<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 5, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BIG FLOWER PRESS HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 13-376-8322
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
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------------------------
3 EAST 54TH STREET
NEW YORK, NEW YORK 10022
(212) 521-1600
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)
------------------------------
MARK A. ANGELSON, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY OF THE BOARD OF DIRECTORS
BIG FLOWER PRESS HOLDINGS, INC.
3 EAST 54TH STREET
NEW YORK, NEW YORK 10022
(212) 521-1600
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)
------------------------------
COPIES TO:
ROBERT E. BUCKHOLZ, JR., ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
8 5/8% Senior Subordinated Notes
due December 1, 2008........................... $250,000,000 $1,025 $256,250,000 $71,237.50
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f); the proposed maximum offering price is based on the
average of the bid and asked prices of the Notes on February 3, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 5, 1999
PROSPECTUS
OFFER TO EXCHANGE
$250,000,000 8 5/8% SENIOR SUBORDINATED NOTES DUE 2008
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
FOR
[LOGO]
ALL OUTSTANDING UNREGISTERED
8 5/8% SENIOR SUBORDINATED NOTES DUE 2008
BIG FLOWER PRESS HOLDINGS, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON - , 1999
UNLESS EXTENDED.
BIG FLOWER PRESS--
- will exchange its unregistered 8 5/8% senior
subordinated notes due December 1, 2008 of which
$250,000,000 aggregate principal amount was issued
on December 9, 1998, for an equal amount of
registered Exchange Notes having the same terms;
and
- may be required to offer to purchase the Exchange
Notes from you if Big Flower Press undergoes a
change of control or sells certain assets.
THE EXCHANGE NOTES--
- have a stated maturity of December 1, 2008;
- will receive interest payments on each January 1
and July 1, commencing July 1, 1999;
- may be redeemed on or after December 1, 2003 by
Big Flower Press;
- may be redeemed until December 1, 2001 with the
net proceeds from issuances of equity interests of
Big Flower Press, but only up to 35% of the
Exchange Notes may be so redeemed;
- may be redeemed, in whole, if Big Flower Press
undergoes a change of control prior to December 1,
2003;
- will be unsecured and subordinated to all existing
and future senior debt of Big Flower Press;
- will be effectively subordinated to all
liabilities of Big Flower Press' subsidiaries,
including trade payables;
- will rank equally with the $350.0 million
aggregate principal amount of Big Flower Press'
8 7/8% senior subordinated notes due 2007 that are
currently outstanding;
- currently have no public market; and
- will not be listed on any national securities
exchange.
<PAGE>
INVESTING IN THE EXCHANGE NOTES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU
SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN THE
EXCHANGE NOTES.
This prospectus includes additional information on the terms of the Exchange
Notes, including redemption and repurchase prices and covenants.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is - , 1999
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
IN THIS PROSPECTUS OR DELIVERED WITH THIS PROSPECTUS. THESE DOCUMENTS ARE
AVAILABLE UPON REQUEST FROM BIG FLOWER PRESS HOLDINGS, INC., 3 EAST 54TH STREET,
NEW YORK, NEW YORK 10022, ATTENTION: IRENE B. FISHER, ESQ., TELEPHONE: (212)
521-1600. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE AT LEAST FIVE DAYS PRIOR TO - (THE "EXPIRATION DATE").
Unless otherwise indicated or the context clearly implies otherwise all
references in this prospectus to the "Company", "Big Flower Press", "we", "us"
or "our" refer to Big Flower Press Holdings, Inc. The Company is a wholly-owned
subsidiary of Big Flower Holdings, Inc. ("Holdings").
The following documents (and the amendments to such documents) filed by Big
Flower Press (File No. 1-4084) and Holdings (File No. 0-29474) with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated in this
prospectus by reference and are made a part of this prospectus and referred to
herein collectively as the "Incorporated Documents":
(i) Annual Report on Form 10-K for the fiscal year ended December 31,
1997, filed with the Commission on March 26, 1998;
(ii) Amendment to Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1997, filed with the Commission on June 29, 1998;
(iii) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998,
filed with the Commission on May 15, 1998;
(iv) Quarterly Report on Form 10-Q for the quarter ended June 30, 1998,
filed with the Commission on August 14, 1998;
(v) Quarterly Report on Form 10-Q for the quarter ended September 30,
1998, filed with the Commission on November 13, 1998;
(vi) Current Report on Form 8-K, filed with the Commission on March 27,
1998, concerning the Company's acquisition of Troypeak Limited and Pismo
Limited;
(vii) Current Report on Form 8-K/A, filed with the Commission on May 28,
1998, amending the Current Report filed with the Commission on March 27,
1998 to include certain financial statements and pro forma financial
information; and
(viii) Current Report on Form 8-K, filed with the Commission on January
19, 1999, concerning the Company's acquisition of Colorgraphic Direct
Response Limited.
All documents filed by Big Flower Press and Holdings pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
prospectus and prior to the termination of this offering shall be deemed to be
incorporated herein by reference and to be a part of this prospectus on and from
the respective date of filing of such documents.
Any statement contained in this prospectus or in a document incorporated, or
deemed to be incorporated, by reference in this prospectus shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained in or incorporated in this prospectus by reference or in any
other subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
As used herein, the terms "prospectus" and "herein" mean this prospectus
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Statements contained in this prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete, and
where reference is made to the particular provisions of such contract or other
document, such provisions are qualified in all respects by reference to all of
the provisions of such contract or other document. Copies of all documents
incorporated by reference, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents), will
be provided without charge to each person, including any beneficial owner, to
whom a copy of this prospectus has been delivered upon the written or oral
request of such person.
i
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Big Flower Press is subject to the informational requirements of the
Exchange Act, and, jointly with Holdings, files reports and other information
with the Commission. Such reports and other information can be inspected and
copied at the Public Reference Section of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of the
reports, proxy statements and other information can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549, at prescribed
rates. In addition, all reports filed by Big Flower Press via the Commission's
Electronic Data Gathering and Retrieval System (EDGAR) can be obtained from the
Commission's Internet web site located at http://www.sec.gov. The common stock
of Holdings is traded on The New York Stock Exchange (the "NYSE"), and such
reports and other information concerning the Company and Holdings also can be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
Big Flower Press was incorporated in Delaware in 1993. Our principal
executive offices are located at 3 East 54th Street, New York, New York 10022
and our telephone number is (212) 521-1600.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS AND THE INCORPORATED DOCUMENTS CONTAIN FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933.
DISCUSSIONS CONTAINING SUCH FORWARD-LOOKING STATEMENTS MAY BE FOUND IN
"SUMMARY," AS WELL AS WITHIN THIS PROSPECTUS GENERALLY. IN ADDITION, WHEN USED
IN THIS PROSPECTUS, INCLUDING THE INCORPORATED DOCUMENTS, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. ALL FORWARD-LOOKING STATEMENTS ARE SUBJECT TO A
NUMBER OF RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM PROJECTED RESULTS. FACTORS THAT MAY CAUSE THESE DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO,
- FLUCTUATIONS IN THE COST OF RAW MATERIALS USED BY BIG FLOWER PRESS,
- CHANGES IN THE ADVERTISING, MARKETING AND INFORMATION SERVICES MARKETS,
- THE FINANCIAL CONDITION OF OUR CUSTOMERS,
- THE GENERAL CONDITION OF THE UNITED STATES AND OTHER ECONOMIES,
- THE AVAILABILITY OF QUALIFIED PERSONNEL AND OTHER INFORMATION TECHNOLOGY
RESOURCES, AND
- MATTERS SET FORTH IN THIS DOCUMENT GENERALLY.
FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION, OUR EXPECTATION AS
TO WHEN WE WILL COMPLETE THE REMEDIATION AND TESTING PHASES OF OUR YEAR 2000
PROGRAM AS WELL AS OUR YEAR 2000 CONTINGENCY PLANS, OUR ESTIMATED COST OF
ACHIEVING YEAR 2000 READINESS AND OUR BELIEF THAT OUR INTERNAL SYSTEMS AND
EQUIPMENT WILL BE YEAR 2000 COMPLIANT IN A TIMELY MANNER.
FACTORS WHICH MAY AFFECT OUR YEAR 2000 READINESS INCLUDE, BUT ARE NOT
LIMITED TO,
- THE ABILITY TO IDENTIFY AND REMEDIATE ALL DATE SENSITIVE LINES OF COMPUTER
CODE,
- THE ABILITY TO REPLACE EMBEDDED COMPUTER CHIPS IN SYSTEMS OR EQUIPMENT
AFFECTED BY YEAR 2000 ISSUES, AND
- THE ACTIONS OF GOVERNMENT AGENCIES OR OTHER THIRD PARTIES WITH RESPECT TO
YEAR 2000 ISSUES.
CONSEQUENTLY, SUCH FORWARD-LOOKING STATEMENTS SHOULD BE REGARDED SOLELY AS
OUR CURRENT PLANS, ESTIMATES AND BELIEFS. WE DO NOT UNDERTAKE AND SPECIFICALLY
DECLINE ANY OBLIGATION TO PUBLICLY RELEASE THE RESULTS OF ANY REVISIONS TO THESE
FORWARD-LOOKING STATEMENTS THAT MAY BE MADE TO REFLECT ANY FUTURE EVENTS OR
CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS OR TO REFLECT THE OCCURRENCE OF
ANTICIPATED OR UNANTICIPATED EVENTS.
ii
<PAGE>
NOTE REGARDING CERTAIN DEFINED TERMS AND OTHER INFORMATION
IN THIS PROSPECTUS
On October 17, 1997, as a result of a holding company reorganization, the
Company became a wholly-owned subsidiary of Holdings. Unless otherwise indicated
or the context clearly implies otherwise, all references in this prospectus to
the "Company", "Big Flower Press", "we", "us" or "our" refer to Big Flower Press
Holdings, Inc. and its subsidiaries. The Private Notes (as defined on page 1 of
this prospectus) and the Exchange Notes are sometimes collectively referred to
in this prospectus as the "Notes". Market data used throughout this prospectus
was obtained from industry publications and internal Company estimates. While
the Company believes such information is reliable, its accuracy has not been
independently verified and cannot be guaranteed.
NOTICE TO INVESTORS
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, we believe that the Exchange Notes
issued pursuant to this offer to exchange (the "Exchange Offer") may be offered
for resale, resold and otherwise transferred by a holder thereof without
compliance with the registration and prospectus delivery provisions of the
Securities Act of 1933, as amended (the "Securities Act"), PROVIDED that the
holder is acquiring the Exchange Notes in the ordinary course of its business,
is not participating and has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes and is not an "affiliate"
of Big Flower Press within the meaning of Rule 405 of the Securities Act.
However, we do not intend to request the Commission to consider, and the
Commission has not considered, this Exchange Offer in the context of a no-action
letter, and there can be no assurance that the staff of the Commission would
make a similar determination with respect to this Exchange Offer as in other
circumstances. Holders of Private Notes wishing to accept the Exchange Offer
must represent to the Company in the letter of transmittal accompanying this
prospectus (the "Letter of Transmittal") that such conditions have been met. Any
holder who tenders in the Exchange Offer with the intention to participate, or
for the purpose of participating, in a distribution of the Exchange Notes may
not rely upon such interpretations by the staff of the Commission and, in the
absence of any exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
secondary resale transaction. Each broker-dealer who holds Private Notes
acquired for its own account as a result of market-making or other trading
activities and who receives Exchange Notes for its own account in exchange for
such Private Notes pursuant to the Exchange Offer must acknowledge in the Letter
of Transmittal that it will deliver a prospectus in connection with any resale
of such Exchange Notes. We have agreed to make this prospectus (as it may be
amended or supplemented) available to any such broker-dealer that requests
copies of such prospectus in the Letter of Transmittal for use in connection
with any such resale for a period of up to 180 days after the Expiration Date.
See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the
Exchange Notes. There can be no assurance as to the liquidity of any market that
may develop for the Exchange Notes, the ability of holders to sell the Exchange
Notes, or the price at which holders would be able to sell the Exchange Notes.
Future trading prices of the Exchange Notes will depend on many factors,
including among other things, prevailing interest rates, our operating results
and the market for similar securities. Historically, the market for
non-investment grade debt, such as the Exchange Notes, has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that any market for the Exchange Notes, if
such market develops, will not be subject to similar disruptions. See "Risk
Factors--Lack of Public Market for the Notes."
We will not receive any proceeds from, and have agreed to bear the expenses
of, the Exchange Offer. No underwriter is being used in connection with the
Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL BIG FLOWER PRESS ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
iii
<PAGE>
SUMMARY
THIS BRIEF SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS. IT
DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. WE URGE YOU TO
READ CAREFULLY THE ENTIRE PROSPECTUS, THE INCORPORATED DOCUMENTS AND THE OTHER
DOCUMENTS TO WHICH THIS PROSPECTUS REFERS, INCLUDING THE CONSOLIDATED FINANCIAL
STATEMENTS OF THE COMPANY, AND THE NOTES THERETO (COLLECTIVELY, THE
"CONSOLIDATED FINANCIAL STATEMENTS") INCORPORATED IN THIS PROSPECTUS BY
REFERENCE.
THE COMPANY
Big Flower Press is a leading advertising and marketing services company
with three principal business segments: advertising insert and newspaper
products, direct mail and direct marketing products, and digital services.
- We provide advertising insert and newspaper products through Treasure
Chest Advertising Company, Inc. ("TC Advertising"), a leading producer of
advertising insert programs, TV listing magazines, Sunday comics, Sunday
magazines and special supplements for many of the most widely circulated
U.S. newspapers.
- Our second operating unit, Webcraft, Inc. ("Webcraft"), is a market leader
in design, development and production of highly personalized, targeted
direct mail; specialty advertising; direct marketing; database solutions
and response management services; and fragrance samplers.
- Our third principal business segment is Big Flower Digital Services, Inc.
("Digital Services"), which offers an array of digital services
principally through its two subsidiaries: Laser Tech Color, Inc. ("Laser
Tech") and Columbine JDS Systems, Inc. ("Columbine").
-- Laser Tech is a leading provider of outsourced, digital premedia and
content management services to retailers, advertising agencies, and
consumer product companies.
-- Columbine is a leading provider of software products and related
services to the advertising agency, cable, satellite and terrestrial
broadcast industries in both the United States and internationally.
THE EXCHANGE OFFER
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The Exchange Offer........................... We are offering to exchange $1,000 principal
amount of registered 8 5/8% senior
subordinated notes due December 1, 2008 (the
"Exchange Notes") for each $1,000 principal
amount of our unregistered 8 5/8% senior
subordinated notes due December 1, 2008 (the
"Private Notes") that are properly tendered
and accepted. We will issue Exchange Notes on
or as promptly as practicable after the
Expiration Date. Currently $250,000,000
aggregate principal amount of Private Notes
is outstanding. See "The Exchange Offer."
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Resale of Exchange Notes..................... The following statements are based on
interpretations by the staff of the
Commission set forth in no-action letters
issued to third parties. We believe that the
Exchange Notes issued pursuant to the
Exchange Offer in exchange for Private Notes
may be offered for resale, resold and
otherwise transferred by a holder thereof
without compliance with the registration and
prospectus delivery provisions of the
Securities Act; PROVIDED, that the holder is
acquiring Exchange Notes in the ordinary
course of its business, is not participating
and has no arrangement or understanding with
any person to participate in the distribution
of the Exchange Notes and is not an
"affiliate" of the Company within the meaning
of Rule 405 under the Securities Act.
Each broker-dealer who holds Private Notes
acquired for its own account as a result of
market-making or other trading activities and
who receives Exchange Notes pursuant to the
Exchange Offer for its own account in
exchange therefor must acknowledge that it
will deliver a prospectus in connection with
any resale of such Exchange Notes. This
prospectus, as it may be amended or
supplemented from time to time, may be used
by a broker-dealer in connection with such
resales of Exchange Notes.
If you tender Private Notes in the Exchange
Offer with the intention to participate, or
for the purpose of participating, in a
distribution of the Exchange Notes, you
cannot rely on the above-referenced position
of the staff of the Commission and, in the
absence of an exemption therefrom, you will
have to comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any resale
transaction. If you fail to comply with such
requirements, you could incur liability under
the Securities Act for which you are not
indemnified by the Company. See "The Exchange
Offer--Resale of the Exchange Notes."
Expiration Date.............................. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on -, 1999, unless the
Exchange Offer is extended by us, in which
case the term "Expiration Date" shall mean
the latest date and time to which the
Exchange Offer is extended. See "The Exchange
Offer--Expiration Date; Extensions;
Amendments."
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Procedures for Tendering Private Notes....... If you wish to accept the Exchange Offer, you
must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in
accordance with the instructions contained in
it, and mail or otherwise deliver such Letter
of Transmittal, or such facsimile, together
with the Private Notes you wish to exchange
and any other required documentation to State
Street Bank and Trust Company, as exchange
agent (the "Exchange Agent"), at the address
set forth on the Letter of Transmittal. By
executing the Letter of Transmittal, you will
represent to and agree with the Company that,
among other things,
- the Exchange Notes to be acquired by you in
connection with the Exchange Offer are
being acquired by you in the ordinary
course of your business,
- you have no arrangement or understanding
with any person to participate in a
distribution of the Exchange Notes, and
- you are not an "affiliate," as defined in
Rule 405 under the Securities Act, of Big
Flower Press. If you are a broker-dealer
that will receive Exchange Notes for your
own account in exchange for Private Notes
that you acquired as a result of your
market-making or other trading activities,
you will be required to acknowledge in the
Letter of Transmittal that you will deliver
a prospectus in connection with any resale
of such Exchange Notes. See "The Exchange
Offer--Procedures for Tendering."
Special Procedures for Beneficial Owners..... If your Private Notes are held through a
broker, dealer, commercial bank, trust
company or other nominee and you wish to
tender such Private Notes in the Exchange
Offer, you should contact such intermediary
promptly and instruct such intermediary to
tender such Private Notes on your behalf. See
"The Exchange Offer--Procedures for
Tendering."
Guaranteed Delivery Procedures............... If you wish to tender your Private Notes and
your Private Notes are not readily available
so you can meet the Expiration Date deadline,
or you cannot deliver your Private Notes, the
Letter of Transmittal or any other
documentation required by the Letter of
Transmittal to the Exchange Agent prior to
the Expiration Date, then you must tender
your Private Notes according to the
guaranteed delivery procedures set forth
under
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3
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<TABLE>
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"The Exchange Offer--Guaranteed Delivery
Procedures."
Acceptance of the Private Notes and
Delivery of the Exchange Notes............. Subject to the satisfaction or waiver of the
conditions to the Exchange Offer, we will
accept for exchange any and all Private Notes
that are properly tendered in the Exchange
Offer prior to the Expiration Date. The
Exchange Notes issued pursuant to the
Exchange Offer will be delivered on the
earliest practicable date following the
Expiration Date. See "The Exchange Offer--
Terms of the Exchange Offer."
Withdrawal Rights............................ You may withdraw your tender of Private Notes
at any time prior to the Expiration Date. See
"The Exchange Offer--Withdrawal of Tenders."
Appraisal Rights............................. Holders of the Private Notes do not have any
appraisal or dissenters' rights under the
General Corporation Law of the State of
Delaware or the indenture, dated as of
December 9, 1998, between the Company and
State Street Bank and Trust Company, as
trustee (the "Indenture"), in connection with
the Exchange Offer. See "The Exchange
Offer--Terms of the Exchange Offer."
Certain Federal Income Tax Considerations.... The exchange of Private Notes for Exchange
Notes should not be treated as a taxable
transaction for United States Federal income
tax purposes. See "Certain United States
Federal Income Tax Considerations."
Exchange Agent............................... State Street Bank and Trust Company is
serving as the Exchange Agent in connection
with the Exchange Offer. State Street Bank
and Trust Company also serves as trustee
under the Indenture and the 8 7/8% Indenture.
</TABLE>
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<PAGE>
THE EXCHANGE NOTES
<TABLE>
<S> <C>
Issuer.......................... Big Flower Press Holdings, Inc.
Securities Offered.............. $250,000,000 principal amount of 8 5/8% Senior
Subordinated Notes due 2008.
Maturity........................ December 1, 2008.
Interest Rate................... 8 5/8% per year.
Interest Payment Dates.......... January 1 and July 1, beginning on July 1, 1999. Interest
began accruing from December 9, 1998.
Ranking......................... The Exchange Notes will be unsecured senior subordinated
obligations of Big Flower Press and will rank junior to
our existing and future senior debt. Assuming we had
issued the Notes and applied the proceeds on September 30,
1998, we would have had consolidated indebtedness of
approximately $722.1 million, including capitalized lease
obligations. Of this amount, $122.0 million would have
been senior debt, including $96.5 million of subsidiaries'
borrowings under the revolving credit facility entered
into on June 22, 1998 (the "Credit Facility") that are
guaranteed by the Company, and $350 million would have
been the principal amount of the Company's outstanding
Senior Subordinated Notes due 2007 (the "8 7/8 Notes"),
which will rank equally with the Notes. Based on the same
assumptions, at September 30, 1998 we also would have had
additional availability of approximately $423.2 million
under the Credit Facility; however, we are subject to
certain leverage ratio restrictions in the Credit Facility
that may significantly curtail our ability to incur such
indebtedness. See "Description of the Credit Facility."
We are a holding company and, as a result, the Exchange
Notes will be effectively subordinated to all liabilities
of our subsidiaries, including trade payables. Assuming we
had issued the Notes and applied the proceeds on September
30, 1998, our subsidiaries would have had approximately
$447.3 million of liabilities (including trade payables
and amounts outstanding under the Credit Facility). See
"Description of the Credit Facility."
Optional Redemption............. We cannot redeem the Exchange Notes until December 1,
2003. After December 1, 2003, we may redeem some or all of
the Exchange Notes at the redemption prices listed in the
"Description of the Exchange Notes" section under the
heading "Optional Redemption," plus accrued interest.
Optional Redemption after Equity
Issuances..................... At any time (which may be more than once) prior to
December 1, 2001, we can choose to redeem up to 35% of the
outstanding Notes with the proceeds from one or more
equity issuances, as long as:
- we pay 108.625% of the face amount of the Notes, plus
interest;
- we redeem the Exchange Notes within 180 days of
completing the equity issuance; and
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5
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- at least 65% of the sum of (i) the aggregate principal
amount of Notes issued on December 9, 1998 and (ii) the
respective initial aggregate principal amount of any
Notes issued under the Indenture after December 9, 1998
remain outstanding immediately after such redemption.
Optional Redemption upon a
Change of Control............. If a change of control of Big Flower Press occurs before
December 1, 2003, we may redeem the Notes, in whole but
not in part, at a price equal to the outstanding principal
amount thereof, plus accrued and unpaid interest thereon
to the date of redemption, plus the "Applicable Premium"
as defined in the "Description of the Exchange
Notes--Optional Redemption."
Change of Control Offer......... If a change of control of Big Flower Press occurs, we must
give holders of the Notes the opportunity to sell us their
Notes at 101% of their face amount, plus accrued interest,
if we do not exercise our option to redeem the Notes.
We might not be able to pay you the required price for
Exchange Notes you present to us at the time of a change
of control because:
- we might not have enough funds at that time; or
- the terms of our senior debt may prevent us from paying.
A change of control shall not be deemed to have occurred
if, after giving effect to the transactions giving rise to
the events or circumstances which would trigger a change
of control, the Company's Fixed Charge Coverage Ratio (as
defined below) is 3.0 to 1 or greater.
Asset Sale Proceeds............. If we or our Restricted Subsidiaries (as defined below)
engage in certain kinds of asset sales, we generally must
either invest the net cash proceeds from such sales in our
business within a period of time, repay senior debt or
make an offer to purchase a principal amount of the Notes
(and 8 7/8% Notes) equal to the excess net cash proceeds.
The purchase price of the Exchange Notes would be 100% of
their principal amount, plus accrued and unpaid interest.
Certain Indenture Provisions.... The indenture contains covenants limiting the Company's or
its Restricted Subsidiaries' ability to:
- incur additional debt;
- pay dividends or make distributions on the Company's
capital stock or repurchase the Company's capital stock;
- make certain investments;
- create liens;
- enter into transactions with affiliates;
- merge or consolidate with another company; and
- transfer and sell assets.
These covenants are subject to a number of important
limitations and exceptions.
Risk Factors.................... Investing in the Exchange Notes involves substantial
risks. See "Risk Factors" on page 9 for a description of
certain of the risks you should consider before investing
in the Exchange Notes.
</TABLE>
6
<PAGE>
SELECTED FINANCIAL DATA
On October 17, 1997, Big Flower Press completed a reorganization of its
legal structure pursuant to Section 251(g) of the Delaware General Corporation
Law. As a result, Holdings became the new parent holding company of Big Flower
Press, which became a wholly-owned subsidiary, and the common stock of Big
Flower Press was automatically exchanged for common stock of the new holding
company. Holdings' operations are conducted through Big Flower Press, which, in
turn, conducts its operations through its operating subsidiaries. Prior to the
formation of Holdings, all corporate overhead expenses for the Company were
incurred by Big Flower Press. Subsequent to the reorganization, these expenses
have been incurred by Holdings and fully allocated to Big Flower Press and its
subsidiaries.
The following table sets forth summary financial data of predecessor TC
Advertising prior to its acquisition by Big Flower Press ("Predecessor TC
Advertising") and of Big Flower Press and its subsidiaries (including TC
Advertising) following Big Flower Press' acquisition of TC Advertising on August
11, 1993. On March 21, 1996, Big Flower Press' Board of Directors elected to
change the Company's fiscal year from a 12-month period ending June 30th to a
calendar year, effective with the period ended December 31, 1995. The summary
financial data as of and for the fiscal year ended June 30, 1993 and for the 42
days ended August 11, 1993 were derived from the audited consolidated financial
statements of Predecessor TC Advertising. The summary financial data of Big
Flower Press as of and for the 323-day period ended June 30, 1994, the fiscal
year ended June 30, 1995, the six months ended December 31, 1995 and the years
ended December 31, 1996 and 1997 were derived from the audited consolidated
financial statements of Big Flower Press. The summary financial data for the
nine-month periods ended September 30, 1997 and 1998 were derived from the
Company's unaudited condensed consolidated interim financial statements for such
periods. On October 4, 1996, Big Flower Press consummated the acquisition of
Scanforms, Inc. ("Scanforms") in a transaction accounted for as a pooling of
interests. Accordingly, the Big Flower Press financial information has been
restated for prior periods to include the results of Scanforms for all periods
presented. The table should be read in conjunction with those Consolidated
Financial Statements which are contained in the Incorporated Documents.
Earnings per share data are not provided for the operating results of Big
Flower Press and its subsidiaries as Big Flower Press is a wholly-owned
subsidiary of Holdings.
<TABLE>
<CAPTION>
PREDECESSOR TC
ADVERTISING BIG FLOWER PRESS
-------------------- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS
TRANSITION
PERIOD
YEAR 42 DAYS 323 DAYS YEAR ENDED YEAR YEAR
ENDED ENDED ENDED ENDED DECEMBER ENDED ENDED
JUNE 30, AUGUST 11, JUNE 30, JUNE 30, 31, DECEMBER 31, DECEMBER 31,
1993 1993 1994 1995 1995 1996 1997
-------- ---------- ---------- ---------- ----------- ------------ ------------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales..................... $555,013 $59,584 $587,630 $ 920,149 $546,840 $1,201,860 $1,376,706
Operating income.............. 22,436 665 25,488 50,712 39,739 69,343 96,694
Interest expense(a)........... 6,792 578 19,735 37,452 19,072 36,165 40,380
Income (loss) before income
taxes and extraordinary
items....................... 10,204 (228) (549) 5,268 12,694 4,998 (10,330)
Income (loss) before
extraordinary item.......... 4,685 (139) (3,277) (1,612) 6,491 (3,285) (32,666)
Extraordinary item, net(b).... (19,248) (2,078) (13,463)
Net income (loss)............. 4,685 (139) (3,277) (1,612) (12,757) (5,363) (46,129)
Ratio of earnings to fixed
charges(c).................. 1.7x --(d) --(d) 1.1x 1.5x 1.1x --(d)
OTHER DATA:
EBITDA(e)..................... $ 34,560 $ 1,901 $ 54,238 $ 93,699 $ 58,372 $ 122,588 $ 164,016
Net cash provided by (used in)
operating activities........ 21,823 (6,363) 31,514 47,597 27,881 135,936 118,088
Net cash provided by (used in)
investing activities........ 10,708 (1,280) (270,223) (7,013) (19,050) (170,849) (316,601)
Net cash provided by (used in)
financing activities........ (31,543) 6,209 241,975 (39,789) (4,326) 29,941 199,620
Capital expenditures.......... 6,967 1,280 6,133 8,496 16,812 55,391 74,045
PRO FORMA DATA:(f)
Net sales..................... $1,662,671
Operating income.............. 122,387
EBITDA........................ 212,996
Interest expense.............. 60,442
Ratio of EBITDA to interest
expense..................... 3.52x
BALANCE SHEET DATA (AT PERIOD
END):
Working capital(g)............ $ (3,597) $ 25,198 $ 34,173 $ 29,797 $ (30,821) $ (16,519)
Net property, plant and
equipment................... 62,850 152,306 137,081 145,323 296,426 366,876
Total assets.................. 160,356 521,461 502,939 573,393 749,742 1,054,268
Long-term debt, net of current
portion(g).................. 34,485 331,940 301,935 274,161 430,766 590,045
Redeemable preferred stock of
a subsidiary................ 16,913 19,357
Stockholder's equity.......... 32,663 19,449 16,593 84,476 96,350 179,242
<CAPTION>
<S> <C> <C>
NINE MONTHS
ENDED
SEPTEMBER 30,
---------------------------
1997 1998
------------ ------------
<S> <C> <C>
OPERATING DATA:
Net sales..................... $ 955,918 $ 1,236,879
Operating income.............. 59,543 90,599
Interest expense(a)........... 29,309 41,502
Income (loss) before income
taxes and extraordinary
items....................... 23,595 45,073
Income (loss) before
extraordinary item.......... 12,134 24,339
Extraordinary item, net(b).... (13,463)
Net income (loss)............. (1,329) 24,339
Ratio of earnings to fixed
charges(c).................. 1.6x 1.8x
OTHER DATA:
EBITDA(e)..................... $ 106,775 $ 154,497
Net cash provided by (used in)
operating activities........ 66,285 60,892
Net cash provided by (used in)
investing activities........ (92,497) (149,267)
Net cash provided by (used in)
financing activities........ 25,816 88,858
Capital expenditures.......... 60,071 69,967
PRO FORMA DATA:(f)
Net sales..................... $ 1,209,871 $ 1,265,595
Operating income.............. 83,744 92,174
EBITDA........................ 151,153 159,095
Interest expense.............. 46,307
Ratio of EBITDA to interest
expense..................... 3.44x
BALANCE SHEET DATA (AT PERIOD
END):
Working capital(g)............ $ (23,710) $ 5,145
Net property, plant and
equipment................... 325,033 436,288
Total assets.................. 814,507 1,246,290
Long-term debt, net of current
portion(g).................. 496,092 713,192
Redeemable preferred stock of
a subsidiary................
Stockholder's equity.......... 92,083 205,581
</TABLE>
FOOTNOTES ON FOLLOWING PAGE
7
<PAGE>
(a) Interest expense excludes amortization of deferred financing fees for all
periods. Interest expense for the year ended December 31, 1996 includes the
amortization of interest rate swap fees of $1.2 million.
(b) Big Flower Press' net loss for the six months ended December 31, 1995
includes an extraordinary loss of $19.2 million, net of tax, on early
extinguishment of debt and termination of a swap agreement. The net loss for
the year ended December 31, 1996 includes an extraordinary loss of $2.1
million, net of tax, on early extinguishment of debt. The net losses for the
year ended December 31, 1997 and the nine months ended September 30, 1997
include extraordinary losses of $13.5 million, net of tax, on the early
extinguishment of debt.
(c) For purposes of this computation, fixed charges consist of interest expense
and amortization of deferred financing fees, capitalized interest and
one-third of rental expenses, representative of that portion of rental
expenses attributable to interest and preferred stock dividends. Earnings
consist of income before income taxes plus fixed charges (other than
capitalized interest, but including the amortization thereof).
