comments as such Holders or their
counsel reasonably may propose, provided, however, that the Company's
obligations set forth in this Section 3(b) shall not require the Company
to delay or postpone the Effective Time or prevent the Company from
otherwise requesting the acceleration of the effectiveness of the Shelf
Registration Statement.
(c) The Company and the Trust shall as promptly as practicable
take such action as may reasonably be necessary so that (i) each of the
Shelf Registration Statement and any amendment thereto and the
Prospectus forming part thereof and any amendment
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<PAGE>
or supplement thereto (and each report or other document incorporated
therein by reference in each case) complies as to form in all material
respects with the Securities Act and the rules and regulations
thereunder, (ii) each of the Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading and (iii) each of the Prospectus forming part of the Shelf
Registration Statement, and any amendment or supplement to such
Prospectus, does not at any time during the Effectiveness Period include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) (1) The Company shall as promptly as practicable advise the
Purchasers and, in the case of clause (i), the Electing Holders and, if
requested by the Purchasers or any such Electing Holder, confirm such
advice in writing:
(i) when the Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when the
Shelf Registration Statement or any post-effective amendment
thereto has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information.
(2) The Company shall as promptly as practicable advise each
Electing Holder of:
(i) the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement
or the initiation of any proceedings for such purpose;
(ii) the receipt by the Company or the Trust of any
notification with respect to the suspension of the qualification
of the securities included in the Shelf Registration Statement
for sale in any jurisdiction or the initiation of any proceeding
for such purpose; and
(iii) the happening of any event that requires the making
of any changes in the Shelf Registration Statement or the
Prospectus included therein so that, as of such date, such Shelf
Registration Statement and Prospectus do not contain an untrue
statement of a material fact and do not omit to state a material
fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not
8
<PAGE>
misleading (which advice shall be accompanied by an instruction
to suspend the use of the Prospectus until the requisite changes
have been made).
(e) The Company and the Trust shall each use its reasonable best
efforts to prevent the issuance, and if issued to obtain the withdrawal,
of any order suspending the effectiveness of the Shelf Registration
Statement at the earliest possible time.
(f) The Company and the Trust shall furnish to each Electing
Holder, without charge, at least one copy of the Shelf Registration
Statement and all post-effective amendments thereto, including financial
statements and schedules, and, if such Holder so requests in writing,
all reports, other documents and exhibits that are filed with or
incorporated by reference in the Shelf Registration Statement.
(g) The Company and the Trust shall, during the Effectiveness
Period, deliver to each Electing Holder, without charge, as many copies
of the Prospectus (including each preliminary Prospectus) included in
the Shelf Registration Statement and any amendment or supplement thereto
as such Electing Holder may reasonably request; and the Company and the
Trust each consents (except during the continuance of any event
described in Section 3(d)(2)(iii) above or during any Suspension Period)
to the use of the Prospectus and any amendment or supplement thereto by
each of the Electing Holders in connection with the resale of the
Registrable Securities covered by the Prospectus and any amendment or
supplement thereto during the Effectiveness Period.
(h) Prior to any offering of Registrable Securities pursuant to
the Shelf Registration Statement, the Company and the Trust shall use
its reasonable best efforts to (1) register or qualify or cooperate with
the Electing Holders and their respective counsel in connection with the
registration or qualification of such Registrable Securities for resale
under the securities or "blue sky" laws of such jurisdictions within the
United States as any Electing Holder may reasonably request, (2) keep
such registrations or qualifications in effect (subject to any
Suspension Period) and comply with such laws so as to permit the
continuance of offers and sales in such jurisdictions for so long as may
be necessary to enable any Electing Holder or underwriter, if any, to
complete its distribution of Registrable Securities pursuant to the
Shelf Registration Statement, and (3) take any and all other actions
necessary or advisable to enable the disposition in such jurisdictions
of such Registrable Securities; provided, however, that in no event
shall the Company or the Trust be obligated to (i) qualify generally to
do business or as a foreign corporation or as a dealer in securities in
any jurisdiction where each would not otherwise be required to so
qualify but for this Section 3(h), (ii) file any general consent to
service of process in any jurisdiction where it is not as of the date
hereof so subject or (iii) subject itself to taxation in any
jurisdiction where it is not otherwise so subject.
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<PAGE>
(i) Unless any Registrable Securities shall be in book-entry only
form, the Company and the Trust shall cooperate with the Electing
Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to
the Shelf Registration Statement free of any restrictive legends and in
such permitted denominations and registered in such names as Electing
Holders may reasonably request in connection with the resale of
Registrable Securities pursuant to the Shelf Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraph
3(d)(2)(iii) above, the Company and the Trust shall as promptly as
practicable prepare a post-effective amendment or supplement to the
Shelf Registration Statement or the Prospectus, or any document
incorporated therein by reference, or file any other required document
so that, as thereafter delivered to purchasers of the Registrable
Securities included therein, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except, in
each case, for an untrue statement of a material fact or omission of a
material fact made in reliance on and in conformity with written
information furnished to the Trust or the Company by or on behalf of any
Electing Holders); provided, however, if the proper officers of the
Company determine in good faith that disclosure in the Shelf
Registration Statement of a material financing, acquisition or other
corporate transaction would not be in the best interests of the Company,
the Company and the Trust shall not be required to prepare and file such
amendment, supplement or document for such period as such officers shall
have determined in good faith is in the best interests of the Company.
Upon receipt of written notice from the Company or the Trust of the
occurrence of any event contemplated by paragraph 3(d)(2)(iii) above or
of any Suspension Period, each Holder shall forthwith discontinue
disposition of Registrable Securities until such Holder has received
copies of the supplemental or amended Prospectus required by this
paragraph 3(j), or until such Holder is advised by the Company or the
Trust that the use of the Prospectus may be resumed and, if so directed
by the Company, such Holder shall deliver to the Company (at the
Company's expense) all copies then in such Holder's possession of the
Prospectus covering such Registrable Securities current at the time of
such notice.
(k) Not later than the Effective Time of any Shelf Registration
Statement hereunder, the Company and the Trust shall each provide a
CUSIP number for the Preferred Securities registered under such Shelf
Registration Statement; in the event of and at the time of any
distribution of the Debentures to Holders, the Company and the Trust
shall provide a CUSIP number for the Debentures and provide the
applicable trustee with certificates for such Registrable Securities, in
a form eligible for deposit with DTC.
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<PAGE>
(l) The Company and the Trust shall each use its reasonable best
efforts to comply with all applicable Rules and Regulations, and to make
generally available to its securityholders as soon as practicable, but
in any event not later than 18 months after (i) the effective date (as
defined in Rule 158(c) under the Securities Act) of the Shelf
Registration Statement, (ii) the effective date of each post effective
amendment to the Shelf Registration Statement, and (iii) the date of
each filing by the Company with the Commission of an Annual Report on
Form 10-K that is incorporated by reference in the Shelf Registration
Statement, an earnings statement of the Company and its subsidiaries
complying with Section 11 (a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158).
(m) The Company and the Trust shall each use its reasonable best
efforts to cause the Indenture, the Trust Agreement and the Guarantee to
be qualified under the Trust Indenture Act in a timely manner.
(n) In the event of an underwritten offering conducted pursuant
to Section 6 hereof, the Company and the Trust shall, if requested, as
promptly as practicable include or incorporate in a Prospectus
supplement or post-effective amendment to the Shelf Registration
Statement such information as the Managing Underwriters reasonably agree
should be included therein and to which the Company does not reasonably
object and shall make all required filings of such Prospectus supplement
or post-effective amendment as soon as practicable after it is notified
of the matters to be included or incorporated in such Prospectus
supplement or post-effective amendment.
(o) The Company and the Trust shall enter into such customary
agreements (including an underwriting agreement in customary form in the
event of an underwritten offering conducted pursuant to Section 6
hereof) and take all other appropriate action in order to expedite and
facilitate the registration and disposition of the Registrable
Securities, and in connection therewith, if an underwriting agreement is
entered into, cause the same to contain indemnification provisions and
procedures reasonably similar to those set forth in Section 5 hereof
with respect to all parties to be indemnified pursuant to Section 5
hereof.
(p) The Company and the Trust shall:
(i) (A) make reasonably available for inspection by
Electing Holders, any underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and
any attorney, accountant or other agent retained by such holders
or any such underwriter all relevant financial and other records,
pertinent corporate or other documents and properties of the
Company, its subsidiaries and the Trust, and (B) cause the
officers, directors, employees, trustees and agents of the
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<PAGE>
Company and the Trust to supply all information reasonably
requested by such Holders or any such underwriter, attorney,
accountant or agent in connection with the Shelf Registration
Statement, in each case, as is customary for similar due
diligence examinations; provided, however, that each Electing
Holder and its representatives and agents shall execute an
agreement (in form reasonably acceptable to the Company)
providing that all records, information and documents that are
designated in writing by the Company and the Trust, in good
faith, as confidential shall be kept confidential by such Holders
and any such underwriter, attorney, accountant or agent, unless
such disclosure is made in connection with a court proceeding or
required by law, or such records, information or documents become
available to the public generally or through a third party
without an accompanying obligation of confidentiality; and
provided further that, if the foregoing inspection and
information gathering would, in the Company's reasonable
judgment, disrupt the Company's conduct of its business, such
inspection and information gathering shall be coordinated on
behalf of the Electing Holders and the other parties entitled
thereto by one counsel designated by and on behalf of Electing
Holders and other parties;
(ii) in connection with any underwritten offering
conducted pursuant to Section 6 hereof, make such representations
and warranties to the Holders participating in such underwritten
offering and to the Managing Underwriters, in form, substance and
scope as are customarily made by the Company and the Trust to
underwriters in primary underwritten offerings of equity and
convertible preferred and debt securities and covering matters
substantially similar to those set forth in the Purchase
Agreement;
(iii) in connection with any underwritten offering
conducted pursuant to Section 6 hereof, obtain opinions of
counsel (which counsel may be an employee of the Company) to the
Company and the Trust (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the Managing
Underwriters) addressed to each Holder participating in such
underwritten offering and the underwriters, covering such matters
as are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested
by such Holders and underwriters substantially similar to those
covered in the Purchase Agreement (it being agreed that the
matters to be covered by such opinions shall include, without
limitation, as of the date of the opinion and as of the Effective
Time of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence
from the Shelf Registration Statement and the Prospectus,
including the documents incorporated by reference therein, of an
untrue statement of a material fact or the omission of a material
fact
12
<PAGE>
required to be stated therein or necessary to make the
statements therein not misleading;
(iv) in connection with any underwritten offering
conducted pursuant to Section 6 hereof, obtain "cold comfort"
letters and updates thereof from the independent public
accountants of the Company and the Trust, addressed to each
Holder participating in such underwritten offering (if such
Holder has provided such letter, representations or
documentation, if any, required for such "cold comfort" letter to
be so addressed) and the underwriters, in customary form and
covering matters of the type customarily covered in "cold
comfort" letters in connection with primary underwritten
offerings substantially similar to those covered pursuant to the
Purchase Agreement; and
(v) deliver such documents and certificates as may be
reasonably requested by any Holders participating in such
underwritten offering and the Managing Underwriters, if any,
including, without limitation, certificates to evidence
compliance with Section 3(j) hereof and with any conditions
contained in the underwriting agreement or other agreements
entered into by the Company and the Trust.
(q) The Company and the Trust shall each use its reasonable best
efforts to cause the Common Stock issuable upon conversion of the
Preferred Securities to be listed for quotation on the New York Stock
Exchange or other stock exchange or trading system on which the Common
Stock primarily trades on or prior to the Effective Time of the Shelf
Registration Statement hereunder.
(r) The Company and the Trust shall each use reasonable best
efforts to take all other steps reasonably necessary to effect the
registration, offering and resale of the Registrable Securities covered
by the Shelf Registration Statement contemplated hereby.
(s) Upon receipt of written notice from the Company that a
Suspension Period is in effect, each Holder shall forthwith discontinue
disposition of Registrable Securities until such Holder has received
copies of the supplemental or amended Prospectus required by Section
3(j) hereof, or until such Holder is advised in writing by the Company
that the use of the Prospectus may be resumed, and, if so directed by
the Company, such Holder shall deliver to the Company (at the Company's
expense) all copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of
such notice.
4. Registration Expenses. The Company and the Trust shall each bear all
reasonable fees and expenses customarily borne by issuers in a non-underwritten
secondary
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<PAGE>
offering by selling securityholders or in an underwritten offering, as the case
may be, incurred in connection with the performance of its obligations under
Sections 2, 3 and 6 hereof. In addition, in the event of an underwritten
offering of Registrable Securities conducted pursuant to Section 6 hereof, or if
in any other event the Company requires that inspection and information
gathering be coordinated by counsel for the Electing Holders as provided in
Section 3(p)(i) hereof, the Company shall pay the fees and expenses of a single
counsel selected by the Electing Holders of not less than 25% of the Registrable
Securities to be included in such underwritten offering (or, in any such other
event, included in the Shelf Registration Statement) to represent them.
5. Indemnification and Contribution.
(a) Indemnification by the Company. Upon the registration of the
Registrable Securities pursuant to Section 2 hereof, and in consideration of the
agreements of the Electing Holders and any underwriters, selling agents or other
securities professionals contained in Section 5(b) hereof, the Company and the
Trust jointly and severally shall indemnify and hold harmless each Electing
Holder and each underwriter, selling agent or other securities professional, if
any, which participates in the disposition of Registrable Securities against any
losses, claims, damages or liabilities, joint or several, to which such person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Shelf Registration Statement under which such
Registrable Securities are to be registered under the Securities Act, or any
Prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, subject to Section 5(d) below, shall reimburse such
person for any expenses reasonably incurred by them in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that neither the Company nor the Trust shall be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such Shelf Registration
Statement or Prospectus, or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company or the Trust
by such person expressly for use therein.
(b) Indemnification by the Holders and any Agents and Underwriters. Each
Electing Holder agrees, as a consequence of the inclusion of any of such
Holder's Registrable Securities in such Shelf Registration Statement, and each
underwriter, selling agent or other securities professional, if any, which
participates in the disposition of Registrable Securities shall, as a
consequence of participating in such disposition of Registrable Securities,
severally and not jointly, (i) indemnify and hold harmless the Company and the
Trust against any losses, claims, damages or liabilities to which the Company
and the Trust may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
14
<PAGE>
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in such Shelf Registration
Statement or Prospectus, or any amendment or supplement, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission in such
Registration Statement or Prospectus, or any amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company and the Trust by such Holder, underwriter, selling agent or other
securities professional expressly for use therein, and (ii) shall reimburse the
Company and the Trust for any legal or other expenses reasonably incurred by the
Company and the Trust in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under Section 5(a) or 5 (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof, but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such subsection. In
case any action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation, provided,
however, that the indemnifying parties shall not, in connection with any one
such proceeding or separate but substantially similar actions or proceedings
arising out of the same general allegations, be liable for the fees and expenses
of more than one separate firm of attorneys at any time for all indemnified
parties, except to the extent that local counsel, in addition to its regular
counsel, is required in order to effectively defend against such action or
proceeding. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim unless
such settlement, compromise or judgment (i) includes an unconditional release of
the indemnified party from all liability arising out of such action or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act, by or on behalf of any indemnified party.
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<PAGE>
(d) Contribution. If the indemnification provided for in this Section 5
is unavailable to an indemnified party under subsection (a) or (b) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
parties on the one hand and the indemnified parties on the other in connection
with the statements or omissions which 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 a party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Trust and the Company on the one hand or
by such Holder, underwriter,, selling agent or other securities professional on
the other, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(d) were determined by pro rata allocation (even if the Electing
Holders or any underwriters, selling agents or other securities professionals or
all of them were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in this Section 5(d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this Section 5(d) shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. The obligations of the Electing Holders and any underwriters, selling
agents or other securities professionals in this Section 5(d) to contribute
shall be several in proportion to the percentage of principal amount of
Registrable Securities registered or underwritten, as the case may be, by them
and not joint. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) Notwithstanding any other provision of this Section 5, in no event
will any (i) Electing Holder be required to undertake liability to any person
under this Section 5 for any amounts in excess of the dollar amount of the
proceeds to be received by such Holder from the resale of such holder's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Shelf Registration Statement under which
such Registrable Securities are to be registered under the Securities Act and
(ii) underwriter, selling agent or other securities professional be required to
undertake liability to any person hereunder for any amounts in excess of the
total price at which Registrable Securities underwritten by it and distributed
to the public were offered to the public.
(f) The obligations of the Company and the Trust under this Section 5
shall be in addition to any liability which the Company and the Trust may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Holder or any
16
<PAGE>
underwriter, selling agent or other securities professional within the meaning
of the Securities Act; and the obligations of any Holder or any underwriter,
selling agent or other securities professional under this Section 5 shall be in
addition to any other liability which the respective person may otherwise have
and shall extend, upon the same terms and conditions, to each director of the
Company, each officer of the Company and Administrative Trustee of the Trust who
signs the Shelf Registration Statement and to each person, if any, who controls
the Trust and the Company within the meaning of the Securities Act.
6. Underwritten Offering. Any Electing Holder of Registrable Securities
who desires to do so may sell Registrable Securities (in whole or in part) in an
underwritten offering; provided that (i) the Holders of at least a majority in
aggregate principal amount of the outstanding Registrable Securities shall
request such an offering and (ii) at least such aggregate principal amount of
such Registrable Securities shall be included in such offering; and provided
further that the Company shall not be obligated to cooperate with more than one
underwritten offering during the Effectiveness Period. Upon receipt of such a
request, the Company and the Trust shall provide all Holders of Registrable
Securities written notice of the request, which notice shall inform such Holders
that they have the opportunity to participate in the offering. In any such
underwritten offering, the investment banker or bankers and manager or managers
that will administer the offering will be selected by, and the underwriting
arrangements with respect thereto (including, subject to clause (ii) above, the
size of the offering) will be approved by the Holders of a majority of the
Registrable Securities to be included in such offering; provided, however, that
such investment bankers and managers and underwriting arrangements must be
reasonably satisfactory to the Company and the Trust. No Holder may participate
in any underwritten offering contemplated hereby unless (a) such Holder agrees
to sell such Holder's Registrable Securities to be included in the underwritten
offering in accordance with any approved underwriting arrangements, (b) such
Holder completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
required under the terms of such approved underwriting arrangements, and (c) if
such Holder is not then an Electing Holder, such Holder returns a completed and
signed Notice and Questionnaire to the Company and the Trust in accordance with
Section 3(a)(2) hereof (but in no event later than 10 days prior to commencement
of the underwritten offering) and provides to the Trust and the Company, in
writing, any information with respect to such Holder or the Registrable
Securities held by such Holder as is, in the reasonable opinion of counsel to
the Trust or the Company, required under applicable law to enable such Holder to
use such Prospectus for resales of such Registrable Securities, each within a
reasonable amount of time before such underwritten offering. The Holders
participating in any underwritten offering shall be responsible for any
underwriting discounts and commissions. The Company and the Trust shall pay all
expenses customarily borne by issuers, including but not limited to filing fees,
the fees and disbursements of its counsel and independent public accountants and
any printing expenses incurred in connection with such underwritten offering.
Notwithstanding the foregoing or the provisions of Section 3(n) hereof, upon
receipt of a request from the Managing Underwriter or a representative of
Holders
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<PAGE>
of a majority of the Registrable Securities to be included in an underwritten
offering to prepare and file an amendment or supplement to the Shelf
Registration Statement and Prospectus in connection with an underwritten
offering, the Company and the Trust may delay the filing of any such amendment
or supplement for up to 90 days if the Company shall have determined in good
faith that the Company has a bona fide business reason for such delay.
7. Miscellaneous.
(a) Other Registration Rights. The Company has granted and may grant
registration rights that would permit any Person that is a third party the right
to piggyback on any Shelf Registration Statement, provided that if the Managing
Underwriter of any underwritten offering conducted pursuant to Section 6 hereof
notifies the Company and the Electing Holders that the total amount of
securities which the Electing Holders and the holders of such piggyback rights
intend to include in any Shelf Registration Statement is such as to materially
and adversely affect the success of such offering, then the amount, number or
kind of securities to be offered for the account of Holders (other than holders
of registration rights under agreements outstanding on the date of this
Agreement whose rights shall be as set forth in such agreements) or such other
holders (in the case of registration rights granted after the date hereof) will
be reduced to the extent necessary to reduce the total amount of securities to
be included in such offering to the amount, number and kind recommended by the
Managing Underwriter, provided that no such reduction shall otherwise affect the
right of such Holders to sell Registrable Securities in non-underwritten
offerings.
(b) Amendments and Waivers. This Agreement, including this Section 7(b),
may be amended, and waivers or consents to departures from the provisions hereof
may be given, only by a written instrument duly executed by the Company, the
Trust and the Holders of a majority in aggregate principal amount of Registrable
Securities then outstanding. Each Holder of Registrable Securities outstanding
at the time of any such amendment, waiver or consent or thereafter shall be
bound by any amendment, waiver or consent effected pursuant to this Section
7(b), whether or not any notice, writing or marking indicating such amendment,
waiver or consent appears on the Registrable Securities or is delivered to such
Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at such address set forth on the record
books of the Company or the Trust, as the case may be;
(ii) if to the Purchasers, initially at the address set forth in
the Purchase Agreement; and
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<PAGE>
(iii) if to the Company or the Trust, initially at its address
set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have duly given when
received.
The Purchasers or the Company and the Trust by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) Parties in Interest. The parties to this Registration Rights
Agreement intend that only Holders of Registrable Securities from time to time
shall be entitled to receive the benefits of this Registration Rights Agreement
and that any Electing Holder shall be bound by the terms and provisions of this
Registration Rights Agreement by reason of such election with respect to the
Registrable Securities which are included in a Shelf Registration Statement. All
the terms and provisions of this Registration Rights Agreement shall be binding
upon, shall inure to the benefit of and shall be enforceable by the respective
successors and assigns of the parties hereto and any Holder from time to time of
the Registrable Securities to the aforesaid extent. In the event that any
transferee of any Holder of Registrable Securities shall acquire Registrable
Securities, in any manner, whether by gift, bequest, purchase, operation of law
or otherwise, such transferee shall, without any further writing or action of
any kind, be entitled to receive the benefits of and, if an Electing Holder, be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Registration Rights Agreement to the aforesaid
extent.
(e) Counterparts. This Registration Rights 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.
(f) Headings. The headings in this Registration Rights Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Registration Rights Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
giving effect to any provisions relating to conflicts of laws.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
19
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Trust and you.
Very truly yours,
Big Flower Trust I
By:
----------------------------------
Name:
Title:
Big Flower Holdings, Inc.
By:
----------------------------------
Name:
Title:
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
BT Alex Brown Incorporated
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
By:
------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
20
<PAGE>
EXHIBIT 10.1
SECOND AMENDMENT TO CREDIT AGREEMENT
SECOND AMENDMENT TO CREDIT AGREEMENT (this
"Amendment"), dated as of October 15, 1997, among BIG FLOWER PRESS HOLDINGS,
INC. (the "Borrower"), the financial institutions party to the Credit Agreement
referred to below (the "Banks"), BANK OF AMERICA NT & SA and THE INDUSTRIAL BANK
OF JAPAN, LIMITED, as Co-Agents (the "Co-Agents"), CREDIT SUISSE FIRST BOSTON,
as Documentation Agent (the "Documentation Agent"), and BANKERS TRUST COMPANY,
as Administrative Agent (the "Administrative Agent") for the Banks. All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks, the Co-Agents, the Documentation
Agent and the Administrative Agent are parties to a Credit Agreement, dated as
of June 12, 1997 (as in effect on the date hereof, the "Credit Agreement");
WHEREAS, the Borrower has requested certain amendments to the Credit
Agreement as provided herein; and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;
NOW, THEREFORE, it is agreed:
I. Amendments to Credit Agreement.
1. Section 3.03(b) of the Credit Agreement is hereby amended by (i)
deleting the word "Borrower" in each place it appears in said Section and
inserting in lieu thereof the word "Parent", (ii) deleting the word "and"
appearing after the text "Attributed Receivables Facility Indebtedness"
appearing in said Section and inserting a comma in lieu thereof and (iii)
inserting the text "and Indebtedness evidenced by the Convertible Subordinated
Debentures" immediately after the text "(xvii), inclusive" appearing in said
Section.
<PAGE>
2. Section 7.11 of the Credit Agreement is hereby amended by
deleting the text "Pledge and Security Agreement" in each place it appears in
said Section and inserting the text "Security Documents" in lieu thereof.
3. Sections 8.01(a) through (e) of the Credit Agreement are hereby
amended by (i) deleting the word "Borrower" in each place it appears in said
Sections and inserting the word "Parent" in lieu thereof and (ii) deleting the
word "Borrower's" in each place it appears in said clauses and inserting the
word "Parent's" in lieu thereof.
4. Section 8.01(g) of the Credit Agreement is hereby amended by
deleting the word "Borrower" in the second and third place as it appears in said
Section and by inserting in lieu thereof the word "Parent".
5. Section 8.01(h) of the Credit Agreement is hereby amended by (i)
deleting the word "Borrower" in each place it appears in said Section and
inserting the word "Parent" in lieu thereof, (ii) inserting the text "(including
any Permitted Subordinated Indebtedness and the Convertible Subordinated
Debentures)" immediately after the text "holders of its Indebtedness" appearing
in said Section and (iii) inserting the phrase "or deliver to holders of
Convertible QUIPS pursuant to the terms of the documentation relating thereto
(or any trustee, agent or other representative therefor)" immediately at the end
of the existing text thereof.
6. Section 8.01(l) of the Credit Agreement is hereby amended by
deleting the word "Borrower" appearing in said Section and inserting the word
"Parent" in lieu thereof.
7. Section 8.08 of the Credit Agreement is hereby amended by
deleting the word "Borrower" appearing therein and by inserting in lieu thereof
the word "Parent".
8. Section 8.14 of the Credit Agreement is hereby amended by
deleting said Section in its entirety and inserting in lieu thereof the
following new Section 8.14:
"8.14 Maintenance of Corporate Separateness. Each of the Parent and
the Borrower will, and will cause each of its Subsidiaries and
Unrestricted Subsidiaries to, satisfy customary corporate formalities,
including the holding of regular board of directors' and shareholders'
meetings or action by directors or shareholders without a meeting and the
maintenance of corporate records. None of the Parent, the Borrower, BF
Trust nor any of their Subsidiaries shall conduct its or their affairs in
a manner which is reasonably likely to result in the corporate or other
existence of the Parent, the Borrower, BF Trust or any of their respective
Subsidiaries or Unrestricted Subsidiaries being ignored, or in the assets
and liabilities of the Borrower or any of its Subsidiaries being
substantively consolidated with those of any other such Person, the Parent
or any Unrestricted Subsidiary in a bankruptcy, reorganization or other
insolvency proceeding."