(d) Earnings were inadequate to cover fixed charges by $0.2 million for
predecessor TC Advertising for the 42 days ended August 11, 1993 and $0.8
million for Big Flower Press for the 323 days ended June 30, 1994. Earnings
were also insufficient to cover fixed charges by $11.8 million for the year
ended December 31, 1997 due primarily to the non-recurring $58.2 million
write-off of in-process technology resulting from the acquisition of
Columbine. Adjusted to eliminate non-cash charges of depreciation and
amortization of $28.8 million and $67.3 million for the 323 days ended June
30, 1994 and the year ended December 31, 1997, respectively, such earnings
would have exceeded fixed charges by $27.9 million and $55.5 million,
respectively.
(e) "EBITDA" represents the sum of operating income, depreciation, amortization
of intangibles and merger costs. EBITDA does not include costs associated
with the A/R Securitization (as defined below) and is presented here to
provide additional information about the Company's ability to meet its
future debt service, capital expenditure and working capital requirements.
It should not be construed as a better indicator of operating performance
than operating income as determined in accordance with generally accepted
accounting principles ("GAAP"), or a better indicator of liquidity than cash
flow from operating activities as determined in accordance with GAAP. The
Company's definition of EBITDA might not be the same as that of other
companies.
(f) Pro forma data adjusts the historical financial data to reflect the
following events as if they had occurred at the beginning of 1997:
- inclusion of all 1997 and 1998 acquisitions with the exception of the
November 1998 acquisitions of DSI Datatrak Systems, Inc. and The Admagic
Group Limited, which were not material, either individually or in the
aggregate, and not including the 1999 acquisition of Colorgraphic Direct
Response Limited for which information is not yet available;
- exclusion of sales under a production arrangement with an unconsolidated
printing venture in which the Company had a minority interest and the
profits related to those sales (the Company sold its minority interest in
the first quarter of 1998 and terminated the production agreement);
- exclusion of non-recurring costs related to acquisitions, the Company's
1997 secondary stock offering as well as extraordinary losses related to
the termination of a credit facility and early extinguishment of debt; and
- the issuance of the Notes, the application of the net proceeds therefrom
to reduce borrowings under the Company's Credit Facility and related
impact on interest expense.
(g) On October 4, 1996, the Company entered into a six-year agreement (the "A/R
Securitization") pursuant to which it may sell fractional undivided
beneficial interests in a designated pool of certain eligible accounts
receivable. The maximum allowable amount of receivables to be sold is $150.0
million. The amount outstanding at any measurement date varies based upon
the level of eligible receivables. Working capital balances since 1996
reflect the effect of that program. At September 30, 1998, interests of
$94.7 million had been sold and were outstanding under the A/R
Securitization. This amount is not reflected in the Company's long-term debt
included above.
8
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS SET FORTH BELOW, AS WELL AS
THE OTHER INFORMATION APPEARING IN THIS PROSPECTUS, BEFORE DECIDING TO SURRENDER
THE PRIVATE NOTES IN EXCHANGE FOR EXCHANGE NOTES PURSUANT TO THE EXCHANGE OFFER.
LEVEL OF INDEBTEDNESS--WE HAVE SIGNIFICANT LEVELS OF INDEBTEDNESS WHICH COULD
AFFECT OUR OPERATIONS
Assuming we had issued the Notes and applied the proceeds on September 30,
1998, we would have had consolidated indebtedness of approximately $722.1
million, including capitalized lease obligations. Of this amount, $122.0 million
would have been senior debt, including $96.5 million of subsidiaries' borrowings
under the Credit Facility that are guaranteed by the Company, and $350 million
would have been the principal amount of the Company's outstanding 8 7/8% Notes,
which will rank equally with the Notes. Based on the same assumptions, at
September 30, 1998 we also would have had additional availability of
approximately $423.2 million under the Credit Facility; however, we are subject
to certain leverage ratio restrictions in the Credit Facility that may
significantly curtail our ability to incur such indebtedness. See "Description
of the Credit Facility."
In addition, subject to the restrictions in the Credit Facility, the
indenture for the 8 7/8% Notes dated as of June 20, 1997 (as supplemented, the
"8 7/8% Indenture") and the indenture governing the Notes (the "Indenture"), we
may incur additional indebtedness from time to time to finance acquisitions or
capital expenditures or for other purposes. At September 30, 1998, we also had
significant commitments under operating leases and approximately $94.7 million
was outstanding under the A/R Securitization. In addition, on October 20, 1997,
Holdings issued $118.6 million of debentures (the "Debentures") in connection
with the issuance of the 6% Convertible Quarterly Income Preferred Securities of
Big Flower Trust I.
The level of Big Flower Press' (and Holdings') consolidated indebtedness
could have important consequences for you. For example it could:
- require a significant portion of our cash flow from operations to be
dedicated to debt service, including debt service on the Debentures, and
such cash would therefore not be available for other purposes;
- limit our ability to obtain additional debt financing in the future for
working capital, capital expenditures or acquisitions; and
- limit our flexibility in reacting to changes in its industry and economic
conditions generally.
Certain of the our competitors currently operate on a less leveraged basis, and
have significantly greater operating and financing flexibility than we do.
HOLDING COMPANY STRUCTURE--OUR OPERATING SUBSIDIARIES PROVIDE OUR CASH FLOW BUT
THEY ARE NOT OBLIGATED TO MAKE PAYMENTS ON OR GUARANTEE THE NOTES, WHICH
EFFECTIVELY SUBORDINATES THE NOTES TO INDEBTEDNESS OF THESE SUBSIDIARIES
Big Flower Press is a holding company. Our only material assets consist of
the outstanding shares of capital stock of our subsidiaries. We are the sole
obligor on the Notes, and the Notes are not guaranteed by any of our
subsidiaries or by Holdings. Therefore, the Notes are structurally subordinated
to all indebtedness of our subsidiaries.
We must rely on dividends and other advances and transfers of funds from our
subsidiaries to provide the funds necessary to meet our debt service obligations
under the Notes and the 8 7/8% Notes, and to pay dividends to Holdings which
enable Holdings to make interest payments on the Debentures. The ability of our
subsidiaries to pay such dividends and make such advances and transfers will be
subject to applicable state laws regulating the payment of dividends. Creditors
of our subsidiaries,
9
<PAGE>
including general creditors, will generally have preferential rights to satisfy
their claims from the assets of such subsidiaries before Big Flower Press, and
the holders of the Notes may satisfy their claims from the assets of such
subsidiaries that remain.
Assuming we had issued the Notes and applied the proceeds on September 30,
1998 our subsidiaries would have had approximately $447.3 million of liabilities
(including trade payables and amounts outstanding under the Credit Facility). In
addition, at September 30, 1998, certain of our subsidiaries had significant
commitments under operating leases.
COMPETITION--OUR INDUSTRY IS HIGHLY COMPETITIVE
The advertising and marketing services industry in which we operate is
highly competitive in most product categories and geographic regions.
Competition is largely based on price, quality and servicing the specialized
needs of customers. During recent periods of economic downturn, excess
production capacity in the business sectors in which we operate has resulted in
more competitive pricing in such sectors.
RAW MATERIALS--SOME OF OUR PRODUCTS HAVE A HIGH PAPER CONTENT, AND THE PRICE AND
AVAILABILITY OF PAPER COULD MATERIALLY ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS
The prices that we charge for our products that contain paper depend, in
part, on the price we pay for paper. TC Advertising is our largest operating
unit and it uses large quantities of paper in its operation. As a result, the
cost of paper significantly affects our net sales. TC Advertising is generally
able to pass increases in the cost of paper on 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 our net
sales. However, volatility in paper costs generally has not affected our
production volume or profits to any significant extent. If there are future
paper cost increases and we are not able to pass such increases on to our
customers, or our customers reduce the size of their print advertising programs,
our results of operations (primarily those of TC Advertising) could be
materially adversely affected.
Production 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 of paper that we
use. Any loss of the sources for paper supply or any disruption in such sources'
business or failure by them to meet our product needs on a timely basis could
cause, at a minimum, temporary shortages in needed materials which could have a
material adverse effect on our results of operations. We actively manage our
paper supply and have established strong relationships with our suppliers, which
include many of the leading paper companies in North America. However, we cannot
assure you that our sources of supply for paper will be adequate. In the event
that such sources are not adequate, we cannot assure you that we will be able to
develop alternative sources in a timely manner.
MANAGEMENT OF GROWTH--OUR ACQUISITION STRATEGY IS A KEY ELEMENT OF OUR OVERALL
BUSINESS STRATEGY
Our primary objective is to be the leading provider of marketing and
advertising services for retailers, national manufacturers and advertising
agencies, among others. One of the key elements of our strategy includes
strategic acquisitions to expand and diversify our products and services in the
advertising and marketing services industry. Over the past five years, we have
completed 27 acquisitions to increase and diversify our industry position. We
continue to seek similar or complementary businesses and intend to continue our
acquisition program in the future.
Our acquisition program may require significant management time and capital
resources. In order to complete such acquisitions, we are likely to need to
incur and/or assume indebtedness and other
10
<PAGE>
obligations, issue equity securities or undertake some combination of such
financing techniques. We cannot assure you that we will be able to successfully
arrange such financing in the future.
While we anticipate that our acquisitions will be beneficial, we cannot
predict if any such transactions will be consummated, the terms or forms of
consideration required in any such transactions, nor whether the acquired
businesses will be successfully integrated into our operations. Accordingly, we
cannot assure you that such acquisitions will not have a material adverse effect
on our performance.
CERTAIN FINANCIAL AND OPERATING RESTRICTIONS--WE ARE SUBJECT TO CERTAIN
RESTRICTIONS UNDER EXISTING AGREEMENTS THAT MAY LIMIT OUR ABILITY TO ENGAGE IN
CERTAIN BUSINESS TRANSACTIONS OR TO MAKE PRINCIPAL AND INTEREST PAYMENTS ON
THE NOTES
Under the terms of our Credit Facility, the 8 7/8% Indenture, the Indenture
and our other outstanding debt instruments we are subject to certain operating
and financial restrictions affecting, and in certain cases limiting, among other
activities, our ability to:
- incur additional indebtedness or create liens on our assets,
- pay dividends,
- sell assets,
- engage in mergers or acquisitions, or
- make investments.
If we fail to comply with any such restrictions our ability to borrow could be
limited or we may be in default under the terms of any such indebtedness. We
cannot assure you that we will be able to comply with such restrictions.
Our ability to engage in certain business transactions which we may desire
to consummate could be limited by such restrictions. Our inability to consummate
any such transaction could have an adverse effect on our operations and our
ability and the ability of our subsidiaries to make principal and interest
payments on their outstanding debt, including the Notes.
LIMITATION ON A CHANGE OF CONTROL--WE MAY NOT HAVE THE FINANCIAL ABILITY TO
PURCHASE THE NOTES IF A CHANGE OF CONTROL OCCURS
If a Change of Control (as defined on page 42) were to occur, we would be
required to make offers to purchase all outstanding Notes and 8 7/8% Notes at a
price equal to 101% of the principal amount to be purchased, plus accrued and
unpaid interest. However, under the terms of the Credit Facility, we are
prohibited from purchasing any Notes or 8 7/8% Notes. The Credit Facility also
provides that the occurrence of certain Change of Control events with respect to
Big Flower Press constitutes a default. As a result, in the event of a Change of
Control, we must offer to repay all borrowings under the Credit Facility or
obtain the consent of our lenders under the Credit Facility to the purchase of
Notes and 8 7/8% Notes. If we do not obtain such consent or repay such
borrowings, we will remain prohibited from purchasing Notes and 8 7/8% Notes. In
such circumstances, our failure to purchase Notes and 8 7/8% Notes tendered to
us would constitute a default under the Indenture and the 8 7/8% Indenture, each
of which, in turn, would constitute a default under the Credit Facility.
We cannot assure you that we would have the financial ability to purchase
the Notes and 8 7/8% Notes if a Change of Control were to occur. We cannot
assure you that we would be able to comply with all of our obligations under the
Credit Facility, the 8 7/8% Indenture, the Indenture and the other indebtedness
if a Change of Control were to occur. See "Description of the Exchange
Notes--Change of Control."
11
<PAGE>
ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATIONS--WE ARE SUBJECT TO GOVERNMENTAL
AND ENVIRONMENTAL REGULATIONS, AND WE CANNOT ASSURE YOU THAT THEY WILL NOT
HAVE A MATERIAL ADVERSE EFFECT ON US
We are subject to federal, state, local and foreign environmental laws,
regulations and ordinances relating to protection of the environment and human
health and safety, including those concerning the discharge, storage, handling
and disposal of hazardous or toxic waste and materials. Such laws, regulations
and ordinances provide for the imposition of significant fines and penalties and
may impose liability for the costs of cleaning up sites of past spills,
disposals or other releases of hazardous substances.
From time to time, our operations have resulted or may result in
non-compliance with or liability for cleanup pursuant to such laws, regulations
and ordinances. In addition, TC Advertising and Webcraft have been identified as
potentially responsible parties under the federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, and under certain
analogous state laws, for several sites to which TC Advertising or Webcraft,
among others, sent waste in the past. We believe that any such non-compliance or
liability under current environmental laws will not have a material adverse
effect on our results of operations and financial condition, but we cannot
assure you that this will be the case. Also, management cannot predict what
environmental laws will be enacted in the future, how existing or future laws or
regulations will be enforced, administered or interpreted, or the amount of
future expenditures which may be required in order to comply with such laws.
RELIANCE ON KEY PERSONNEL--WE HAVE A SMALL NUMBER OF KEY MANAGEMENT AND
OPERATING PERSONNEL
Our success will largely be determined by the efforts of a relatively small
number of key management and operating personnel. The loss of any of such
personnel could adversely affect us. Our success also depends in part upon our
ability to hire and retain highly qualified operating, marketing, financial and
technical personnel. We cannot assure you that we will be able to hire or retain
necessary personnel.
RAPID TECHNOLOGICAL CHANGE AND NEW PRODUCTS--OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL POSITION MAY BE MATERIALLY ADVERSELY AFFECTED IF COLUMBINE DOES NOT
MEET THE CHALLENGES POSED BY RAPID TECHNOLOGICAL CHANGE AND THE NEED TO
INTRODUCE NEW PRODUCTS
Columbine must continually change and improve its products in response to
changes in operating systems, application and networking software, computer and
communications hardware, programming tools and computer language technology. Our
future operating results may be affected by Columbine's ability to enhance its
current products and to develop and introduce new products that address the
increasingly sophisticated needs of its customers and that keep pace with
technological developments, new competitive product offerings and emerging
industry standards. If Columbine does not respond adequately to these needs in a
timely manner, our business, operating results and financial condition may be
materially adversely affected.
YEAR 2000 READINESS AND RISKS--YEAR 2000 ISSUES MAY CAUSE DISRUPTIONS TO OUR
OPERATIONS
Year 2000 issues result from the inability of computer programs or
computerized equipment to accurately calculate, store or use a date subsequent
to December 31, 1999. The erroneous date can be interpreted in a number of
different ways; typically, the year 2000 is interpreted as the year 1900. This
could result in a system failure or miscalculations causing disruptions of
operations, such as a temporary inability to process transactions, send invoices
or engage in similar normal business activities.
We have undertaken a comprehensive program to address the issue of computer
software and embedded microchips which are unable to distinguish between the
year 1900 and the year 2000 within the Company and in the products and services
we purchase from our material suppliers (the "Year 2000 Project"). We have
established Year 2000 teams at TC Advertising, Webcraft, Laser Tech and
12
<PAGE>
Columbine, as well as at our headquarters. As of September 30, 1998, the
estimated total cost of the Year 2000 Project was approximately $4.5 million, of
which approximately $3.0 million reflected allocation of internal costs and
approximately $1.5 million reflected amounts for external consultants,
equipment, hardware and software. The total amount spent on the Year 2000
Project through September 30, 1998 was approximately $2.2 million, of which
approximately $1.8 million reflected allocation of internal costs and
approximately $0.4 million related to external costs, principally consultants.
If we fail to address a material Year 2000 issue, certain of our normal
business activities or operations could be interrupted, or fail. Due to the
diversity and decentralized nature of our operations, there are few systems the
failure of which would have a material adverse effect on Big Flower Press as a
whole. Nonetheless, we rely upon utility companies, telecommunication services
providers, the United States Postal Service, the financial services industry and
other suppliers outside of our control, and we cannot assure you that such
suppliers or other third parties will not suffer a Year 2000 business
disruption.
We believe that the most reasonably likely worst case scenario is that the
systems or equipment of one or more third parties fail. If such a failure
occurs, one or more of our operations could be reduced or suspended and this
could have a material adverse effect on our consolidated financial position or
results of operations. Because of the general uncertainty inherent in the Year
2000 issue, resulting in part from the uncertainty of the Year 2000 readiness of
our material vendors and customers and their respective customers, we cannot
determine at this time whether the consequences of Year 2000 failures will have
a material impact on our consolidated financial condition or results of
operations. We expect the Year 2000 Project to significantly reduce our level of
uncertainty about the Year 2000 issue and, in particular, about the Year 2000
compliance and readiness of our material vendors and customers. We believe that,
with the implementation of new business systems and completion of the Year 2000
Project as scheduled, the possibility of significant interruptions of normal
operations should be greatly reduced.
LACK OF PUBLIC MARKET FOR THE NOTES--THERE IS CURRENTLY NO MARKET FOR THE
EXCHANGE NOTES, AND YOU CANNOT BE SURE THAT ONE WILL DEVELOP
The Exchange Notes are new securities for which there is currently no
market. We can give you no assurance as to the development or liquidity of any
market for the Exchange Notes. If a market for the Exchange Notes does develop,
the Exchange Notes could trade at prices that may be higher or lower than their
principal amount depending upon many factors. Such factors would include:
- prevailing interest rates;
- our operating results; and
- the markets for similar securities.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of securities
similar to the Exchange Notes. If a market for the Exchange Notes does develop,
such a market may be subject to similar disruptions.
FAILURE TO EXCHANGE PRIVATE NOTES--IF YOU WISH TO TENDER YOUR PRIVATE NOTES FOR
EXCHANGE, YOU MUST COMPLY WITH THE REQUIREMENTS DESCRIBED IN THIS PROSPECTUS
You will receive Exchange Notes in exchange for Private Notes only after the
Exchange Agent receives such Private Notes, a properly completed and duly
executed Letter of Transmittal and all other required documentation within the
time limits described below. If you wish to tender your Private Notes in
exchange for Exchange Notes, you should allow sufficient time for delivery.
Neither the Exchange Agent nor the Company is under any duty to give
notification of defects or irregularities with respect to tenders of Private
Notes for exchange. Private Notes that are not tendered or are tendered
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<PAGE>
but not accepted will, following consummation of the Exchange Offer, continue to
be subject to the existing restrictions upon transfer.
In addition, if you tender Private Notes in the Exchange Offer for the
purpose of participating in a distribution of the Exchange Notes, you will be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each broker-dealer
who holds Private Notes acquired for its own account as a result of
market-making or other trading activities and who receives Exchange Notes for
its own account in exchange for such Private Notes pursuant to the Exchange
Offer must acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Notes.
To the extent that Private Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Private
Notes could be adversely affected due to the limited amount, or "float," of the
Private Notes that are expected to remain outstanding following the Exchange
Offer. Generally, a lower "float" of a security could result in less demand to
purchase such security and could, therefore, result in lower prices for such
security. For the same reason, to the extent that a large amount of Private
Notes is not tendered or is tendered and not accepted in the Exchange Offer, the
trading market for the Exchange Notes could be adversely affected. See "Plan of
Distribution" and "The Exchange Offer."
NO CASH PROCEEDS TO THE COMPANY
This Exchange Offer is intended to satisfy certain obligations of the
Company under the Registration Rights Agreement. We will not receive any
proceeds from the issuance of the Exchange Notes, and we have agreed to pay for
the expenses of the Exchange Offer. In consideration for issuing the Exchange
Notes as contemplated in this prospectus, we will receive, in exchange, Private
Notes in like principal amount. The form and terms of the Exchange Notes are
identical in all material respects to the form and terms of the Private Notes,
except as otherwise described herein under "The Exchange Offer--Terms of the
Exchange Offer." The Private Notes surrendered in exchange for the Exchange
Notes will be retired and cancelled and cannot be reissued. Accordingly,
issuance of the Exchange Notes will not result in any increase in our
outstanding debt.
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<PAGE>
CAPITALIZATION
This table sets forth our capitalization as of September 30, 1998, and as
adjusted to give effect to the issuance of the Notes and the application of the
proceeds thereof. You should read this table in conjunction with the Summary
Financial Data and our Consolidated Financial Statements incorporated by
reference in this prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt (a):
Credit Facility (b)..................................................... $ 339,800 ($243,300)(c) $ 96,500
8 7/8% Notes............................................................ 350,113 350,113
The Notes............................................................... -- 250,000(c) 250,000
Other debt.............................................................. 25,496 25,496
---------- ----------- -----------
Total long-term debt.................................................... 715,409 6,700 722,109
Total stockholder's equity................................................ 205,581 205,581
---------- ----------- -----------
Total capitalization...................................................... $ 920,990 $ 6,700 $ 927,690
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
- ------------------------
(a) Includes current portion of long term debt in the amount of $2.2 million and
does not include $94.7 million outstanding under the A/R Securitization.
(b) Based on the Credit Facility of $530.0 million, total availability would
have been $423.2 million which reflects $530.0 million less borrowings of
$96.5 million which would have been outstanding as of September 30, 1998 on
a pro forma basis, less letters of credit of $10.3 million.
(c) Represents the issuance of the Private Notes, the net proceeds of which were
used to repay borrowings under the Credit Facility.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We sold the Private Notes on December 9, 1998 (the "Issue Date") to BT Alex.
Brown Incorporated, Chase Securities Inc., and Goldman, Sachs & Co.
(collectively the "Initial Purchasers") pursuant to the Purchase Agreement. The
Initial Purchasers subsequently sold the Private Notes to (a) "qualified
institutional buyers" ("QIBs"), as defined in Rule 144A under the Securities Act
("Rule 144A"), in reliance on Rule 144A, and to (b) persons in offshore
transactions in reliance on Regulation S under the Securities Act. As a
condition to the initial sale of the Private Notes, the Company and the Initial
Purchasers entered into the Registration Rights Agreement on December 9, 1998.
Pursuant to the Registration Rights Agreement, we agreed to (i) file with the
Commission within 60 days after the Issue Date a registration statement under
the Securities Act with respect to the Exchange Notes and (ii) use our
reasonable best efforts to cause such Registration Statement to become effective
under the Securities Act within 120 days after the Issue Date. We agreed to
issue and exchange the Exchange Notes for all Private Notes validly tendered and
not withdrawn before the expiration of the Exchange Offer. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Registration Statement is
intended to satisfy certain of our obligations under the Registration Rights
Agreement and the Purchase Agreement.
TERMS OF THE EXCHANGE OFFER
Based on the terms and conditions in this prospectus and in the Letter of
Transmittal, we will accept any and all Private Notes validly tendered and not
withdrawn prior to the Expiration Date.
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<PAGE>
We will issue $1,000 principal amount of Exchange Notes in exchange for each
$1,000 principal amount of outstanding Private Notes validly tendered pursuant
to the Exchange Offer and not withdrawn prior to the Expiration Date. Private
Notes may be tendered only in integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Private Notes except that (i) the Exchange Notes will be registered for
the exchange offer under the Securities Act and, therefore, the Exchange Notes
will not bear legends restricting the transfer thereof and (ii) holders of the
Exchange Notes will not be entitled to any of the registration rights of holders
of Private Notes under the Registration Rights Agreement, which rights will
terminate upon the consummation of the Exchange Offer. The Exchange Notes will
evidence the same indebtedness as the Private Notes (which they replace) and
will be issued under, and be entitled to the benefits of, the Indenture, which
also authorized the issuance of the Private Notes, such that both series of
Notes will be treated as a single class of debt securities under the Indenture.
As of the date of this prospectus, $250,000,000 in aggregate principal
amount of the Private Notes is outstanding, all of which is registered in the
name of Cede & Co., as nominee for The Depository Trust Company (the
"Depositary" or "DTC"). Solely for reasons of administration, the Company has
fixed the close of business on - , 1999 as the record date for the Exchange
Offer for purposes of determining the persons to whom this prospectus and the
Letter of Transmittal will be mailed initially. There will be no fixed record
date for determining holders of the Private Notes entitled to participate in the
Exchange Offer.
As a holder of the Private Notes, you do not have any appraisal or
dissenters' rights under the General Corporation Law of the State of Delaware or
the Indenture in connection with the Exchange Offer. We intend to conduct the
Exchange Offer in accordance with the provisions of the Registration Rights
Agreement and the applicable requirements of the Securities Act and the rules
and regulations of the Commission promulgated thereunder.
We shall be deemed to have accepted validly tendered Private Notes when, and
if, we give oral or written notice thereof to the Exchange Agent. The Exchange
Agent will act as agent for the tendering holders of Private Notes for the
purposes of receiving the Exchange Notes from us.
If you tender Private Notes in the Exchange Offer, you will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. We will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
- , 1999, unless we extend the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended.
In order to extend the Exchange Offer, we will (i) notify the Exchange Agent
of any extension by oral or written notice and (ii) issue a press release or
other public announcement which shall include disclosure of the approximate
number of Private Notes deposited to date, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.
We reserve the right (i) to delay accepting any Private Notes, (ii) to
extend the Exchange Offer or (iii) if, in the opinion of counsel for us, the
consummation of the Exchange Offer would violate any applicable law, rule or
regulation or any applicable interpretation of the staff of the Commission, to
terminate or amend the Exchange Offer by giving oral or written notice of such
delay, extension, termination or amendment to the Exchange Agent. Any such delay
in acceptance, extension, termination or amendment will be followed as promptly
as practicable by a press release or other public announcement thereof. If the
Exchange Offer is amended in a manner determined by us to constitute a material
change, we will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the holders, and we will extend the
Exchange Offer for a period of five to ten
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<PAGE>
business days, depending upon the significance of the amendment and the manner
of disclosure to the holders, if the Exchange Offer would otherwise expire
during such five to ten business day period.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, we shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will accrue cash interest on the same terms as the
Private Notes, I.E., at the rate of 8 5/8% per annum from December 9, 1998,
payable semi-annually in arrears on January 1 and July 1 of each year,
commencing July 1, 1999.
RESALE OF THE EXCHANGE NOTES
Based upon interpretations by the staff of the Commission set forth in
certain no-action letters issued to third parties, we believe that if you
exchange Private Notes for Exchange Notes in the ordinary course of business,
you are not participating, do not intend to participate, and have no arrangement
with any person to participate in a distribution of the Exchange Notes, and if
you are not an "affiliate" of the Company within the meaning of Rule 405 of the
Securities Act, you will be allowed to resell the Exchange Notes to the public
without further registration under the Securities Act and without delivering to
the purchasers of the Exchange Notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act. However, if any holder
acquires the Exchange Notes in the Exchange Offer for the purpose of
distributing or participating in the distribution of the Exchange Notes, such
holder cannot rely on the position of the staff of the Commission enumerated in
such no-action letters issued to third parties and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available.
Each broker-dealer that receives the Exchange Notes for its own account in
exchange for Private Notes acquired by such broker-dealer as a result of
market-making or other trading activities must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of any Exchange Notes received in
exchange for Private Notes acquired by such broker-dealer as a result of
market-making or other trading activities. Pursuant to the Registration Rights
Agreement, we have agreed to make this prospectus, as it may be amended or
supplemented from time to time, available to any such broker-dealer that
requests copies of such prospectus in the Letter of Transmittal for use in
connection with any such resale for a period of up to 180 days after the
registration statement relating to the exchange is declared effective. See "Plan
of Distribution."
PROCEDURES FOR TENDERING
If you wish to tender Private Notes you must complete, sign and date the
Letter of Transmittal, or facsimile thereof, have the signatures thereon
guaranteed if so required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile to the Exchange Agent at
the
17
<PAGE>
address set forth below under "--Exchange Agent" for receipt prior to the
Expiration Date. In addition, either:
- certificates for such Private Notes must be received by the Exchange Agent
along with the Letter of Transmittal,
- a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Private Notes into the Exchange Agent's account at
the Depositary pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration
Date, or
- you must comply with the guaranteed delivery procedures described below.
If you do not withdraw your tender of Private Notes prior to the Expiration
Date, it will constitute an agreement between you and Big Flower Press in
accordance with the terms and subject to the conditions set forth in this
prospectus and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT
TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. DO NOT
SEND THE LETTER OF TRANSMITTAL OR ANY PRIVATE NOTES TO US. YOU MAY REQUEST YOUR
BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR NOMINEE TO EFFECT THE ABOVE
TRANSACTIONS FOR YOU.
If you are a beneficial owner of the Private Notes and your Private Notes
are held through a broker, dealer, commercial bank, trust company or other
nominee and you wish to tender your Private Notes, you should contact such
intermediary promptly and instruct such intermediary to tender the Private Notes
on your behalf.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "--Withdrawal of Tenders"), as the case may be, must be guaranteed by
an Eligible Institution (as defined below) unless you tender your Private Notes
(i) as a registered holder and you have not completed the box titled "Special
Delivery Instruction" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. In the event that signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, such
guarantee must be made by a member firm of a registered national securities
exchange or of the NASD, a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act which is a member of one of
the recognized signature guarantee programs identified in the Letter of
Transmittal (an "Eligible Institution").
If you sign the Letter of Transmittal even though you are not the registered
holder of any Private Notes listed in such Letter of Transmittal, such Private
Notes must be endorsed or accompanied by a properly completed bond power, signed
by such registered holder exactly as the registered holder's name appears on
such Private Notes.
In connection with any tender of Private Notes in definitive certificated
form, if you sign the Letter of Transmittal or any Private Notes or bond powers
in your capacity as trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or if you are otherwise acting in a
fiduciary or representative capacity, you should so indicate when signing, and,
unless waived by the Company, you must submit evidence satisfactory to the
Company of your authority to so act with the Letter of Transmittal.
The Exchange Agent and the Depositary have confirmed that any financial
institution that is a participant in the Depositary's system may utilize the
Depositary's Automated Tender Offer Program to tender Private Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Private Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. We reserve the absolute right to reject any and all Private Notes not
properly tendered or any Private Notes the Company's acceptance of which would,
in the
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<PAGE>
opinion of counsel for the Company, be unlawful. We also reserve the right to
waive any defects, irregularities or conditions of tender as to particular
Private Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letter of Transmittal) will be
final and binding on all parties. Unless waived, you must cure any defects or
irregularities in connection with tenders of Private Notes within such time as
we shall determine. Although we intend to notify holders of defects or
irregularities in connection with tenders of Private Notes, neither the Company,
the Exchange Agent nor any other person shall incur any liability for failure to
give such notification. Tenders of Private Notes will not be deemed to have been
made until such defects or irregularities have been cured or waived.
We have no present plan to acquire any Private Notes that are not tendered
in the Exchange Offer or to file a registration statement to permit resales of
any Private Notes that are not tendered pursuant to the Exchange Offer. We
reserve the right in our sole discretion to purchase or make offers for any
Private Notes that remain outstanding subsequent to the Expiration Date and, to
the extent permitted by applicable law, to purchase Private Notes in the open
market, in privately negotiated transactions or otherwise. The terms of any such
purchases or offers could differ from the terms of the Exchange Offer.
By tendering Private Notes pursuant to the Exchange Offer, you will
represent to the Company that, among other things,
(a) you have full power and authority to tender, sell, assign and transfer
the Private Notes tendered,
(b) the Company will acquire good, marketable and unencumbered title to the
Private Notes being tendered, free and clear of all security interests,
liens, restrictions, charges, encumbrances, conditional sale agreements
or other obligations relating to their sale or transfer, and not subject
to any adverse claim when the Private Notes are accepted by the Company,
(c) the Exchange Notes to be acquired by you in connection with the Exchange
Offer are being acquired by you in the ordinary course of business,
(d) you have no arrangement or understanding with any person to participate
in the distribution of the Exchange Notes,
(e) you acknowledge and agree that if you are a broker-dealer registered
under the Exchange Act or you are participating in the Exchange Offer for
the purposes of distributing the Exchange Notes, you must comply with the
registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale of the Exchange Notes acquired by
you and cannot rely on the position of the staff of the Commission set
forth in certain no-action letters,
(f) you understand that a secondary resale transaction described in clause
(e) above and any resales of Exchange Notes obtained by you in exchange
for Private Notes acquired by you directly from the Company should be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or Item 508, as
applicable, of Regulation S-K of the Commission, and
(g) you are not an "affiliate", as defined in Rule 405 under the Securities
Act, of the Company.
If you are a broker-dealer and you will receive Exchange Notes for your own
account in exchange for Private Notes that were acquired as a result of
market-making activities or other trading activities, you will be required to
acknowledge in the Letter of Transmittal that you will deliver a prospectus in
connection with any resale of such Exchange Notes.
RETURN OF PRIVATE NOTES
If any tendered Private Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Private Notes are withdrawn
or are submitted for a greater principal amount than you desire to exchange,
such unaccepted, withdrawn or nonexchanged Private Notes will
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<PAGE>
be returned without expense to (a) the tendering holder thereof or (b) in the
case of Private Notes tendered by book-entry transfer into the Exchange Agent's
account at the Depositary pursuant to the book-entry transfer procedures
described below, such Private Notes will be credited to an account maintained
with the Depositary, as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Private Notes at the Depositary for purposes of the Exchange Offer within
two business days after the date of this prospectus, and any financial
institution that is a participant in the Depositary's systems may make
book-entry delivery of Private Notes by causing the Depositary to transfer such
Private Notes into the Exchange Agent's account at the Depositary in accordance
with the Depositary's procedures for transfer. However, although delivery of
Private Notes may be effected through book-entry transfer at the Depositary, you
have to transmit the Letter of Transmittal or a facsimile thereof, with any
required signature guarantees and any other required documents, to the Exchange
Agent at the address set forth below under "--Exchange Agent" for its receipt on
or prior to the Expiration Date or pursuant to the guaranteed delivery
procedures described below.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your Private Notes and (i) your Private Notes are not
readily available so you can meet the Expiration Date deadline or (ii) you
cannot deliver your Private Notes, the Letter of Transmittal or any other
required documents to the Exchange Agent prior to the Expiration Date, you may
nonetheless effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Company, by
facsimile transmission, mail or hand delivery, setting forth the name and
address of the holder, the certificate number(s) of such Private Notes, if
applicable, and the principal amount of Private Notes tendered, stating that
the tender is being made thereby and guaranteeing that, within five NYSE
trading days after the Expiration Date, the Letter of Transmittal, or a
facsimile thereof, together with the certificate(s) representing the Private
Notes in proper form for transfer or a Book-Entry Confirmation, as the case
may be, and any other documents required by the Letter of Transmittal, will
be deposited by the Eligible Institution with the Exchange Agent; and
(c) Such properly executed Letter of Transmittal, or facsimile thereof,
as well as the certificate(s) representing all tendered Private Notes in
proper form for transfer or a Book-Entry Confirmation, as the case may be,
and all other documents required by the Letter of Transmittal are received
by the Exchange Agent within five NYSE trading days after the Expiration
Date.
The Exchange Agent will send you a Notice of Guaranteed Delivery upon your
request if you wish to tender your Private Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, you may withdraw your tender of Private
Notes at any time prior to the Expiration Date.
To withdraw a tender of Private Notes in the Exchange Offer, the Exchange
Agent must receive a written or facsimile transmission notice of withdrawal at
its address set forth herein prior to the Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Private
Notes to be withdrawn (the "Depositor"), (ii) identify the Private Notes to be
withdrawn (including the certificate number or numbers, if applicable, and
principal amount of such Private Notes) and (iii) be signed by the holder in the
same manner as the original signature on the Letter of Transmittal by which such
Private Notes were tendered (including any required signature guarantees).
20
<PAGE>
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, in its sole
discretion, whose determination shall be final and binding on all parties. Any
Private Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer, and no Exchange Notes will be issued with
respect thereto unless the Private Notes so withdrawn are validly retendered.
Properly withdrawn Private Notes may be retendered by following one of the
procedures described above under "--Procedures for Tendering" at any time prior
to the Expiration Date.
TERMINATION OF CERTAIN RIGHTS
All registration rights under the Registration Rights Agreement accorded to
holders of the Private Notes (and all rights to receive additional interest in
the event of a Registration Default as defined therein) will terminate upon
consummation of the Exchange Offer, except with respect to the Company's
continuing obligation, for a period of up to 180 days after the Registration
Statement is declared effective, to keep the Registration Statement effective
and to provide copies of the latest version of the prospectus to any
broker-dealer that requests copies of such prospectus in the Letter of
Transmittal for use in connection with any resale by such broker-dealer of
Exchange Notes received for its own account pursuant to the Exchange Offer in
exchange for Private Notes acquired for its own account as a result of
market-making or other trading activities.
EXCHANGE AGENT
State Street Bank and Trust Company is the Exchange Agent for the Exchange
Offer. You should direct any questions and requests for assistance, requests for
additional copies of this prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery to the Exchange Agent, addressed as
follows:
<TABLE>
<CAPTION>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
<S> <C>
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box 778 4th Floor
Boston, MA 02102-0078 Two International Place
Boston, MA 02110
Attn.: Kellie Mullen
Attn.: Kellie Mullen
(For Eligible Institutions Only)
Confirm by Telephone: By Facsimile:
(617) 664-5587 (617) 664-5290
</TABLE>
State Street Bank and Trust Company also serves as Trustee under the Indenture
and the 8 7/8% Indenture.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by us. The principal
solicitation is being made by mail; however, additional solicitation may be made
by telegraph, facsimile transmission, e-mail, telephone or in person by officers
and regular employees of the Company and its affiliates.
We have not retained a dealer-manager in connection with the Exchange Offer
and will not make any payments to brokers, dealers or others soliciting
acceptances of the Exchange Offer. We will, however, pay the Exchange Agent
reasonable and customary fees for its services and will reimburse it for its
reasonable, out-of-pocket expenses in connection therewith.
Any expenses you will incur in connection with the Exchange Offer, including
registration fees, fees and expenses of the Exchange Agent and the Trustee,
accounting and legal fees, and printing costs, will be paid by us.
21
<PAGE>
We will pay all transfer taxes, if any, applicable to the exchange of
Private Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the Private Notes pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered holder or any other persons) will be payable by the tendering
holder. If you do not submit satisfactory evidence of payment of such taxes or
exemption therefrom with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to you.
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. You are urged to consult
your financial and tax advisors in making your decisions on what action to take.
Private Notes that are not exchanged for the Exchange Notes pursuant to the
Exchange Offer will remain "restricted securities" within the meaning of Rule
144(a)(3)(iv) of the Securities Act. Accordingly, such Private Notes may not be
offered, sold, pledged or otherwise transferred except:
- to a person who the seller reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities
Act purchasing for its own account or for the account of a qualified
institutional buyer in a transaction meeting the requirements of Rule
144A,
- in an offshore transaction complying with Rule 903 or Rule 904 of
Regulation S under the Securities Act,
- pursuant to an exemption from registration under the Securities Act
provided by Rule 144 thereunder (if available),
- pursuant to an effective registration statement under the Securities Act,
or
- pursuant to another available exemption from the registration requirements
of the Securities Act,
and, in each case, in accordance with all other applicable securities laws.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of
the Exchange Offer. The expenses of the Exchange Offer will be amortized over
the remaining term of the Notes.
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DESCRIPTION OF THE CREDIT FACILITY
On June 12, 1997, Big Flower Press entered into the Credit Facility with a
syndicate of banks and Bankers Trust Company as Administrative Agent and
Collateral Agent and Credit Suisse First Boston as Documentation Agent. The
Credit Facility was amended and restated as of June 22, 1998. Pursuant to the
Credit Facility, certain of our existing and future domestic subsidiaries (the
"Domestic Subsidiary Borrowers") may borrow, subject to certain conditions, up
to $530 million on a revolving credit basis, of which up to $30.0 million is
available as US dollar denominated swingline loans and up to $45.0 million is
available as US dollar denominated letters of credit. The Credit Facility
includes a Pounds Sterling Sub-Facility of up to $162 million (on a U.S. dollar
equivalent basis) which permits certain of our existing and future U.K.
subsidiaries (the "U.K. Subsidiary Borrowers" and, together with the Domestic
Subsidiary Borrowers, the "Subsidiary Borrowers") to borrow funds, subject to
certain conditions, in pounds sterling on a revolving credit basis, of which up
to L20.0 million is available as pounds sterling denominated swingline loans and
up to $45.0 million (on a US dollar equivalent basis) is available as letters of
credit denominated in pounds sterling. Borrowings under the Credit Facility are
available for general corporate purposes, permitted acquisitions and
investments.
Each of Holdings, the Company and each other wholly-owned domestic
subsidiary of Holdings guaranteed all obligations of the Subsidiary Borrowers
under the Credit Facility. Certain wholly-owned U.K. subsidiaries of Holdings
guaranteed all obligations of the U.K. Subsidiary Borrowers under the Credit
Facility. The Domestic Subsidiary Borrowers are joint and several borrowers
under the Credit Facility and, as such, are jointly and severally obligated with
respect to all obligations of the Domestic Subsidiary Borrowers under the Credit
Facility. The U.K. Subsidiary Borrowers are joint and several borrowers under
the Pounds Sterling Sub-Facility and, as such, are jointly and severally
obligated with respect to all obligations of the U.K. Subsidiary Borrowers under
the Credit Facility. Holdings and each of its wholly-owned domestic subsidiaries
(including the Company) have, subject to certain exceptions, pledged all of the
stock and other equity interests and intercompany notes owned by them as
collateral under the terms of the Credit Facility to secure their respective
obligations under the Credit Facility or guaranty, as the case may be, PROVIDED
that no more than 65% of the voting common stock or other equity interests
entitled to vote of each first-tier foreign subsidiary has been pledged under
the terms of the Credit Facility. The U.K. Subsidiary Borrowers and certain of
their wholly-owned U.K. Subsidiaries have pledged all of the stock and other
equity interests and intercompany notes owned by them as collateral under the
terms of the Credit Facility to secure their respective obligations under the
Credit Facility or guaranty, as the case may be, subject to certain exceptions.
The Credit Facility provides that the revolving credit facility terminates
and all loans thereunder must be repaid on June 12, 2002. Under the Credit
Facility, outstanding loans (other than swingline loans and loans denominated in
pounds sterling) bear interest at the Applicable Margin described below over, at
our option, (i) Base Rate or (ii) LIBOR. Base Rate is defined as the higher of
(x) 1/2 of 1% in excess of the Federal Funds Rate (as defined in the Credit
Facility) and (y) the prime lending rate of Bankers Trust Company in effect from
time to time. The Applicable Margin varies depending on Holdings' leverage
ratio, as tested on a rolling four quarter basis, and defined generally as the
ratio of debt to earnings, plus interest, taxes, depreciation and amortization
(the "Leverage Ratio"). The Applicable Margin for LIBOR loans ranges from 0.50%
to 1.75%. For Base Rate loans the Applicable Margin varies from 0.00% to 0.75%.
Swingline loans denominated in US dollars bear interest at the Applicable Margin
over Base Rate and letter of credit fees are charged at a rate, varying with the
Leverage Ratio, from 0.50% to 1.75%. Outstanding loans denominated in pounds
sterling (other than swingline loans denominated in pounds sterling) bear
interest at the Applicable Margin for LIBOR loans over the Sterling Euro Rate
plus the MLA Costs (as defined in the Credit Facility) incurred by the banks in
order to comply with U.K. mandatory liquid asset requirements. Swingline loans
denominated in pounds sterling bear interest at the Applicable Margin for LIBOR
loans plus the overnight LIBOR rate plus MLA Costs.
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<PAGE>
Holdings may voluntarily terminate the banks' commitments under the Credit
Facility at any time, subject to three Business Days' notice. The Credit
Facility also provides for mandatory reductions of the banks' commitments in the
event Holdings, the Company or any of their respective subsidiaries incurs debt
or issues preferred stock (other than certain permitted debt or preferred
stock).
The Credit Facility contains restrictions that include limitations on
Holdings and its subsidiaries with respect to:
- the incurrence, creation and maintenance of liens (other that permitted
liens),
- the incurrence and maintenance of additional debt, subject to certain
exceptions and an available basket amount,
- mergers, acquisitions, purchases and sales of assets, subject to certain
exceptions and an available basket amount,
- sale and leaseback transactions,
- changes in business conducted, and
- dividends and other restricted payments (subject to available baskets).
In addition, the Credit Facility contains a Leverage Ratio requirement of no
greater than 4.25 to 1.0 until December 31, 1999 and thereafter no greater than
4.00 to 1.0. The minimum net interest coverage ratio is 2.25 to 1.0.
The Credit Facility contains customary events of default, including:
- failure by a Subsidiary Borrower to make principal payments or interest
and fee payments within certain grace periods,
- inaccuracy of representations and warranties in any material respects when
made,
- breach of covenants (in certain cases, subject to grace periods),
- failure by Holdings, the Company or any of their respective subsidiaries
to make payments in respect of certain indebtedness,
- bankruptcy, insolvency or similar events with respect to Holdings, the
Company or any of their respective significant subsidiaries,
- certain ERISA defaults,
- material judgments that remain unsatisfied or unstayed for certain time
periods, or
- a change in control (as defined in the Credit Facility) of Holdings, the
Company or any Subsidiary Borrower.
DESCRIPTION OF THE 8 7/8% NOTES
The $350 million aggregate principal amount of the 8 7/8% Notes were issued
under the 8 7/8% Indenture dated as of June 20, 1997 between us and the trustee
named therein. The 8 7/8% Notes mature on July 1, 2007 and are not redeemable at
our option until July 1, 2002. Thereafter, the 8 7/8% Notes are redeemable at
our option at various premiums declining to par on July 1, 2005.
The 8 7/8% Indenture contains optional redemption provisions in the event of
issuances of Equity Interests (as defined therein) of the Company and any Change
of Control (as defined therein) and requirements to make an offer to purchase
8 7/8% Notes in the event of a Change of Control or certain asset sales, in each
case that are substantially similar to those contained in the Indenture. In
addition,
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the 8 7/8% Indenture contains restrictive covenants, events of default and other
provisions substantially similar to those contained in the Indenture. See
"Description of the Exchange Notes."
DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
The Private Notes were, and the Exchange Notes will be, issued under an
indenture (the "Indenture") dated as of December 9, 1998 between the Company and
State Street Bank and Trust Company, as trustee (the "Trustee"). The following
description of the material provisions of the Indenture is a summary only, does
not purport to be complete and is qualified in its entirety by reference to all
of the provisions of the Trust Indenture Act of 1939, as amended (the "TIA"),
and the Indenture and the Exchange Notes to be issued thereunder, including the
definitions therein of certain terms. Prospective purchasers of the Exchange
Notes are referred to the Indenture and the TIA for a statement of such
provisions. Capitalized terms used herein and not otherwise defined shall have
the meanings given to them in the Indenture. For definitions of certain terms
used in this section, see "--Certain Definitions" below. References in this
section to the "Company" include only Big Flower Press Holdings, Inc. and not
its Subsidiaries. References in this section to the "Notes" are references to
the Private Notes and the Exchange Notes, collectively.
The Private Notes and the Exchange Notes will be considered collectively to
be a single class for all purposes under the Indenture, including, without
limitation, waivers, amendments, redemptions and offers to purchase.
PRINCIPAL, MATURITY AND INTEREST
The Notes will be general unsecured obligations of the Company limited to
$350.0 million in aggregate principal amount, of which $250.0 million were
issued on December 9, 1998, in the form of Private Notes. Exchange Notes in
aggregate principal amount of $250.0 million are hereby offered in exchange for
such Private Notes. Additional Notes may be issued in one or more series, from
time to time, subject to the limitations set forth under "--Certain
Covenants--Limitation on Additional Indebtedness." The Exchange Notes will be
issued only in fully registered form without coupons in denominations of $1,000
and any integral multiple thereof.
The Exchange Notes will mature on December 1, 2008. The Exchange Notes will
bear interest at the rate per annum of 8 5/8% from the date of issuance, payable
semiannually on January 1 and July 1 of each year, commencing July 1, 1999, to
the registered holders of the Exchange Notes at the close of business on the
June 15 or December 15 immediately preceding such Interest Payment Date.
Principal, premium, if any, and interest on each of the Exchange Notes will
be payable, and the Exchange Notes may be presented for registration of transfer
or exchange, at the corporate trust office of the Trustee or such other office
or agency of the Company as may be designated by the Company for such purpose.
At the option of the Company, payment of interest may be made by check mailed to
the holders at the addresses set forth on the registry books maintained by the
Trustee, who will initially act as registrar for the Exchange Notes.
OPTIONAL REDEMPTION
The Exchange Notes are not redeemable at the Company's option prior to
December 1, 2003 (other than out of the net proceeds of certain issuances of
Equity Interests of the Company or in the case of a Change of Control as
described below). The Exchange Notes will be subject to redemption at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of the
principal amount) set forth in the table
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<PAGE>
below, plus accrued and unpaid interest thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning December 1 of the
years indicated in the table below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2003.............................................................................. 104.313%
2004.............................................................................. 102.875%
2005.............................................................................. 101.438%
2006 and thereafter............................................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to December 1, 2001, the
Company may also redeem up to 35% of the principal amount of the Notes issued
under the Indenture with the net proceeds from issuances of Equity Interests of
the Company (other than Redeemable Stock) at a redemption price equal to
108.625% of the principal amount thereof, plus accrued and unpaid interest to
the redemption date; PROVIDED that at least 65% of the principal amount of the
Notes issued under the Indenture must remain outstanding after each such
redemption. Any such redemption will be required to occur on or prior to 180
days after the receipt of the proceeds of such issuances of Equity Interests.
In addition, at any time on or prior to December 1, 2003, upon the
occurrence of a Change of Control that has been approved by a majority of the
Board of Directors of the Company as such Board of Directors was constituted
immediately prior to the transaction giving rise to such Change of Control, the
Company may redeem the Exchange Notes, in whole but not in part, at a redemption
price equal to the principal amount thereof plus the Applicable Premium plus
accrued and unpaid interest, if any, to the date of redemption. Notice of
redemption of the Exchange Notes pursuant to this paragraph shall be mailed to
holders of the Exchange Notes not more than 30 days following the occurrence of
a Change of Control. The Company may not redeem Exchange Notes pursuant to this
paragraph if it has made an offer to repurchase the Exchange Notes with respect
to such Change of Control.
"Applicable Premium" means, with respect to an Exchange Note, the greater of
(i) 4.313% of the then outstanding principal amount of such Exchange Note and
(ii) (a) the present value of all remaining required interest and principal
payments due on such Exchange Note and all premium payments relating thereto
assuming a redemption date of December 1, 2003, computed using a discount rate
equal to the Treasury Rate plus 75 basis points minus (b) the then outstanding
principal amount of such Exchange Note minus (c) accrued interest paid on the
redemption date.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two business days prior to the date fixed
for redemption (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the then
remaining term to December 1, 2003; PROVIDED, HOWEVER, that if the then
remaining term to December 1, 2003 is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the then
remaining term to December 1, 2003 is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
SELECTION AND NOTICE
In case of a partial redemption, selection of the Exchange Notes or portions
thereof for redemption shall be made by the Trustee by lot, PRO RATA or in such
manner as it shall deem appropriate and
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fair and in such manner as complies with any applicable legal requirements.
Exchange Notes may be redeemed in part in multiples of $1,000 principal amount
only. Notice of redemption will be sent, by first class mail, postage prepaid,
at least 30 days and not more than 60 days prior to the date fixed for
redemption to each holder whose Exchange Notes are to be redeemed at the last
address for such holder then shown on the registry books. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Exchange
Note shall state the portion of the principal amount thereof to be redeemed. A
new Exchange Note in principal amount equal to the unredeemed portion thereof
will be issued in the name of the holder thereof upon cancellation of the
original Exchange Note. On and after any Redemption Date, interest will cease to
accrue on the Exchange Notes or part thereof called for redemption as long as
the Company has deposited with the paying agent funds in satisfaction of the
redemption price pursuant to the Indenture.
CHANGE OF CONTROL
In the event of a Change of Control (the date of such occurrence being the
"Change of Control Date"), if either (i) the Company does not redeem the
Exchange Notes as described under "--Optional Redemption" or (ii) such Change of
Control occurs after December 1, 2003, the Company shall notify the holders in
writing of such occurrence and shall make an offer to purchase (the "Change of
Control Offer"), on a business day (the "Change of Control Payment Date") not
later than 60 days following the Change of Control Date, all Notes then
outstanding at a purchase price (the "Change of Control Purchase Price") equal
to 101% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the Change of Control Payment Date. Notice of a Change of Control Offer
shall be mailed by the Company not less than 30 days nor more than 45 days
before the Change of Control Payment Date. The Change of Control Offer is
required to remain open from the time of mailing for at least 20 business days
and until the close of business on the third business day prior to the Change of
Control Payment Date. The 8 7/8% Indenture contains the same provisions with
respect to a Change of Control. (For the definition of Change of Control, see
"-- Certain Definitions -- Change of Control" below.)
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Notes that might be delivered by holders seeking
to accept the Change of Control Offer. In the event the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would seek third-party financing to the extent it does not have
available funds to meet its purchase obligations. However, there can be no
assurance that the Company would be able to obtain such financing. The Company
shall not be required to make a Change of Control Offer upon a Change of Control
if a third party makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements applicable to a Change of
Control Offer made by the Company and purchases all Notes validly tendered and
not withdrawn under such Change of Control Offer.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) under the Exchange Act and any other securities laws or
regulations (including Rule 14e-1 under the Exchange Act) in connection with the
repurchase of the Exchange Notes pursuant to a Change of Control Offer. To the
extent that the provisions of any securities laws or regulations conflict with
the "CHANGE OF CONTROL" provisions of the Indenture, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the "CHANGE OF CONTROL" provisions of the
Indenture by virtue thereof.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a holder's right to redemption upon a Change of Control.
Restrictions in the Indenture described herein on the ability of the Company and
its Restricted Subsidiaries to incur additional Indebtedness, to grant liens on
its property, to make Restricted Payments and to make Asset Sales may also make
27
<PAGE>
more difficult or discourage a takeover of the Company whether favored or
opposed by the management of the Company. Consummation of any such transaction
in certain circumstances may require redemption or repurchase of the Notes, and
there can be no assurance that the Company or the acquiring party will have
sufficient financial resources to effect such redemption or repurchase. Such
restrictions and the restrictions on transactions with Affiliates may, in
certain circumstances, make more difficult or discourage any leveraged buyout of
the Company or any of its Subsidiaries by the management of the Company. While
such restrictions cover a wide variety of arrangements which have traditionally
been used to effect highly leveraged transactions, the Indenture may not afford
the holders of Exchange Notes protection in all circumstances from the adverse
aspects of a highly leveraged transaction, reorganization, restructuring, merger
or similar transaction.
SUBORDINATION
The payment of the principal of, premium, if any, and interest on the
Exchange Notes will be subordinated in right of payment, as set forth in the
Indenture, to the prior payment in full in cash or cash equivalents of all
Senior Indebtedness, whether outstanding on the Issue Date or thereafter
incurred, including any interest accruing subsequent to a bankruptcy or other
similar proceeding whether or not such interest is an allowed claim enforceable
against the Company in a bankruptcy case under Title 11 of the United States
Code.
Upon any distribution of assets of the Company of any kind or character,
whether in cash, property or securities upon any dissolution, winding up, total
or partial liquidation or reorganization of the Company (including, without
limitation, in bankruptcy, insolvency, or receivership proceedings or upon any
assignment for the benefit of creditors or any other marshalling of the
Company's assets and liabilities), the holders of Senior Indebtedness shall
first be entitled to receive payment in full in cash or cash equivalents of all
amounts payable under Senior Indebtedness (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Indebtedness whether or not interest is an allowed claim enforceable
against the Company in any such proceeding) before the holders will be entitled
to receive any payment with respect to the Notes, and until all Obligations with
respect to Senior Indebtedness are paid in full in cash or cash equivalents, any
distribution to which the holders would be entitled shall be made to the holders
of Senior Indebtedness.
No direct or indirect payment by or on behalf of the Company of principal
of, premium, if any, or interest on the Exchange Notes whether pursuant to the
terms of the Exchange Notes or upon acceleration or otherwise shall be made if,
at the time of such payment, there exists a default in the payment of all or any
portion of principal of, premium, if any, or interest on any Senior
Indebtedness, and such default shall not have been cured or waived or the
benefits of this sentence waived by or on behalf of the holders of Senior
Indebtedness. In addition, during the continuance of any other 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 Notes, the
date of such acceleration, no such payment may be made by the Company upon or in
respect of the Exchange Notes 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). 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. Not more than one Payment Blockage Period may be commenced with
respect to the
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<PAGE>
Exchange Notes during any period of 360 consecutive days. For all purposes of
this paragraph, 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.
If, notwithstanding the foregoing, any payment or distribution of assets or
securities of the Company of any kind or character, whether in cash, property or
securities, shall be received by the Trustee or the holders or any paying agent
(or, if the Company is acting as its own paying agent, money for any such
payment or distribution shall be segregated or held in trust) on account of
principal of, premium, if any, or interest on the Exchange Notes before all
Senior Indebtedness is paid in full in cash or cash equivalents, such payment or
distribution shall be received and held in trust by the Trustee or such holder
or paying agent for the benefit of the holders of the Senior Indebtedness, or
their respective representative, ratably according to the respective amounts of
Senior Indebtedness held or represented by each, and shall be paid over or
delivered to the holders of the Senior Indebtedness remaining unpaid to the
extent necessary to make payment in full of all Senior Indebtedness remaining
unpaid after giving effect to all concurrent payments and distributions to or
for the holders of such Senior Indebtedness.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, holders may recover less ratably than creditors of
the Company who are holders of Senior Indebtedness. The Indenture will limit,
subject to certain financial tests and specific exceptions, the amount of
additional Indebtedness, including Senior Indebtedness, that the Company and its
Subsidiaries can incur. See "--Certain Covenants--Limitation on Additional
Indebtedness."
The Exchange Notes will be structurally subordinated to all liabilities,
including trade payables and capitalized lease obligations of the Company's
Subsidiaries. Any right of the Company to receive assets of any Subsidiary upon
such Subsidiary's liquidation or reorganization (and the consequent right of the
holders to participate in those assets) will be structurally subordinated to the
claims of such Subsidiary's creditors, except to the extent that the Company is
itself recognized as a creditor of such Subsidiary, in which case the claims of
the Company would still be subject to any security interests in the assets of
such Subsidiary and any liabilities of such Subsidiary senior to that held by
the Company and may otherwise be challenged in a liquidation or reorganization
proceeding. At September 30, 1998, on a pro forma basis assuming the issuance of
the Private Notes and application of the proceeds therefrom to repay
indebtedness under the Credit Facility, (i) the Company and its Subsidiaries
had, on a consolidated basis, approximately $722.1 million of indebtedness
(including capitalized lease obligations) including $122.0 million of Senior
Indebtedness (including $96.5 million of subsidiaries' borrowings under the
Credit Facility that are guaranteed by the Company) and $350 million principal
amount of 8 7/8% Notes which will rank PARI PASSU with the Notes and (ii) the
aggregate amount of liabilities (including trade payables and amounts
outstanding under the Credit Facility) of the Company's Subsidiaries that
effectively ranked senior to the Notes would have been approximately $447.3
million. In addition, at September 30, 1998, certain Subsidiaries of the Company
had significant commitments under operating leases and approximately $94.7
million was outstanding under the A/R Securitization.
CERTAIN COVENANTS
LIMITATION ON RESTRICTED PAYMENTS. The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, (i)
declare or pay any dividend or make any distribution on account of the Company's
Capital Stock or other Equity Interests (other than dividends or distributions
payable in Equity Interests (other than Redeemable Stock) of the Company),
29
<PAGE>
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or (iii) make any Investment (other than a Permitted
Investment) (the foregoing actions set forth in clauses (i) through (iii) being
referred to as "Restricted Payments"), if:
(a) a Default or Event of Default shall have occurred and be continuing
at the time of such Restricted Payment or shall occur immediately after
giving effect thereto; or
(b) immediately after such Restricted Payment and after giving effect
thereto on a PRO FORMA basis, the Company could not incur at least $1.00 of
additional Indebtedness pursuant to the first paragraph of the "LIMITATION
ON ADDITIONAL INDEBTEDNESS" covenant (without giving effect to clauses (i)
through (xvi) of the second paragraph thereof); or
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made after June 20, 1997, exceeds the sum of (i) 50% of
the amount of the Adjusted Consolidated Net Income of the Company for the
period (taken as one accounting period) from January 1, 1997 through the end
of the Company's fiscal quarter ending immediately prior to the time of such
Restricted Payment (or, if Adjusted Consolidated Net Income for such period
is a deficit, 100% of such deficit) plus (ii) 100% of the aggregate amounts
contributed to the capital of the Company from and after June 20, 1997 plus
(iii) 100% of the aggregate net cash proceeds and the fair market value, as
determined in good faith by the Board of Directors, of property other than
cash received by the Company from and after June 20, 1997 from the issue or
sale of Equity Interests of the Company (other than such Equity Interests
issued or sold to a Restricted Subsidiary and other than Redeemable Stock)
or any Indebtedness or security convertible into or exchangeable for any
such Equity Interest that has been so converted or exchanged (excluding the
net cash proceeds from issuances and sales of Equity Interests financed,
directly or indirectly, using borrowed funds from the Company or any
Restricted Subsidiary until and to the extent such borrowing is repaid) plus
(iv) $75.0 million. As of September 30, 1998, the amount available for
Restricted Payments pursuant to this clause (c) was approximately $215.0
million.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at the date of
declaration thereof such payment would have complied with the provisions of the
Indenture; (ii) (A) the retirement of any Equity Interests of the Company (the
"Retired Equity Interests") either in exchange for or out of the net proceeds of
the substantially concurrent sale (other than to a Restricted Subsidiary) of
other Equity Interests of the Company (the "Refunding Equity Interests") other
than any Redeemable Stock and (B) if the Retired Equity Interest constituted
Qualified Preferred Stock, the declaration and payment of dividends on the
Refunding Equity Interest in an aggregate amount per year no greater than the
aggregate amount of dividends per year that was declarable and payable on such
Retired Equity Interest immediately prior to such retirement to the extent such
Refunding Equity Interest is designated to be Qualified Preferred Stock by the
Company at the time of its issuance; (iii) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company
issued to employees, officers or directors of the Company and its Subsidiaries
pursuant to agreements containing provisions for the repurchase of such Equity
Interests upon death, disability or termination of employment or directorship of
such persons, or in accordance with the Company's insider trading policy, not to
exceed $5.0 million in any fiscal year plus the aggregate cash proceeds from any
reissuance during such fiscal year of Equity Interests by the Company to
employees, officers or directors of the Company and its Subsidiaries plus the
aggregate cash proceeds from any payments on life insurance policies with
respect to any employees, officers or directors of the Company and its
Subsidiaries which proceeds are used to purchase the Equity Interests of the
Company held by any such employees, officers or directors; (iv) the declaration
and payment of dividends to holders of any class or series of the Company's
preferred stock issued after the Issue Date (including, without limitation, the
declaration and payment of dividends on Refunding Equity Interests in excess of
the dividends declarable and payable thereon pursuant to clause (ii) of this
paragraph);
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<PAGE>
PROVIDED that at the time of such issuance the Company's Fixed Charge Coverage
Ratio for the four full fiscal quarters ending immediately prior to the date of
such issuance would have been at least 1.25 to 1, determined on a PRO FORMA
basis as if such issuance was at the beginning of such four-quarter period, and
at the time of issuance, such preferred stock is designated by the Company to be
Qualified Preferred Stock; and (v) an Investment in any Unrestricted Subsidiary
either in exchange for Equity Interests of the Company (other than Redeemable
Stock) or out of the proceeds of the sale (other than to a Restricted
Subsidiary) of Equity Interests of the Company (other than Redeemable Stock)
received by the Company not more than 12 months prior to the date of such
Investment (to the extent such sale of Equity Interests has not previously been
included in any calculation under clause (c) above for purposes of permitting a
Restricted Payment); PROVIDED that in the cases of clauses (iii) (other than
with respect to the repurchase of Equity Interests with insurance proceeds),
(iv) and (v), so long as no Default or Event of Default shall have occurred and
be continuing at the time of such Restricted Payment or shall occur immediately
after giving effect thereto.