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<PAGE>
9. Section 9.03 of the Credit Agreement is hereby amended by (i)
deleting clauses (ii), (iii) and (iv) of said Section in their entirety and
inserting in lieu thereof the following new clauses (ii), (iii) and (iv):
"(ii) in addition to Dividends otherwise permitted for such purpose
by clause (iv) of this Section 9.03, the Borrower may pay Dividends to
Parent to enable Parent, and so long as Parent uses, as soon as reasonably
practicable, the proceeds of such Dividends, to repurchase Parent Common
Stock and/or options to purchase Parent Common Stock held by directors,
executive officers, members of management or employees of Parent or any of
its Affiliates, so long as (x) no Default or Event of Default then exists
or would exist immediately after giving effect thereto and (y) the
aggregate amount of cash expended by Parent pursuant to this clause (ii)
in any calendar year shall not exceed $6,000,000; provided that, in
addition to amounts available pursuant to preceding clause (y) (but
subject to the requirements of preceding clause (x)), the Borrower may pay
additional Dividends to Parent to enable Parent, and so long as Parent
uses, as soon as reasonably practicable, the proceeds of such Dividends,
to make additional cash purchases in respect of Parent Common Stock and/or
options to purchase Parent Common Stock previously held by any person
listed above, after the death of such person, with proceeds of key-man
life insurance maintained by any Credit Party on such person;
(iii) so long as there shall exist no Default or Event of Default
(both before and after giving effect to the payment thereof), the Borrower
may pay cash Dividends to Parent, so long as the proceeds thereof are used
by Parent (as soon as reasonably practicable) to pay taxes then due and
payable, operating expenses and payables owing by Parent in the ordinary
course of its business, other similar corporate overhead costs and
expenses, and expenses (other than principal, liquidation preference,
interest or dividends) in respect of the Convertible QUIPS and/or
Convertible Subordinated Debentures;
(iv) so long as no Default or Event of Default is in existence or
would exist immediately after giving effect to the respective Dividend,
the Parent shall be permitted to pay cash Dividends in an amount not to
exceed the Available Basket Amount on such date (after giving effect to
all prior and contemporaneous adjustments thereto, except as a result of
such Dividend), and the Borrower shall be permitted to pay Dividends to
the Parent so long as the Parent, as soon as reasonably practicable, uses
such amounts to pay Dividends as contemplated above pursuant to this
clause (iv);",
(ii) deleting the period at the end of clause (v) of said Section and inserting
a semi-colon in lieu thereof and (iii) inserting the following new clauses at
the end of said Section:
"(vi) the Borrower may make cash Dividends to Parent, which in turn
shall utilize the full amount of such cash Dividends for the purpose of
paying interest,
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<PAGE>
and so long as Parent, by the immediately succeeding Business Day,
utilizes the full amount of such cash Dividends to pay interest as and
when due on the Convertible Subordinated Debentures then outstanding to BF
Trust, which in turn shall utilize the full amount of such interest
payments on the day of its receipt thereof to pay accrued dividends then
owing with respect to Convertible QUIPS then outstanding, provided that
(x) the amount of cash Dividends payable by the Borrower pursuant to this
clause (vi) shall not exceed the amounts necessary to make such dividend
payments owing with respect to the Convertible QUIPS, (y) no such Dividend
shall be made at any time when the payment of cash interest on the
Convertible Subordinated Debentures is not permitted to be made pursuant
to the subordination provisions applicable thereto and (z) no such
Dividend may be made at any time following the occurrence and during the
continuance of any Default or Event of Default or if a Default or Event of
Default would exist immediately after giving effect to the payment of such
Dividend; and
(vii) at any time after the third anniversary of the date of the
issuance of the Convertible QUIPS, the Convertible QUIPS may be optionally
redeemed by BF Trust in accordance with their terms, so long as (x) no
Default or Event of Default exists at the time of such redemption or
immediately after giving effect thereto (and to the payments of any
Dividends pursuant to this clause (vii)) and (y) at the time notice of
redemption is given, the market price of the common stock of Parent (as
reasonably determined in good faith by Parent) exceeds the conversion
price then applicable in connection with a conversion of the Convertible
QUIPS into common stock of Parent; and in the event such an optional
redemption occurs, any shares of Convertible QUIPS which are in fact
optionally redeemed (and which are not, in accordance with the terms of
the Convertible QUIPS, converted into shares of common stock of Parent)
may be redeemed by BF Trust, and in such case cash Dividends may be paid
by the Borrower to Parent, and used by Parent, to repay principal then
outstanding pursuant to the Convertible Subordinated Debentures, at such
times and in such amounts as are needed to make such payments in respect
of the optional redemption of the Convertible QUIPS (and in each case so
long as no Default or Event of Default exists at the time of any such
payment or would exist immediately after giving effect thereto)."
10. Section 9.12 of the Credit Agreement is hereby amended by (i)
deleting the word "Borrower" appearing in Section 9.12(a) and inserting in lieu
thereof the word "Parent", (ii) inserting the word "Parent" immediately before
the phrase "Rights Plan" appearing in Section 9.12(a), (iii) deleting the word
"Borrower" the first time it appears in clause (c) thereof and by inserting in
lieu thereof the word "Parent" and (iv) inserting the following new clause (e)
immediately at the end thereof:
"(e) The Borrower shall not issue any capital stock, other than
common stock issued to, and held by, Parent which is pledged (and
delivered for pledge) pursuant to the Parent Pledge Agreement.
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<PAGE>
11. Sections 10.04, 10.05, 10.06 and 10.09 of the Credit Agreement
are hereby amended by deleting the word "Borrower" in each place it appears in
said Sections and inserting the word "Parent" in lieu thereof.
12. Section 10.08 of the Credit Agreement is hereby amended by
deleting said Section in its entirety and inserting in lieu thereof the
following new Section 10.08:
"10.08 Guarantees. Any Guarantee or any material provision thereof
shall cease to be in full force or effect as to the relevant Guarantor, or
any Guarantor or Person acting by or on behalf of such Guarantor shall
deny or disaffirm such Guarantor's obligations under the relevant
Guarantee, or any Guarantor shall default in the due performance or
observance of any material term, covenant or agreement on its part to be
performed or observed pursuant to the relevant Guarantee; or".
13. Section 10 of the Credit Agreement is hereby further amended by
(i) inserting the text "or" at the end of Section 10.11 of the Credit Agreement
and (ii) inserting the following new Sections immediately after Section 10.11 of
the Credit Agreement:
"10.12 Operations of Parent; Etc. Parent shall (i) engage in any
business other than its ownership of the capital stock of the Borrower and
the common securities of BF Trust or incur any liabilities or Indebtedness
(other than liabilities and Indebtedness under the Credit Documents, the
Convertible Subordinated Debenture Documents, the Convertible QUIPS
Documents and the Parent Rights Plan and liabilities of the types
described in Section 9.03(ii)), provided that Parent may engage in those
activities that are incidental to (x) the maintenance of its corporate
existence in compliance with applicable law, (y) legal, tax and accounting
matters in connection with any of the foregoing activities and (z) the
entering into, and performance of its obligations under, the Credit
Documents, the Convertible Subordinated Debenture Documents, Convertible
QUIPS Documents and the Parent Rights Plan or (ii) amend or modify, or
permit the amendment or modification of, any provision of any Convertible
Subordinated Debenture Document or any Convertible QUIPS Document to which
it is a party or (iii) except for optional redemptions as specifically
permitted pursuant to Section 9.03(vii), redeem any Convertible QUIPS or
permit the redemption of any Convertible QUIPS (in each case excluding any
exchange of Convertible QUIPS for Convertible Subordinated Debentures or
Parent Common Stock, in each case in accordance with the terms applicable
to the Convertible QUIPS), or (iv) amend, modify or change its certificate
of incorporation (including, without limitation, by the filing or
modification of any certificate of designation other than any certificate
of designation relating to Qualified Preferred Stock) or by-laws or any
agreement entered into by it with respect to its capital stock, or enter
into any new agreement with respect to its capital stock, other than any
amendments, modifications or
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<PAGE>
changes pursuant to this clause (iv) and any such new agreements pursuant
to this clause (iv) which do not in any way adversely affect the interests
of the Banks; or
10.13 Operations of BF Trust; Etc. BF Trust shall engage in any
business other than its holding of Convertible Subordinated Debentures and
its issuance of Convertible QUIPS, or engage in any activities other than
those that are incidental or related to the foregoing; or
10.14 Parent Dividends. Parent shall pay, or permit the payment of,
any Dividends with respect to Parent other than Dividends paid by Parent
in accordance with the express provisions of Sections 9.03(ii) and (iv)."
14. The definition of "Available Basket Amount" appearing in Section
11 of the Credit Agreement is hereby amended by inserting "immediately after the
phrase "Effective Date," appearing in clause (i) thereof the following new
proviso:
"provided that (x) all proceeds of equity contributions to the
Borrower made by the Parent with proceeds of its issuance of the
Convertible Subordinated Debentures as contemplated by the Convertible
QUIPS Preliminary Offering Memorandum shall be excluded for purposes of
preceding clause (i) and (y) from and after the Convertible QUIPS Issuance
Date, proceeds of equity issuances by the Borrower shall only be included
for purposes of preceding clause (i) to the extent not otherwise excluded
pursuant to preceding clause (x) and only to the extent the proceeds of
such equity issuances by the Borrower were received by it from Parent and
represent contributions of proceeds of issuances of equity by the Parent
effected after the Convertible QUIPS Issuance Date,".
15. The definition of "Consolidated Debt" appearing in Section 11 of
the Credit Agreement is hereby amended by (i) deleting the word "Borrower" each
place it appears in said definition and by inserting in lieu thereof the word
"Parent" and (ii) inserting the following new sentence immediately at the end
thereof:
"Notwithstanding anything to the contrary contained in the
immediately preceding sentence, neither the Convertible QUIPS nor the
Convertible Subordinated Debentures issued by the Parent to BF Trust in
connection with the issuance of the Convertible QUIPS shall be included as
a component of Consolidated Debt (and to the extent same would otherwise
be reflected therein, Consolidated Debt shall be reduced by the amount
attributable thereto which would otherwise be so reflected).
16. The definition of "Consolidated EBIT" appearing in Section 11 of
the Credit Agreement is hereby amended by inserting the phrase "(or, for periods
after the QUIPS Issuance Date, Parent)" immediately after the word "Borrower"
appearing therein.
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<PAGE>
17. The definition of "Consolidated Net Income" appearing in Section
11 of the Credit Agreement is hereby amended by (i) inserting, immediately after
the word "Borrower" the first time it appears in said definition the phrase
"(or, for periods after the Convertible QUIPS Issuance Date, Parent), (ii)
deleting the word "Borrower" each place it appears in said definition after the
first use of such term and by inserting in lieu thereof the word "Parent", and
(iii) deleting the last proviso to said definition and inserting in lieu thereof
the following new proviso:
"and provided further that (x) for all purposes of calculating
Consolidated Net Income, Consolidated Net Income shall be reduced (to the
extent same has not already been reduced thereby) by the amount of all
cash Dividend payments made with respect to the Convertible QUIPS or, to
the extent same have been exchanged for Convertible Subordinated
Debentures, all cash interest payments made with respect to such
Convertible Subordinated Debentures, and Consolidated Net Income shall not
be otherwise reduced by interest expense with respect to the Convertible
Subordinated Debentures or the accrual of Dividends with respect to the
Convertible QUIPS and (y) in calculating Consolidated Net Income for the
purposes of the definition of Consolidated Cumulative 25% Net Income
Amount, Consolidated Net Income shall mean the amount determined as
otherwise provided above less (to the extent not already reduced thereby)
the amount of all cash Dividend requirements (whether or not declared or
paid) on Preferred Stock other than the Convertible QUIPS (including,
without limitation, any Qualified Preferred Stock and Permitted Acquired
Subsidiary Preferred Stock) then outstanding paid, accrued or scheduled to
be paid or accrued during such period".
18. The definition of "Consolidated Net Interest Expense" appearing
in Section 11 of the Credit Agreement is hereby amended by (i) inserting the
phrase "(or for periods after the QUIPS Issuance Date, Parent)" immediately
after the word "Borrower" the first place it appears therein, (ii) deleting the
word "Borrower" the second place it appears therein and by inserting in lieu
thereof the word "Parent", (iii) in each place, after the second time, the word
"Borrower" appears therein and inserting the phrase "or Parent, as the case may
be," immediately after such word and (iv) inserting the following new sentence
immediately at the end thereof:
"Notwithstanding anything to the contrary contained above,
Consolidated Net Interest Expense shall not include any amounts relating
to interest or dividends accruing on the Convertible Subordinated
Debentures or the Convertible QUIPS, except that an amount equal to all
cash payments (excluding cash payments made in respect of the liquidation
preference thereof in accordance with Section 9.03(vii)) made to holders
of Convertible QUIPS or, after any exchange of same for Convertible
Subordinated Debentures, in respect of Convertible Subordinated
Debentures, shall be treated as a component of Consolidated Net Interest
Expense, with the amount of any Dividends paid in respect of the
Convertible QUIPS not to be grossed up as contemplated by clause (iii) of
the immediately preceding sentence
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<PAGE>
unless the correlating payments of interest on the Convertible
Subordinated Debentures may not be deducted by Parent for its tax purposes
(in which case such payments shall be so grossed up).
19. The definition of "Continuing Directors" appearing in Section 11
of the Credit Agreement is hereby amended by (i) deleting the text "Borrower" in
each place it appears in said Section and inserting in lieu thereof the word
"Parent" and (ii) deleting the phrase "Effective Date" appearing therein and by
inserting in lieu thereof the phrase "Convertible QUIPS Issuance Date".
20. The definition of "Credit Document" appearing in Section 11 of
the Credit Agreement is hereby amended by inserting the text ", the Parent
Guaranty" immediately after the text "each Security Document".
21. The definition of "Material Adverse Effect" appearing in Section
11 of the Credit Agreement is hereby amended by deleting the word "Borrower"
appearing therein and by inserting in lieu thereof the word "Parent".
22. The definition of "Permitted Subordinated Indebtedness"
appearing in Section 11 of the Credit Agreement is hereby amended by deleting
the amount "$250,000,000" appearing in said definition and inserting in lieu
thereof the amount "$350,000,000".
23. The definition of "Qualified Preferred Stock" appearing in
Section 11 of the Credit Agreement is hereby amended by (i) deleting the word
"Borrower" the first place it appears therein and by inserting in lieu thereof
the word "Parent" and (ii) deleting the word "Borrower" the second place it
appears therein and by inserting in lieu thereof the phrase "Parent or any of
its Subsidiaries".
24. The definition of "Security Document" appearing in Section 11 of
the Credit Agreement is hereby amended by inserting the text "and the Parent
Pledge Agreement" immediately after the text "the Pledge and Security
Agreement".
25. The definition of "Subsidiary" appearing in Section 11 of the
Credit Agreement is hereby amended by adding the phrase "or the Parent, as the
case may be" immediately at the end of the last sentence appearing in said
definition.
26. Section 10 of the Credit Agreement is hereby amended by (i)
deleting the definition of "Change of Control" in its entirety and (ii)
inserting the following new definitions in appropriate alphabetical order:
"BF Trust" shall mean Big Flower Trust I, a statutory business trust
formed under the laws of Delaware.
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<PAGE>
"Change of Control" shall mean (i) at any time a "Change of Control"
under, and as defined in, the Convertible Subordinated Debenture Indenture, the
Convertible QUIPS Documents, any Existing Indebtedness, any Permitted Debt or
Qualified Preferred Stock, in each case to the extent then outstanding, shall
have occurred; or (ii) at any time and for any reason whatsoever (a) any
"Person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), excluding the Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act),
directly or indirectly, of 30% or more of the outstanding Voting Stock of Parent
(or 40% or more of the outstanding Voting Stock of Parent, to the extent (and
only to the extent) such "Person" or "group" "beneficially owning" 30% or more
of such Voting Stock received all (to the extent in excess of 5% of the
outstanding Voting Stock of Parent) of the Voting Stock so owned by such
"Person" or "group" in connection with an acquisition approved by Continuing
Directors in advance thereof) or (b) the Board of Directors of Parent shall
cease to consist of a majority of Continuing Directors or (c) Parent shall cease
to own 100% on a fully diluted basis of the shares of outstanding capital stock
of the Borrower or (d) at any time prior to a termination of BF Trust and the
distribution of Convertible Subordinated Debentures as contemplated by the
Convertible QUIPS Preliminary Offering Memorandum, Parent shall cease to own
100% of the outstanding common securities of BF Trust.
"Convertible QUIPS" shall mean BF Trust's Convertible Quarterly
Income Preferred Securities, liquidation preference of $50 per security, which
preferred securities shall be exchangeable, in certain circumstances, for a
portion (equal to the aggregate liquidation preference of the Convertible QUIPS
so exchanged) of the Convertible Subordinated Debentures held by BF Trust;
provided that in no event shall the number of Convertible QUIPS issued exceed
the lesser of (x) that number of Convertible QUIPS issued on the Convertible
QUIPS Issuance Date plus any Convertible QUIPS subsequently issued as a result
of the underwriters' over-allotment option as described in the Convertible QUIPS
Preliminary Offering Memorandum or (y) 3,000,000.
"Convertible QUIPS Documents" shall mean and include (i) the
Convertible QUIPS and (ii) the subordinated guaranty of Parent in favor of the
holders of the Convertible QUIPS as more fully described in the Convertible
QUIPS Preliminary Offering Memorandum.
"Convertible QUIPS Issuance Date" shall mean the date of initial
issuance of Convertible QUIPS.
"Convertible QUIPS Preliminary Offering Memorandum" shall mean the
Offering Memorandum in respect of the Convertible QUIPS, dated as of October 3,
1997.
"Convertible Subordinated Debentures" shall mean Parent's
Convertible Subordinated Debentures due October, 2027, issued to BF Trust,
bearing interest at the same dividend rate as is applicable to the Convertible
QUIPS, and convertible into Parent
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<PAGE>
Common Stock pursuant to a Permitted Conversion, in an aggregate principal
amount not to exceed at any time outstanding (x) 103.1% of the aggregate
liquidation preference of Convertible QUIPS issued on the Convertible QUIPS
Issuance Date (plus the aggregate liquidation preference of any additional
Convertible QUIPS issued pursuant to the exercise of the underwriters'
over-allotment option as described in the Convertible QUIPS Preliminary Offering
Memorandum) less (y) the aggregate liquidation value of all Convertible QUIPS
exchanged for Parent Common Stock in connection with a Permitted Conversion.
"Convertible Subordinated Debenture Documents" shall mean the
Convertible Subordinated Debenture Indenture and all other agreements and
documents entered into in connection with the issuance of the Convertible
Subordinated Debentures.
"Convertible Subordinated Debenture Indenture" shall mean the
indenture entered into between Parent, BF Trust and a trustee to be designated
in respect of the Convertible Subordinated Debentures, as the same be amended,
modified or supplemented from time to time in accordance with the terms hereof
and thereof.
"Guarantees" shall mean and include each of the Parent Guaranty and
the Subsidiaries Guaranty.
"Guarantors" shall mean and include each of the Parent and each
Subsidiary Guarantor.
"Parent" shall mean Big Flower Holdings, Inc., a Delaware
corporation.
"Parent Common Stock" shall mean the common stock of Parent, $.01
par value per share.
"Parent Guaranty" shall have the meaning provided in the Second
Amendment.
"Parent Pledge Agreement" shall have the meaning provided in the
Second Amendment.
"Parent Rights Plan" shall have the meaning provided in the Second
Amendment.
"Permitted Conversion" shall mean the conversion into Parent Common
Stock of Convertible Subordinated Debentures received by any holder of
Convertible QUIPS in exchange for such holder's Convertible QUIPS in accordance
with the terms of the Convertible Subordinated Debenture Indenture.
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<PAGE>
"Second Amendment" shall mean the Second Amendment to this
Agreement, dated as of October 15, 1997.
27. Section 12.03 of the Credit Agreement is hereby amended by
deleting amended by deleting the word "Borrower" in each place it appears in
said Section and inserting in lieu thereof the word "Parent".
28. Notwithstanding anything to the contrary contained in the Credit
Agreement or any other Credit Documents, prior to the issuance of the
Convertible QUIPS, the Borrower may establish Parent as a direct Wholly-Owned
Subsidiary of Borrower, and may also establish another newly-formed direct
Wholly-Owned Subsidiary of Parent (the "Merger Sub"), (ii) at the time of the
issuance of the Convertible QUIPS (or immediately prior thereto) Merger Sub may
be merged with and into the Borrower, with the Borrower surviving said merger as
a direct wholly-owned Subsidiary of Parent and (iii) Parent may establish BF
Trust as contemplated by the Convertible QUIPS Preliminary Offering Memorandum
(with the transactions described in clauses (i) through (iii), above, being
collectively called the "Corporate Reorganization"), in each case so long as,
before (or contemporaneous with) the occurrence of the transactions described in
preceding clause (ii), Parent shall have (x) duly authorized, executed and
delivered a pledge agreement substantially in the form of the Pledge and
Security Agreement (as amended, modified or supplemented from time to time, the
"Parent Pledge Agreement"), (y) delivered to the Collateral Agent, as pledgee
thereunder, all of the capital stock of the Borrower owned by the Parent,
together with executed and undated stock powers and (z) duly authorized,
executed and delivered a guaranty in form and substance satisfactory to Agents
and the Required Banks, (1) guaranteeing all of the Obligations of the Borrower
under the Credit Agreement and (2) providing covenants by the Parent to the
effect that it will take all action as may be needed to comply with the
covenants contained in the Credit Agreement, and so that no Default or Event of
Default occurs as a result of actions taken by the Parent (as amended, modified
or supplemented from time to time, the "Parent Guaranty"). Notwithstanding
anything to the contrary contained in the Credit Agreement or any other Credit
Documents, in connection with the Corporate Reorganization, modifications may be
made to the certificate of incorporation and/or bylaws of the Borrower, so long
as the Borrower reasonably determines that such modifications are not adverse to
the Banks in any material respect and the Parent may adopt a shareholders'
rights plan as a successor plan to the Rights Plan previously applicable to the
Borrower (the "Parent Rights Plan").
II. Miscellaneous Provisions.
1. In order to induce the Banks to enter into this Amendment, the
Borrower hereby represents and warrants that:
(a) no Default or Event of Default exists as of the Second Amendment
Effective Date, both before and after giving effect to this Amendment; and
-11-
<PAGE>
(b) all of the representations and warranties contained in the
Credit Agreement and the other Credit Documents are true and correct in
all material respects on the Second Amendment Effective Date both before
and after giving effect to this Amendment, with the same effect as though
such representations and warranties had been made on and as of the Second
Amendment Effective Date (it being understood that any representation or
warranty made as of a specific date shall be true and correct in all
material respects as of such specific date).
2. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
3. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.
4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
5. This Amendment shall become effective on the date (the "Second
Amendment Effective Date") when the Borrower and the Required Banks shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including by way of facsimile transmission) the same to
the Administrative Agent at its Notice Office.
6. Notwithstanding anything to the contrary contained above and
subject to the proviso to this Section 6, this Amendment shall cease to be
effective (and shall be deemed to never have been effective), and shall be of no
further force or effect, unless on or prior to November 15, 1997, each of the
following conditions shall have been satisfied to the satisfaction of the
Administrative Agent:
(i) the Second Amendment Effective Date shall have theretofore
occurred;
(ii) the Corporate Reorganization as contemplated by Section 28 of
Part I of this Second Amendment shall have been consummated, and the
Parent Pledge Agreement and Parent Guaranty shall have been executed and
delivered, in form satisfactory to the Administrative Agent, as
contemplated by said Section 28, and all capital stock of the Borrower
owned by the Parent shall have been delivered for pledge pursuant to the
Parent Pledge Agreement;
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<PAGE>
(iii) the Administrative Agent shall have received an opinion of
counsel (who may be internal counsel) to the Parent and Borrower in
respect of the actions taken as contemplated by this Section 6, and said
opinion shall be in form and substance reasonably satisfactory to the
Administrative Agent;
(iv) (x) BF Trust shall have received gross cash proceeds of at least
$100,000,000 from the issuance by BF Trust of the Convertible QUIPS, (y)
Parent shall have received gross cash proceeds of at least $100,000,000
from the issuance by Parent of the Convertible Subordinated Debentures to
BF Trust and (z) Parent shall have contributed the net cash proceeds of
such issuance of Convertible Subordinated Debentures to the Borrower as a
capital contribution;
(v) the Borrower shall have received gross cash proceeds of
$100,000,000 from its issuance of additional 8-7/8% Senior Subordinated
Notes due 2007 as contemplated by the preliminary offering memorandum with
respect thereto dated October 3, 1997; and
(vi) (x) the Agents and the Banks shall have received true and correct
copies of the Convertible Subordinated Debenture Documents and the
Convertible QUIPS Documents certified as such by an Authorized Officer of
the Borrower, each of which shall have been duly authorized, executed and
delivered by the parties thereto and shall be in full force and effect and
in form and substance (including all terms and conditions thereof)
reasonably satisfactory to the Agents and (y) all material conditions
precedent set forth in the Convertible Subordinated Debenture Documents
and the Convertible QUIPS Documents shall have been satisfied and not
waived (unless waived with the consent of the Agents) and the Convertible
Subordinated Debentures and Convertible QUIPS shall have been issued in
accordance with the Convertible Subordinated Debenture Documents and the
Convertible QUIPS Documents, as the case may be, and all applicable law;
provided, that notwithstanding the foregoing provisions of this Section 6, (I)
in the event that the conditions set forth in clauses (ii), (iv) and (vi) above
have not been satisfied to the satisfaction of the Administrative Agent on or
prior to November 15, 1997 but the conditions set forth in each of clauses (i),
(iii) and (v) have been so satisfied on such date, the amendment contained in
Section 22 of Part I of this Amendment (and only said Section 22) shall continue
to be effective and be of full force and effect and (II) in the event the
condition set forth in clause (v) above shall not have been satisfied to the
satisfaction of the Administrative Agent on or prior to November 15, 1997 but
the conditions set forth in each of clauses (i), (ii), (iii), (iv) and (vi)
shall have been so satisfied on such date, then each of the amendments set forth
in Part I of this Amendment (other than Section 22 of such Part I) shall
continue to be effective and be of full force and effect.
7. From and after the Second Amendment Effective Date, and unless
and until the Second Amendment (or any amendment contained therein) ceases to be
effective
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<PAGE>
in accordance with the provisions of preceding Section 6, all references in the
Credit Agreement and each of the other Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as amended hereby.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment as of the date first
above written.
BIG FLOWER PRESS HOLDINGS, INC.
By
-------------------------------------
Title:
BANKERS TRUST COMPANY,
Individually and as Administrative Agent
By
-------------------------------------
Title:
CREDIT SUISSE FIRST BOSTON,
Individually
By
-------------------------------------
Title:
By
-------------------------------------
Title:
CREDIT SUISSE FIRST BOSTON,
as Documentation Agent
By
-------------------------------------
Title:
By
-------------------------------------
Title:
<PAGE>
- ------------------------------------------------------------------------------
GUARANTEE
of
BIG FLOWER PRESS HOLDINGS, INC.
in favour of
BANKERS TRUST COMPANY
in respect of obligations
of BIG FLOWER LIMITED under
a Facility Letter
dated 18 September 1997
- ------------------------------------------------------------------------------
<PAGE>
THIS GUARANTEE is made the 18 day of September 1997
by
(1) BIG FLOWER PRESS HOLDINGS, INC. (the "Guarantor")
in favour of
(2) BANKERS TRUST COMPANY, at its branch in London, (the "Bank").