In determining the aggregate amount expended for Restricted Payments in
accordance with clause (c) above, (1) no amounts expended under clause (iii)
(only with respect to the use of insurance proceeds to repurchase Equity
Interests) of the immediately preceding paragraph shall be included and (2) 100%
of the amounts expended under clauses (i), (ii), (iii) (other than with respect
to the repurchase of Equity Interests with insurance proceeds), (iv) and (v) of
the immediately preceding paragraph shall be included.
LIMITATION ON ADDITIONAL INDEBTEDNESS. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable with respect to any Indebtedness unless the Company's Fixed Charge
Coverage Ratio for its four full fiscal quarters ending immediately prior to the
date such additional Indebtedness is created, incurred, issued, assumed or
guaranteed would have been at least 2.25 to 1, determined on a PRO FORMA basis
(including a PRO FORMA application of the net proceeds of such Indebtedness) as
if the additional Indebtedness had been created, incurred, issued, assumed or
guaranteed at the beginning of such four-quarter period.
The foregoing limitations will not apply to the incurrence of (i)
Indebtedness pursuant to the Credit Facility in an amount equal to $475.0
million; (ii) Existing Indebtedness, including the 8 7/8% Notes; (iii)
Indebtedness represented by the Notes in an aggregate principal amount equal to
$250.0 million; (iv) Capital Lease Obligations; (v) Indebtedness constituting
purchase money obligations for property acquired in the ordinary course of
business or other similar financing transactions; (vi) Indebtedness incurred in
connection with capital expenditures not to exceed 6% of net sales of the
Company and its Restricted Subsidiaries in any fiscal year; (vii) Indebtedness
constituting reimbursement obligations with respect to letters of credit,
including, without limitation, letters of credit in respect of workers'
compensation claims, issued for the account of the Company or a Restricted
Subsidiary in the ordinary course of business, or other Indebtedness with
respect to reimbursement-type obligations regarding workers' compensation
claims; (viii) additional Indebtedness in an aggregate principal amount up to
$45.0 million at any one time outstanding for the Company and its Restricted
Subsidiaries; (ix) Indebtedness created, incurred, issued, assumed or given in
exchange for, or the proceeds of which are used, to extend, refinance, renew,
replace, substitute or refund any Indebtedness permitted under the Indenture or
any Indebtedness issued to so extend, refinance, renew, replace, substitute or
refund such Indebtedness, including any additional Indebtedness incurred to pay
premiums and fees in connection therewith (the "Refinancing Indebtedness");
PROVIDED that (A) the principal amount of such Refinancing Indebtedness shall
not exceed the outstanding principal amount of Indebtedness (including unused
commitments) so extended, refinanced, renewed, replaced, substituted or refunded
plus any amounts incurred to pay premiums and fees in connection therewith, (B)
in the case of Refinancing Indebtedness for Indebtedness permitted under clause
(ii) of this paragraph (other than Senior Indebtedness), the Refinancing
Indebtedness shall have an Average Life equal to or greater
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than the Average Life of the Indebtedness being extended, refinanced, renewed,
replaced, substituted or refunded and (C) to the extent such Refinancing
Indebtedness refinances Indebtedness subordinated to the Notes, such Refinancing
Indebtedness is subordinated to the Notes at least to the same extent as the
Indebtedness being extended, refinanced, renewed, replaced, substituted or
refunded; (x) intercompany Indebtedness incurred in connection with Investments
in Unrestricted Subsidiaries; PROVIDED that such Investments are permitted by
the "LIMITATION ON RESTRICTED PAYMENTS" covenant; (xi) Indebtedness under Raw
Material Hedge Agreements; (xii) Indebtedness under Currency Agreements and
Interest Rate Agreements; PROVIDED that in the case of Currency Agreements which
relate to other Indebtedness, such Currency Agreements do not increase the
Indebtedness of the Company outstanding other than as a result of fluctuations
in foreign currency exchange rates; (xiii) Indebtedness arising from the
honoring by a bank or other financial institution of a check, draft or similar
instrument inadvertently drawn against insufficient funds in the ordinary course
of business; (xiv) Indebtedness between the Company and any Restricted
Subsidiary or between Restricted Subsidiaries; (xv) guarantees by Restricted
Subsidiaries of Indebtedness of the Company or any Restricted Subsidiary if the
Indebtedness so guaranteed is permitted under the Indenture; and (xvi) the
Company's obligations arising from the repurchase, redemption or other
acquisitions of Equity Interests from employees, officers and directors of the
Company and its Subsidiaries to the extent permitted by the "LIMITATION ON
RESTRICTED PAYMENTS" covenant.
Notwithstanding anything in the Indenture to the contrary, the consummation
of the transactions contemplated by the A/R Securitization shall not be deemed
to be incurrence of Indebtedness by the Company or by any Restricted Subsidiary.
DIVIDENDS AND PAYMENT RESTRICTIONS. The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to (i) pay dividends or
make any other distributions on its Capital Stock, or any other interest or
participation in, or measured by, its profits, owned by the Company or any of
its Restricted Subsidiaries, or pay any Indebtedness owed to the Company or any
of its Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of: (A) the terms (as
in effect on the Issue Date) of Existing Indebtedness, (B) the terms (as in
effect on the Issue Date) of the Credit Facility, (C) the terms of Indebtedness
of the Company or any of its Restricted Subsidiaries incurred in accordance with
the "LIMITATION ON ADDITIONAL INDEBTEDNESS" covenant; PROVIDED that the terms of
any such Indebtedness constitute no greater encumbrance or restriction on the
ability of any Restricted Subsidiary to pay dividends or make distributions,
make loans or advances or transfer properties or assets than the encumbrances or
restrictions imposed by the terms of the Credit Facility as in effect on the
Issue Date, (D) the terms of the Indenture and the Notes, (E) applicable law,
(F) customary non-assignment provisions entered into in the ordinary course of
business and consistent with past practices, (G) the terms of purchase money
obligations for property acquired in the ordinary course of business, but only
to the extent that such purchase money obligations restrict or prohibit the
transfer of the property so acquired, (H) any encumbrance or restriction with
respect to a Restricted Subsidiary that was not a Restricted Subsidiary on the
Issue Date, which encumbrance or restriction is in existence at the time such
person becomes a Restricted Subsidiary or is created on the date it becomes a
Restricted Subsidiary, (I) any encumbrance or restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement which has been entered
into for the sale or disposition of all or substantially all the Capital Stock
or assets of such Restricted Subsidiary, (J) the terms of the A/R Securitization
or (K) any encumbrance or restriction existing under any amendment to, and any
agreement which refinances or replaces, the agreements described in clauses (A),
(B), (C), (D), (H) and (J); PROVIDED that the terms and conditions of any such
encumbrances or restrictions contained in any such amendment or agreement as
determined in good
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faith by the Board of Directors of the Company constitute no greater encumbrance
or restriction on the ability of any Restricted Subsidiary to pay dividends or
make distributions, make loans or advances or transfer properties or assets than
those under or pursuant to the agreement evidencing the Indebtedness or
obligations as amended, refinanced or replaced. Nothing contained in this
covenant shall prevent the Company or a Restricted Subsidiary from entering into
any agreement permitting or providing for the incurrence of Liens otherwise
permitted by the "LIMITATION ON LIENS" covenant.
LIMITATION ON LIENS. The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien (other than Permitted Liens) upon any asset now owned
or hereafter acquired by it, or any income or profits therefrom or assign or
convey any right to receive income therefrom. Notwithstanding the foregoing, the
Company or any Restricted Subsidiary may create or assume any Lien upon its
properties or assets if the Company shall cause the Notes to be equally and
ratably secured with all other Indebtedness secured by such Lien for so long as
such other Indebtedness shall be so secured.
LIMITATION ON ASSET SALES. The Company shall not, and shall not permit any
of its Restricted Subsidiaries to, directly or indirectly, consummate any Asset
Sale that results in Net Proceeds in excess of $1.5 million (including the sale
of any of the Capital Stock of any Restricted Subsidiary) unless such Asset Sale
is for fair market value as determined by the Board of Directors of the Company
acting reasonably and in good faith and the Company or any Restricted Subsidiary
applies the Net Proceeds from such Asset Sale to one or more of the following in
such combination as it shall choose: (a) an investment in assets (including
Capital Stock or other securities purchased in connection with the acquisition
of Capital Stock or property of another person) used or useful in businesses
similar or ancillary to the business of the Company or its Restricted
Subsidiaries as conducted at the time of such Asset Sale; PROVIDED that such
investment occurs on or prior to the 366th day following the date of such Asset
Sale (the "Asset Sale Payment Date"); (b) a Net Proceeds Offer (as defined
below) expiring on or prior to the Asset Sale Payment Date; or (c) in the case
of an Asset Sale by the Company, the purchase, redemption or other prepayment or
repayment of outstanding Senior Indebtedness on or prior to the Asset Sale
Payment Date and, in the case of an Asset Sale by any Restricted Subsidiary, the
purchase, redemption or other prepayment or repayment of any Indebtedness of
such Restricted Subsidiary on or prior to the Asset Sale Payment Date; PROVIDED
that any prepayment or repayment of amounts outstanding under the Credit
Facility in excess of $20 million in the aggregate after the Issue Date shall be
a permanent reduction in the commitment thereunder. Notwithstanding the
foregoing, in the event such Net Proceeds, after giving effect to any investment
or payment permitted by clause (a) or (c) above (the "Excess Proceeds"), are
less than $15.0 million, the application of the Excess Proceeds to a Net
Proceeds Offer may be deferred until such time as the Excess Proceeds, plus the
aggregate amount of any subsequent Net Proceeds not otherwise invested or
applied to repay amounts outstanding under the Senior Indebtedness of the
Company or under the Indebtedness of any Restricted Subsidiary, as the case may
be, as permitted by clause (a) or (c) above, are at least equal to $15.0
million, at which time the Company shall apply all the Excess Proceeds to a Net
Proceeds Offer. Upon completion of a Net Proceeds Offer, the amount of Excess
Proceeds shall be reset at zero.
For purposes of clause (b) of the preceding paragraph, the Company will
apply that portion of the Net Proceeds of the Asset Sale required to make a
tender offer in accordance with applicable law (a "Net Proceeds Offer") to
repurchase Notes at a price not less than 100% of the principal amount thereof
plus accrued and unpaid interest to the date of repurchase which date shall be
no earlier than 30 days nor later than 45 days after the date of mailing of the
Net Proceeds Offer (the "Net Proceeds Payment Date"). The Company may, at its
option, receive credit against any Net Proceeds Offer for the principal amount
of Notes acquired by the Company or any of its Subsidiaries and surrendered for
cancellation within six months prior to or at any time after the date of such
Asset Sale relating to such Net Proceeds Offer and before the Net Proceeds
Payment Date. Any Net Proceeds Offer will be made
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by the Company only if and to the extent permitted under, and subject to prior
compliance with, the terms of any agreement governing Senior Indebtedness of the
Company or Indebtedness of a Restricted Subsidiary, as the case may be. If the
Company commences a Net Proceeds Offer and securities of the Company ranking
PARI PASSU in right of payment with the Notes are outstanding at the
commencement of such Net Proceeds Offer and the terms of such securities provide
that a similar offer must be made with respect thereto (as is the case with the
8 7/8% Notes), then the Net Proceeds Offer for the Notes shall be made
concurrently with such other offer and securities of each issue will be accepted
PRO RATA in proportion to the aggregate principal amount of securities of each
issue which the holders of securities of such issue elect to have purchased.
After the last date on which holders are permitted to tender their Notes in a
Net Proceeds Offer, the Company will not be restricted under the "LIMITATION ON
ASSET SALES" covenant of the Indenture as to its use of any remaining Net
Proceeds available to make such Net Proceeds Offer but not used to redeem Notes
pursuant thereto.
Notwithstanding the foregoing, if, at the time of an Asset Sale by the
Company or any Restricted Subsidiary, the Company's Fixed Charge Coverage Ratio
for the four fiscal quarter period ending immediately prior to the date of such
Asset Sale would have been at least 2.75 to 1, determined on a PRO FORMA basis
as if such Asset Sale occurred at the beginning of such four-quarter period,
then any Net Proceeds received will not be subject to the "LIMITATION ON ASSET
SALES" covenant.
Each Net Proceeds Offer will be mailed to the record holders within 15 days
following the determination by the Company to make such a Net Proceeds Offer and
shall comply with the procedures set forth in the Indenture. The Company will
provide the Trustee with written notice of such determination as soon as such
determination is made by the Company. Upon receiving notice of the Net Proceeds
Offer, holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 in exchange for cash. To the extent holders properly tender
Notes in an amount exceeding the holders' PRO RATA share of the Net Proceeds,
Notes of tendering holders will be repurchased on a PRO RATA basis (with such
adjustments as may be deemed appropriate by the Company so that only Notes in
denominations of $1,000 or integral multiples of $1,000 shall be acquired). A
Net Proceeds Offer shall remain open from the time of mailing for at least 20
business days and until the close of business on the third business day prior to
the Net Proceeds Payment Date.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) under the Exchange Act and any other securities laws or
regulations (including Rule 14e-1 under the Exchange Act) in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "LIMITATION
ON ASSET SALES" provision of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "LIMITATION ON ASSET SALES" provisions of the
Indenture by virtue thereof.
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TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, enter into any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate,
except for (i) transactions (including any investments, loans or advances by or
to any Affiliate) the terms of which in good faith are fair and reasonable to
the Company or such Restricted Subsidiary, as the case may be, and are at least
as favorable as the terms that could be obtained by the Company or such
Restricted Subsidiary, as the case may be, in a comparable transaction made on
an arms' length basis between unaffiliated parties (as determined by the Board
of Directors of the Company acting reasonably and in good faith, as evidenced by
a resolution of the Board of Directors); PROVIDED that, in the case of any
transaction with an Affiliate involving aggregate consideration in excess of
$10.0 million, either (A) such transaction is entered into in the ordinary
course of the business of the Company or its Restricted Subsidiaries, (B) a
majority of the directors of the Company unaffiliated with such Affiliate or, if
there are no such directors, a majority of the directors of the Company approve
such transaction or (C) the Company or such Restricted Subsidiary, as the case
may be, delivers to the Trustee and the holders a written opinion of a
nationally recognized investment banking firm stating that such transaction is
fair to the Company or such Restricted Subsidiary from a financial point of
view, (ii) payments by the Company or any of its Restricted Subsidiaries made
pursuant to any financial advisory, financing, underwriting or placement
agreement; PROVIDED that the terms of any such arrangement or agreement shall be
on terms which in good faith are fair and reasonable to the Company or such
Restricted Subsidiary, as the case may be (as determined by the Board of
Directors of the Company acting reasonably and in good faith, as evidenced by a
resolution of the Board of Directors of the Company), (iii) any Restricted
Payment not otherwise prohibited under the "LIMITATION ON RESTRICTED PAYMENTS"
covenant, (iv) the payment of reasonable and customary regular fees to directors
of the Company and its Subsidiaries who are not employees of the Company or its
Subsidiaries, (v) advances or loans to employees, officers and directors of the
Company and its Subsidiaries permitted by clauses (iii) and (iv) of the
definition of Permitted Investments and (vi) transactions between or among any
of the Company and its Restricted Subsidiaries.
LIMITATION ON MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. The Company shall
not in a single transaction or a series of related transactions consolidate
with, or merge with or into another person, or directly or indirectly sell,
transfer, lease or convey substantially all of its properties and assets, to
another person (except any Restricted Subsidiary; PROVIDED that in connection
with any merger of the Company with any such Restricted Subsidiary, no
consideration (other than common stock in the surviving corporation or the
Company) shall be issued or distributed to the stockholders of the Company), or
permit any person to merge with or into it unless: (i) the Company shall be the
continuing person, or the person (if other than the Company) formed by such
consolidation or into which the Company is merged or to which the properties and
assets of the Company are transferred shall be a corporation or partnership
organized and existing under the laws of the United States or any State thereof
or the District of Columbia and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, all of the obligations of the Company under the
Notes and the Indenture; (ii) immediately before and immediately after giving
effect to such transaction or series of transactions, no Default or Event of
Default under the Indenture shall have occurred and be continuing; and (iii)
immediately before and immediately after giving effect to such transaction or
series of transactions on a PRO FORMA basis (including, without limitation, any
Indebtedness incurred or assumed in anticipation of or in connection with such
transaction or series of transactions), the Company could incur $1.00 of
additional Indebtedness under the first paragraph of the "LIMITATION ON
ADDITIONAL INDEBTEDNESS" covenant described above (without giving effect to
clauses (i) through (xvi) of the second paragraph thereof).
LIMITATION ON CREATION OF SENIOR SUBORDINATED DEBT. The Indenture will
provide that the Company shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is
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expressly by its terms subordinate or junior in right of payment to any Senior
Indebtedness and senior in any respect in right of payment to the Notes.
SUPPLEMENTAL INDENTURES
The Indenture permits the Company and the Trustee, without notice to or the
consent of the holders, to enter into one or more indentures supplemental
thereto for certain specified purposes, including, without limitation, (i) to
cure ambiguities, defects or inconsistencies; (ii) to add additional covenants
for the benefit of the holders or to surrender any right or power conferred upon
the Company in the Indenture or to make any other change that does not adversely
affect the rights of any holder; PROVIDED that in making such change, the
Trustee may rely upon an Opinion of Counsel stating that such change does not
adversely affect the rights of any holder, (iii) to provide for collateral for
the Notes, (iv) to evidence the succession of another person to the Company and
the assumption by any such successor of the obligations of the Company in
accordance with Article V of the Indenture and the Notes, (v) to provide for
uncertificated Notes and (vi) to effect or maintain the qualification of the
Indenture under the TIA. Subject to the absolute and unconditional right of
holders to receive principal, premium, if any, and interest, other
modifications, amendments or supplements to the Indenture or the Notes may be
made with the consent of the holders of not less than a majority in aggregate
principal amount of the then outstanding Notes, and such modifications,
amendments or supplemental indentures will be binding on every holder whether or
not such holder has consented thereto; PROVIDED that no such modification,
amendment or supplemental indenture shall, without the consent of holders of
each outstanding Note affected thereby, among other things, (i) reduce the
percentage of principal amount of Notes whose holders must consent to an
amendment, supplement or waiver of any provision of the Indenture or the Notes;
(ii) reduce the rate or extend the time for payment of interest on any Note;
(iii) reduce the principal amount of any Note or reduce the redemption or
repurchase price thereof; (iv) change the Maturity Date, the Net Proceeds
Payment Date or the Change of Control Payment Date; (v) alter the purchase price
in connection with any repurchase of Notes described in the "LIMITATION ON ASSET
SALES" covenant or under the "CHANGE OF CONTROL" provisions in any manner
adverse to any holder; (vi) make any changes in the provisions concerning
waivers of Defaults or Events of Default by holders or the rights of holders to
recover the principal of, or premium, if any, or interest on, or redemption
payment with respect to, any Note; (vii) make any changes relating to (a) the
right of the Trustee to file proof of claim in any bankruptcy or similar
proceeding, or (b) the limitation on the right of holders to direct the Trustee
to institute legal proceedings with respect to the Indenture or to such
provision; (viii) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes or that resulted from
a failure to make the payments required by the "LIMITATION ON ASSET SALES"
covenant or the "CHANGE OF CONTROL" provisions; (ix) make the principal of, or
the interest on, any Note payable with anything or in any manner other than as
provided for in the Indenture and the Notes as in effect on the Issue Date; or
(x) make any change in the subordination provisions of the Indenture and the
Notes in a manner that adversely affects the holders.
EVENTS OF DEFAULT AND REMEDIES
Events of Default under the Indenture include the following: (a) default in
the payment of interest on any Notes when the same shall become due and payable
and the continuance of such default for a period of 30 days; (b) default in the
payment of all or any part of the principal of, or premium, if any, on, any
Notes when and as the same shall become due and payable at maturity, or upon
acceleration, redemption or otherwise, including default in the payment of the
purchase price required to be offered in a Net Proceeds Offer or a Change of
Control Offer; (c) a failure by the Company and its Subsidiaries to comply with
any of the other agreements or covenants in or provisions of the Notes or the
Indenture which failure continues for a period of 45 days after written notice
specifying such failure and demanding that the Company remedy the same has been
given to the Company by the Trustee or to the Company and the Trustee by holders
of at least 25% in aggregate principal amount of Notes
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then outstanding; (d) default under any mortgage, indenture or instrument under
which there may be issued or evidenced any Indebtedness for borrowed money by
the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee is now existing or hereafter created if either (x)
such default results from the failure to pay the final scheduled principal
installment in an amount of at least $15.0 million in respect of any such
Indebtedness on the stated maturity date thereof (after giving effect to any
applicable grace periods) or (y) as a result of such default the maturity of
such Indebtedness has been accelerated prior to its express maturity, and the
principal amount of such Indebtedness, together with the principal amount of any
other such Indebtedness with respect to which the principal amount remains
unpaid upon its final maturity (after giving effect to any extension of such
maturity date by the holder of such Indebtedness and the expiration of any
applicable grace period) or the maturity of which has been so accelerated,
aggregates $15.0 million or more; (e) a final judgment or final judgments for
the payment of money, or the issuance of any warrant of attachment against any
portion of the property or the assets of the Company or any of its Restricted
Subsidiaries, that in the aggregate, equal or exceed $15.0 million at any one
time shall be entered against the Company or any of its Restricted Subsidiaries
and such judgment or judgments or warrant of attachment shall not be discharged,
satisfied, stayed, annulled or rescinded within 60 days of being entered, or in
the case of any final judgment which provides for payment over time, from any
applicable payment date; or (f) certain events of bankruptcy, insolvency or
reorganization with respect to the Company or a Significant Restricted
Subsidiary.
If a Default or an Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each holder a notice of the
Default or Event of Default within 30 days after it occurs or, if later, within
10 days after such Default or Event of Default becomes known to the Trustee,
unless such Default or Event of Default has been cured. Except in the case of a
Default or Event of Default in the payment of principal of, premium, if any, or
interest on, any Note, the Trustee may withhold the notice if and so long as a
committee of its trust officers in good faith determines that withholding the
notice is in the interest of the holders.
If an Event of Default (other than an Event of Default described in clause
(f) of the second preceding paragraph with respect to the Company) shall occur
and be continuing, then, and in every such case, unless the principal of all the
Notes shall have already become due and payable, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the then
outstanding Notes, by notice in writing to the Company (and to the Trustee if
given by holders) may declare all of the unpaid principal of, premium, if any,
and accrued interest thereon to be due and payable immediately. In the event of
a declaration of acceleration because of an Event of Default described in clause
(d) of the second preceding paragraph has occurred and is continuing, such
declaration of acceleration shall be automatically annulled if such payment
default is cured or waived or the holders of the Indebtedness which is the
subject of such event of default have rescinded their declaration of
acceleration in respect of such Indebtedness within 60 days thereof and the
Trustee has received written notice of such cure, waiver or rescission and no
other Event of Default described in clause (d) of the second preceding paragraph
has occurred that has not been cured or waived within 60 days of the declaration
of such acceleration in respect thereof and if (i) the repayment of Indebtedness
or annulment of such acceleration, as the case may be, would not conflict with
any judgment or decree of a court of competent jurisdiction and (ii) all
existing Events of Default, except non-payment of principal or interest which
have become due solely due to such acceleration, have been cured or waived. If
an Event of Default specified in clause (f) of the second preceding paragraph
with respect to the Company occurs, all unpaid principal of, premium, if any,
applicable to, and accrued interest due and payable on all the outstanding Notes
shall become immediately due and payable without any declaration or other act on
the part of the Trustee or any holder.
The provisions described in the preceding paragraphs, however, are subject
to the condition that if, at any time after a declaration of acceleration has
been made and before a judgment or decree for
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payment of the money due has been obtained, the holders of a majority in
aggregate principal amount of the then outstanding Notes, by written notice to
the Company and the Trustee, may waive, on behalf of all holders, a Default or
an Event of Default if: (a) the Company has paid or deposited with the Trustee a
sum sufficient to pay (i) all overdue interest on all Notes, (ii) the principal
of and premium, if any, applicable to any Notes which would become due otherwise
than by such declaration of acceleration, and interest thereon at the rate borne
by the Notes, (iii) to the extent that payment of such interest is lawful,
interest on overdue interest at the rate borne by the Notes and (iv) all sums
paid or advanced by the Trustee under the Indenture and the compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
(b) all Events of Default, other than the nonpayment of the principal of the
Notes which have become due solely by such declaration of acceleration, have
been cured or waived. Notwithstanding the previous sentence, no waiver shall be
effective for any Default or Event of Default in the payment of the principal
of, premium, if any, or interest on any Note held by a nonconsenting holder or
any Default or Event of Default with respect to any covenant or provision which
cannot be modified or amended without the consent of the holder of each then
outstanding Note, unless all such affected holders agree, in writing, to waive
such Default or Event of Default. No such waiver shall cure or waive any
subsequent default or impair any right consequent thereon.
Prior to the declaration of acceleration of the maturity of the Notes, the
holder or holders of not less than a majority in aggregate principal amount of
the Notes at the time outstanding by written notice to the Company and the
Trustee may waive on behalf of all the holders any past default under the
Indenture and its consequence, except a default in the payment of principal of,
premium, if any, or interest on any Note or a default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the holder of each outstanding Note affected. The Trustee is under no obligation
to exercise any of its rights or powers under the Indenture at the request,
order or direction of any of the holders unless such holders have offered to the
Trustee reasonable security or indemnity. Subject to all the provisions of the
Indenture and applicable law, the holders of a majority in aggregate principal
amount of the Notes at the time outstanding have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee.
The Company is required to furnish the Trustee, forthwith upon becoming
aware of any Default or Event of Default under the Indenture, an Officers'
Certificate specifying such default and within 120 days after the end of each
fiscal year, an Officers' Certificate to the effect that the officers executing
the same have conducted, or supervised, a review of the activities of the
Company and its Subsidiaries and of performance under the Indenture and that, to
such officers' knowledge, based on their review, the Company has fulfilled all
of its obligations under the Indenture, or, if there has been a failure to
comply with such obligations, describing such failure with particularity.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
Notes, except for (i) the rights of holders to receive payments in respect of
the principal, premium, if any, and interest when and to the extent such
payments are due, (ii) the Company's obligations with respect to registration of
Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an
office or agency for payments, (iii) the rights, powers, trust, duties and
immunities of the Trustee and the Company's obligations in connection therewith
and (iv) the Legal Defeasance provisions of the Indenture. In addition, the
Company may, at its option and at any time, elect to have the obligations of the
Company released with respect to certain covenants that are described in the
Indenture ("Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of Default with respect
to the Notes. In the event Covenant Defeasance occurs, certain events
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(not including non-payment, bankruptcy, receivership, reorganization and
insolvency events) described under "Events of Default and Remedies" will no
longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders cash in U.S. dollars, non-callable U.S. government obligations, or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be; (ii)
in the case of Legal Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the holders will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal 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 Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the holders 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;
(iv) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under the
Indenture or any other material agreement or instrument to which the Company or
any of its Restricted Subsidiaries is a party or by which the Company or any of
its Restricted Subsidiaries is bound; (vi) the Company shall have delivered to
the Trustee an officers' certificate stating that the deposit was not made by
the Company with the intent of preferring the holders over any other creditors
of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; (vii) the Company shall
have delivered to the Trustee an officers' certificate and an opinion of
counsel, each stating that all conditions precedent provided for or relating to
the Legal Defeasance or the Covenant Defeasance have been complied with; (viii)
the Company shall have delivered to the Trustee an opinion of counsel to the
effect that (A) the trust funds will not be subject to any rights of holders of
Senior Indebtedness, including, without limitation, those arising under the
Indenture and (B) after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; and (ix)
certain other customary conditions precedent are satisfied. Notwithstanding the
foregoing, the opinion of counsel required by clause (ii) above need not be
delivered if all Notes not theretofore delivered to the Trustee for cancellation
(x) have become due and payable, (y) will become due and payable on the maturity
date within one year or (z) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and
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thereafter repaid to the Company or discharged from such trust) have been
delivered to the Trustee for cancellation or (b) all Notes not theretofore
delivered to the Trustee for cancellation have become due and payable and the
Company has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire Indebtedness on
the Notes not theretofore delivered to the Trustee for cancellation, for
principal of, premium, if any, and interest on the Notes to the date of deposit
together with irrevocable instructions from the Company directing the Trustee to
apply such funds to the payment thereof at maturity or redemption, as the case
may be; (ii) the Company has paid all other sums payable under the Indenture by
the Company; and (iii) the Company has delivered to the Trustee an officers'
certificate and an opinion of counsel stating that all conditions precedent
under the Indenture relating to the satisfaction and discharge of the Indenture
have been complied with.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Indenture or the Notes or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each holder of the Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents, and the Company may
require a holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed. See
"Book-Entry; Delivery and Form."
The registered holder of a Note will be treated as the owner of it for all
purposes.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest, it must
eliminate such conflict within ninety days, apply to the Commission for
permission to continue, or resign.
The holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of his or her own affairs. Subject to such provisions, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any of the holders, unless they shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
ADDITIONAL INFORMATION
The Indenture provides that the Company will deliver to the Trustee within
15 days after the filing of the same with the Commission, copies of the
quarterly and annual report and of the information, documents and other reports,
if any, which the Company is required to file with the Commission
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pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further
provides that, notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide the Trustee
and holders with such annual reports and such information, documents and other
reports specified in Sections 13 and 15(d) of the Exchange Act. The Company will
also comply with the other provisions of TIA Section 314(a).
CERTAIN DEFINITIONS
"ADJUSTED CONSOLIDATED NET INCOME" means, with respect to any person for any
period, (i) the Consolidated Net Income of such person for such period plus (ii)
in the case of the Company and its Restricted Subsidiaries, (A) all cash
received during such period by the Company or any Restricted Subsidiary from its
Unrestricted Subsidiaries but only to the extent that the Company elects to so
include such cash payments (in whole or in part) in Adjusted Consolidated Net
Income and not as a reduction in the carrying value of the Investment in such
Unrestricted Subsidiary (whether or not in accordance with GAAP), such election
to be made prior to the making of a Restricted Payment based upon such cash
received and (B) amortization, depreciation and other non-cash charges relating
to acquisitions by the Company since its formation, including goodwill,
non-compete agreements, the stepped-up basis on assets acquired and deferred
financing costs, in each case to the extent such items reduced Consolidated Net
Income. Each item of Adjusted Consolidated Net Income will be determined in
conformity with GAAP, except as set forth in this definition and except that,
for purposes of the application of Accounting Principles Board Opinions Nos. 16
and 17, such person may select an amortization practice allowable by GAAP up to
40 years, notwithstanding the use of a different amortization in such person's
consolidated financial statements. Any designation of a Subsidiary of the
Company as a Restricted Subsidiary or Unrestricted Subsidiary at or prior to the
time of the calculation of Adjusted Consolidated Net Income of a Subsidiary will
be treated as if it had occurred at the beginning of the applicable period.
"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. A person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another person if the controlling person
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies, of the controlled person, whether through ownership
of voting securities, by agreement or otherwise.
"A/R SECURITIZATION" means the receivables facility in effect on the Issue
Date in the amount of $150 million, pursuant to which (x) the Company's
Subsidiaries from time to time sell or otherwise transfer accounts receivable
and related assets to a special-purpose corporation (the "Receivables
Subsidiary") and (y) the Receivables Subsidiary sells or otherwise transfers
accounts receivable and related assets (or interests therein) to the purchasers,
as the same may be amended, modified, supplemented, extended, renewed, refunded,
refinanced, restructured or replaced from time to time (including, without
limitation, any extention of maturity thereof, or the inclusion of additional
purchasers thereunder).
"ASSET SALE" means, with respect to any person, in one or a series of
related transactions, the sale, lease, conveyance, disposition or other transfer
by the referent person of any of its assets (including by way of sale and
leaseback and including the sale or other transfer or issuance of any of the
Capital Stock of any Subsidiary of the referent person); PROVIDED that
notwithstanding the foregoing, the term "Asset Sale" shall not include the sale,
lease, conveyance, disposition or other transfer of (i) all or substantially all
of the assets of the Company, as permitted pursuant to the "LIMITATION ON
MERGERS, CONSOLIDATIONS OR SALES OF ASSETS" covenant, (ii) any assets between
the Company and any Restricted Subsidiary, (iii) (A) cash and cash equivalents,
(B) inventory and (C) any other tangible or intangible asset, in each case in
the ordinary course of business of the Company or its Restricted Subsidiaries,
(iv) the sale of accounts receivable pursuant to the A/R Securitization or (v)
the sale or discount, in
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each case without recourse, of accounts receivable arising in the ordinary
course of business, but only in connection with the compromise or collection
thereof.
"AVERAGE LIFE" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment or, in the case of Redeemable Stock,
each successive scheduled mandatory redemption payment of such security or
instrument multiplied by the amount of such principal payment or, in the case of
Redeemable Stock, mandatory redemption payment by (ii) the sum of all such
principal payments or, in the case of Redeemable Stock, mandatory redemption
payment.
"CAPITAL LEASE OBLIGATION" means, with respect to any person, at the time
any determination thereof is to be made, the amount of the liability in respect
of a capital lease which would at such time be required to be capitalized on the
balance sheet of such person in accordance with GAAP.
"CAPITAL STOCK" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock.
"CHANGE OF CONTROL" means (i) an event or series of events by which any
Person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is
or becomes the beneficial owner (as defined under Rule 13d-3 under the Exchange
Act) directly or indirectly of more than 50% of the combined voting power of the
then outstanding securities of the Company ordinarily (and apart from rights
accruing under certain circumstances) having the right to vote in the election
of directors or (ii) the replacement of a majority of the Board of Directors of
the Company over a one-year period from the directors who constituted the Board
of Directors at the beginning of such period, which replacement shall not have
been approved by the Board of Directors as so constituted at the beginning of
such period or (a) by directors whose nomination for election by the
stockholders of the Company was approved by such Board of Directors or (b) by
directors elected by such Board of Directors or (c) by directors approved in the
same manner as (a) or (b) above that were nominated or elected by directors
approved as set forth in (a) or (b) above. Notwithstanding the foregoing, a
Change of Control shall not be deemed to have occurred if one or more of the
above events occurs or circumstances exist and, after giving effect to the
transaction giving rise to such events or circumstances, the Company's Fixed
Charge Coverage Ratio is 3.0 to 1 or greater.
"CONSOLIDATED EBITDA" means, with respect to any person for any period and
without duplication, the Adjusted Consolidated Net Income of such person for
such period plus (a) provision for taxes based on income or profits to the
extent such provision for taxes was included in computing Adjusted Consolidated
Net Income, plus (b) consolidated Interest Expense, whether paid or accrued, to
the extent such expense was deducted in computing Adjusted Consolidated Net
Income (including amortization of original issue discount and non-cash interest
payments), plus (c) depreciation, amortization
and other non-cash charges to the extent such depreciation, amortization and
other non-cash charges were deducted in computing Adjusted Consolidated Net
Income (including amortization of goodwill and other intangibles).
"CONSOLIDATED FIXED CHARGES" means, with respect to any person for any
period, the (a) consolidated Interest Expense, whether paid or accrued, to the
extent such expense was deducted in computing Adjusted Consolidated Net Income
(including amortization of original issue discount and non-cash interest
payments) and (b) aggregate amount of all dividends paid or accumulated by such
person during such period on Qualified Preferred Stock and all cash dividend
payments by such person during such period on all series of other preferred
stock of such person and its Subsidiaries, other than dividends paid by such
person during such period on preferred stock of Unrestricted Subsidiaries and
dividends paid to such person or its Subsidiaries (other than in the case of the
Company and its Restricted Subsidiaries, Unrestricted Subsidiaries) times a
fraction, the numerator of which is one and the denominator of which is one
minus the then Current Effective Consolidated Tax Rate of such person during
such period.
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"CONSOLIDATED NET INCOME" means, with respect to any person for any period,
the aggregate net income (or loss) of such person and its Subsidiaries (other
than, in the case of the Company and its Subsidiaries, Unrestricted
Subsidiaries) for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED that (i) the net income (or loss) of any person which is not
a Subsidiary of the referent person or is accounted for by the equity method of
accounting by such referent person shall be included only to the extent of the
amount of cash dividends or distributions (including tax sharing payments) paid
to the referent person during such period or a Subsidiary of the referent person
(other than, in the case of the Company and its Restricted Subsidiaries,
Unrestricted Subsidiaries), (ii) except to the extent includible pursuant to the
foregoing clause (i), the income (or loss) of any person accrued prior to the
date it becomes a Subsidiary of such person or is merged into or consolidated
with such person or any of its Subsidiaries or that person's assets are acquired
by such person or any of its Subsidiaries shall be excluded, (iii) any gains or
losses of such person for such period attributable to Asset Sales net of related
tax costs or tax benefits, as the case may be, shall be excluded and (iv) all
extraordinary gains or losses of such person for such period shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any person, at any date of
determination, the sum of the Capital Stock and additional paid-in capital plus
retained earnings (or minus accumulated deficit) of such person and its
Subsidiaries on a consolidated basis, less amounts attributable to Redeemable
Stock of such person, each item to be determined in conformity with GAAP
(excluding the effects of (i) foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52 and (ii) the application of Accounting Principles Board Opinions Nos. 16
and 17 and related interpretations).
"CONSOLIDATED TANGIBLE ASSETS" means, with respect to any person, at any
time, the total consolidated assets of such person less the consolidated assets
of such person which constitute goodwill, in each case as set forth on such
person's most recent balance sheet.
"CREDIT FACILITY" means that certain amended and restated credit agreement
dated as of June 22, 1998, by and among the Company, certain of its
subsidiaries, Holdings, certain financial institutions parties thereto and
Bankers Trust Company and Credit Suisse First Boston, as agents, providing for a
revolving credit facility, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, supplemented, extended, renewed, refunded,
refinanced, restructured or replaced from time to time (including, without
limitation, any extension of maturity thereof, or the inclusion of additional
borrowers or guarantors thereunder), in each case in whole or in part, whether
by the same or any other lender or group of lenders.
"CURRENCY AGREEMENT" means the obligations of any person pursuant to any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such person or any of its Subsidiaries against
fluctuations in currency values.
"CURRENT EFFECTIVE CONSOLIDATED TAX RATE" means, with respect to any person
for any period, cash income taxes paid or payable by such person for such period
DIVIDED by the amount of income used in determining the amount of such cash
income taxes paid or payable, in each case without giving effect to any gains on
Asset Sales.
"DESIGNATED SENIOR INDEBTEDNESS" means (i) all Senior Indebtedness under the
Credit Facility and (ii) any Senior Indebtedness permitted under the Indenture
having a principal amount of at least $15.0 million that is designated as
"Designated Senior Indebtedness" by written notice from the Company to the
Trustee.
"8 7/8% NOTES" means the $350 million aggregate principal amount of the
Company's 8 7/8% Senior Subordinated Notes due 2007.
"EQUITY INTERESTS" means Capital Stock, warrants, options or other rights to
acquire Capital Stock (but excluding any debt security which is convertible
into, or exchangeable for, Capital Stock).
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"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its Restricted
Subsidiaries (other than Indebtedness under the Credit Facility) in existence on
the Issue Date.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any person for any
period, the ratio of Consolidated EBITDA for such person for such period to
Consolidated Fixed Charges for such person for such period. For purposes of the
foregoing computation, in calculating Consolidated EBITDA and Consolidated Fixed
Charges, (a) the transaction giving rise to the need to calculate the Fixed
Charge Coverage Ratio shall be assumed to have occurred on the first day of the
four-quarter period for which the Fixed Charge Coverage Ratio is being
determined (the "Reference Period"), (b) any acquisition or divestiture of
assets or the Capital Stock of any Subsidiary of such person (Restricted
Subsidiary, in the case of the Company) which occurred during the Reference
Period or subsequent to the Reference Period and prior to the date of the
transaction referenced in clause (a) above (the "Transaction Date") shall be
assumed to have occurred on the first day of the Reference Period, excluding, in
the case of an acquisition of assets or Capital Stock, any operating expense or
cost reduction of such person or the person to be acquired which, in the good
faith estimate of management, will be eliminated or realized, as the case may
be, as a result of such acquisition, as if such acquisition of assets or Capital
Stock (including the incurrence of any Indebtedness in connection with any such
acquisition and the application of the proceeds thereof) took place on the first
day of the Reference Period and as if the elimination of such operating expense
and the realization of such cost reductions were achieved on the first day of
the Reference Period; PROVIDED that the foregoing eliminations of operating
expenses and realizations of cost reductions shall be of the types permitted to
be given effect to in accordance with Article 11 of Regulation S-X under the
Exchange Act as in effect on the Issue Date, (c) the incurrence of any
Indebtedness during the Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date and the application of the proceeds
therefrom shall be assumed to have occurred on the first day of the Reference
Period, (d) Consolidated Fixed Charges attributable to any Indebtedness (whether
existing or being incurred) computed on a pro forma basis and bearing a floating
interest rate shall be computed as if the rate in effect on the Transaction Date
had been the applicable rate for the entire period, unless such person or any of
its Subsidiaries (Restricted Subsidiaries, in the case of the Company) is party
to an Interest Rate Agreement which will remain in effect for the twelve-month
period after the Transaction Date and which has the effect of fixing the
interest rate on the date of computation, in which case such rate (whether
higher or lower) shall be used and (e) there shall be excluded from Consolidated
Fixed Charges any portion of such Consolidated Fixed Charges related to any
amount of Indebtedness that was outstanding during or subsequent to the
Reference Period but is not outstanding on the Transaction Date, except for
Consolidated Fixed Charges actually incurred with respect to Indebtedness
borrowed (as adjusted pursuant to clause (d)) under a revolving credit or
similar arrangement to the extent the commitment thereunder remains in effect on
the Transaction Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or in such other statements by
such other entity as approved by a significant segment of the accounting
profession which are in effect in the United States at the time and for the
period as to which such accounting principles are to be applied; PROVIDED,
HOWEVER, that for purposes of determining compliance with covenants in the
Indenture, "GAAP" means such generally accepted accounting principles as in
effect as of the Issue Date.
"HOLDER" means a person in whose name a Note is registered. The holder of a
Note will be treated as the owner of such Note for all purposes.
"INDEBTEDNESS" means, with respect to any person, any indebtedness, in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement obligations with respect thereto) or representing the balance
deferred and unpaid of the
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purchase price of any property (including pursuant to financing leases), if and
to the extent any of the foregoing indebtedness would appear as a liability upon
a balance sheet of such person prepared in accordance with GAAP (except that any
such balance that constitutes a trade payable and/or an accrued liability
arising in the ordinary course of business shall not be considered
Indebtedness), and shall also include, to the extent not otherwise included, any
Capital Lease Obligations, the maximum fixed repurchase price of any Redeemable
Stock or preferred stock of any Subsidiary (Restricted Subsidiary, in the case
of the Company) of such person (except, with respect to the Company, to the
extent such Restricted Subsidiary guarantees the obligations under the Notes),
indebtedness secured by a Lien to which the property or assets owned or held by
such person are subject, whether or not the obligations secured thereby shall
have been assumed, and guarantees of items that would be included within this
definition to the extent of such guarantees (exclusive of whether such items
would appear upon such balance sheet). For purposes of the preceding sentence,
the maximum fixed repurchase price of any Redeemable Stock or preferred stock of
any Restricted Subsidiary of such person which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Redeemable Stock
or such preferred stock as if such Redeemable Stock or such preferred stock were
repurchased on any date on which Indebtedness shall be required to be determined
pursuant to the Indenture; PROVIDED that if such Redeemable Stock or such
preferred stock is not then permitted to be repurchased, the repurchase price
shall be the book value of such Redeemable Stock or such preferred stock. The
amount of Indebtedness of any person at any date shall be, in the case of
Indebtedness of others secured by a Lien to which the property or assets owned
or held by such person are subject, the lesser of the fair market value at such
date of any asset subject to a Lien securing the Indebtedness of others and the
amount of the Indebtedness secured.
"INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal, investment
banking or consulting firm of nationally recognized standing that is, in the
reasonable and good faith judgment of the board of directors of the Company,
qualified to perform the task for which such firm has been engaged and
disinterested and independent with respect to the Company and its Affiliates.
"INTEREST EXPENSE" means, with respect to any person, for any period, the
aggregate amount of interest in respect of Indebtedness (including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and the net cost (benefit)
associated with Interest Rate Agreements, and excluding amortization of deferred
finance fees) and all but the principal component of rentals in respect of
Capital Lease Obligations, paid, accrued or scheduled to be paid or accrued by
such person during such period.
"INTEREST RATE AGREEMENTS" means the obligations of any person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such person or any of its
Subsidiaries against fluctuations in interest rates.
"INVESTMENT" means any direct or indirect advance, loan (other than advances
to customers in the ordinary course of business, which are recorded as accounts
receivable on the balance sheet of any person or its Subsidiaries) or other
extension of credit or capital contribution to (by means of any transfer of cash
or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities issued by any other person; in each
case, other than as a result of the issuance of Capital Stock of such person or
the delivery of Capital Stock of such person's direct or indirect parent. For
the purposes of the "LIMITATION ON RESTRICTED PAYMENTS" covenant, (i)
"Investment" shall include and be valued at the fair market value of the net
assets of any Restricted Subsidiary at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary and shall exclude the fair market value
of the net assets of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the
amount of any Investment shall be the original cost of such Investment plus the
cost of all additional Investments by the Company or any of its Restricted
Subsidiaries, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, reduced by
the payment of dividends or distributions (including
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tax sharing payments) in connection with such Investment to the extent such
distribution constitutes a return on capital in accordance with GAAP; PROVIDED,
HOWEVER, that in the case of an Investment in an Unrestricted Subsidiary, the
Company may elect to include such cash payments (in whole or in part) in
Adjusted Consolidated Net Income and not as a reduction in the carrying value of
the Investment in such Unrestricted Subsidiary (whether or not in accordance
with GAAP), such election to be made prior to the making of a Restricted Payment
based upon such dividend or distribution.
"ISSUE DATE" means December 9, 1998.
"LIEN" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give any security interest in and any filing or other agreement to give
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"MATURITY DATE" means, when used with respect to any Note, the date
specified in such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to provisions of the Indenture regarding acceleration of
Indebtedness or any Net Proceeds Offer or Change of Control Offer).
"NET PROCEEDS" means, with respect to any Asset Sale, the aggregate amount
of U.S. Legal Tender (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, and including
any amounts received as disbursements or withdrawals from any escrow or similar
account established in connection with any such Asset Sale, but, in each such
case, only as and when so received) received by the Company or any of its
Restricted Subsidiaries in respect of such Asset Sale, net of (i) the cash
expenses of such sale (including, without limitation, the payment of principal,
premium, if any, and interest on Indebtedness required to be paid as a result of
such Asset Sale (other than pursuant to the "LIMITATION ON ASSET SALE" covenant)
and legal, accounting and investment banking fees and sales commissions), (ii)
taxes paid or payable as a result thereof, (iii) any portion of cash proceeds
which the Company determines in good faith should be reserved for post-closing
adjustments, it being understood and agreed that on the day that all such
post-closing adjustments have been determined, the amount (if any) by which the
reserved amount in respect of such Asset Sale exceeds the actual post-closing
adjustments payable by the Company or any of its Subsidiaries shall constitute
Net Proceeds on such date and (iv) any relocation expenses and pension,
severance and shutdown costs incurred as a result thereof.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"PERMITTED INVESTMENTS" means (i) cash or Cash Equivalents, (ii) Investments
that are in persons (including Unrestricted Subsidiaries) who derive substantial
revenues from operations similar or ancillary to the business of the Company or
its Restricted Subsidiaries as conducted at the time of such Investment and that
have the purpose of furthering the operations of the Company and its Restricted
Subsidiaries; PROVIDED that Investments of the type described in this clause
(ii) shall not exceed $25.0 million at any one time outstanding in the case of
persons which are not Restricted Subsidiaries or which do not in connection with
such Investment become a Restricted Subsidiary, (iii) advances to employees and
officers of the Company and its Subsidiaries not in excess of $1.0 million at
any one time outstanding, (iv) loans to employees, officers and directors of the
Company and its Subsidiaries to finance the purchase of Equity Interests in the
Company, (v) accounts receivable created or acquired in the ordinary course of
business, (vi) obligations or shares of Capital Stock received in connection
with any good faith settlement or bankruptcy proceeding involving a claim
relating to a Permitted Investment, (vii) Currency Agreements and Interest Rate
Agreements and other similar agreements designed to hedge against fluctuations
in foreign exchange rates and interest rates entered into in the ordinary course
of business in connection with the operation of the Company's or its Restricted
Subsidiaries'
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businesses and (viii) agreements designed to hedge against fluctuations in the
cost of raw materials entered into in the ordinary course of business in
connection with the operation of the Company's and its Restricted Subsidiaries'
business ("Raw Material Hedge Agreements").
"PERMITTED LIEN" means (i) Liens for taxes, assessments, governmental
charges or claims not yet due or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; (ii) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business,
deposits made to obtain the release of such Liens, and with respect to amounts
not yet delinquent for a period of more than 60 days or being contested in good
faith by appropriate proceedings, if a reserve or other appropriate provision,
if any, as shall be required in conformity with GAAP shall have been made
therefor; (iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security; (iv) Liens incurred or deposits made to secure
the performance of tenders, bids, leases, statutory obligations, surety and
appeal bonds, government contracts, performance and return of money bonds and
other obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, zoning or other restrictions, minor defects or irregularities in
title and other similar charges or encumbrances not interfering in any material
respect with the business of the Company or any of its Restricted Subsidiaries
incurred in the ordinary course of business; (vi) Liens (including extensions,
renewals and replacements thereof) upon real or tangible personal property
acquired after the date of the Indenture whether or not such Lien existed on the
date of acquisition of such property; PROVIDED that (a) any such Lien is created
solely for the purpose of securing Indebtedness representing, or incurred to
finance, refinance or refund, the cost (including the cost of construction) of
the item of property subject thereto, (b) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such cost, (c) such
Lien does not extend to or cover any other property other than such item of
property and any improvements on such item and (d) the incurrence of such
Indebtedness is permitted by the "LIMITATION ON ADDITIONAL INDEBTEDNESS"
covenant; (vii) Liens securing reimbursement obligations with respect to letters
of credit which encumber documents and other property relating to such letters
of credit and the products and proceeds thereof; (viii) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods; (ix) judgment and
attachment Liens not giving rise to an Event of Default; (x) leases or subleases
granted to others not interfering in any material respect with the business of
the Company or any of its Restricted Subsidiaries; (xi) Liens encumbering
customary initial deposits and margin deposits, and other Liens incurred in the
ordinary course of business and which are within the general parameters
customary in the industry, in each case securing Indebtedness under Interest
Rate Agreements, Currency Agreements and Raw Material Hedge Agreements; (xii)
Liens encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual or warranty requirements of the Company or its
Subsidiaries; (xiii) Liens arising out of consignment or similar arrangements
for the sale of goods entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business of the Company and its
Restricted Subsidiaries; (xiv) any interest or title of a lessor in the property
subject to any Capital Lease Obligations or operating lease; (xv) Liens arising
from filing Uniform Commercial Code financing statements regarding leases; (xvi)
Liens permitted or required by the Credit Facility as in effect on the Issue
Date; (xvii) Liens securing Senior Indebtedness and Liens on assets of
Restricted Subsidiaries securing Indebtedness of such Restricted Subsidiaries;
(xviii) Liens between the Company and any Restricted Subsidiary or between
Restricted Subsidiaries; (xix) Liens on assets of Restricted Subsidiaries
securing letters of credit issued in the ordinary course of business of such
Restricted Subsidiaries; (xx) additional Liens at any one time outstanding with
respect to assets of the Company and its Restricted Subsidiaries the fair market
value of which does not exceed $15.0 million on the date of determination; (xxi)
Liens existing on the Issue Date and any extensions, renewals or replacements
thereof; (xxii) Liens deemed to arise from the A/R Securitization; and (xxiii)
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the Lien granted to the Trustee under the Indenture and any substantially
equivalent Lien granted to any trustee or similar institution under any
indenture for Indebtedness permitted by the terms of the Indenture.
"QUALIFIED PREFERRED STOCK" means preferred stock of the Company that is
designated as such pursuant to clause (ii) or (iv) of the second paragraph of
the "LIMITATION ON RESTRICTED PAYMENTS" covenant.
"REDEEMABLE STOCK" means any Equity Interest which, by its terms (or by
terms of any security into which it is convertible or for which it is
exchangeable before the stated maturity of the Notes), or upon the happening of
any event, matures or is mandatorily redeemable (other than for Capital Stock
not constituting Redeemable Stock), in whole or in part, prior to the Maturity
Date, or is, by its terms or upon the happening of any event, redeemable at the
option of the holder thereof, in whole or in part, at any time prior to the
Maturity Date, except for Equity Interests of the Company issued to employees,
officers and directors of the Company and its Subsidiaries pursuant to
agreements containing provisions for the repurchase of such Equity Interest upon
death, disability or termination of employment or directorship of such persons;
PROVIDED that any Equity Interest that is considered to be Redeemable Stock
solely because it is redeemable upon the occurrence of the same events that
would require a redemption or repurchase of the Notes shall not be deemed to be
Redeemable Stock; PROVIDED, FURTHER, that such Equity Interest is not
convertible or exchangeable into debt.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company which at the
time of determination is not an Unrestricted Subsidiary. The Board of Directors
of the Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if, immediately after giving effect to such designation, the
Company could incur at least $1.00 of additional Indebtedness pursuant to the
first paragraph of the "LIMITATION ON ADDITIONAL INDEBTEDNESS" covenant (without
giving effect to clauses (i) through (xvi) of the second paragraph thereof), on
a PRO FORMA basis taking into account such designation.
"SENIOR INDEBTEDNESS" means any Indebtedness permitted to be incurred under
the terms of the Indenture, unless the instrument under which such Indebtedness
is incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Notes. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness shall not include (a) Indebtedness that is
expressly subordinate or junior in right of payment to any Indebtedness of the
Company, (b) Indebtedness that is represented by Redeemable Stock, (c) any
liability for Federal, state, local or other taxes owed or owing by the Company,
(d) Indebtedness of the Company to any Subsidiary of the Company, (e) trade
payables and (f) Indebtedness that is incurred in violation of the Indenture
(but, as to any such Indebtedness, no such violation shall be deemed to exist
for purposes of this definition if the holder(s) of such obligation or their
representative or the Company shall have furnished to the Trustee an opinion of
counsel unqualified in all material respects, addressed to the Trustee (which
legal counsel may, as to matters of fact, rely upon an officers' certificate of
the Company) to the effect that the incurrence of such Indebtedness does not
violate the provisions of the Indenture).
"SIGNIFICANT RESTRICTED SUBSIDIARY" means any Restricted Subsidiary which
accounted for more than 10% of the Company's Consolidated Tangible Assets or
more than 10% of the Company's consolidated revenues or more than 10% of the
Company's Consolidated EBITDA, in each case as of the end of the Company's most
recent fiscal year.
"SUBSIDIARY" with respect to any person, means (i) any corporation of which
the outstanding Capital Stock having at least a majority of the votes entitled
to be cast in the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such person or (ii) any other
person of which at least a majority of the voting interest under ordinary
circumstances is at such time, directly or indirectly, owned by such person.
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"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company which at
the time of determination is an Unrestricted Subsidiary (as designated by the
Board of Directors of the Company, as provided below) and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary, unless such Subsidiary owns any
Capital Stock of, or owns, or holds any Lien on, any property of, any other
Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so
designated; PROVIDED that (a) the Company certifies that such designation
complies with the "LIMITATION ON RESTRICTED PAYMENTS" covenant and (b) each
Subsidiary to be so designated and each of its Subsidiaries has not at the time
of designation, and does not thereafter, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries. The Board of Directors of the
Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary
only if, immediately after giving effect to such designation, the Company could
incur at least $1.00 of additional Indebtedness pursuant to the first paragraph
of the "LIMITATION ON ADDITIONAL INDEBTEDNESS" covenant (without giving effect
to clauses (i) through (xvi) of the second paragraph thereof) on a PRO FORMA
basis taking into account such designation.
BOOK-ENTRY; DELIVERY AND FORM
The Exchange Notes initially will be represented by one or more permanent
global certificates in definitive, fully registered form (the "Global Notes").
The Global Notes will be deposited upon issuance with The Depository Trust
Company, New York, New York (the "Depositary" or "DTC") and registered in the
name of a nominee of DTC.
THE GLOBAL NOTE. We expect that pursuant to procedures established by DTC
(i) upon the issuance of the Global Notes, DTC or its custodian will credit, on
its internal system, the principal amount of Exchange Notes of the individual
beneficial interests represented by such Global Notes to the respective accounts
of persons who have accounts with such depositary and (ii) ownership of
beneficial interests in the Global Notes will be shown on, and the transfer of
such ownership will be effected only through, records maintained by DTC or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants).
Ownership of beneficial interests in the Global Notes will be limited to persons
who have accounts with DTC ("participants") or persons who hold interests
through participants.
So long as DTC, or its nominee, is the registered owner or holder of the
Exchange Notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Exchange Notes represented by such Global Notes for
all purposes under the Indenture. No beneficial owner of an interest in the
Global Notes will be able to transfer that interest except in accordance with
DTC's procedures, in addition to those provided for under the Indenture with
respect to the Exchange Notes.
Payments of the principal of, premium (if any), and interest (including
Additional Interest) on, the Global Notes will be made to DTC or its nominee, as
the case may be, as the registered owner thereof. None of the Company, the
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
We expect that DTC or its nominee, upon receipt of any payment of principal,
premium, if any, interest (including Additional Interest) on the Global Notes,
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the Global
Notes as shown on the records of DTC or its nominee. We also expect that
payments by participants to owners of beneficial interests in the Global Notes
held through such participants will be governed by standing instructions and
customary practice, as is now the case with securities held for the
49
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accounts of customers registered in the names of nominees for such customers.
Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of Exchange Notes (including the presentation of Exchange Notes for
exchange as described below) only at the direction of one or more participants
to whose account the DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of Notes as to which
such participant or participants has or have given such direction. However, if
there is an Event of Default under the Indenture, DTC will exchange the Global
Notes for Certificated Securities, which it will distribute to its participants.
DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED SECURITIES. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Note and a successor depositary is not
appointed by us within 90 days, Certificated Securities will be issued in
exchange for the Global Notes.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Private Notes for Exchange Notes should not be treated as a
taxable transaction for United States Federal income tax purposes because the
Exchange Notes will not be considered to differ materially in kind or in extent
from the Private Notes. Rather, the Exchange Notes received by a holder of
Private Notes should be treated as a continuation of such holder's investment in
the Private Notes. As a result, there should be no material United States
Federal income tax consequences to holders exchanging Private Notes for Exchange
Notes.
PERSONS CONSIDERING THE EXCHANGE OF THE PRIVATE NOTES FOR EXCHANGE NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE TAX CONSEQUENCES ARISING
UNDER STATE, LOCAL, OR FOREIGN LAWS OF SUCH AN EXCHANGE.
50
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PLAN OF DISTRIBUTION
This prospectus, as it may be amended or supplemented from time to time, may
be used by a broker-dealer in connection with resales of any Exchange Notes
received in exchange for Private Notes acquired by such broker-dealer as a
result of market-making or other trading activities. Each such broker-dealer
that receives Exchange Notes for its own account in exchange for such Private
Notes pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. We have agreed
that for a period of up to 180 days after the Registration Statement is declared
effective, we will make this prospectus, as amended or supplemented, available
to any such broker-dealer that requests copies of this prospectus in the Letter
of Transmittal for use in connection with any such resale.
We will not receive any proceeds from any sale of Exchange Notes by
broker-dealers or any other persons. Exchange Notes received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions or through the writing of options on the Exchange Notes, or a
combination of such methods of resale, at market prices prevailing at the time
of resale or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange
Notes that were received by it for its own account pursuant to the Exchange
Offer in exchange for Private Notes acquired by such broker-dealer as a result
of market-making or other trading activities and any broker-dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
We have agreed to pay all expenses incident to our performance of, or
compliance with, the Registration Rights Agreement and will indemnify the
holders of Private Notes (including any broker-dealers), and certain parties
related to such holders, against certain liabilities, including liabilities
under the Securities Act.
VALIDITY OF THE EXCHANGE NOTES
The validity of the Exchange Notes will be passed upon for us by Sullivan &
Cromwell, New York, New York.
EXPERTS
The financial statements and related financial schedules incorporated in
this prospectus by reference from the Company's Annual Report on Form 10-K for
the year ended December 31, 1997 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. NEITHER THE MAKING OF THE EXCHANGE OFFER PURSUANT
TO THIS PROSPECTUS NOR THE ACCEPTANCE OF PRIVATE NOTES FOR SURRENDER FOR
EXCHANGE PURSUANT THERETO SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
EACH BROKER-DEALER WHO HOLDS PRIVATE NOTES ACQUIRED FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND WHO RECEIVES EXCHANGE
NOTES FOR ITS OWN ACCOUNT IN EXCHANGE FOR SUCH PRIVATE NOTES PURSUANT TO THE
EXCHANGE OFFER MUST DELIVER A COPY OF THIS PROSPECTUS IN CONNECTION WITH ANY
RESALE OF SUCH EXCHANGE NOTES.
------------------------
TABLE OF CONTENTS
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PAGE
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<S> <C>
Incorporation of Certain Documents by
Reference..................................... i
Where You Can Find More Information............. ii
Special Note Regarding Forward-Looking
Statements.................................... ii
Note Regarding Certain Defined Terms and Other
Information in this Prospectus................ iii
Notice to Investors............................. iii
Summary......................................... 1
Risk Factors.................................... 9
No Cash Proceeds to the Company................. 14
Capitalization.................................. 15
The Exchange Offer.............................. 15
Description of the Credit Facility.............. 23
Description of the 8 7/8% Notes................. 24
Description of the Exchange Notes............... 25
Book-Entry; Delivery and Form................... 49
Certain United States Federal Income Tax
Considerations................................ 50
Plan of Distribution............................ 51
Validity of the Exchange Notes.................. 51
Experts......................................... 51
</TABLE>
BIG FLOWER PRESS
HOLDINGS, INC.
OFFER TO EXCHANGE
$250,000,000
8 5/8% SENIOR SUBORDINATED NOTES
DUE 2008
FOR ALL OUTSTANDING UNREGISTERED
8 5/8% SENIOR SUBORDINATED NOTES
DUE 2008
[LOGO]
- , 1999
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware empowers
a Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. A Delaware corporation may indemnify directors, officers, employees
and other agents of such corporation in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the person to be indemnified has been
adjudged to be liable to the corporation. Where a director, officer, employee or
agent of the corporation is successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to above or in defense of any claim,
issue or matter therein, the corporation must indemnify such person against the
expenses (including attorneys' fees) which he or she actually and reasonably
incurred in connection therewith.
The Bylaws contain provisions that provide for indemnification of officers
and directors and their heirs and distributees to the fullest extent permitted
by, and in the manner permissible under, the General Corporation Law of the
State of Delaware.
As permitted by Section 102(b)(7) of the General Corporation Law of the
State of Delaware, the Company's Certificate of Incorporation contains a
provision eliminating the personal liability of a director to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
subject to certain exceptions.
The Company maintains policies insuring its officers and directors against
certain civil liabilities, including liabilities under the Securities Act.
Pursuant to the Registration Rights Agreement, the Company has agreed to
indemnify holders of registrable Notes against certain liabilities. Also
pursuant to the Registration Rights Agreement, the Company and certain
broker-dealers, including certain persons associated with such broker-dealers,
have agreed to indemnify each other against certain liabilities.