WHEREAS, BIG FLOWER LIMITED, a company incorporated under the laws of
England and Wales with its registered office at Broadwalk House, 5 Appold
Street, London, EC2A 2HA, and Bankers Trust Company have entered into a
Facility Letter, dated 18 September 1997 (as modified, supplemented or
amended from time to time, the "Facility Letter"), providing for the making
of Loans as contemplated therein;
WHEREAS, it is a condition to the making of loans under the Facility
Letter that the Guarantor shall have executed and delivered this Guarantee;
and
WHEREAS, the Guarantor will obtain benefits as a result of the loans made
to the Borrower and to the Olwen Direct Mail Limited under the Facility
Letter and, accordingly, desires to execute and deliver this Guarantee in
order to satisfy the condition described in the preceding paragraph;
NOW THIS GUARANTEE WITNESSES as follows:
1. Interpretation
Terms defined in the Facility Letter shall, except as otherwise expressly
provided herein or as the context otherwise requires, have the same meanings
in this Guarantee (including, without limitation, the preamble and recitals
hereto).
2. Guarantee
The Guarantor, as primary obligor and not merely as surety,
unconditionally and irrevocably:
(a) guarantees to the Bank the due and punctual payment of any and
all sums from time to time due from the Borrower under the Facility
Letter and the due and punctual performance of each of the Borrower's
other obligations under the Facility Letter, including, without
limitation, the payment of all sums and the performance of all
obligations due from the Borrower by virtue of its joint and several
liability for the obligations of Olwen thereunder;
(b) undertakes to pay to the Bank on demand any sum due from the
Borrower under the Facility Letter which is unpaid; and
(c) agrees to indemnify the Bank on demand against any loss
incurred by the
1
<PAGE>
Bank as a result of the Facility Letter or this Guarantee being or
becoming, in whole or in part, void, voidable or unenforceable for any
reason whatsoever, whether or not known to the Bank (the amount of such
loss being the amount which the Bank would otherwise have been entitled
to recover from the Borrower).
3. Preservation of Guarantee
3.1 The Bank shall be at liberty without thereby affecting its rights
hereunder or otherwise conferred by law at any time at its absolute
discretion and with or without the assent or knowledge of or notice to the
Guarantor:
(a) to give time to the Borrower or Olwen for the payment of all or
any sums due or payable under the Facility Letter;
(b) to neglect or forbear to enforce payment of all or any sums due
or payable under the Facility Letter and (without prejudice to the
foregoing) to grant any time or other indulgence or forbearance to and
fail to assert or pursue or delay in asserting or pursuing any right or
remedy against the Borrower or Olwen;
(c) to accept, vary, exchange, renew, abstain from perfecting or
release any security (other than this Guarantee) now held or to be held
by it for or on account of any sums payable or expressed to be payable
under the Facility Letter;
(d) to amend, add to or vary the terms of the Facility Letter; and
(e) to compound with, accept compositions from and make any other
arrangements with the Borrower or Olwen.
3.2 This Guarantee and the rights of the Bank hereunder or otherwise
conferred by law shall not be affected by the appointment of a receiver or
liquidator or by any alteration of the Borrower's or Olwen's status or any
defective or irregular exercise of the powers of the Borrower or Olwen to
raise finance or by any other act or circumstance which (apart from this
provision) would or might constitute a legal or equitable defence for or
discharge of a surety or guarantor. This Guarantee may be called up and
enforced without steps or proceedings first being taken against the Borrower
or Olwen or the exercise of any remedy under the Facility Letter and the
Guarantor irrevocably waives any right it may have of first requiring the
Bank (or any trustee, agent or other person acting on its behalf) to proceed
against or enforce any other rights or security or claim payment from any
person (including without limitation the Borrower or Olwen) before claiming
from the Guarantor under this Guarantee.
3.3 Any unenforceability, illegality or invalidity of any obligation of
any person (including without limitation the Borrower or Olwen) under the
Facility Letter or any other document or security delivered in connection
therewith shall not reduce, release or prejudice any obligation of the
Guarantor under this Guarantee, which obligation shall remain in full force
and effect notwithstanding any such unenforceability, illegality or
invalidity.
3.4 Where any discharge (whether in respect of the obligations of the
Borrower or Olwen under the Facility Letter or any security for those
obligations or otherwise) is made in
2
<PAGE>
whole or in part or any arrangement is made on the faith of any payment,
security or other disposition which is avoided or must be restored upon an
insolvency or liquidation or any similar event, the liability of the
Guarantor hereunder shall continue or be reinstated (as the case may be) as
if such discharge or arrangement had not occurred. The Bank (or any trustee,
agent or other person acting on its behalf) may concede or compromise any
claim that any payment, security or other disposition is liable to avoidance
or restoration.
3.5 Until all amounts which may be or become payable by the Borrower or
Olwen under or in connection with the Facility Letter have been irrevocably
paid in full, the Bank (or any trustee, agent or other Person acting on its
behalf) may:
(i) refrain from applying or enforcing any other moneys, security
or rights held or received by the Bank (or such trustee, agent or other
Person) in respect of such amounts, or apply and enforce the same in such
manner and order as it sees fit (whether against such amounts or otherwise)
and the Guarantor shall not be entitled to the benefit of the same; and
(ii) hold in a suspense account any moneys received from the
Guarantor or on account of the Guarantor's liability under the Guarantee,
bearing interest at such market rates as the Bank shall reasonably
determine.
4. Demand upon the Guarantor
4.1 Any demand to be made by the Bank hereunder may be made on the
Guarantor as provided in Section 13 hereof.
4.2 The Bank shall not be required before exercising any of the rights,
powers or remedies available to or conferred on it under the Guarantee or by
law (a) to make any demand on or of the Borrower or Olwen, (b) to take any
other action or obtain any judgment in any court against the Borrower or
Olwen, (c) to make or file any action or proof in any winding-up, dissolution
or other similar proceeding in respect of the Borrower or Olwen or (d) to
enforce or seek to enforce any other security as may then have been granted
or pledged in respect of the obligations of the Borrower or Olwen guaranteed
hereunder.
5. Continuing Guarantee
This Guarantee is a continuing guarantee and shall remain in force until
any commitments under the Facility Letter shall have been terminated and all
sums payable or expressed to be payable by the Borrower or Olwen under the
Facility Letter have been paid in full. Any full or partial settlement or
discharge between the Guarantor and the Bank entered into as a consequence of
payment by the Borrower or Olwen of sums hereby guaranteed or any other act
shall be conditional upon such payment or other act not being avoided or
reduced by virtue of any provision of law or enactment (including, without
limitation, any such relating to liquidation of the Borrower or Olwen) for
the time being in force.
3
<PAGE>
6. Additional Security
This Guarantee shall be in addition to and shall not be in any way
prejudiced or affected by any collateral or other security hereafter held by
the Bank for any or all the moneys payable or expressed to be payable by the
Borrower or Olwen under the Facility Letter nor shall such collateral or
other security or any lien to which the Bank may be otherwise entitled or the
liability of any person or persons for all or any part of such moneys be in
any manner prejudiced or affected by the Guarantee.
7. Non-Competition; Subrogation
7.1 Unless and until all sums payable or expressed to be payable under
the Facility Letter shall have first been completely discharged, the
Guarantor shall not (a) be entitled as against the Bank by paying off all or
part only of the moneys hereby secured or on any other ground to claim any
set-off or counterclaim against the Borrower in respect of any liability on
the part of the Guarantor to the Bank in respect of any payment by the
Guarantor hereunder or (b) be entitled to claim or have the benefit of any
set-off, counterclaim or proof against or dividend, composition or payment by
the Borrower or any benefit of any security which the Bank may now or
hereafter hold for such sums or to have any share therein or (c) claim
payment of, or prove in any bankruptcy, winding-up, liquidation, composition
or arrangement relating to the Borrower for, any other moneys for the time
being due to the Guarantor from the Borrower or exercise any right or a
remedy in respect thereof.
7.2 If the Borrower or Olwen shall become bankrupt or go into
liquidation or be wound up or enter into a composition or make any
arrangements with its creditors, the Bank shall be at liberty to prove for
the whole of the moneys so owing to it under the Facility Letter in priority
to any right of proof on the part of the Guarantor and to accept any
composition or any dividends or payments, as if this Guarantee had not been
given, and to appropriate any such composition, dividends or payments in
reduction of any obligation of the Borrower in priority to any claim by the
Guarantor in respect thereof, and so that its right to recover from the
Guarantor to the full extent of this Guarantee shall not be prejudiced and so
that this Guarantee shall apply to and secure any ultimate balance which
after receipt of such composition, dividends or payments may remain due and
owing to it or them under the Facility Letter.
7.3 Subject to Clauses 7.1 and 7.2 (including without limitation the
complete payment and discharge of all sums payable under the Facility
Letter), the Guarantor shall be fully subrogated, to the extent of its
payments hereunder, to the rights under the Facility Letter of the Person for
whose benefit such payment is applied.
7.4 Following an Event of Default which is continuing any moneys
obtained by the Guarantor from the Borrower prior to the complete payment and
discharge of all sums payable under the Facility Letter, whether in breach of
the provisions of this Guarantee or otherwise, shall be held by the Guarantor
on trust to pay the same in or towards discharge of its obligations hereunder.
8. Representations
8.1 In order to induce the Bank to enter into the Facility Letter and to
make the loans
4
<PAGE>
as therein provided, the Guarantor represents and warrants to the Bank as
follows:
8.1.1 It is incorporated and existing under the laws of Delaware
and has full power and authority to enter into, exercise its rights and
perform and comply with its obligations hereunder;
8.1.2 All actions and things required by its constitutional
documents and applicable law to be taken, fulfilled and done (including the
obtaining of any consents or the making of any registrations) in order to:
(a) enable the Guarantor lawfully to agree to be bound by,
enter into, exercise its rights and perform and comply with its obligations
hereunder;
(b) to ensure that those obligations are legal, valid,
binding and enforceable; and
(c) to make this Guarantee admissible in evidence in the
English courts have been taken, fulfilled and done;
8.1.3 The obligations expressed to be assumed by the Guarantor
hereunder are legal, valid, binding and enforceable;
8.1.4 The Guarantor is not in default in respect of any
obligation nor does any default exist in respect of, or under any agreement
relating to, any of its indebtedness for or in respect of moneys borrowed or
raised (whether as principal debtor or otherwise) which default has or could
have an adverse effect on the Guarantor's ability to perform and comply with
its obligations hereunder;
8.1.5 No petition has been presented or meeting convened for
winding up the Guarantor.
8.2 Each of the representations made by the Guarantor in this Guarantee
shall be deemed to be repeated by the Guarantor on the date a notice of
drawing (as referred to in the Facility Letter) is issued by the Borrower or
Olwen and on the date of any drawing by the Borrower or Olwen under the
Facility Letter.
9. Covenants
The Guarantor hereby agrees to comply with the covenants set out in
Sections 8.01(g), 8.03, 8.09, 9.01 and 9.04 of the Credit Agreement as if the
same were set out fully in this Guarantee.
10. Payments; Taxes; Indemnities
Clauses 5.1, 5.2, 10.2 and 10.3 of the Facility Letter shall be
incorporated herein as if each such Clause were set forth in its entirety
herein, but as if references therein (i) to "the Borrower" were references to
"the Guarantor", (ii) to "this letter" were references to "this Guarantee"
and (iii) in the case of Clause 10.2, references to overdue sums were
references to
5
<PAGE>
sums due hereunder.
11. Separability; Headings
11.1 In case of any one or more of the provisions contained in this
Guarantee shall be invalid, illegal or unenforceable in any respect under any
law, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
11.2 The section headings herein and the Table of Contents are for
convenience only and shall not affect the construction of this Guarantee.
12. Enforceability; Transfer of Rights
This Guarantee shall take effect for the benefit of the Bank. The Bank
may at any time assign or transfer all or any part of its rights or interests
under or in respect of this Guarantee with the prior written consent of the
Guarantor, which consent shall not be unreasonably withheld or delayed. The
Guarantor may not assign or tranfer any of its respective rights, interests
or obligations under or in resepect of this Guarantee to any person.
13. Notices
Unless otherwise provided herein, any communication, demand or notice to
be given hereunder will be duly given when delivered in writing or sent by
telex (answerback received) to a party at its address below or by facsimile
transmission. A communication, demand or notice given pursuant to this
Guarantee shall be in English and addressed, until such party shall have
notified the other parties of a change in address:
If to the Guarantor:
Big Flower Press Holdings, Inc.
3 East 54th Street
17th Floor
New York
NY10022
Attention:
Telex:
Facsimile:
If to the Bank:
Bankers Trust Company
1 Appold Street
Broadgate
London
EC2A 2HE
6
<PAGE>
Attention: Alice Thompson
Facsimile: 0171 982 1182
with a copy to:
BT Services Ireland Limited
4th Floor, Abbey Court,
Irish Life Centre
Lower Abbey Street
Dublin 1, Ireland
Attention: Mr. Tom O'Doherty, Loans Administration
Facsimile: 00 353 1 670 1708/9
Any such communication, demand or notice shall be deemed received on
the date of receipt, if delivered by hand, telex or facsimile transmission,
or on the seventh Business Day following dispatch, if posted, except as
otherwise provided therein.
14. Reinstatement of Obligation
14.1 Any settlement or discharge between the Guarantor and the Bank shall
be conditional upon no security or payment to the Bank by the Borrower, Olwen
or the Guarantor or any other person on behalf of the Borrower, Olwen or, as
the case may be, the Guarantor being avoided or reduced by virtue of any
provisions or enactments relating to bankruptcy, insolvency, liquidation or
similar laws of general application for the time being in force and, if any
such security or payment is so avoided or reduced, the Bank shall be entitled
to recover the value or amount of such security or payment from the Guarantor
subsequently as if such settlement or discharge had not occurred.
15. Law
This Guarantee shall be governed by and construed in accordance with
English law.