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ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES
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(a) Exhibits
4.1 Form of Exchange Note (included in exhibit 4.2)
4.2 Indenture, dated as of December 9, 1998 (the "Indenture"), between Big Flower Press
Holdings, Inc., as Issuer, and State Street Bank and Trust Company, as Trustee*
4.3 Registration Rights Agreement, dated as of December 9, 1998, between the Company and
BT Alex. Brown Incorporated, Chase Securities Inc. and Goldman, Sachs & Co.*
5.1 Opinion of Sullivan & Cromwell regarding the validity of the Exchange Notes+
12.1 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends*
23.1 Consent of Sullivan & Cromwell (included in Exhibit 5.1)
23.2 Consent of Deloitte & Touche LLP*
24.1 Power of Attorney (included on Page II-4 of this Registration Statement)*
25.1 Statement of Eligibility of State Street Bank and Trust Company, as Trustee*
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
</TABLE>
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* Filed herewith
+ To be filed by amendment
ITEM 22. UNDERTAKINGS
1. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
2. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suite or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
offered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
3. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
II-2
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4. The undersigned registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement;
(ii) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof;
(iii) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unexchanged at the termination
of the offering.
II-3
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SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on February 5, 1999.
<TABLE>
<S> <C> <C>
BIG FLOWER PRESS HOLDINGS, INC.
By: /s/ R. THEODORE AMMON
--------------------------------------
R. Theodore Ammon
Chairman
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints R. Theodore Ammon and Edward T. Reilly,
and each and either of them, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all
amendments (including, without limitation, post-effective amendments) to this
Registration Statement, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ R. THEODORE AMMON Chairman and Director
- ------------------------------ (Principal Executive February 5, 1999
R. Theodore Ammon Officer)
/s/ EDWARD T. REILLY President, Chief Executive
- ------------------------------ Officer and Director February 5, 1999
Edward T. Reilly
Executive Vice President
/s/ RICHARD L. RITCHIE and
- ------------------------------ Chief Financial Officer February 5, 1999
Richard L. Ritchie (Principal Financial and
Accounting Officer)
/s/ MARK A. ANGELSON Director
- ------------------------------ February 5, 1999
Mark A. Angelson
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
4.1 Form of Exchange Note (included in Exhibit 4.2)
4.2 Indenture, dated as of December 9, 1998 (the "Indenture"), between Big Flower Press Holdings, Inc., as
Issuer, and State Street Bank and Trust Company, as Trustee*
4.3 Registration Rights Agreement, dated as of December 9, 1998, between the Company and BT Alex. Brown
Incorporated, Chase Securities Inc. and Goldman, Sachs & Co.*
5.1 Opinion of Sullivan & Cromwell regarding the validity of the Exchange Notes+
12.1 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends*
23.1 Consent of Sullivan & Cromwell (included in Exhibit 5.1)
23.2 Consent of Deloitte & Touche LLP*
24.1 Power of Attorney (included on Page II-4 of this Registration Statement)*
25.1 Statement of Eligibility of State Street Bank and Trust Company, as Trustee*
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
</TABLE>
- ------------------------
* Filed herewith
+ To be filed by amendment
<PAGE>
Exhibit 4.2
================================================================================
BIG FLOWER PRESS HOLDINGS, INC.
as Issuer
--------------------------
and
STATE STREET BANK AND TRUST COMPANY
--------------------------
as Trustee
INDENTURE
Dated as of December 9, 1998
up to $350,000,000
8 5/8% Senior Subordinated Notes due 2008
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA SECTION INDENTURE SECTION
----------- -----------------
Section 310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(a)(5) .............................. 7.10
(b) .............................. 7.8; 7.10; 11.2
(c) .............................. N.A.
Section 311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
Section 312(a) .............................. 2.5
(b) .............................. 11.3
(c) .............................. 11.3
Section 313(a) .............................. 7.6
(b)(1) .............................. 7.6
(b)(2) .............................. 7.6
(c) .............................. 7.6; 11.2
(d) .............................. 7.6
Section 314(a) .............................. 4.6; 4.7; 11.2
(b) .............................. N.A.
(c)(1) .............................. 11.4
(c)(2) .............................. 11.4
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 11.5
(f) .............................. N.A.
Section 315(a) .............................. 7.1(b)
(b) .............................. 7.5; 11.2
(c) .............................. 7.1(a)
(d) .............................. 7.1(c)
(e) .............................. 6.11
Section 316(a)
(last sentence) .............................. 2.9
(a)(1)(A) .............................. 6.5
(a)(1)(B) .............................. 6.4
(a)(2) .............................. N.A.
(b) .............................. 6.7
(c) .............................. 9.4
Section 317(a)(1) .............................. 6.8
(a)(2) .............................. 6.9
(b) .............................. 2.4
Section 318(a) .............................. 11.1
(c) .............................. 11.1
- ------------------------------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of this Indenture.
-i-
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE. . . . . . . . . . . . 1
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Incorporation by Reference of Trust Indenture Act. . . . . . . .23
SECTION 1.3 Rules of Construction. . . . . . . . . . . . . . . . . . . . . .24
ARTICLE II THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . .24
SECTION 2.1 Form and Dating. . . . . . . . . . . . . . . . . . . . . . . . .24
SECTION 2.2 Execution and Authentication.. . . . . . . . . . . . . . . . . .24
SECTION 2.3 Registrar and Paying Agent.. . . . . . . . . . . . . . . . . . .26
SECTION 2.4 Paying Agent To Hold Money in Trust. . . . . . . . . . . . . . .27
SECTION 2.5 Securityholder Lists.. . . . . . . . . . . . . . . . . . . . . .27
SECTION 2.6 Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . .27
SECTION 2.7 Replacement Securities.. . . . . . . . . . . . . . . . . . . . .28
SECTION 2.8 Outstanding Securities.. . . . . . . . . . . . . . . . . . . . .28
SECTION 2.9 Treasury Securities. . . . . . . . . . . . . . . . . . . . . . .29
SECTION 2.10 Temporary Securities. . . . . . . . . . . . . . . . . . . . . .29
SECTION 2.11 Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 2.12 Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . .30
SECTION 2.13 CUSIP Number. . . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 2.14 Book-Entry Provisions for Global Securities.. . . . . . . . . .31
SECTION 2.15 Special Transfer Provisions.. . . . . . . . . . . . . . . . . .32
ARTICLE III REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . .34
SECTION 3.1 Notices to Trustee.. . . . . . . . . . . . . . . . . . . . . . .34
SECTION 3.2 Selection of Securities To Be Redeemed.. . . . . . . . . . . . .34
SECTION 3.3 Notice of Redemption.. . . . . . . . . . . . . . . . . . . . . .35
SECTION 3.4 Effect of Notice of Redemption.. . . . . . . . . . . . . . . . .36
SECTION 3.5 Deposit of Redemption Price. . . . . . . . . . . . . . . . . . .36
SECTION 3.6 Securities Redeemed in Part. . . . . . . . . . . . . . . . . . .37
ARTICLE IV COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .37
SECTION 4.1 Payment of Securities. . . . . . . . . . . . . . . . . . . . . .37
SECTION 4.2 Maintenance of Office or Agency. . . . . . . . . . . . . . . . .37
SECTION 4.3 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . .38
SECTION 4.4 Payment of Taxes and Other Claims. . . . . . . . . . . . . . . .38
SECTION 4.5 Maintenance of Properties; Books and Records;
Compliance with Law. . . . . . . . . . . . . . . . . . . . .39
SECTION 4.6 Compliance Certificates; Notice of Default.. . . . . . . . . . .39
-ii-
<PAGE>
SECTION 4.7 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
SECTION 4.8 Limitation on Restricted Payments. . . . . . . . . . . . . . . .41
SECTION 4.9 Limitation on Additional Indebtedness. . . . . . . . . . . . . .44
SECTION 4.10 Dividends and Payment Restrictions. . . . . . . . . . . . . . .46
SECTION 4.11 Limitation on Liens.. . . . . . . . . . . . . . . . . . . . . .47
SECTION 4.12 Limitation on Asset Sales.. . . . . . . . . . . . . . . . . . .47
SECTION 4.13 Transactions With Affiliates. . . . . . . . . . . . . . . . . .51
SECTION 4.14 Limitation on Creation of Senior Subordinated Debt. . . . . . .52
SECTION 4.15 Change of Control.. . . . . . . . . . . . . . . . . . . . . . .53
SECTION 4.16 Waiver of Stay; Extension of Usury Laws.. . . . . . . . . . . .55
SECTION 4.17 Maintenance of Insurance. . . . . . . . . . . . . . . . . . . .55
ARTICLE V SUCCESSOR CORPORATION . . . . . . . . . . . . . . . . . . . . . .56
SECTION 5.1 Limitation on Mergers, Consolidations or Sales of Assets.. . . .56
SECTION 5.2 Successor Entity Substituted.. . . . . . . . . . . . . . . . . .57
ARTICLE VI DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . .57
SECTION 6.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . .57
SECTION 6.2 Acceleration.. . . . . . . . . . . . . . . . . . . . . . . . . .60
SECTION 6.3 Other Remedies.. . . . . . . . . . . . . . . . . . . . . . . . .61
SECTION 6.4 Waiver of Past Default.. . . . . . . . . . . . . . . . . . . . .62
SECTION 6.5 Control by Majority. . . . . . . . . . . . . . . . . . . . . . .62
SECTION 6.6 Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . .62
SECTION 6.7 Rights of Holders To Receive Payment.. . . . . . . . . . . . . .63
SECTION 6.8 Collection Suit by Trustee.. . . . . . . . . . . . . . . . . . .63
SECTION 6.9 Trustee May File Proofs of Claim.. . . . . . . . . . . . . . . .63
SECTION 6.10 Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . .64
SECTION 6.11 Undertaking for Costs.. . . . . . . . . . . . . . . . . . . . .64
SECTION 6.12 Rights and Remedies Cumulative. . . . . . . . . . . . . . . . .65
SECTION 6.13 Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . .65
ARTICLE VII TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
SECTION 7.1 Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . .65
SECTION 7.2 Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . .67
SECTION 7.3 Individual Rights of Trustee.. . . . . . . . . . . . . . . . . .68
SECTION 7.4 Trustee's Disclaimer.. . . . . . . . . . . . . . . . . . . . . .68
SECTION 7.5 Notice of Defaults.. . . . . . . . . . . . . . . . . . . . . . .68
SECTION 7.6 Reports by Trustee to Holders. . . . . . . . . . . . . . . . . .68
SECTION 7.7 Compensation and Indemnity.. . . . . . . . . . . . . . . . . . .69
SECTION 7.8 Replacement of Trustee.. . . . . . . . . . . . . . . . . . . . .70
SECTION 7.9 Successor Trustee by Merger, Etc.. . . . . . . . . . . . . . . .71
SECTION 7.10 Eligibility; Disqualification.. . . . . . . . . . . . . . . . .71
SECTION 7.11 Preferential Collection of Claims Against Company.. . . . . . .71
-iii-
<PAGE>
ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE . . . . . . . . . . . . . .72
SECTION 8.1 Termination of the Company's Obligations.. . . . . . . . . . . .72
SECTION 8.2 Legal Defeasance and Covenant Defeasance.. . . . . . . . . . . .73
SECTION 8.3 Conditions to Legal Defeasance or Covenant Defeasance. . . . . .75
SECTION 8.4 Application of Trust Money.. . . . . . . . . . . . . . . . . . .77
SECTION 8.5 Repayment to the Company.. . . . . . . . . . . . . . . . . . . .78
SECTION 8.6 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . .78
ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS. . . . . . . . . . . . . . .79
SECTION 9.1 Without Consent of Holders.. . . . . . . . . . . . . . . . . . .79
SECTION 9.2 With Consent of Holders. . . . . . . . . . . . . . . . . . . . .79
SECTION 9.3 Compliance with Trust Indenture Act. . . . . . . . . . . . . . .81
SECTION 9.4 Revocation and Effect of Consents. . . . . . . . . . . . . . . .81
SECTION 9.5 Notation on or Exchange of Securities. . . . . . . . . . . . . .82
SECTION 9.6 Trustee To Sign Amendments, Etc. . . . . . . . . . . . . . . . .82
ARTICLE X SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . .83
SECTION 10.1 Securities Subordinated to Senior Indebtedness. . . . . . . . .83
SECTION 10.2 No Payment on Securities in Certain Circumstances.. . . . . . .83
SECTION 10.3 Securities Subordinated to Prior Payment of
All Senior Indebtedness on Dissolution,
Liquidation or Reorganization of Company. . . . . . . . . .85
SECTION 10.4 Holders To Be Subrogated to Rights of Holders
of Senior Indebtedness. . . . . . . . . . . . . . . . . . .86
SECTION 10.5 Obligations of the Company Unconditional. . . . . . . . . . . .87
SECTION 10.6 Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice. . . . . . . . . . . . . . . . . . . .88
SECTION 10.7 Subordination Rights Not Impaired by Acts or
Omissions of Company or Holders of Senior
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . .88
SECTION 10.8 Holders Authorize Trustee to Effectuate Subordination
of Securities.. . . . . . . . . . . . . . . . . . . . . . .89
SECTION 10.9 Right of Trustee to Hold Senior Indebtedness. . . . . . . . . .90
SECTION 10.10 Article X Not to Prevent Events of Default.. . . . . . . . . .90
SECTION 10.11 No Fiduciary Duty of Trustee to Holders of
Senior Indebtedness.. . . . . . . . . . . . . . . . . . . .90
-iv-
<PAGE>
ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . .90
SECTION 11.1 Trust Indenture Act Controls. . . . . . . . . . . . . . . . . .90
SECTION 11.2 Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . .91
SECTION 11.3 Communications by Holders with Other Holders. . . . . . . . . .92
SECTION 11.4 Certificate and Opinion of Counsel as to
Conditions Precedent. . . . . . . . . . . . . . . . . . . .92
SECTION 11.5 Statements Required in Certificate and Opinion of Counsel.. . .93
SECTION 11.6 Rules by Trustee, Paying Agent, Registrar.. . . . . . . . . . .93
SECTION 11.7 Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . .93
SECTION 11.8 GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . .93
SECTION 11.9 No Recourse Against Others. . . . . . . . . . . . . . . . . . .94
SECTION 11.10 Successors.. . . . . . . . . . . . . . . . . . . . . . . . . .94
SECTION 11.11 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . .94
SECTION 11.12 Severability.. . . . . . . . . . . . . . . . . . . . . . . . .94
SECTION 11.13 Table of Contents, Headings, Etc.. . . . . . . . . . . . . . .94
SECTION 11.14 No Adverse Interpretation of Other Agreements. . . . . . . . .94
SECTION 11.15 Benefits of Indenture. . . . . . . . . . . . . . . . . . . . .95
SECTION 11.16 Independence of Covenants. . . . . . . . . . . . . . . . . . .95
Exhibit A-1 - Form of Series A Security
Exhibit A-2 - Form of Series B Security
Exhibit B - Form of Legend for Global Securities
Exhibit C - Transferee Certificate for Non-QIB Accredited Investors
Exhibit D - Transferee Certificate for Transfers Pursuant Regulation S
Note: This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture.
-v-
<PAGE>
INDENTURE dated as of December 9, 1998, between BIG FLOWER PRESS HOLDINGS,
INC., a corporation duly organized and existing under the laws of the State of
Delaware, as Issuer (the "Company"), and STATE STREET BANK AND TRUST COMPANY, a
national banking association duly organized and existing under the laws of the
United States, as Trustee (the "Trustee").
The parties hereto agree as follows for the benefit of each other and for
the equal and ratable benefit of the Holders:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS.
"Accrued Bankruptcy Interest" means all interest accruing subsequent to the
occurrence of any events specified in Section 6.1(vi) or (vii) or which would
have accrued but for any such event.
"Adjusted Consolidated Net Income" means, with respect to any Person for
any period, (i) the Consolidated Net Income of such Person for such period plus
(ii) in the case of the Company and its Restricted Subsidiaries, (A) all cash
received during such period by the Company or any Restricted Subsidiary from its
Unrestricted Subsidiaries but only to the extent that the Company elects to so
include such cash payments (in whole or in part) in Adjusted Consolidated Net
Income and not as a reduction in the carrying value of the Investment in such
Unrestricted Subsidiary (whether or not in accordance with GAAP), such election
to be made prior to the making of a Restricted Payment based upon such cash
received and (B) amortization, depreciation and other non-cash charges relating
to acquisitions by the Company since its formation, including goodwill,
non-compete agreements, the stepped-up basis on assets acquired and deferred
financing costs, in each case to the extent such items reduced Consolidated Net
Income. Each item of Adjusted Consolidated Net Income will be determined in
conformity with GAAP, except as set forth in this definition and except that,
for purposes of the application of Accounting Principles Board Opinions Nos. 16
and 17, such Person may select an amortization practice allowable by GAAP up to
40 years, notwithstanding the use of a different amortization in such Person's
consolidated financial statements. Any designation of a Subsidiary of the
Company as a Restricted Subsidiary or Unrestricted Subsidiary at or prior to the
time of the calculation
<PAGE>
-2-
of Adjusted Consolidated Net Income of a Subsidiary will be treated as if it had
occurred at the beginning of the applicable period.
"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. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies, of the controlled Person, whether through ownership
of voting securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Agent Bank" means Bankers Trust Company and/or any successor agent or
agents pursuant to the Credit Agreement.
"Agent Members" has the meaning provided in Section 2.14.
"Asset Sale" means, with respect to any Person, in one or a series of
related transactions, the sale, lease, conveyance, disposition or other transfer
by the referent Person of any of its assets (including by way of sale and
leaseback and including the sale or other transfer or issuance of any of the
Capital Stock of any Subsidiary of the referent Person); PROVIDED that
notwithstanding the foregoing, the term "Asset Sale" shall not include the sale,
lease, conveyance, disposition or other transfer of (i) all or substantially all
of the assets of the Company, as permitted pursuant to Section 5.1, (ii) any
assets between the Company and any Restricted Subsidiary, (iii)(A) cash and cash
equivalents, (B) inventory and (C) any other tangible or intangible asset, in
each case in the ordinary course of business of the Company or the Restricted
Subsidiaries, (iv) the sale of accounts receivable pursuant to the Receivables
Financing or (v) the sale or discount, in each case without recourse, of
accounts receivable arising in the ordinary course of business, but only in
connection with the compromise or collection thereof.
"Asset Sale Payment Date" has the meaning provided in Section 4.12.
<PAGE>
-3-
"Average Life" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment or, in the case of Redeemable Stock,
each successive scheduled mandatory redemption payment of such security or
instrument multiplied by the amount of such principal payment or, in the case of
Redeemable Stock, mandatory redemption payment by (ii) the sum of all such
principal payments or, in the case of Redeemable Stock, mandatory redemption
payments.
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means with respect to the Company or any Person, the
board of directors of the Company or such Person or any committee of such board
of directors duly authorized to act for it hereunder.
"Board Resolution" means with respect to the Company or any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of the
Company or such Person to have been duly adopted by the Board of Directors of
the Company or such Person and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, a Sunday or any day on
which banking institutions in New York, New York, Hartford, Connecticut or any
city in which the principal trust office of the Trustee is located are required
or authorized by law, regulation or other governmental action to be closed.
"Capital Lease Obligation" means, with respect to any Person, at the time
any determination thereof is to be made, the amount of the liability in respect
of a capital lease which would at such time be required to be capitalized on the
balance sheet of such Person in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock.
"Cash Equivalents" means, at any time, (i) any evidence of Indebtedness
with a maturity of one year or less from the date of acquisition issued or
directly and fully guaranteed or insured by the United States of America or any
agency or in-
<PAGE>
-4-
strumentality thereof; PROVIDED that the full faith and credit of the United
States of America or any agency or instrumentality thereof is pledged in support
thereof; (ii) bank deposits of, or certificates of deposit or acceptances with a
maturity of one year or less from the date of acquisition of, any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500,000,000; (iii)
commercial paper with a maturity of one year or less from the date of
acquisition issued by a corporation (except an Affiliate of the Company)
organized under the laws of any state of the United States or the District of
Columbia and rated at least A-1 by Standard & Poor's Corporation or at least P-1
by Moody's Investors Service, Inc.; (iv) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; PROVIDED that
the terms of such agreements comply with the guidelines set forth in the Federal
Financial Agreements of Depositary Institutions With Securities Dealers and
Others, as adopted by the Comptroller of the Currency on October 31, 1985; and
(v) money market funds and mutual funds, the assets of which are solely invested
in (i) through (iv) above.
"Change of Control" means (i) an event or series of events by which any
Person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is
or becomes the beneficial owner (as defined under Rule 13d-3 under the Exchange
Act) directly or indirectly of more than 50% of the combined voting power of the
then outstanding securities of the Company ordinarily (and apart from rights
accruing under certain circumstances) having the right to vote in the election
of directors or (ii) the replacement of a majority of the Board of Directors
over a one-year period from the directors who constituted the Board of Directors
at the beginning of such period, which replacement shall not have been approved
by the Board of Directors as so constituted at the beginning of such period or
(a) by directors whose nomination for election by the stockholders of the
Company was approved by such Board of Directors or (b) by directors elected by
such Board of Directors or (c) by directors approved in the same manner as (a)
or (b) above that were nominated or elected by directors approved as set forth
in (a) or (b) above. Notwithstanding the foregoing, a Change of Control shall
not be deemed to have occurred if one or more of the above events occurs or
circumstances exist and, after giving effect to the transaction giving rise to
such events or
<PAGE>
-5-
circumstances, the Company's Fixed Charge Coverage Ratio is 3.0 to 1 or greater.
"Change of Control Date" has the meaning provided in Section 4.15.
"Change of Control Offer" has the meaning provided in Section 4.15.
"Change of Control Payment Date" has the meaning provided in Section 4.15.
"Change of Control Purchase Price" has the meaning provided in Section
4.15.
"Common Stock" means, with respect to any Person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of, such Person's common stock, whether
outstanding at the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"Company" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and, thereafter,
means the successor.
"Consolidated EBITDA" means, with respect to any Person for any period and
without duplication, the Adjusted Consolidated Net Income of such Person for
such period plus (a) provision for taxes based on income or profits to the
extent such provision for taxes was included in computing Adjusted Consolidated
Net Income, plus (b) consolidated Interest Expense, whether paid or accrued, to
the extent such expense was deducted in computing Adjusted Consolidated Net
Income (including amortization of original issue discount and non-cash interest
payments), plus (c) depreciation, amortization and other non-cash charges to the
extent such depreciation, amortization and other non-cash charges were deducted
in computing Adjusted Consolidated Net Income (including amortization of
goodwill and other intangibles).
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the (a) consolidated Interest Expense, whether paid or accrued, to the
extent such expense was deducted in computing Adjusted Consolidated Net Income
(including amortization of original issue discount and non-cash inter-
<PAGE>
-6-
est payments) and (b) aggregate amount of all dividends paid or accumulated by
such Person during such period on Qualified Preferred Stock and all cash
dividend payments by such Person during such period on all series of other
preferred stock of such Person and its Subsidiaries, other than dividends paid
by such Person during such period on preferred stock of Unrestricted
Subsidiaries and dividends paid to such Person or its Subsidiaries (other than
in the case of the Company and its Restricted Subsidiaries, Unrestricted
Subsidiaries) times a fraction, the numerator of which is one and the
denominator of which is one minus the then Current Effective Consolidated Tax
Rate of such Person during such period.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate net income (or loss) of such Person and its Subsidiaries (other
than, in the case of the Company and its Subsidiaries, Unrestricted
Subsidiaries) for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED that (i) the net income (or loss) of any Person which is not
a Subsidiary of the referent Person or is accounted for by the equity method of
accounting by such referent Person shall be included only to the extent of the
amount of cash dividends or distributions (including tax sharing payments) paid
to the referent Person during such period or a Subsidiary of the referent Person
(other than, in the case of the Company and its Restricted Subsidiaries,
Unrestricted Subsidiaries), (ii) except to the extent includable pursuant to the
foregoing clause (i), the income (or loss) of any Person accrued prior to the
date it becomes a Subsidiary of such Person or is merged into or consolidated
with such Person or any of its Subsidiaries or that Person's assets are acquired
by such Person or any of its Subsidiaries shall be excluded, (iii) any gains or
losses of such Person for such period attributable to Asset Sales net of related
tax costs or tax benefits, as the case may be, shall be excluded and (iv) all
extraordinary gains or losses of such Person for such period shall be excluded.
"Consolidated Net Worth" means, with respect to any Person, at any date of
determination, the sum of the Capital Stock and additional paid-in capital plus
retained earnings (or minus accumulated deficit) of such Person and its
Subsidiaries on a consolidated basis, less amounts attributable to Redeemable
Stock of such Person, each item to be determined in conformity with GAAP
(excluding the effects of (i) foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52 and
<PAGE>
-7-
(ii) the application of Accounting Principles Board Opinions Nos. 16 and 17 and
related interpretations).
"Consolidated Tangible Assets" means, with respect to any Person, at any
time, the total consolidated assets of such Person less the consolidated assets
of such Person which constitute goodwill, in each case as set forth on such
Person's most recent balance sheet.
"Covenant Defeasance" has the meaning provided in Section 8.2.
"Credit Agreement" means that certain amended and restated credit agreement
dated as of June 22, 1998, by and among the Company, certain of its
Subsidiaries, Big Flower Holdings, Inc., certain financial institutions parties
thereto and Bankers Trust Company and Credit Suisse First Boston, as agents,
providing for a revolving credit facility, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, supplemented,
extended, renewed, refunded, refinanced, restructured or replaced from time to
time (including, without limitation, any extension of maturity thereof, or the
inclusion of additional borrowers or guarantors thereunder), in each case in
whole or in part, whether by the same or any other lender or group of lenders.
"Currency Agreement" means the obligations of any Person pursuant to any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its Subsidiaries against
fluctuations in currency values.
"Current Effective Consolidated Tax Rate" means, with respect to any Person
for any period, cash income taxes paid or payable by such Person for such period
DIVIDED by the amount of income used in determining the amount of such cash
income taxes paid or payable, in each case without giving effect to any gains on
Asset Sales.
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official charged with maintaining possession or control over property
for one or more creditors.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
<PAGE>
-8-
"Depository" means The Depository Trust Company, its nominees and
successors.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the Credit Agreement and (ii) any Senior Indebtedness permitted under this
Indenture having a principal amount of at least $15.0 million that is designated
as "Designated Senior Indebtedness" by written notice from the Company to the
Trustee.
"8 7/8% Notes" means the $350 million aggregate principal amount of the
Company's 8 7/8% Senior Subordinated Notes due 2007.
"8 7/8% Issue Date" means June 20, 1997.
"Equity Interests" means Capital Stock, warrants, options or other rights
to acquire Capital Stock (but excluding any debt security which is convertible
into, or exchangeable for, Capital Stock).
"Event of Default" has the meaning provided in Section 6.1.
"Excess Proceeds" has the meaning provided in Section 4.12.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means Indebtedness of the Company and the
Restricted Subsidiaries (other than Indebtedness under the Credit Agreement) in
existence on the Issue Date.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value
shall be determined by the Board of Directors of the Company acting reasonably
and in good faith and shall, in the case of any assets or property the fair
market value of which exceeds $1.5 million, be evidenced by a Board Resolution
(certified by the Secretary or Assistant Secretary of the Company) delivered to
the Trustee.
<PAGE>
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"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of Consolidated EBITDA for such Person for such period to
Consolidated Fixed Charges for such Person for such period. For purposes of the
foregoing computation, in calculating Consolidated EBITDA and Consolidated Fixed
Charges, (a) the transaction giving rise to the need to calculate the Fixed
Charge Coverage Ratio shall be assumed to have occurred on the first day of the
four-quarter period for which the Fixed Charge Coverage Ratio is being
determined (the "Reference Period"), (b) any acquisition or divestiture of
assets or the Capital Stock of any Subsidiary of such Person (Restricted
Subsidiary, in the case of the Company) which occurred during the Reference
Period or subsequent to the Reference Period and prior to the date of the
transaction referenced in clause (a) above (the "Transaction Date") shall be
assumed to have occurred on the first day of the Reference Period, excluding, in
the case of an acquisition of assets or Capital Stock, any operating expense or
cost reduction of such Person or the Person to be acquired which, in the good
faith estimate of management, will be eliminated or realized, as the case may
be, as a result of such acquisition, as if such acquisition of assets or Capital
Stock (including the incurrence of any Indebtedness in connection with any such
acquisition and the application of the proceeds thereof) took place on the first
day of the Reference Period and as if the elimination of such operating expense
and the realization of such cost reductions were achieved on the first day of
the Reference Period; PROVIDED that the foregoing eliminations of operating
expenses and realizations of cost reductions shall be of the types permitted to
be given effect to in accordance with Article 11 of Regulation S-X under the
Exchange Act as in effect on the Issue Date, (c) the incurrence of any
Indebtedness during the Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date and the application of the proceeds
therefrom shall be assumed to have occurred on the first day of the Reference
Period, (d) Consolidated Fixed Charges attributable to any Indebtedness (whether
existing or being incurred) computed on a PRO FORMA basis and bearing a floating
interest rate shall be computed as if the rate in effect on the Transaction Date
had been the applicable rate for the entire period, unless such Person or any of
its Subsidiaries (Restricted Subsidiaries, in the case of the Company) is party
to an Interest Rate Agreement which will remain in effect for the twelve-month
period after the Transaction Date and which has the effect of fixing the
interest rate on the date of computation, in which case such rate (whether
higher or lower) shall be used and (e) there shall be excluded from Consolidated
Fixed Charges any portion of such Consolidated Fixed Charges related
<PAGE>
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to any amount of Indebtedness that was outstanding during or subsequent to the
Reference Period but is not outstanding on the Transaction Date, except for
Consolidated Fixed Charges actually incurred with respect to Indebtedness
borrowed (as adjusted pursuant to clause (d)) under a revolving credit or
similar arrangement to the extent the commitment thereunder remains in effect on
the Transaction Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or in such other statements by
such other entity as approved by a significant segment of the accounting
profession which are in effect in the United States at the time and for the
period as to which such accounting principles are to be applied; PROVIDED,
HOWEVER, that, for purposes of determining compliance with covenants in this
Indenture, "GAAP" means such generally accepted accounting principles as in
effect as of the Issue Date.
"Global Security" has the meaning provided in Section 2.2.
"guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical or legal effect of which is to assure in any way the
payment or performance (or payment of damages in the event of a non-performance)
of all or any part of such obligation, including, without limitation, the
payment of amounts drawn down by letters of credit.
"Holder" or "Securityholder" means a Person in whose name a Security is
registered. The Holder of a Security will be treated as the owner of such
Security for all purposes.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become directly or indirectly liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to
generally accepted accounting principles or otherwise, of any such Indebtedness
or other obligation on the balance sheet of such Person (and "incurrence,"
"incurred," "in-
<PAGE>
-11-
currable" and "incurring" shall have meanings correlative to the foregoing).
"Indebtedness" means, with respect to any Person, any indebtedness in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement obligations with respect thereto) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
financing leases), if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP (except that any such balance that constitutes a trade payable and/or
an accrued liability arising in the ordinary course of business shall not be
considered Indebtedness), and shall also include, to the extent not otherwise
included, any Capital Lease Obligations, the maximum fixed repurchase price of
any Redeemable Stock or preferred stock of any Subsidiary (Restricted
Subsidiary, in the case of the Company) of such Person (except, with respect to
the Company, to the extent such Restricted Subsidiary guarantees the obligations
under the Securities), indebtedness secured by a Lien to which the property or
assets owned or held by such Person are subject, whether or not the obligations
secured thereby shall have been assumed and guarantees of items that would be
included within this definition to the extent of such guarantees (exclusive of
whether such items would appear upon such balance sheet). For purposes of the
preceding sentence, the maximum fixed repurchase price of any Redeemable Stock
or preferred stock of any Restricted Subsidiary of such Person which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Redeemable Stock or such preferred stock as if such Redeemable Stock or
such preferred stock were repurchased on any date on which Indebtedness shall be
required to be determined pursuant to this Indenture; PROVIDED that if such
Redeemable Stock or such preferred stock is not then permitted to be
repurchased, the repurchase price shall be the book value of such Redeemable
Stock or such preferred stock. The amount of Indebtedness of any Person at any
date shall be, in the case of Indebtedness of others secured by a Lien to which
the property or assets owned or held by such Person are subject, the lesser of
the fair market value at such date of any asset subject to a Lien securing the
Indebtedness of others and the amount of the Indebtedness secured.
"Indenture" means this Indenture as amended or supplemented from time to
time pursuant to the terms hereof.
<PAGE>
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"Independent Financial Advisor" means an accounting, appraisal, investment
banking or consulting firm of nationally recognized standing that is, in the
reasonable and good faith judgment of the Board of Directors of the Company,
qualified to perform the task for which such firm has been engaged and
disinterested and independent with respect to the Company and its Affiliates.
"Initial Purchasers" means BT Alex. Brown Incorporated, Chase Securities
Inc. and Goldman, Sachs & Co.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest," when used with respect to any Security, means the amount of all
interest accruing on such Security, including all interest accruing subsequent
to the occurrence of any events specified in Sections 6.1(a)(vi) and (vii) or
which would have accrued but for any such event.
"Interest Expense" means, with respect to any Person, for any period, the
aggregate amount of interest in respect of Indebtedness (including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and the net cost (benefit)
associated with Interest Rate Agreements, and excluding amortization of deferred
finance fees) and all but the principal component of rentals in respect of
Capital Lease Obligations, paid, accrued or scheduled to be paid or accrued by
such Person during such period.
"Interest Payment Date," when used with respect to any Security, means the
stated maturity of an installment of interest specified in such Security.
"Interest Rate Agreements" means the obligations of any Person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates.
"Investment" means any direct or indirect advance, loan (other than
advances to customers in the ordinary course of business which are recorded as
accounts receivable on the balance sheet of any Person or its Subsidiaries) or
other extension of credit or capital contribution to (by means of any transfer
of cash or other property to others or any payment for
<PAGE>
-13-
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities
issued by any other Person; in each case, other than as a result of the issuance
of Capital Stock of such Person or the delivery of Capital Stock of such
Person's direct or indirect parent. For the purpose of Section 4.8, (i)
"Investment" shall include and be valued at the fair market value of the net
assets of any Restricted Subsidiary at the time that such Restricted Subsidiary
is designated an Unrestricted Subsidiary and shall exclude the fair market value
of the net assets of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the
amount of any Investment shall be the original cost of such Investment plus the
cost of all additional Investments by the Company or any of its Restricted
Subsidiaries, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, reduced by
the payment of dividends or distributions (including tax sharing payments) in
connection with such Investment to the extent such distribution constitutes a
return on capital in accordance with GAAP; PROVIDED, HOWEVER, that in the case
of an Investment in an Unrestricted Subsidiary, the Company may elect to include
such cash payments (in whole or in part) in Adjusted Consolidated Net Income and
not as a reduction in the carrying value of the Investment in such Unrestricted
Subsidiary (whether or not in accordance with GAAP), such election to be made
prior to the making of a Restricted Payment based upon such dividend or
distribution.
"Issue Date" means December 9, 1998, the date of first issuance of the
Notes under this Indenture.
"Legal Defeasance" has the meaning provided in Section 8.2.
"Legal Holiday" means any day other than a Business Day.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give any security interest in and any filing or other agreement to give
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
<PAGE>
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"Maturity Date" means, when used with respect to any Security, the date
specified in such Security as the fixed date on which the final installment of
principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to Section 6.2 or any Net Proceeds Offer or Change
of Control Offer).
"Net Proceeds" means, with respect to any Asset Sale, the aggregate amount
of U.S. Legal Tender (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, and including
any amounts received as disbursements or withdrawals from any escrow or similar
account established in connection with any such Asset Sale, but, in each such
case, only as and when so received) received by the Company or any of its
Restricted Subsidiaries in respect of such Asset Sale, net of (i) the cash
expenses of such sale (including, without limitation, the payment of principal,
premium, if any, and interest on Indebtedness required to be paid as a result of
such Asset Sale (other than pursuant to Section 4.12) and legal, accounting and
investment banking fees and sales commissions), (ii) taxes paid or payable as a
result thereof, (iii) any portion of cash proceeds which the Company determines
in good faith should be reserved for post-closing adjustments, it being
understood and agreed that on the day that all such post-closing adjustments
have been determined, the amount (if any) by which the reserved amount in
respect of such Asset Sale exceeds the actual post-closing adjustments payable
by the Company or any of its Subsidiaries shall constitute Net Proceeds on such
date and (iv) any relocation expenses and pension, severance and shutdown costs
incurred as a result thereof.
"Net Proceeds Offer" has the meaning provided in Section 4.12.
"Net Proceeds Payment Date" has the meaning provided in Section 4.12.
"Non-U.S. Person" means a Person who is not a U.S. Person, as defined in
Regulation S.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
<PAGE>
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"Offering Memorandum" means the Offering Memorandum dated December 2, 1998
pursuant to which $250.0 million of the Securities were offered, and any
supplement thereto.
"Officer" means the Chairman, the President, any Vice President, the Chief
Financial Officer, the Chief Executive Officer, the Chief Operating Officer, the
Treasurer, the Secretary or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers or by an
Officer and an Assistant Treasurer or Assistant Secretary of the Company.
"Offshore Physical Securities" has the meaning provided in Section 2.2.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee, which may include outside or in-house
counsel to the Company.
"Paying Agent" has the meaning provided in Section 2.3.
"Payment Blockage Period" has the meaning provided in Section 10.2.
"Permitted Investments" means (i) cash or Cash Equivalents, (ii)
Investments that are in Persons (including Unrestricted Subsidiaries) who derive
substantial revenues from operations similar or ancillary to the business of the
Company or its Restricted Subsidiaries as conducted at the time of such
Investment and that have the purpose of furthering the operations of the Company
and its Restricted Subsidiaries; PROVIDED that Investments of the type described
in this clause (ii) shall not exceed $25.0 million at any one time outstanding
in the case of Persons which are not Restricted Subsidiaries or which do not in
connection with such Investment become a Restricted Subsidiary, (iii) advances
to employees and officers of the Company and its Subsidiaries not in excess of
$1.0 million at any one time outstanding, (iv) loans to employees, officers and
directors of the Company and its Subsidiaries to finance the purchase of Equity
Interests in the Company, (v) accounts receivable created or acquired in the
ordinary course of business, (vi) obligations or shares of Capital Stock
received in connection with any good faith settlement or bankruptcy proceeding
involving a claim relating to a Permitted Investment, (vii) Currency Agreements
and Interest Rate Agreements and other similar agreements designed to hedge
against
<PAGE>
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fluctuations in foreign exchange rates and interest rates entered into in the
ordinary course of business in connection with the operation of the Company's or
its Restricted Subsidiaries' businesses and (viii) agreements designed to hedge
against fluctuations in the cost of raw materials entered into in the ordinary
course of business in connection with the operation of the Company's and its
Restricted Subsidiaries' business ("Raw Material Hedge Agreements").
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims not yet due or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; (ii) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business,
deposits made to obtain the release of such Liens, and with respect to amounts
not yet delinquent for a period of more than 60 days or being contested in good
faith by appropriate proceedings, if a reserve or other appropriate provision,
if any, as shall be required in conformity with GAAP shall have been made
therefor; (iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security; (iv) Liens incurred or deposits made to secure
the performance of tenders, bids, leases, statutory obligations, surety and
appeal bonds, government contracts, performance and return of money bonds and
other obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, zoning or other restrictions, minor defects or irregularities in
title and other similar charges or encumbrances not interfering in any material
respect with the business of the Company or any of its Restricted Subsidiaries
incurred in the ordinary course of business; (vi) Liens (including extensions,
renewals and replacements thereof) upon real or tangible personal property
acquired after the date of this Indenture whether or not such Liens existed on
the date of acquisition of such property; PROVIDED that (a) any such Lien is
created solely for the purpose of securing Indebtedness representing, or
incurred to finance, refinance or refund, the cost (including the cost of
construction) of the item of property subject thereto, (b) the principal amount
of the Indebtedness secured by such Lien does not exceed 100% of such cost, (c)
such Lien does not extend to or cover any other property other than such item of
property and any improvements on such
<PAGE>
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item and (d) the incurrence of such Indebtedness is permitted by Section 4.9;
(vii) Liens securing reimbursement obligations with respect to letters of credit
which encumber documents and other property relating to such letters of credit
and the products and proceeds thereof; (viii) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; (ix) judgment and attachment
Liens not giving rise to an Event of Default; (x) leases or subleases granted to
others not interfering in any material respect with the business of the Company
or any of its Restricted Subsidiaries; (xi) Liens encumbering customary initial
deposits and margin deposits, and other Liens incurred in the ordinary course of
business and which are within the general parameters customary in the industry,
in each case securing Indebtedness under Interest Rate Agreements, Currency
Agreements and Raw Material Hedge Agreements; (xii) Liens encumbering deposits
made to secure obligations arising from statutory, regulatory, contractual or
warranty requirements of the Company or its Subsidiaries, (xiii) Liens arising
out of consignment or similar arrangements for the sale of goods entered into by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business of the Company and its Restricted Subsidiaries; (xiv) any interest or
title of a lessor in the property subject to any Capital Lease Obligations or
operating lease; (xv) Liens arising from filing Uniform Commercial Code
financing statements regarding leases; (xvi) Liens permitted or required by the
Credit Agreement as in effect on the Issue Date; (xvii) Liens securing Senior
Indebtedness and Liens on assets of Restricted Subsidiaries securing
Indebtedness of such Restricted Subsidiaries; (xviii) Liens between the Company
and any Restricted Subsidiary or between Restricted Subsidiaries; (xix) Liens on
assets of Restricted Subsidiaries securing letters of credit issued in the
ordinary course of business of such Restricted Subsidiaries; (xx) additional
Liens at any one time outstanding with respect to assets of the Company and its
Restricted Subsidiaries the fair market value of which does not exceed $15.0
million on the date of determination; (xxi) Liens existing on the Issue Date and
any extensions, renewals or replacements thereof; (xxii) Liens deemed to arise
from the Receivables Financing; and (xxiii) the Lien granted to the Trustee
under this Indenture and any substantially equivalent Lien granted to any
trustee or similar institution under any indenture for Indebtedness permitted by
the terms of this Indenture.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization
<PAGE>
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or government or any agency or political subdivision thereof or other entity of
any kind.
"Physical Security" means, collectively, the Offshore Physical Securities
and the U.S. Physical Securities.
"principal" of a debt security means the principal amount of the security
plus, when appropriate, the premium, if any, on the security.
"preferred stock," as applied to the Capital Stock of any Person, means
Capital Stock of such Person (other than Common Stock of such Person) of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Private Placement Legend" means the legend initially set forth on the
Series A Securities in the form set forth on Exhibit A-1.
"pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms of this Indenture, a calculation in accordance with
Article 11 of Regulation S-X under the Securities Act.
"Qualified Institutional Buyer" or "QIB" shall have the meaning specified
in Rule 144A under the Securities Act.
"Qualified Preferred Stock" means preferred stock of the Company that is
designated as such pursuant to clause (ii) or (iv) of the second paragraph of
Section 4.8.
"Raw Material Hedge Agreements" has the meaning provided in the definition
of "Permitted Investments."
"Receivables Financing" means the receivables facility in effect on the
Issue Date in the amount of $150.0 million, pursuant to which (x) the Company's
Subsidiaries from time to time sell or otherwise transfer accounts receivable
and related assets to a special-purpose corporation (the "Receivables
Subsidiary") and (y) the Receivables Subsidiary sells or otherwise transfers
accounts receivable and related assets (or interests therein) to the purchasers,
as the same may be amended, modified, supplemented, extended, renewed, refunded,
refinanced, restructured or replaced from time to time (includ-
<PAGE>
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ing, without limitation, any extension of maturity thereof, or the inclusion of
additional purchasers thereunder).
"Redeemable Stock" means any Equity Interest which, by its terms (or by
terms of any security into which it is convertible or for which it is
exchangeable before the Stated Maturity of the Securities) or upon the happening
of any event, matures or is mandatorily redeemable (other than for Capital Stock
not constituting Redeemable Stock), in whole or in part, prior to the Maturity
Date, or is, by its terms or upon the happening of any event, redeemable at the
option of the holder thereof, in whole or in part, at any time prior to the
Maturity Date, except for Equity Interests of the Company issued to employees,
officers and directors of the Company and its Subsidiaries pursuant to
agreements containing provisions for the repurchase of such Equity Interest upon
death, disability or termination of employment or directorship of such Persons;
PROVIDED that any Equity Interest that is considered to be Redeemable Stock
solely because it is redeemable upon the occurrence of the same events that
would require a redemption or repurchase of the Securities shall not be deemed
to be Redeemable Stock; PROVIDED, FURTHER, that such Equity Interest is not
convertible or exchangeable into debt.
"Redemption Date" means, with respect to any Security, the Maturity Date of
such Security or the date on which such Security is to be redeemed by the
Company pursuant to the terms of the Securities.
"Refinancing Indebtedness" has the meaning provided in clause (ix) of the
second paragraph of Section 4.9.
"Refunding Equity Interests" has the meaning provided in clause (ii)(A) of
the second paragraph of Section 4.8.
"Registered Exchange Offer" means the offer to exchange the Series B
Securities for all of the outstanding Series A Securities in accordance with the
Registration Rights Agreement.
"Registrar" has the meaning provided in Section 2.3.
"Registration Rights Agreement" means the Registration Rights Agreement by
and among the Company and the Initial Purchasers, relating to $250.0 million of
the Securities and dated the Issue Date, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
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"Regulation S" means Regulation S under the Securities Act.
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Indebtedness.
"Restricted Payment" has the meaning provided in Section 4.8.
"Restricted Security" has the meaning set forth in Rule 144(a)(3) under the
Securities Act; PROVIDED that the Trustee shall be entitled to request and
conclusively rely upon an Opinion of Counsel with respect to whether any
Security is a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company which at the
time of determination is not an Unrestricted Subsidiary. The Board of Directors
of the Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if, immediately after giving effect to such designation, the
Company could incur at least $1.00 of additional Indebtedness pursuant to the
first paragraph of Section 4.9 (without giving effect to clauses (i) through
(xvi) of the second paragraph thereof), on a pro forma basis taking into account
such designation.
"Retired Equity Interests" has the meaning provided in clause (ii)(A) of
the second paragraph of Section 4.8.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Series A Securities and Series B Securities, as
amended or supplemented from time to time in accordance with the terms hereof,
that are issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securityholder" means Holder.
"Senior Indebtedness" means any Indebtedness permitted to be incurred under
the terms of this Indenture, unless the instrument under which such Indebtedness
is incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Securities. Notwithstanding anything
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to the contrary in the foregoing, Senior Indebtedness shall not include (a)
Indebtedness that is expressly subordinate or junior in right of payment to any
Indebtedness of the Company, (b) Indebtedness that is represented by Redeemable
Stock, (c) any liability for Federal, state, local or other taxes owed or owing
by the Company, (d) Indebtedness of the Company to any Subsidiary of the
Company, (e) trade payables and (f) Indebtedness that is incurred in violation
of this Indenture (but, as to any such Indebtedness, no such violation shall be
deemed to exist for purposes of this definition if the holder(s) of such
obligation or their representative or the Company shall have furnished to the
Trustee an opinion of counsel unqualified in all material respects, addressed to
the Trustee (which legal counsel may, as to matters of fact, rely upon an
officers' certificate of the Company) to the effect that the incurrence of such
Indebtedness does not violate the provisions of this Indenture).
"Series A Securities" means the 8 5/8% Senior Subordinated Notes due 2008,
Series A, issued, authenticated and delivered under this Indenture, as amended
or supplemented from time to time pursuant to the terms of this Indenture,
substantially in the form set forth in Exhibit A-1.
"Series B Securities" means the 8 5/8% Senior Subordinated Notes due 2008,
Series B (the terms of which are identical to the Series A Securities except
that the Series B Securities shall be registered under the Securities Act, and
shall not contain the restrictive legend on the face of the form of the Series A
Securities), to be issued in exchange for the Series A Securities pursuant to
the Registered Exchange Offer and this Indenture, substantially in the form set
forth in Exhibit A-2.
"Significant Restricted Subsidiary" means any Restricted Subsidiary which
accounted for more than 10% of the Company's Consolidated Tangible Assets or
more than 10% of the Company's consolidated revenues or more than 10% of the
Company's Consolidated EBITDA, in each case as of the end of, or for, the
Company's most recent fiscal year.
"Stated Maturity" means, with respect to any security or Indebtedness, the
date specified in such security or Indebtedness as the fixed date on which the
principal of such security or Indebtedness is due and payable, including
pursuant to any mandatory redemption provision (other than pursuant to any
provision providing for the repurchase of such security at the option of the
holder thereof).
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"Subsidiary" with respect to any Person, means (i) any corporation of which
the outstanding Capital Stock having at least a majority of the votes entitled
to be cast in the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such Person or (ii) any other
Person of which at least a majority of the voting interest under ordinary
circumstances is at such time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means such successor.
"Trust Officer" means an officer of the Trustee assigned to the Corporate
Trustee Administration Department or similar department performing corporate
trust work, or any successor to such department or, in the case of a successor
trustee, an officer assigned to the department, division or group performing the
corporate trust work of such successor.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company which at
the time of determination is an Unrestricted Subsidiary (as designated by the
Board of Directors, as provided below) and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary, unless such Subsidiary owns any Capital Stock of, or
owns, or holds any Lien on, any property of, any other Subsidiary of the Company
which is not a Subsidiary of the Subsidiary to be so designated; PROVIDED that
(a) the Company certifies that such designation complies with Section 4.8 and
(b) each Subsidiary to be so designated and each of its Subsidiaries has not at
the time of designation, and does not thereafter, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if,
immediately after giving effect to such designation, the Company could incur at
least $1.00 of additional Indebtedness pursuant to the first paragraph of
Section 4.9 (without giving effect to clauses (i) through (xvi) of
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the second paragraph thereof) on a PRO FORMA basis taking into account such
designation.
"U.S. Government Obligations" means direct non-callable obligations
of, or non-callable obligations guaranteed by, the United States of America for
the payment of which guarantee or obligation the full faith and credit of the
United States is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"U.S. Physical Securities" means Securities issued in the form of
certificated Securities in registered form in substantially the form set forth
in Exhibit A-1 or Exhibit A-2.
SECTION 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision shall be deemed incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
(a) "Commission" means the SEC;
(b) "indenture securities" means the Securities;
(c) "indenture security holder" means a Securityholder;
(d) "indenture to be qualified" means this Indenture;
(e) "indenture trustee" or "institutional trustee" means the Trustee;
and
(f) "obligor" on the indenture securities means the Company or any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings so assigned to them therein.
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SECTION 1.3 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is exclusive;
(c) words in the singular include the plural, and words in the plural
include the singular;
(d) provisions apply to successive events and transactions;
(e) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other Subdivision; and
(f) unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall
be made, and all financial statements required to be delivered hereunder
shall be prepared in accordance with GAAP as in effect from time to time,
applied on a basis consistent with the most recent audited consolidated
financial statements of the Company.
ARTICLE II
THE SECURITIES
SECTION 2.1 FORM AND DATING.
The Series A Securities and the Series B Securities and the Trustee's
certificate of authentication with respect thereto shall be substantially in the
form set forth in Exhibits A-1 and A-2 annexed hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, rule, usage or
agreement to which the Company is subject. Each Security shall be dated the
date of its issuance and shall show the date of its authentication. The terms
and provisions contained in the Securities shall constitute, and are expressly
made, a part of this Indenture.
SECTION 2.2 EXECUTION AND AUTHENTICATION.
Two Officers shall execute the Securities on behalf of the Company by
either manual or facsimile signature.
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If a Person whose signature is on a Security as an Officer no longer
holds that office at the time the Trustee authenticates the Security, the
Security shall be valid nevertheless.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Series A Securities for original issue
on the Issue Date in the aggregate principal amount not to exceed $250,000,000,
upon receipt of an Officers' Certificate. In addition, on or prior to the date
of consummation of the Registered Exchange Offer, the Trustee or an
authenticating agent shall authenticate Series B Securities and, if required by
the Registration Rights Agreement, Private Exchange Notes (as defined in the
Registration Rights Agreement) to be issued at the time of consummation of the
Registered Exchange Offer in the aggregate principal amount of up to
$250,000,000 upon receipt of an Officers' Certificate. In addition, the Trustee
shall authenticate Securities issued in one or more series (such Securities to
be substantially in the form of Exhibit A-1 or Exhibit A-2 (and if in the form
of Exhibit A-1, the same principal amount of Securities in the form of Exhibit
A-2 in exchange therefor upon consummation of a registered exchange offer)) in
an aggregate principal amount not to exceed $100,000,000 upon receipt of an
Officers' Certificate. In each case, the Officers' Certificate shall specify
the amount of Securities to be authenticated and the date on which the
Securities are to be authenticated and shall be signed by two Officers directing
the Trustee to authenticate the Securities and certifying that all conditions
precedent to the issuance of the Securities contained herein have been complied
with. The aggregate principal amount of Securities outstanding at any time may
not exceed $350,000,000 except as provided in Section 2.7.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. Such authenticating agent shall
have the same authenticating rights and duties as the Trustee in any dealings
hereunder with the Company or with any Affiliate of the Company.
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The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
Securities offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent Global Securities in registered
form, substantially in the form set forth in Exhibit A-1 ("Global Securities"),
deposited with the Trustee, as custodian for the Depository, and shall bear the
legend set forth on Exhibit B. The aggregate principal amount of any Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Securities offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of certificated Securities in
registered form set forth in Exhibit A-1 ("Offshore Physical Securities").
SECTION 2.3 REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in the City of New York, State of New York) where
Securities may be presented for registration of transfer or for exchange (the
"Registrar"), an office or agency (which shall be located in the Borough of
Manhattan, City of New York, State of New York) where Securities may be
presented for payment (the "Paying Agent") and an office or agency where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Registrar shall keep a register of the Securities
and of their transfer and exchange. The Company may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent. The Company may act as its own Paying
Agent, except that for the purposes of payments on account of principal on the
Securities pursuant to Sections 4.12 and 4.15, neither the Company nor any
Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the forego-
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ing notice, the Trustee shall act as such and shall be entitled to appropriate
compensation in accordance with Section 7.7.
The Company initially appoints the Trustee as Registrar and Paying
Agent and agent for service of notices and demands in connection with the
Securities.
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST.
Each Paying Agent shall hold in trust for the benefit of the
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities, and shall notify the
Trustee of any default by the Company in making any such payment. Money held in
trust by the Paying Agent need not be segregated except as required by law and
in no event shall the Paying Agent be liable for any interest on any money
received by it hereunder. The Company at any time may require the Paying Agent
to pay all money held by it to the Trustee and account for any funds disbursed
and the Trustee may at any time during the continuance of any Event of Default
specified in Section 6.1(i) or (ii), upon written request to the Paying Agent,
require such Paying Agent to pay forthwith all money so held by it to the
Trustee and to account for any funds disbursed. Upon making such payment, the
Paying Agent shall have no further liability for the money delivered to the
Trustee.
SECTION 2.5 SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Securityholders and otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish or cause the Registrar
to furnish to the Trustee before each Interest Payment Date, and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Securityholders.
SECTION 2.6 TRANSFER AND EXCHANGE.
Subject to the provisions of Sections 2.14 and 2.15, when Securities
are presented to the Registrar or a co-Registrar with a request from the Holder
of such Securities to register the transfer or to exchange them for an equal
principal amount of Securities of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested; PROVIDED that
every Security presented or surren-
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dered for registration of transfer or exchange shall be duly endorsed or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar, duly executed by the Holder thereof or his attorneys
duly authorized in writing. To permit registrations of transfers and exchanges,
the Company shall issue and execute and the Trustee shall authenticate new
Securities evidencing such transfer or exchange. No service charge shall be
made to the Securityholder for any registration of transfer or exchange. The
Company may require from the Securityholder payment of a sum sufficient to cover
any transfer taxes or other governmental charge that may be imposed in relation
to a transfer or exchange, but this provision shall not apply to any exchange
pursuant to Sections 2.10, 4.12, 4.15 or 9.5 (in which events the Company will
be responsible for the payment of such taxes). The Registrar or co-Registrar
shall not be required to register the transfer of or exchange of any Security
(i) during a period beginning at the opening of business 15 days before the
mailing of a notice of redemption of Securities and ending at the close of
business on the day of such mailing and (ii) selected for redemption in whole or
in part pursuant to Article III, except the unredeemed portion of any Security
being redeemed in part.
SECTION 2.7 REPLACEMENT SECURITIES.
If a mutilated Security is surrendered to the Registrar or the Trustee
or if the Holder of a Security of any series claims that the Security has been
lost, destroyed or wrongfully taken, the Company shall issue and the Trustee
shall authenticate a replacement Security if the Holder of such Security
furnishes to the Company and to the Trustee evidence reasonably acceptable to
them of the ownership and the destruction, loss or theft of such Security. If
required by the Trustee or the Company, an indemnity bond shall be posted,
sufficient in the judgment of the Company or the Trustee, as the case may be, to
protect the Company, the Trustee or any Agent from any loss that any of them may
suffer if such Security is replaced. The Company may charge such Holder for the
Company's expenses in replacing such Security and the Trustee may charge the
Company for the Trustee's expenses in replacing such Security. Every
replacement Security shall constitute an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
SECTION 2.8 OUTSTANDING SECURITIES.
The Securities outstanding at any time are all Securities that have
been authenticated by the Trustee except for
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(a) those canceled by it, (b) those delivered to it for cancellation, (c) those
described in this Section 2.8 as not outstanding. A Security does not cease to
be outstanding because the Company or one of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a BONA FIDE purchaser in whose hands such Security
is a legal, valid and binding obligation of the Company.
If the Paying Agent holds, in its capacity as such, on any Maturity
Date or on any optional redemption date money sufficient to pay all accrued
interest and principal with respect to such Securities payable on that date and
is not prohibited from paying such money to the Holders thereof pursuant to the
terms of this Indenture, then on and after that date such Securities cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9 TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities have concurred in any declaration of acceleration or notice of
default or direction, waiver or consent or any amendment, modification or other
change to this Indenture, Securities owned by the Company or any Subsidiary or
an Affiliate of the Company shall be deemed not to be outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent or any amendment, modification
or other change to this Indenture, only Securities that the Trustee knows are so
owned shall be so disregarded. The Company shall notify the Trustee, in
writing, when it or any of its Affiliates repurchases or otherwise acquires
Securities, of the aggregate principal amount of such Securities so repurchased
or otherwise acquired.
SECTION 2.10 TEMPORARY SECURITIES.
Until definitive Securities are prepared and ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company reasonably considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate definitive Securities in exchange for temporary
Securities. Un-
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til such exchange, such temporary Securities shall be entitled to the same
rights, benefits and privileges as the definitive Securities.
SECTION 2.11 CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Securities surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall (subject to the record-retention requirements of the Exchange Act) dispose
of canceled Securities unless the Company directs the Trustee to return such
Securities to the Company, and, if so disposed, shall deliver a certificate of
disposition thereof to the Company. The Company may not reissue or resell, or
issue new Securities to replace, Securities that the Company has redeemed or
paid, or that have been delivered to the Trustee for cancellation.
SECTION 2.12 DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus, to the extent permitted by law, any
interest payable on the defaulted interest, to the Persons who are
Securityholders on a subsequent special record date. Such record date shall be
the fifteenth day next preceding the date fixed by the Company for the payment
of defaulted interest, whether or not such day is a Business Day. At least 15
days before the subsequent special record date, the Company shall mail (or cause
to be mailed) to each Securityholder a notice that states the record date, the
payment date and the amount of defaulted interest to be paid. Notwithstanding
the foregoing, any interest which is paid prior to the expiration of the 30-day
period set forth in Section 6.1(i) shall be paid to Holders of Securities as of
the regular record date for the interest payment date for which interest has not
been paid. Notwithstanding the foregoing, 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 Securities may be listed,
and upon such notice as may be required by such exchange.
SECTION 2.13 CUSIP NUMBER.
The Company in issuing the Securities may use a "CUSIP" number, and if
so, such CUSIP number shall be included
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in notices of redemption or exchange as a convenience to Holders; PROVIDED that
any such notice may state that no representation is made as to the correctness
or accuracy of the CUSIP number printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed on
the Securities. The Company will promptly notify the Trustee of any change in
the CUSIP number.
SECTION 2.14 BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES.
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit B.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Security, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. U.S. Physical Securities shall be transferred to all beneficial
owners in exchange for their beneficial interests in Global Securities, in
accordance with the rules and procedures of the Depository, only if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depository to issue U.S. Physical Securities.
(c) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surren-
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dered to the Trustee for cancellation, and the Company shall execute, and the
Trustee shall authenticate and deliver, to each beneficial owner identified by
the Depository in exchange for its beneficial interest in the Global Securities,
an equal aggregate principal amount of U.S. Physical Securities of authorized
denominations.
(d) Any U.S. Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of
Section 2.15, bear the legend regarding transfer restrictions applicable to the
U.S. Physical Securities set forth in Exhibit A-1.
(e) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
SECTION 2.15 SPECIAL TRANSFER PROVISIONS.
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS AND
NON-U.S. PERSONS. The following provisions shall apply with respect to the
registration of any proposed transfer of a Security constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person
(i) the Registrar shall register the transfer of any Security
constituting a Restricted Security, whether or not such Security bears
the Private Placement Legend, if (x) the requested transfer is after
December 9, 2000 or (y) (1) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB (excluding Non-U.S.
Persons), the proposed transferee has delivered to the Registrar a
certificate substantially in the form of Exhibit C hereto or (2) in the
case of a transfer to a Non-U.S. Person, the proposed transferee has
delivered to the Registrar a certificate substantially in the form of
Exhibit D hereto, together, in the case of clause (i)(x) with such other
certifications, legal opinions or other information as the Company or
the Trustee may reasonably require to confirm that such transfer is
being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
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(b) TRANSFERS TO QIBS. The following provisions shall apply with
respect to the registration of any proposed transfer of a Security constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Security stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Security stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Securities to be transferred consist of Physical Securities which after
transfer are to be evidenced by an interest in the Global Security, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall reflect on
its books and records the date and an increase in the principal amount of
the Global Security in an amount equal to the principal amount of the
Physical Securities to be transferred, and the Trustee shall cancel the
Physical Securities so transferred.
(c) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless (i) the circumstances contemplated by
paragraph (a)(i)(x) of this Section 2.15 exist, (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and
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the Trustee to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act or (iii) such Security has been sold pursuant to an effective
registration statement under the Securities Act.
(d) GENERAL. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.14 or this Section 2.15.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
ARTICLE III
REDEMPTION
SECTION 3.1 NOTICES TO TRUSTEE.
If the Company elects to redeem Securities pursuant to Section 5 of
the Securities, it shall notify the Trustee and the Paying Agent in writing of
the Redemption Date and the principal amount of Securities to be redeemed.
The Company shall give each notice provided for in this Section 3.1 at
least 45 days before the Redemption Date (unless a shorter notice shall be
satisfactory to the Trustee), together with an Officers' Certificate stating
that such redemption will comply with the conditions contained herein and in the
Securities.
SECTION 3.2 SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed, the Trustee
shall select Securities to be so redeemed in compliance with applicable legal
requirements and the requirements of the principal national securities exchange,
if any, on which the Securities are listed or, if the Securities are not listed
on a national securities exchange, by lot, pro rata or in such other fair and
reasonable manner chosen at the discretion of the Trustee; PROVIDED that, with
respect to re-
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demptions made with net proceeds of issuances of Equity Interests of the Company
as described in the second paragraph of Section 5 of each of the Securities,
such redemptions shall be made on a pro rata basis (to the extent permitted by
the Depository).
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption. Securities in denominations of $1,000
may only be redeemed in whole. The Trustee may select for redemption portions
(equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee shall promptly notify the
Company in writing of the Securities selected for redemption and, in the case of
any Security selected for partial redemption, the principal amount of each
certificate selected for redemption.
SECTION 3.3 NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause the mailing of a notice of redemption by
first-class mail, postage prepaid, to each Holder of Securities to be redeemed
at such Holder's address as it appears on the Securities register maintained by
the Registrar with a copy to the Trustee and any Paying Agent.