16. Judgement Currency, Jurisdiction and Immunity.
16.1 Any amount received or recovered by the Bank (whether under this
Guarantee or otherwise) in respect of any sum expressed to be due to it from
the Guarantor under this Guarantee in a currency (the "other currency") other
than that in which the relevant obligation is expressed to be payable,
whether as a result of, or enforcement of, a judgment or order of a court or
tribunal of any jurisdiction, in the dissolution of the Guarantor or
otherwise, shall only constitute a discharge of the Guarantor to the extent
of the amount in the currency in which the relevant obligation is expressed
to be payable which the Bank would be able to purchase in accordance with
normal banking procedures with the amount so received or recovered in the
other currency (after any premium and costs of exchange) on the date of that
receipt or recovery (or, if it would not be practicable to make that purchase
on that date, on the first date on which it is practicable to do so). If
that amount in the other currency is less than the amount in the currency in
which the relevant obligation is expressed to be payable to the Bank, the
Guarantor shall indemnify it against any loss sustained by it as a result.
In such event, the Guarantor shall
7
<PAGE>
also indemnify the Bank against the cost of making any such purchase. These
indemnities constitute a separate and independent obligation from the other
obligations in this Guarantee, shall give rise to a separate and independent
cause of action, shall apply irrespective of any indulgence granted by the
Bank and shall continue in full force and effect despite any judgment, order,
claim or proof for a liquidated amount in respect of any sum due under this
Guarantee or any judgment or order. No proof or evidence of any actual loss
may be required other than proof of the actual amount in the currency in
which the relevant obligation is expressed to be payable purchased by the
Bank as mentioned above and the date upon which such purchase was effected.
16.2 In relation to any legal action or proceedings arising out of or in
connection with this Guarantee ("Proceedings"), the Guarantor irrevocably
submits to the non-exclusive jurisdiction of the High Court of Justice in
England. The Guarantor irrevocably waives any objection to Proceedings in
any such court on the grounds of venue or on the grounds that the Proceedings
have been brought in an inconvenient forum. The submissions contained, and
the taking of Proceedings in any of the jurisdictions referred to, in this
Section 16.2 shall not preclude any party from taking Proceedings in any
other of such jurisdictions or in any other jurisdiction in which Proceedings
may be commenced against the Guarantor.
16.3 Without prejudice to any other permitted mode of service, the
Guarantor agrees that service of any writ, notice or other document for the
purpose of any proceedings in such courts shall be duly served upon it if
delivered or sent by registered post to Broadwalk House, 5 Appold Street,
London EC2A 2MA (marked for the attention of Jeffrey Sultoon) or such other
address in England or Wales as the Guarantor may notify from time to time to
the Bank.
16.4 To the extent that the Guarantor may now or hereafter be entitled,
in any jurisdiction in which Proceedings may at any time be commenced with
respect to this Guarantee, to claim for itself or any of its properties,
assets or revenues any immunity (sovereign or otherwise) from suit,
jurisdiction of any court, attachment prior to judgment, attachment in aid of
execution of a judgment, execution of a judgment or from set-off, banker's
lien, counterclaim or any other legal process or remedy with respect to its
obligations under this Guarantee and/or to the extent that in any such
jurisdiction there may be attributed to the Guarantor, any such immunity
(whether or not claimed), the Guarantor hereby to the fullest extent
permitted by applicable law irrevocably agrees not to claim, and hereby to
the fullest extent permitted by applicable law irrevocably waives, any such
immunity. The Guarantor irrevocably and generally consents in respect of any
Proceedings anywhere to the giving of any relief or the issue of any process
in connection with those Proceedings including, without limitation, the
making, enforcement or execution against any property, assets or revenues
whatsoever (irrespective of their use or intended use) of any order or
judgment which may be made or given in those Proceedings.
8
<PAGE>
IN WITNESS WHEREOF this Guarantee has been duly executed and is intended
to be and is hereby delivered as a deed on the date first above written.
Executed as a deed by )
BIG FLOWER PRESS )
HOLDINGS, INC. )
Executed as a deed by )
BANKERS TRUST COMPANY )
9
<PAGE>
Big Flower Limited
5 Appold Street
London EC2A 2HA
Dear Sirs,
We, Bankers Trust Company acting through our branch at [London] (the
"Bank"), set out below the terms and conditions on which we are prepared to
provide to you, Big Flower Limited, (the "Borrower") and to Olwen Direct Mail
Limited ("Olwen"), provided that Olwen, the Bank and the Borrower execute the
Deed of Accession attached to this letter as Appendix C, the following loan
facility:-
1. Amount and Commitment Period
The amount of the facility is L27,000,000 (the "Facility Amount"). The
facility shall be available to the Borrower for drawing by an initial drawing
of L23,287,685.84 and thereafter for subsequent drawings each of a minimum of
L200,000 (except where the remaining undrawn amount of the facility is less
than L200,000 in which case the amount available up to the Facility Amount
may be drawn) and an integral multiple of L200,000 on any day on which banks
in London are open and on which Sterling deposits may be dealt in on the
London inter-bank market and on which commercial banks and foreign exchange
markets are open for business in London and New York City (a "Business Day")
during the period (the "Commitment Period") ending on 30th November, 1997 if:-
1.1 the conditions precedent listed in Clause 7.1 are fulfilled to the
Bank's satisfaction; and
1.2 not later than 5 p.m. (London time) on the Business Day preceding
the date of the relevant drawing, the Bank has received from the Borrower a
notice of drawing in the form attached as Appendix A except that in the case
of the first drawing under the facility, the Borrower may submit its notice
of drawing not later than 2 p.m. on the Business Day of such drawing.
2. Purpose
The Borrower shall use the entire proceeds of each drawing for the
acquisition of Olwen, the refinancing of existing indebtedness of Olwen and
for the general corporate purposes of the Borrower and its subsidiaries
(including working capital), but the Bank need not check that the Borrower
does so.
-1-
<PAGE>
3. Repayment, Prepayment and Cancellation
3.1 Subject as otherwise provided in this letter, the principal amount of
all outstanding drawings shall be repaid on 1st December 1997 (the "Final
Maturity Date").
3.2 The Borrower may prepay any drawing or any part thereof which is a
minimum of L200,000 and an integral multiple of L200,000, on the last day of
any period for determining interest in relation to that drawing in accordance
with Clause 4 (each such period and each period for determining interest in
accordance with Clause 10.2, an "Interest Period") if the Borrower provides
the Bank with not less than one Business Day's prior notice of the date and
amount of the prepayment.
3.3 Any notice of prepayment under this letter will oblige the Borrower
to prepay in accordance with that notice. The Borrower may not repay or
prepay all or part of the loan except as expressly provided in this letter.
Any amount prepaid may be reborrowed.
3.4 Any repayment or prepayment shall be made together with all unpaid
interest accrued on the amount of that repayment or prepayment and any other
sum then due under this letter.
3.5 The Borrower may by not less than one Business Day's prior notice to
the Bank cancel all or any part (but if in part in a minimum principal amount
of L200,000 and in an amount which is an integral multiple of L200,000) of
the Bank's unutilised commitment hereunder.
4. Interest
4.1 Interest will be calculated and payable on each drawing by reference
to successive Interest Periods. Interest accrued during an Interest Period
shall be paid by the Borrower to the Bank on the last day of that Interest
Period unless provided otherwise in this letter. Each Interest Period shall
be of one, two, three or four weeks' duration, as selected by the Borrower in
a notice received by the Bank not later than 2 p.m. (London time) on the
Business Day immediately preceding the beginning of that Interest Period
except that:--
(a) any Interest Period which would otherwise end on a non-Business
Day shall instead end on the next Business Day unless it would thereby end
in the next calendar month, in which case it shall end on the immediately
preceding Business Day and each subsequent Interest Period shall end on
the last Business Day in the appropriate month;
(b) subject to the above exceptions, any Interest Period for which no
effective selection notice is received by the Bank shall be of one week's
duration;
(c) if an Interest Period would otherwise overrun the Final Maturity
Date, such Interest Period shall be shortened so that it ends on the Final
Maturity Date.
4.2
(a) The rate of interest applicable in relation to any Interest
Period shall be the rate per annum (as determined by the Bank) equal to
the sum (rounded up to the nearest four decimal points) of:--
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(i) the Margin (namely 1.25%); and
(ii) LIBOR (being on any date the rate at which the Bank is
offered Sterling deposits by prime banks in the London inter-bank
market at or about 11.00 a.m. on such date in an amount equivalent
to the relevant drawing and with a maturity equivalent to the
duration of such Interest Period) in effect on the first day of such
Interest Period; and
(iii) the MLA Costs in relation to that Interest Period or part
thereof as determined in accordance with Appendix B. The Bank shall
notify the Borrower of the MLA Costs applicable to that Interest
Period as soon as practicable after the determination thereof.
(b) However, in relation to any Interest Period for which (i) the
Bank is not offered deposits as contemplated by Clause 4.2.1(ii) or (ii)
the Bank determines that the deposits so offered to the Bank are not
sufficient to enable the Bank to fund (having regard to its other funding
requirements) the amount to which that Interest Period relates, then the
Bank shall, as soon as practicable, notify the Borrower and shall for a
period of up to five Business Days negotiate with the Borrower in good
faith with a view to agreeing a substitute basis for determining the rate
of interest applicable during that particular Interest Period. If a
substitute basis is agreed, it shall take effect retrospectively from
the commencement of that Interest Period. If a substitute basis is not
agreed then with retrospective effect from the commencement of that
Interest Period, the rate of interest applicable to that Interest Period
shall be calculated in accordance with Clause 4.2.1 except that there
shall be substituted for the rate referred to in Clause 4.2.1(ii) the
percentage per annum reasonably determined by the Bank to be that which
expresses the cost to the Bank of funding the relevant drawing for that
Interest Period by whatever means the Bank reasonably determines to be
appropriate.
5. Payments
5.1 Each payment by the Borrower under this letter shall be made in
Sterling so as to be received by the Bank in immediately available cleared
funds, free and clear of any restriction or condition, not later than 2 p.m.
(London time) on the due date by transfer to such account of the Bank as the
Bank may from time to time designate.
5.2 Each such payment pursuant to Clause 5.1 shall be made without any
set-off or counterclaim or any deduction or withholding on account of United
Kingdom tax except to the extent required by law, in which event the Borrower
shall pay the Bank such additional sum as will result in the Bank receiving
on the due date of the relevant payment (free from any liability in relation
to any such deduction or withholding) a net sum equal to the full amount
which would have been receivable had no such deduction or withholding been
required. The Borrower shall on request supply the Bank with evidence
satisfactory to the Bank of the relevant deduction or withholding. However no
such additional sum shall be payable if the Bank ceases to be a bank as
defined in Section 840A of the Income and Corporation Taxes Act 1988 and
which is within the charge to UK corporation tax as regards any interest
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received by it hereunder otherwise than as a result of the introduction of,
change in, or any change in the interpretation, administration or application
of, any law or regulation or any practice or concession of the UK Inland
Revenue occurring after the date of this letter. Without prejudice to the
foregoing provisions of this Clause 5.2, if the Bank is required to make any
payment in respect of taxes on or in relation to any sum received or
receivable hereunder by the Bank or any liability in respect of any such
payment is asserted, imposed, levied or assessed against the Bank, upon
demand by the Bank, the Borrower shall indemnify the Bank against such
payment or liability, together with any interest, penalties and expenses
payable or incurred in connection therewith provided that this indemnity
shall not extend to any liability of the Bank arising from UK corporation tax.
5.3 Any payment which would otherwise be due on a non-Business Day shall
instead be due on the next Business Day.
6. Illegality and Increased Costs
6.1 If (a) the adoption of any applicable law, rule or regulation, any
change therein or any change in the interpretation or administration thereof,
after the date of this letter would make it unlawful for the Bank to perform
all or any of its obligations under this letter or (b) compliance by a Bank
(or its holding company) with any request or directive (whether or not having
the force of law) issued after the date of this letter by any central bank or
fiscal or other monetary authority with which it is customary for banks in
the relevant jurisdiction to comply would prevent the Bank from performing
all or any part of its obligations under this letter, its commitment
hereunder shall be cancelled upon prior written notification by the Bank to
the Borrower of the relevant circumstances, whereupon the Borrower shall, on
the date specified in such notice, repay the outstanding drawings hereunder
together with all accrued interest and all other amounts owing hereunder to
the Bank.
6.2 Subject to Clause 6.3, the Borrower shall on demand by the Bank pay
to the Bank the amount of any increased cost reasonably determined by the
Bank to be incurred by it (or its holding company) as a result of the
introduction of or any change in, or any change in the interpretation or
application of, any law or regulation or directive (including without
limitation any law or regulation or directive relating to taxation, or
reserve asset, special deposit, cash ratio, liquidity or capital adequacy
requirements or any other form of banking or monetary control).
In this Letter "increased cost" means (i) an additional cost incurred by
the Bank (or its holding company) as a result of the Bank having entered
into, or performing, maintaining or funding its obligations under, this
Letter; or (ii) a reduction in any amount payable to the Bank or the
effective return to the Bank under this Letter or to the Bank (or its holding
company) on its capital; or (iii) the amount of any payment made by the Bank
or the amount of any interest or other return foregone by it calculated by
reference to any amount received or receivable by it from the Borrower.
6.3 Clause 6.2 does not apply to any increased cost (a) compensated for
pursuant to Clause 5.2, or (b) attributable to any change in the rate of tax
on the overall net income of the Bank imposed in the jurisdiction in which
its principal office for the time being is situate or (c) compensated for by
the MLA Costs.