The notice shall identify the Securities to be redeemed and shall
state:
(a) the Redemption Date;
(b) the redemption price to be paid;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price and accrued interest, if any;
(e) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date and the only remaining right of the Holders
of such Securities is to receive payment of the redemption price upon
surrender to the Paying Agent of the Securities to be redeemed;
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(f) if any Security is to be redeemed in part, the portion of the
principal amount (equal to $1,000 or any integral multiple thereof) of such
Security to be redeemed and that, on or after the Redemption Date, upon
surrender of such Security, a new Security or Securities in aggregate
principal amount equal to the unredeemed portion thereof will be issued
without charge to the Securityholder;
(g) if less than all of the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed; and
(h) the CUSIP number, if any.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the redemption price. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price plus accrued interest to the Redemption Date, but interest installments
whose Interest Payment Date is on or prior to such Redemption Date will be
payable on the relevant Interest Payment Dates to the Holders of record at the
close of business on the relevant record dates referred to in the Securities.
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE.
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent in immediately available funds U.S. Legal Tender sufficient to pay
the redemption price of and accrued interest on all Securities or portions
thereof to be redeemed on that date.
If any Security surrendered for redemption in the manner provided in
the Securities shall not be so paid on the Redemption Date due to the failure of
the Company to deposit sufficient funds with the Paying Agent, interest will
continue to accrue from and including the Redemption Date until such payment is
made on the unpaid principal and, to the extent lawful, on any interest not paid
on such unpaid principal, in each case at the date and in the manner provided in
the Securities.
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SECTION 3.6 SECURITIES REDEEMED IN PART.
Upon surrender to the Paying Agent of a Security that is redeemed in
part, the Company shall execute and the Trustee shall authenticate for the
Holder a new Security equal in principal amount to the unredeemed portion of the
Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1 PAYMENT OF SECURITIES.
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities and this Indenture.
An installment of principal or interest shall be considered paid on
the date due if the Trustee or Paying Agent (other than the Company or any
Subsidiary of the Company or any Affiliate of any thereof) holds on such date
immediately available funds designated for and sufficient to pay such
installment.
The Company shall pay interest (including Accrued Bankruptcy Interest)
on overdue principal and on overdue installments of interest, in each case at
the rate per annum specified in the Securities, to the extent lawful.
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency, where Securities may be surrendered for
registration of transfer or exchange or for presentation for payment and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 11.2.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be
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presented or surrendered for any or all such purposes and may from time to time
rescind such designations; PROVIDED that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York, for such purposes.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the corporate trust office of
the Trustee set forth in Section 11.2 as an agency of the Company in accordance
with Section 2.3.
SECTION 4.3 CORPORATE EXISTENCE.
Subject to Article V hereof, the Company shall do or cause to be done,
at its own cost and expense, all things necessary to, and will cause each of its
Restricted Subsidiaries to, preserve and keep in full force and effect the
corporate existence and rights (charter and statutory), licenses and/or
franchises of the Company and each of its Restricted Subsidiaries; PROVIDED that
the Company shall not be required to preserve any such right, license or
franchise, or the corporate existence of any of its Restricted Subsidiaries, if
in the judgment of the Board of Directors or management of the Company (i) such
preservation or existence is not desirable in the conduct of business of the
Company or such Restricted Subsidiary and (ii) the loss of such right, license
or franchise or the dissolution of such Restricted Subsidiary is not adverse in
any material respect to the Holders.
SECTION 4.4 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall and shall cause each of its Subsidiaries to pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all material taxes, assessments and governmental charges levied
or imposed upon its or its Subsidiaries' income, profits or property and (b) all
material lawful claims for labor, materials and supplies which, if unpaid, would
be reasonably likely to by law become a Lien upon its property or the property
of any of its Subsidiaries; PROVIDED 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 negotiations or proceedings and for which disputed
amounts adequate reserves (in the good faith judgment of the Board of Directors
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or management of the Company) have been made in accordance with GAAP.
SECTION 4.5 MAINTENANCE OF PROPERTIES; BOOKS
AND RECORDS; COMPLIANCE WITH LAW.
(a) The Company shall and shall cause each of its Restricted
Subsidiaries to, at all times cause all properties used or useful in the conduct
of its business to be maintained and kept in good condition, repair and working
order (reasonable wear and tear excepted) and supplied with all necessary
equipment, and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereto; PROVIDED that nothing in
this Section 4.5 shall prevent the Company or any Restricted Subsidiary from
discontinuing the operation or maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposal is either (i) in
the ordinary course of business, (ii) in the reasonable and good faith judgment
of the Board of Directors or management of the Company or the Restricted
Subsidiary concerned, as the case may be, desirable in the conduct of the
business of the Company or such Restricted Subsidiary, as the case may be, or
(iii) otherwise permitted by this Indenture.
(b) The Company shall and shall cause each of its Restricted
Subsidiaries to keep proper and true books of record and account, in which full
and correct entries shall be made of all financial transactions and the assets
and business of the Company and each Restricted Subsidiary, and reflect on its
financial statements adequate accruals and appropriations to reserves, all in
accordance with GAAP consistently applied to the Company and its Subsidiaries
taken as a whole.
(c) The Company shall and shall cause each of its Subsidiaries to
comply in all material respects with all statutes, laws, ordinances, or
government rules and regulations to which it is subject, non-compliance with
which would materially adversely affect the business, earnings, properties,
assets or condition (financial or otherwise) of the Company and its Subsidiaries
taken as a whole.
SECTION 4.6 COMPLIANCE CERTIFICATES; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of its fiscal year, an Officers' Certificate complying with Section
314(a)(4) of the TIA stating (i) that a review of the activities of the Company
and the ac-
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tivities of its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Company has kept, observed, performed and fulfilled its obligations under
this Indenture and the Securities and (ii) that, to the best knowledge of such
Officer after due inquiry, the Company has kept, observed, performed and
fulfilled, in each case in all material respects, each and every covenant and
other obligation contained in this Indenture and the Securities and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof and has not failed to comply with any other obligation
hereunder (or, if a Default, Event of Default or failure to comply with any
other obligation hereunder shall have occurred, describing with particularity
all such Defaults, Events of Default or failures to comply with any other
obligation hereunder of which such Officer may have knowledge, including, but
not limited to, their status and what action the Company is taking or proposes
to take with respect thereto).
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the Company shall
deliver to the Trustee within 120 days after the end of each fiscal year a
written statement by the Company's independent certified public accountants
stating (A) that their audit examination has included a reading of the relevant
provisions of this Indenture and the Securities as they relate to accounting
matters, and (B) whether, in connection with their audit examination, any
Default or Event of Default has come to their attention as they relate to
accounting matters and if such a Default or Event of Default has come to their
attention, specifying the nature and period of existence thereof; PROVIDED that,
without any restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default or Event of Default that would
not be disclosed in the course of an audit examination conducted in accordance
with generally accepted auditing standards.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto.
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SECTION 4.7 REPORTS.
(a) The Company shall deliver to the Trustee and mail to each Holder,
within 15 days after the filing of the same with the SEC, copies of its annual
report and of the information, documents and other reports, if any, which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. The Company shall also comply with the other provisions of TIA
Section 314(a).
(b) If the Company ceases to be subject to the requirements of such
Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC, to
the extent permitted, and distribute to the Trustee and to each Holder copies of
the quarterly and annual financial information that would have been required to
be filed with the SEC pursuant to the Exchange Act had the Company been subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act. All
such financial information shall include consolidated financial statements
(including footnotes) prepared in accordance with GAAP. Such annual financial
information shall also include an opinion thereon expressed by an independent
accounting firm of established national reputation. All such consolidated
financial statements shall be accompanied by a "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The financial
information to be distributed to Holders shall be filed with the Trustee and
mailed to the Holders at their respective addresses appearing in the register of
the Securities maintained by the Registrar, within 120 days after the end of the
Company's fiscal year and within 60 days after the end of each of the first
three quarters of each such fiscal year.
SECTION 4.8 LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on account of the Company's Capital Stock or other Equity
Interests (other than dividends or distributions payable in Equity Interests
(other than Redeemable Stock) of the Company), (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company or
(iii) make any Investment (other than a Permitted Investment) (the foregoing
actions set forth in clauses (i) through (iii) being referred to as "Restricted
Payments"), if:
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(a) a Default or Event of Default shall have occurred and be
continuing at the time of such Restricted Payment or shall occur
immediately after giving effect thereto; or
(b) immediately after such Restricted Payment and after giving effect
thereto on a PRO FORMA basis, the Company could not incur at least $1.00 of
additional Indebtedness pursuant to the first paragraph of Section 4.9
(without giving effect to clauses (i) through (xvi) of the second paragraph
thereof); or
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made after the 8 7/8% Issue Date exceeds the sum of (1)
50% of the amount of the Adjusted Consolidated Net Income of the Company
for the period (taken as one accounting period) from January 1, 1997
through the end of the Company's fiscal quarter ending immediately prior to
the time of such Restricted Payment (or, if Adjusted Consolidated Net
Income for such period is a deficit, 100% of such deficit) PLUS (2) 100% of
the aggregate amounts contributed to the capital of the Company from and
after the 8 7/8% Issue Date PLUS (3) 100% of the aggregate net cash
proceeds and the fair market value, as determined in good faith by the
Board of Directors of the Company, of property other than cash received by
the Company from and after the 8 7/8% Issue Date from the issue or sale of
Equity Interests of the Company (other than such Equity Interests issued or
sold to a Restricted Subsidiary and other than Redeemable Stock) or any
Indebtedness or security convertible into or exchangeable for any such
Equity Interest that has been so converted or exchanged (excluding the net
cash proceeds from issuances and sales of Equity Interests financed,
directly or indirectly, using borrowed funds from the Company or any
Restricted Subsidiary until and to the extent such borrowing is repaid)
PLUS (4) $75.0 million.
The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at the date of
declaration thereof such payment would have complied with the provisions of this
Indenture; (ii)(A) the retirement of any Equity Interests of the Company (the
"Retired Equity Interests") either in exchange for or out of the net proceeds of
the substantially concurrent sale (other than to a Restricted Subsidiary) of
other Equity Interests of the Company (the "Refunding Equity Interests") other
than any Redeemable Stock and (B) if the Retired Equity Interest consti-
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tuted Qualified Preferred Stock, the declaration and payment of dividends on the
Refunding Equity Interest in an aggregate amount per year no greater than the
aggregate amount of dividends per year that was declarable and payable on such
Retired Equity Interest immediately prior to such retirement to the extent such
Refunding Equity Interest is designated to be Qualified Preferred Stock by the
Company at the time of its issuance; (iii) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company
issued to employees, officers or directors of the Company and its Subsidiaries
pursuant to agreements containing provisions for the repurchase of such Equity
Interests upon death, disability or termination of employment or directorship of
such Persons, or in accordance with the Company's insider trading policy, not to
exceed $5.0 million in any fiscal year PLUS the aggregate cash proceeds from any
reissuance during such fiscal year of Equity Interests by the Company to
employees, officers or directors of the Company and its Subsidiaries PLUS the
aggregate cash proceeds from any payments on life insurance policies with
respect to any employees, officers or directors of the Company and its
Subsidiaries which proceeds are used to purchase the Equity Interests of the
Company held by any such employees, officers or directors; (iv) the declaration
and payment of dividends to holders of any class or series of the Company's
preferred stock issued after the Issue Date (including, without limitation, the
declaration and payment of dividends on Refunding Equity Interests in excess of
the dividends declarable and payable thereon pursuant to clause (ii) of this
paragraph); PROVIDED that at the time of such issuance the Company's Fixed
Charge Coverage Ratio for the four full fiscal quarters ending immediately prior
to the date of such issuance would have been at least 1.25 to 1, determined on a
PRO FORMA basis as if such issuance was at the beginning of such four-quarter
period, and at the time of issuance, such preferred stock is designated by the
Company to be Qualified Preferred Stock; and (v) an Investment in any
Unrestricted Subsidiary either in exchange for Equity Interests of the Company
(other than Redeemable Stock) or out of the proceeds of the sale (other than to
a Restricted Subsidiary) of Equity Interests of the Company (other than
Redeemable Stock) received by the Company not more than 12 months prior to the
date of such Investment (to the extent such sale of Equity Interests has not
previously been included in any calculation under clause (c) above for purposes
of permitting a Restricted Payment); PROVIDED that, in the cases of clauses
(iii) (other than with respect to the repurchase of Equity Interests with
insurance proceeds), (iv) and (v), no Default or Event of Default shall have
occurred and be continuing at the
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time of such Restricted Payment or shall occur immediately after giving effect
thereto.
In determining the aggregate amount expended for Restricted Payments
in accordance with clause (c) above, (1) no amounts expended under clause (iii)
(only with respect to the use of insurance proceeds to repurchase Equity
Interests) of the immediately preceding paragraph shall be included and (2) 100%
of the amounts expended under clauses (i), (ii), (iii) (other than with respect
to the repurchase of Equity Interests with insurance proceeds), (iv) and (v) of
the immediately preceding paragraph shall be included.
SECTION 4.9 LIMITATION ON ADDITIONAL INDEBTEDNESS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to any
Indebtedness unless the Company's Fixed Charge Coverage Ratio for its four full
fiscal quarters ending immediately prior to the date such additional
Indebtedness is created, incurred, issued, assumed or guaranteed would have been
at least 2.25 to 1, determined on a PRO FORMA basis (including a pro forma
application of the net proceeds of such Indebtedness) as if the additional
Indebtedness had been created, incurred, issued, assumed or guaranteed at the
beginning of such four-quarter period.
The foregoing limitations will not apply to the incurrence of (i)
Indebtedness pursuant to the Credit Agreement in an amount equal to $475.0
million; (ii) Existing Indebtedness, including the 8-7/8% Notes; (iii)
Indebtedness represented by the Securities in an aggregate principal amount
equal to $250.0 million; (iv) Capital Lease Obligations; (v) Indebtedness
constituting purchase money obligations for property acquired in the ordinary
course of business or other similar financing transactions; (vi) Indebtedness
incurred in connection with capital expenditures not to exceed 6% of the
Company's consolidated net sales (as set forth in the Company's consolidated
statement of operations, as determined in accordance with GAAP) in any fiscal
year; (vii) Indebtedness constituting reimbursement obligations with respect to
letters of credit, including, without limitation, letters of credit in respect
of workers' compensation claims, issued for the account of the Company or a
Restricted Subsidiary in the ordinary course of business, or other Indebtedness
with respect to reimbursement-type obligations regarding workers' compensation
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claims; (viii) additional Indebtedness in an aggregate principal amount up to
$45.0 million at any one time outstanding for the Company and its Restricted
Subsidiaries; (ix) Indebtedness created, incurred, issued, assumed or given in
exchange for, or the proceeds of which are used, to extend, refinance, renew,
replace, substitute or refund any Indebtedness permitted under this Indenture or
any Indebtedness issued to so extend, refinance, renew, replace, substitute or
refund such Indebtedness, including any additional Indebtedness incurred to pay
premiums and fees in connection therewith (the "Refinancing Indebtedness");
PROVIDED that (A) the principal amount of such Refinancing Indebtedness shall
not exceed the outstanding principal amount of Indebtedness (including unused
commitments) so extended, refinanced, renewed, replaced, substituted or refunded
PLUS any amounts incurred to pay premiums and fees in connection therewith, (B)
in the case of Refinancing Indebtedness for Indebtedness permitted under clause
(ii) of this paragraph (other than Senior Indebtedness), the Refinancing
Indebtedness shall have an Average Life equal to or greater than the Average
Life of the Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded and (C) to the extent such Refinancing Indebtedness
refinances Indebtedness subordinated to the Securities, such Refinancing
Indebtedness is subordinated to the Securities at least to the same extent as
the Indebtedness being extended, refinanced, renewed, replaced, substituted or
refunded; (x) intercompany Indebtedness incurred in connection with Investments
in Unrestricted Subsidiaries; PROVIDED that such Investments are permitted by
Section 4.8; (xi) Indebtedness under Raw Material Hedge Agreements; (xii)
Indebtedness under Currency Agreements and Interest Rate Agreements; PROVIDED
that in the case of Currency Agreements which relate to other Indebtedness, such
Currency Agreements do not increase the Indebtedness of the Company outstanding
other than as a result of fluctuations in foreign currency exchange rates;
(xiii) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn against
insufficient funds in the ordinary course of business; (xiv) Indebtedness
between the Company and any Restricted Subsidiary or between Restricted
Subsidiaries; (xv) guarantees by Restricted Subsidiaries of Indebtedness of the
Company or any Restricted Subsidiary if the Indebtedness so guaranteed is
permitted under this Indenture; and (xvi) the Company's Obligations arising from
the repurchase, redemption or other acquisition of Equity Interests from
employees, officers or directors of the Company and its Subsidiaries to the
extent permitted by Section 4.8.
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Notwithstanding anything in this Indenture to the contrary, the consummation of
the transactions contemplated by the Receivables Financing shall not be deemed
to be the incurrence of Indebtedness by the Company or by any Restricted
Subsidiary.
SECTION 4.10 DIVIDENDS AND PAYMENT RESTRICTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock, or any other interest or participation in, or measured by,
its profits, owned by the Company or any of its Restricted Subsidiaries, or pay
any Indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii)
make loans or advances to the Company or any of its Restricted Subsidiaries or
(iii) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of: (A) the terms (as in effect on the Issue Date) of
Existing Indebtedness, (B) the terms (as in effect on the Issue Date) of the
Credit Agreement, (C) the terms of Indebtedness of the Company or any of its
Restricted Subsidiaries incurred in accordance with Section 4.9; PROVIDED that
the terms of any such Indebtedness constitute no greater encumbrance or
restriction on the ability of any Restricted Subsidiary to pay dividends or make
distributions, make loans or advances or transfer properties or assets than the
encumbrances or restrictions imposed by the terms of the Credit Agreement as in
effect on the Issue Date, (D) the terms of the indenture governing the 8 7/8%
Notes, the 8 7/8% Notes, this Indenture and the Securities, (E) applicable law,
(F) customary non-assignment provisions entered into in the ordinary course of
business and consistent with past practices, (G) the terms of purchase money
obligations for property acquired in the ordinary course of business, but only
to the extent that such purchase money obligations restrict or prohibit the
transfer of the property so acquired, (H) any encumbrance or restriction with
respect to a Restricted Subsidiary that was not a Restricted Subsidiary on the
Issue Date, which encumbrance or restriction is in existence at the time such
Person becomes a Restricted Subsidiary or is created on the date it becomes a
Restricted Subsidiary, (I) any encumbrance or restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement which has been entered
into for the sale or disposition of all or substantially all the
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Capital Stock or assets of such Restricted Subsidiary, (J) the terms of the
Receivables Financing or (K) any encumbrance or restriction existing under any
amendment to, and any agreement which refinances or replaces, the agreements
described in clauses (A), (B), (C), (D), (H) and (J); PROVIDED that the terms
and conditions of any such encumbrances or restrictions contained in any such
amendment or agreement as determined in good faith by the Board of Directors of
the Company constitute no greater encumbrance or restriction on the ability of
any Restricted Subsidiary to pay dividends or make distributions, make loans or
advances or transfer properties or assets than those under or pursuant to the
agreement evidencing the Indebtedness or obligations so amended, refinanced or
replaced. Nothing contained in this covenant shall prevent the Company or a
Restricted Subsidiary from entering into any agreement permitting or providing
for the incurrence of Liens otherwise permitted by Section 4.11.
SECTION 4.11 LIMITATION ON LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (other than Permitted Liens) upon any asset now owned or
hereafter acquired by it, or any income or profits therefrom or assign or convey
any right to receive income therefrom. Notwithstanding the foregoing, the
Company or any Restricted Subsidiary may create or assume any Lien upon its
properties or assets if the Company shall cause the Securities to be equally and
ratably secured with all other Indebtedness secured by such Lien for so long as
such other Indebtedness shall be so secured.
SECTION 4.12 LIMITATION ON ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate any Asset Sale that results
in Net Proceeds in excess of $1.5 million (including the sale of any of the
Capital Stock of any Restricted Subsidiary) unless such Asset Sale is for fair
market value as determined by the Board of Directors acting reasonably and in
good faith and the Company or any Restricted Subsidiary applies the Net Proceeds
from such Asset Sale to one or more of the following in such combination as it
shall choose: (a) an investment in assets (including Capital Stock or other
securities purchased in connection with the acquisition of Capital Stock or
property of another Person) used or useful in businesses similar or ancillary to
the business of the Company or its Restricted Subsidiaries as conducted at the
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time of such Asset Sale; PROVIDED that such investment occurs on or prior to the
366th day following the date of such Asset Sale (the "Asset Sale Payment Date");
(b) a Net Proceeds Offer (as defined below) expiring on or prior to the Asset
Sale Payment Date; or (c) in the case of an Asset Sale by the Company, the
purchase, redemption or other prepayment or repayment of outstanding Senior
Indebtedness on or prior to the Asset Sale Payment Date and, in the case of an
Asset Sale by any Restricted Subsidiary, the purchase, redemption or other
prepayment or repayment of any Indebtedness of such Restricted Subsidiary on or
prior to the Asset Sale Payment Date; PROVIDED that any prepayment or repayment
of amounts outstanding under the Credit Agreement in excess of $20.0 million in
the aggregate after the Issue Date shall be a permanent reduction in the
commitment thereunder in the amount of such excess. Notwithstanding the
foregoing, in the event such Net Proceeds, after giving effect to any investment
or payment permitted by clause (a) or (c) above (the "Excess Proceeds"), are
less than $15.0 million, the application of the Excess Proceeds to a Net
Proceeds Offer may be deferred until such time as the Excess Proceeds, plus the
aggregate amount of any subsequent Net Proceeds not otherwise invested or
applied to repay amounts outstanding under the Senior Indebtedness of the
Company or under the Indebtedness of any Restricted Subsidiary, as the case may
be, as permitted by clause (a) or (c) above, are at least equal to $15.0
million, at which time the Company shall apply all the Excess Proceeds to a Net
Proceeds Offer. Upon completion of a Net Proceeds Offer, the amount of Excess
Proceeds shall be reset at zero.
For purposes of clause (b) of the preceding paragraph, the Company
will apply that portion of the Net Proceeds of the Asset Sale required to make a
tender offer in accordance with applicable law (a "Net Proceeds Offer") to
repurchase Securities at a price not less than 100% of the principal amount
thereof plus accrued and unpaid interest to the date of repurchase, which date
shall be no earlier than 30 days nor later than 45 days after the date of
mailing of the Net Proceeds Offer (the "Net Proceeds Payment Date"). The
Company may, at its option, receive credit against any Net Proceeds Offer for
the principal amount of Securities acquired by the Company or any of its
Subsidiaries and surrendered for cancellation within six months prior to or at
any time after the date of such Asset Sale relating to such Net Proceeds Offer
and before the Net Proceeds Payment Date. Any Net Proceeds Offer will be made
by the Company only if and to the extent permitted under, and subject to prior
compliance with, the terms of any agreement governing Senior Indebtedness of the
Company or Indebtedness of a
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Restricted Subsidiary, as the case may be. If the Company commences a Net
Proceeds Offer and securities of the Company ranking PARI PASSU in right of
payment with the Securities are outstanding at the commencement of such Net
Proceeds Offer and the terms of such securities provide that a similar offer
must be made with respect thereto, then the Net Proceeds Offer for the
Securities shall be made concurrently with such other offer and securities of
each issue will be accepted PRO RATA in proportion to the aggregate principal
amount of securities of each issue which the holders of securities of such issue
elect to have purchased. After the last date on which Holders are permitted to
tender their Securities in a Net Proceeds Offer, the Company will not be
restricted under this Section 4.12 as to its use of any remaining Net Proceeds
available to make such Net Proceeds Offer but not used to redeem Securities
pursuant hereto.
Notwithstanding the foregoing, if, at the time of an Asset Sale by the
Company or any Restricted Subsidiary, the Company's Fixed Charge Coverage Ratio
for the four fiscal quarter period ending immediately prior to the date of such
Asset Sale would have been at least 2.75 to 1, determined on a PRO FORMA basis
as if such Asset Sale occurred at the beginning of such four-quarter period,
then any Net Proceeds received will not be subject to this Section 4.12.
At such time as the Company determines to make a Net Proceeds Offer,
it shall so notify the Trustee in writing. Within 15 days thereafter, it shall
mail or cause the Trustee to mail (in the Company's name and at its expense)
notice of a Net Proceeds Offer to the Holders of the Securities at their last
registered addresses with a copy to the Trustee and the Paying Agent. The Net
Proceeds Offer shall remain open from the time of mailing for at least 20
Business Days and until the close of business on the third Business Day prior to
the Net Proceeds Payment Date. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Securities pursuant to the
Net Proceeds Offer. The notice, which shall govern the terms of the Net
Proceeds Offer, shall state:
(i) that the Net Proceeds Offer is being made pursuant to this
Section 4.12;
(ii) the purchase price (including the amount of accrued and unpaid
interest, if any) for each Security and the Net Proceeds Payment Date;
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(iii) that any Security not tendered or accepted for payment will
continue to accrue interest in accordance with the terms thereof;
(iv) that any Security accepted for payment pursuant to the Net
Proceeds Offer shall cease to accrue interest after the Net Proceeds
Payment Date unless the Company shall fail to make payment therefor;
(v) that Holders electing to have Securities purchased pursuant to
a Net Proceeds Offer will be required to surrender their Securities to the
Paying Agent at the address specified in the notice prior to 5:00 p.m., New
York City time, on the third Business Day immediately preceding the Net
Proceeds Payment Date and must complete any form letter of transmittal
proposed by the Company and acceptable to the Trustee and the Paying Agent;
(vi) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than 5:00 p.m., New York City time, on
the third Business Day immediately preceding the Net Proceeds Payment Date,
a telex or facsimile transmission (confirmed by overnight delivery of the
original thereof) or letter setting forth the name of the Holder, the
principal amount of Securities the Holder delivered for purchase, the
Security certificate number (if any) and a statement that such Holder is
withdrawing his election to have such Securities purchased;
(vii) that if Securities in a principal amount in excess of the
Holders' PRO RATA share of the Net Proceeds are tendered pursuant to a Net
Proceeds Offer, the Company shall purchase Securities on a PRO RATA basis
among the Securities tendered (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of
$1,000 or integral multiples of $1,000 shall be acquired);
(viii) that Holders whose Securities are purchased only in part will
be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered; and
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(ix) the instructions that Holders must follow in order to tender
their Securities.
On or before the Net Proceeds Payment Date, the Company shall (i)
accept for payment, on a PRO RATA basis among the Securities, Securities or
portions thereof tendered pursuant to the Net Proceeds Offer, (ii) deposit with
the Paying Agent money, in immediately available funds, in an amount sufficient
to pay the purchase price of all Securities or portions thereof so tendered and
accepted and (iii) deliver to the Paying Agent the Securities so accepted
together with an Officers' Certificate setting forth the Securities or portions
thereof tendered to and accepted for payment by the Company. The Paying Agent
shall promptly mail or deliver to Holders of Securities so accepted payment in
an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Company
to the Holder thereof. The Company will publicly announce the results of the
Net Proceeds Offer on the first Business Day following the Net Proceeds Payment
Date. To the extent the Holders' PRO RATA portion of a Net Proceeds Offer is
not fully subscribed to by such Holders, the Company may retain such unutilized
portion of the Net Proceeds. The Paying Agent shall promptly deliver to the
Company the balance of any moneys held by the Paying Agent after payment to the
Holders of Securities as aforesaid.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations (including Rule 14e-1 under the Exchange Act) in connection with
the repurchase of Securities pursuant to a Net Proceeds Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.12, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.12 by virtue thereof.
SECTION 4.13 TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transaction (including,
without limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate, except for (i) transactions
(including any investments, loans or advances by or to any Af-
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filiate) the terms of which in good faith are fair and reasonable to the Company
or such Restricted Subsidiary, as the case may be, and are at least as
favorable as the terms that could be obtained by the Company or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an arm's
length basis between unaffiliated parties (as determined by the Board of
Directors of the Company acting reasonably and in good faith, as evidenced by a
resolution of such Board of Directors); PROVIDED that, in the case of any
transaction with an Affiliate involving aggregate consideration in excess of
$10.0 million, either (A) such transaction is entered into in the ordinary
course of the business of the Company or its Restricted Subsidiaries, (B) a
majority of the directors of the Company unaffiliated with such Affiliate or, if
there are no such directors, a majority of the directors of the Company approve
such transaction or (C) the Company or such Restricted Subsidiary, as the case
may be, delivers to the Trustee and the Holders a written opinion of a
nationally recognized investment banking firm stating that such transaction is
fair to the Company or such Restricted Subsidiary from a financial point of
view, (ii) payments by the Company or any of its Restricted Subsidiaries made
pursuant to any financial advisory, financing, underwriting or placement
agreement; PROVIDED that the terms of any such arrangement or agreement shall be
on terms which in good faith are fair and reasonable to the Company or such
Restricted Subsidiary, as the case may be (as determined by the Board of
Directors of the Company acting reasonably and in good faith, as evidenced by a
resolution of such Board of Directors), (iii) any Restricted Payment not
otherwise prohibited under Section 4.8, (iv) the payment of reasonable and
customary regular fees to directors of the Company and its Subsidiaries who are
not employees of the Company or its Subsidiaries, (v) advances or loans to
employees, officers and directors of the Company and its Subsidiaries permitted
by clauses (iii) and (iv) of the definition of Permitted Investments and (vi)
transactions between or among any of the Company and its Restricted
Subsidiaries.
SECTION 4.14 LIMITATION ON CREATION OF SENIOR SUBORDINATED DEBT.
The Company shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is expressly by its terms
subordinate or junior in right of payment to any Senior Indebtedness and senior
in any respect in right of payment to the Securities.
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SECTION 4.15 CHANGE OF CONTROL.
In the event of a Change of Control (the date of such occurrence being
the "Change of Control Date"), if either (i) the Company does not redeem
Securities pursuant to the third paragraph of Paragraph 5 of the Securities or
(ii) such Change of Control occurs after December 1, 2003, the Company shall
notify the Holders in writing of such occurrence and shall make an offer to
purchase (the "Change of Control Offer"), on a Business Day (the "Change of
Control Payment Date") not later than 60 days following the Change of Control
Date, all Securities then outstanding at a purchase price (the "Change of
Control Purchase Price") equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the Change of Control Payment Date.
Notice of a Change of Control Offer shall be mailed by the Company not
less than 30 days nor more than 45 days before the Change of Control Payment
Date to the Holders of Securities at their last registered addresses with a copy
to the Trustee and the Paying Agent. The Change of Control Offer shall remain
open from the time of mailing for at least 20 Business Days and until 5:00 p.m.,
New York City time, on the third Business Day prior to the Change of Control
Payment Date. The notice, which shall govern the terms of the Change of Control
Offer, shall include such disclosures as are required by law and shall state:
(a) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Securities will be accepted for payment;
(b) the purchase price (including the amount of accrued and unpaid
interest, if any) for each Security and the Change of Control Payment Date;
(c) that any Security not tendered for payment will continue to
accrue interest in accordance with the terms thereof;
(d) that any Security accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Payment Date unless the Company shall fail to make payment therefor;
(e) that Holders electing to have Securities purchased pursuant to a
Change of Control Offer will be required to surrender their Securities to
the Paying Agent
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at the address specified in the notice prior to 5:00 p.m., New York City
time, on the third Business Day prior to the Change of Control Payment
Date and must complete any form letter of transmittal proposed by the
Company and acceptable to the Trustee and the Paying Agent;
(f) that Holders of Securities will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York
City time, on the third Business Day prior to the Change of Control Payment
Date, a telex or facsimile transmission (confirmed by overnight delivery of
the original thereof) or letter setting forth the name of the Holder, the
principal amount of Securities the Holder delivered for purchase, the
Security certificate number (if any) and a statement that such Holder is
withdrawing his election to have such Securities purchased;
(g) that Holders whose Securities are purchased only in part will be
issued Securities equal in principal amount to the unpurchased portion of
the Securities surrendered;
(h) the instructions that Holders must follow in order to tender
their Securities; and
(i) a brief description of the events resulting in such