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7. Conditions Precedent and Drawdown
7.1 The Bank shall not be obliged to advance any drawing under this
facility unless:--
(a) before the Borrower requests any drawing, the Bank has received
the following, in form and substance satisfactory to the Bank acting
reasonably (and has notified the Borrower upon such receipt that all the
conditions set out in this Clause 7.1 have been met to the satisfaction of
the Bank acting reasonably):
(i) the enclosed copy of this letter, countersigned and dated
on the Borrower's behalf;
(ii) a guarantee from Big Flower Press Holdings, Inc. (the
"Guarantor"), in form and substance agreed between the Bank and the
Borrower;
(iii) a certificate of incumbency in form and substance
satisfactory to the Bank acting reasonably, certified to the Bank's
reasonable satisfaction, attaching:--
(A) the Borrower's Memorandum and Articles of Association;
(B) a resolution of the Borrower's Board of Directors
approving this letter and authorising the countersignature of the
enclosed copy of this letter and the Share Charge and the giving
of any notice or the taking of any other action under or in
connection with this letter and the Share Charge;
(C) the names, titles and specimen signatures of the
persons authorised to take action as specified in Clause
7.1.1(iii)(b) above and those authorised to operate the facility;
(iv) a certificate of incumbency in form and substance
satisfactory to the Bank acting reasonably, certified to the Bank's
reasonable satisfaction, attaching:--
(A) the Guarantor's certificate of incorporation and
bylaws;
(B) a resolution of the Guarantor's Board of Directors
approving the Guarantee and authorising its execution and the
giving of any notice of the taking of any other action under
or in connection with the Guarantee;
(v) a legal opinion in form and substance agreed between the
Bank and the Borrower from Ashurst Morris Crisp, legal advisers to the
Borrower in England;
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(vi) a legal opinion in form and substance agreed between the
Bank and the Borrower from the General Counsel of the Guarantor in New
York;
(vii) evidence that Ashurst Morris Crisp has irrevocably accepted
its designation as the Guarantor's agent to receive service of
process as provided in Section 16.2 of the Guarantee, satisfactory in
form and substance to the Bank acting reasonably; and
(viii) within 45 days of this letter, management accounts of the
Borrower; and
(ix) a certificate issued by the Guarantor to the Bank
certifying compliance with the Credit Agreement or, in the case of any
breach under the Credit Agreement, certifying that such breach has
been waived, in the agreed form attached hereto as Appendix C;
(b) no Event of Default specified in Clause 10.2 (nor any event
which, with the giving of any notice, and/or the expiry of any grace
period, provided for in Clause 10.2, would constitute an Event of Default
(hereinafter referred to as a "Default")) has occurred on or before the
proposed date of the relevant drawing or will occur as a result of the
relevant drawing being made.
7.2 The proceeds of each drawing will be made available to the Borrower
or as the Borrower directs in immediately available cleared funds, free and
clear of any restriction or condition, not later than 2 pm (London time) on
the due date by transfer to such account of the Borrower with such bank in
London as the Borrower shall have specified in the Notice of Drawing.
8. Representation and Warranties
By countersigning the copy of this letter, the Borrower will
represent and warrant to the Bank as follows (each such representation and
warranty to survive such countersignature and the making of any drawing
hereunder):--
8.1 The Borrower is incorporated and existing under the laws of England
as a limited liability company and has full power and authority to enter
into, exercise its rights and perform and comply with its obligations
hereunder and under the Share Charge;
8.2 All action, conditions and things required by the Borrower's
Memorandum and Articles of Association and the laws of England to be taken,
fulfilled and done (including the obtaining of any consents, or the making of
any registrations or filings) in order to:-
(a) enable the Borrower lawfully to agree to be bound by, enter
into, exercise its rights and perform and comply with its obligations
hereunder and under the Share Charge;
(b) to ensure that those obligations are legal, valid, binding and
enforceable; and
(c) to make this letter and the Share Charge and the Borrower's
countersignature hereunder admissible in evidence in the English courts
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have been taken, fulfilled and done;
8.3 The obligations expressed to be assumed by the Borrower hereunder
and under the Share Charge are legal, valid, binding and enforceable;
8.4 Neither the Borrower, the Guarantor nor any of their respective
subsidiaries is in default in respect of any obligation nor does any default
exist in respect of, or under any agreement relating to, any of its
indebtedness for or in respect of moneys borrowed or raised (whether as
principal debtor or otherwise) which default has or could reasonably be
expected to have a material adverse effect on the Borrower's ability to
perform and comply with its obligations hereunder or the Guarantor's ability
to perform and comply with its obligations under the Guarantee;
8.5 No Event of Default or Default (nor any event referred to in Clause
7.1(a)(ix)) has occurred or will occur as a result or making any drawing under
this facility;
8.6 It is not necessary in order to ensure the legality, validity,
enforceability or admissibility in evidence of this letter, the Share Charge
or the Guarantee that any stamp, registration or similar duty or tax be paid
in England and Wales or in the States of Delaware or New York or under the
federal laws of the United States of America on or in relation to such
documents;
8.7 No litigation, arbitration or administrative proceedings are
current or, to its knowledge, pending or threatened, which could reasonably
be expected to be adversely determined or if pursued to their final
conclusions whether or not adversely determined, would have a material
adverse effect on the business or financial condition of the Borrower or its
ability to perform its obligations under this letter or the Share Charge;
8.8 All information given to the Bank in writing by or on behalf of the
Borrower concerning the Borrower, Olwen and their respective businesses,
affairs, assets or liabilities was when given and is on the date hereof (to
the best of the Borrower's knowledge) true and correct in all material
respects and (to the best of the Borrower's knowledge) no matter or fact has
not been disclosed in writing to the Bank which could render any such
information untrue or misleading in any material respect; and
8.9 Following the acquisition of Olwen, it will be the legal and
beneficial owner of the property which is the subject of the Share Charge with
full title guarantee, and the Share Charge will create an Encumbrance of the
type and with the priority that such Share Charge purports to create, over
all such property.
8.10 Each of the representations and warranties in this Clause will be
correct and complied with as though made on and as of the date of any Notice of
Drawing and the date of any drawing hereunder.
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9. Undertakings
By countersigning the copy of this letter, the Borrower will
undertake to the Bank that, so long as any sum remains to be drawn or remains
payable under this facility:--
9.1 It will notify the Bank of the occurrence of any Event of Default
(or of any event referred to in Clause 7.1(a)(ix)) within five Business Days
of becoming aware of the same;
9.2 It will not, and will cause its subsidiaries not to, create, incur,
assume or suffer to exist any Encumbrance on or with respect to any of its
properties, assets or revenues, whether now owned or hereafter acquired, to
secure any Indebtedness (as defined in the Credit Agreement) other than
Permitted Liens (as defined in the Credit Agreement) or as contemplated in
this letter.
9.3 Immediately on the acquisition by it of Olwen, it shall enter into
the Share Charge and provide any documents or other instruments required to
be provided to the Bank pursuant thereto.
9.4 It shall duly and punctually perform and observe all terms,
covenants and conditions on its part to be performed and observed under the
Share Charge and shall not permit Olwen to re-register as an unlimited
company;
9.5 It shall ensure that its payment obligations under this letter
shall at all times be direct, unconditional, and general obligations and
shall at all times rank at least pari passu in right of payment with all
its other outstanding unsubordinated indebtedness;
9.6 It shall keep its business and assets insured and use all
reasonable efforts to procure that the business and assets of its
subsidiaries are insured with reputable underwriters or insurance companies
in the manner and to the extent usual for such business and assets and, from
time to time upon the reasonable request of the Bank and to the extent
practicable, furnish the Bank with evidence as to its compliance with its
obligations under this paragraph; and
9.7 It shall remain at all times a wholly owned subsidiary of the
Guarantor.
10. Events of Default
10.1 At any time after the occurrence (for whatever reason and whether
within or beyond the Borrower's control) of an Event of Default (as defined
below) the Bank, by written notice to the Borrower, may:
(a) terminate the Bank's commitment to lend hereunder;
(b) demand immediate repayment of the outstanding principal amount
of the drawings together with accrued interest (if any) and any other sums
payable hereunder;
(c) give written notice to the Guarantor to pay under the Guarantee;
and/or
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(d) if 30 days after giving notice to the Guarantor under paragraph
(c) above no payment under the Guarantee has been made, enforce all or any
part of its security constituted under the Share Charge.
10.2 The following shall each be an "Event of Default":
(a) The Borrower or the Guarantor fails to pay any principal sum
expressed to be due hereunder or under the Guarantee as and when provided in
this letter or the Guarantee, as applicable, or fails to pay any other
amount within three Business Days of the date such amount falls due
hereunder or under the Guarantee;
(b) Any representation, warranty or statement by the Borrower under
or in connection with this letter or the Share Charge or by the Guarantor
under the Guarantee is not complied with in any material respect, or is or
proves to have been incorrect in any material respect when made;
(c) The Borrower fails to perform or comply with any provisions
of Clauses 2, 4 or 5 of the Share Charge;
(d) The Guarantor fails to perform or comply with any of the
provisions of the Guarantee (other than payment obligations) and such
failure is not remedied within 30 days after notice of that failure has
been given to the Guarantor by the Bank;
(e) The Guarantee or the obligations of the Borrower under this
letter or the Share Charge shall, for any reason whatsoever, cease to be in
full force and effect or any person acting by or on behalf of the Guarantor
shall deny or disaffirm the Guarantor's obligations under the Guarantee;
(f) The security constituted by the Share Charge ceases to be
effective or is materially impaired;
(g) The Indebtedness of the Guarantor under the Credit Agreement
either (a) shall become capable of acceleration in accordance with
Section 10 thereof (as a result of the occurrence of an Event of Default
(as defined in the Credit Agreement), (b) is accelerated or placed on
demand or (c) is not paid when due and before the end of any applicable
grace period;
(h) An Event of Default as defined in Section 10.02 (in respect of
the Guarantor), 10.04, 10.05 or 10.09 of the Credit Agreement shall occur in
relation to the Borrower or the Guarantor (notwithstanding any provision to
the contrary in the Credit Agreement the Borrower is deemed to be a
Subsidiary and not an Insignificant Subsidiary for the purposes of this
Section 10.2(h)).
10.3 If the Borrower does not pay any sum expressed to be payable
hereunder as provided in this letter, the Borrower shall on demand pay
interest on the amount from time to time outstanding in respect of that
overdue sum for the period beginning on its due date and ending on the date
of its receipt by the Bank (both before and after judgment). The rate of
interest applicable shall be the rate per annum equal to the sum of 1% and
the rate which
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would be applicable under Clause 4.2 if that overdue sum were of principal.
If however the overdue sum is of principal and becomes due otherwise than on
the last day of an Interest Period, the first default Interest Period
applicable to that overdue sum shall end on the last day of the Interest
Period first-mentioned in this sentence and the rate of interest applicable
to that sum for that period shall be the sum of 1% and the rate applicable to
it immediately before it became due. Any such interest not paid on demand
shall itself bear interest accordingly.
10.4 The Borrower shall on demand indemnify the Bank against any
funding or other cost, loss, expense or liability (including loss of Margin)
which has been or will be sustained or incurred by the Bank as a result of
any Event of Default, or its receipt or recovery of all or any part of any
drawing or any overdue sum otherwise than on the last day of an Interest
Period relating thereto or any drawing duly requested failing to be made due
to any of the conditions precedent for such drawing specified in Clause 7 not
being satisfied.
11. Expenses
11.1 The Borrower will reimburse the Bank on demand:-
(a) all reasonable expenses (including reasonable legal fees)
incurred by the Bank in preparing and negotiating, executing and completing
the transactions contemplated in this letter, the Share Charge and the
Guarantee and any other documents referred to therein and all expenses
(including reasonable legal fees) incurred by the Bank in enforcing and/or
preserving any of its rights hereunder or under the Guarantee or the Share
Charge; and
(b) any stamp, registration or similar fees or taxes of any kind
payable in connection with this letter, the Guarantee or the Share Charge
and any penalty for late payment thereof.
11.2 The Borrower agrees to pay to the Bank a commitment fee (the
"Commitment Fee") in respect of the Commitment Period computed at a rate
equal to 0.375 per cent. per annum on the utilised commitment from time to
time of the Bank. Accrued Commitment Fee shall be due and payable in arrears
on the Final Maturity Date or such earlier date as the commitment shall be
terminated.
11.3 The Borrower agrees to pay to the Bank an up-front facility fee of
L33,750 upon signing this letter.
12. Accession
12.1 Each of the parties to this facility agrees that after the date of
this letter Olwen may become an Acceding Borrower to this facility on the
terms and conditions set out in this Clause 12, provided that Olwen shall
have no liability under this letter in respect of any drawing made by the
Borrower hereunder or any interest thereon or any other amounts payable
hereunder in respect thereof.
12.2 Olwen may become an Acceding Borrower under this letter if:
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12.2.1 the Borrower gives written notice to the Bank (such notice
to be, mutatis mutandis, in the form of the certificate delivered
pursuant to Clause 7.1(a)(iii), be accompanied by certified copies of
Olwen's most recent management accounts, its most recent audited accounts
and be otherwise in form and substance satisfactory to the Bank, acting
reasonably;
12.2.2 each of the Bank, Olwen and the Borrower executes and
delivers the Deed of Accession (attached to this letter as Appendix C);
12.2.3 the Bank receives a legal opinion from Ashurst Morris Crisp in
form and substance agreed between the Bank and the Acceding Borrower.
12.3 The Acceding Borrower shall use the entire proceeds of each drawing
for its working capital requirements, but the Bank need not check that the
Acceding Borrower does so.
12.4 Subject to the liability of the Acceding Borrower being limited as
aforesaid, following the satisfaction of the conditions specified in Clause
12.2:
12.4.1 Clauses 1, 3.1 to 3.4 (inclusive), 4, 5, 6, 7.2, 10.1, 10.2
and 10.3 of this letter shall apply to the Acceding Borrower and the words
"Borrower" shall be read as "Borrower or the Acceding Borrower, as the case
may be," (except that in Clause 10.1 notice of an Event of Default shall
always be provided to the Borrower);
12.4.2 Clauses 7.1(b), 10.4, 11.2 and 13 shall apply to the Acceding
Borrower and in these provisions the word "Borrower" shall be read as
"Borrower and/or the Acceding Borrower"; and
12.4.3 The Acceding Borrower shall represent and warrant to the
Bank and undertake to the Bank in the terms of Clauses 8 and 9 as if
references to the "Borrower" were references to the "Acceding Borrower" and
references to the Share Charge and Guarantee were deleted.
12.5 For the avoidance of doubt, only this Clause 12 and the provisions
specified in Clauses 12.4.1, 12.4.2 and 12.4.3 shall apply to the Acceding
Borrower and then only so far as imposing any liability on the Acceding
Borrower as aforesaid.
12.6 For the avoidance of doubt, the Borrower shall be jointly and
severally liable with the Acceding Borrower under this letter for all of the
Acceding Borrower's obligations hereunder.
13. Miscellaneous
13.1 In this letter:--
"Acceding Borrower" means Olwen which may become a borrower to this
facility in accordance with the terms and conditions set out in Clause 12.
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"Credit Agreement" means the credit agreement dated as of June 12, 1997
among, inter alia, Big Flower Press Holdings, Inc., as borrower, and Bankers
Trust Company, as Administrative Agent as amended, modified and/or varied
from time to time;
"Encumbrance" means any mortgage, pledge, lien, charge, assignment,
hypothecation or security interest or any other agreement or arrangement
having the effect of conferring security including security equivalents such
as finance leases, sale and re-purchase, sale and leaseback, sale of
receivables on a recourse basis, deferred purchases and title retention
agreements other than any such security interest or arrangement arising under
or in relation to the accounts receivable facility arrangements between the
Bank and the Guarantor and provided further that if there are any conflicts
between this letter and such arrangements the accounts receivable facility
arrangements shall prevail;
"Guarantee" means the guarantee described in Clause 7.1.1(ii);
"Guarantor" means Big Flower Press Holdings, Inc.
"Qualifying Bank" means at any time a bank as defined in Section 840A of
the Taxes Act 1988 for the purposes of Section 349 of that Act which is
within the charge to UK corporation tax as respects any interest payable or
paid to it under this letter.
"Share Charge" means the charge over the shares of Olwen to be granted
by the Borrower in favour of the Bank; and
"Sterling", "Pounds" and "L" means the lawful currency for the time being
of the United Kingdom;
13.2 Except as expressly provided herein, all notices and other
communications provided for hereunder shall be in writing and shall be by
facsimile or letter and shall be sent:-
13.2.1 to the Borrower at fax no.0171 972 7990 or c/o Ashurst
Morris Crisp, Broadwalk House, 5 Appold Street, London EC2A 2HA (in each
case marked for the attention of Jeffrey Sultoon) and copied to Mark
Angelson at fax no. 001 212 521 1640.
13.2.2 to the Bank at fax no. 0171 982 2087 or to 1 Appold
Street, Broadgate, London EC2A 2HE marked for the attention of Alice
Thompson with a copy to 00 353 1 805 1092 or to: BT Services Ireland
Limited, 4th Floor, Abbey Court, Irish Life Centre, Lower Abbey Street,
Dublin 1, Ireland (in each case, marked for the attention of Mr Tom
O'Doherty, Loans Administration);
or such other fax number or address or marked for such other attention as the
relevant party may from time to time notify the other for the purpose of this
facility. Any notice or communication hereunder shall be deemed received
when sent (if by fax) or when delivered to the appropriate address or two
days after being posted (if by letter) and shall be effective notwithstanding
any change of fax number or address or that it be returned undelivered
(except that, if received on a non-Business Day or after normal business
hours, it shall be deemed
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received on the next Business Day after such receipt). Any notice or other
communication shall be irrevocable.
13.3 All interest and Commitment Fees shall accrue from day to day and be
calculated on the basis of actual days elapsed and a 365 day year.
13.4 Any amount received or recovered by the Bank (whether under this
letter or otherwise) in respect of any sum expressed to be due to it from the
Borrower under this letter in a currency (the "other currency") other than
that in which the relevant obligation is expressed to be payable, whether as
a result of, or enforcement of, a judgment or order of a court or tribunal of
any jurisdiction, in the dissolution of the Borrower or otherwise, shall only
constitute a discharge of the Borrower to the extent the amount in the
currency in which the relevant obligation is expressed to be payable which
the Bank would be able to purchase in accordance with normal banking
procedures with the amount so received or recovered in the other currency
(after any premium or costs of exchange) on the date of that receipt or
recovery (or, if it would not be practicable to make that purchase on that
date, on the first date on which it is practicable to do so). If that amount
in the other currency is less than the amount in the currency in which the
relevant obligation is expressed to be payable to the Bank, the Borrower
shall indemnify it against any loss sustained by it as a result. In such
event, the Borrower shall also indemnify the Bank against the costs of making
any such purchase. These indemnities constitute a separate and independent
obligation from the other obligations in this letter, shall give rise to a
separate and independent cause of action, shall apply irrespective of any
indulgence granted by the Bank and shall continue in full force and effect
despite any judgment, order, claim or proof for a liquidated amount in
respect of any sum due under this letter or any judgment or order. No proof
or evidence of any actual loss may be required other than proof of the actual
amount in the currency in which the relevant obligation is expressed to be
payable purchased by the Bank as mentioned above and the date upon which such
purchase was effected.
13.5 In case any one or more provisions of this letter shall be invalid,
illegal or unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions contained herein shall not in
any way be affected or impaired thereby.
13.6 No failure by the Bank to exercise or delay by the Bank in
exercising any right or remedy under this letter will operate as a waiver
thereof, nor will any single or partial exercise by the Bank of any right or
remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies provided in
this letter are cumulative and not exclusive of any rights or remedies
provided by law.
13.7 The Bank shall be entitled, but not obliged, without notice to the
Borrower to combine, consolidate or merge all or any of the Borrower's
accounts with any liabilities to the Bank and may set-off or transfer any sum
outstanding to the credit of any of the Borrower's accounts (whether or not
then due) or any credit balances on any other accounts with the Bank to which
the Borrower is beneficially entitled in or towards the satisfaction of any
of its liabilities to the Bank and may do so notwithstanding that the
balances on such accounts and the liabilities may not be expressed in the
same currency and the Bank is hereby authorised go use any such sums or
credit balances to effect any necessary conversions at its own rate of
exchange then prevailing.
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<PAGE>
13.8 The letter shall benefit and be binding on the Bank and the
Borrower, their respective successors and any permitted assignee or
transferee of some or all of a party's rights or obligations under this
letter. Any reference in this letter to any party shall be construed
accordingly. The Borrower may not assign or transfer all or part of its
rights or obligations under this letter. The Bank may transfer all or part
of its rights and obligations under this letter to a Qualifying Bank with a
lending office in the UK or change its lending office within the UK for the
purposes of this letter with the prior written consent of the Borrower, such
consent not to be unreasonably withheld or delayed. The transfer shall
become effective when the Borrower has been notified of it by the Bank and
has received from the transferee an undertaking (addressed to it) to be bound
by this letter and to perform the obligations transferred to it.
13.9 The Bank's initial lending office for the purposes of this letter is
set out at the commencement of this letter.
13.10 This letter, and the Borrower's agreement to be bound by it, shall
be governed by and construed in accordance with English law.
Please confirm your agreement to the terms and conditions of this letter
by countersigning and dating the enclosed copy of this letter and returning
it to us at the address set out at the beginning of this letter so as to be
received by us by 18th September, 1997.
Yours faithfully,
Bankers Trust Company.................................................
We agree to the terms and conditions of your letter dated 18th September,
1997 of which the above is a copy.
.................................................
for and on behalf of
Big Flower Limited
..................................................
Name: MARK A. ANGELSON
Title: DIRECTOR
-14-
<PAGE>
APPENDIX A
FORM OF NOTICE OF DRAWING REFERRED TO IN CLAUSE 1.2
[Date]
Bankers Trust Company acting through its branch at London
Attention: [ ].
In accordance with Clause 1.2 of the facility letter dated 18th
September, 1997 (the "Facility Letter") from the Bank to the Borrower, the
Borrower gives the Bank notice that the Borrower wishes to make a drawing of
- -pound- [ ] under that facility on [ ], 1997 (or if
not a Business Day; the next succeeding day which is a Business Day).
The Borrower elects for the interest period relating to the drawing to be
of [ ] week(s).
The Borrower represents, warrants and confirms that:
(A) the representations and warranties contained in Clause 8 of the
Facility Letter and those in the Share Charge and the Guarantee which are
expressed to be made or repeated on the date of this notice of drawing are
true and correct and will be true and correct immediately after the drawing
is made; and
(B) no Event of Default or Default has occurred and is continuing or is
reasonably likely to result from the drawing.
Capitalised terms used herein shall have the respective meanings provided
to such terms in the Facility Letter.
This notice of drawing shall be governed by English law.
Big Flower Limited
By:
--------------------------
Name:
------------------------
Title:
-----------------------
-15-
<PAGE>
APPENDIX B
CALCULATION OF THE MLA COST
(a) The MLA Cost for a drawing denominated in Sterling is calculated in
accordance with the following formula:-
BY + L (Y - X ) + S (Y - Z)
-----------------------------
100 - (B + S) % per annum = MLA Cost
where on the day of application of the formula:
B is the percentage of the Bank's eligible liabilities which the Bank of
England requires the Bank to hold on a non-interest bearing deposit
account in accordance with its cash ratio requirements;
Y is the rate at which Sterling deposits are offered by the Bank to
leading banks in the London interbank market at or about 11.00 am on
that day for the relevant Interest Period;
L is the percentage of eligible liabilities which the Bank of England
requires the Bank to maintain as secured money with members of the
London Discount Market Association and/or as secured call money with
certain money brokers and gilt-edged primary market makers;
X is the rate at which secured Sterling deposits in the relevant amount
may be placed by the Bank with members of the London Discount Market
Association and/or as secured call money with certain money brokers
and gilt-edged primary market makers at or about 11.00 am on that day
for the relevant Interest Period;
S is the percentage of the Bank's eligible liabilities which the Bank of
England requires the Bank to place as a special deposit; and
Z is the interest rate per annum allowed by the Bank of England on
special deposits.
(b) For the purposes of this Appendix B "eligible liabilities" and
"special deposits" have the meanings given to them at the time of application
of the formula by the Bank of England.
(c) In the application of the formula, B, Y, L, X, S and Z are included
in the formula as figures and not as percentages, eg. If B = 0.5% and Y =
15%, BY is calculated as 0.5 x 15.
(d) The formula is applied on the first day of the relevant Interest
Period.
(e) If the Bank determines that a change in circumstances has rendered
or will render, the formula inappropriate, the Bank acting reasonably shall
determine and shall notify the Borrower of, the manner in which the MLA Costs
will subsequently be calculated. The manner of calculation so notified by
the Bank shall, in the absence of manifest error, be binding on the Borrower.
-16-
<PAGE>
APPENDIX C
Deed of Accession
THIS DEED OF ACCESSION is made on 1997
BETWEEN:
(1) OLWEN DIRECT MAIL LIMITED ("Olwen");
(2) BIG FLOWER LIMITED (the "Existing Borrower"); and
(3) BANKERS TRUST COMPANY (the "Bank").
WHEREAS:
(A) This Deed is entered into in connection with a facility letter dated 18th
September 1997 (the "Facility Letter") from the Bank to the Existing Borrower.
(B) The Existing Borrower wishes that Olwen shall become an Acceding Borrower
as contemplated by Clause 12 of the Facility Letter and the Bank consents
thereto.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. Definitions
Terms defined in the Facility Letter shall have the same meaning when
used in this Deed.
2. Admission of Acceding Borrower
2.1 Each of the parties to this Deed agrees that Olwen should accede to
the Facility Letter in accordance with Clause 12 therein.
3. Law
This Deed of Accession shall be governed by and construed in all respects
in accordance with English law.
IN WITNESS whereof the parties have caused this Deed to be duly executed on
the date first written above.
Signed as a Deed by )
Olwen Direct Mail Limited )
acting by [ ], a )
Director, and [ ] [a )
Director/the Company Secretary] )
-17-
<PAGE>
Signed as a Deed by )
Big Flower Limited )
acting by [ ] a )
Director and [ ] [a )
Director/Company Secretary] )
Signed as a Deed by )
[ ] )
for and on behalf of )
Bankers Trust Company )
-18-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS FOUND ON PAGES 2 THROUGH 4 OF THE COMPANY'S FORM 10-Q FOR
THE YEAR TO DATE
</LEGEND>
<CIK> 0001048662
<NAME> Big Flower Holdings, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,804
<SECURITIES> 0
<RECEIVABLES> 112,707
<ALLOWANCES> 10,116
<INVENTORY> 40,136
<CURRENT-ASSETS> 170,535
<PP&E> 452,468
<DEPRECIATION> 127,435
<TOTAL-ASSETS> 814,507
<CURRENT-LIABILITIES> 194,245
<BONDS> 0
0
0
<COMMON> 185
<OTHER-SE> 91,898
<TOTAL-LIABILITY-AND-EQUITY> 814,507
<SALES> 955,918
<TOTAL-REVENUES> 955,918
<CGS> 752,981
<TOTAL-COSTS> 752,981
<OTHER-EXPENSES> 146,496
<LOSS-PROVISION> 2,260
<INTEREST-EXPENSE> 30,586
<INCOME-PRETAX> 23,595
<INCOME-TAX> 11,461
<INCOME-CONTINUING> 12,134
<DISCONTINUED> 0
<EXTRAORDINARY> (13,463)
<CHANGES> 0
<NET-INCOME> (1,329)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
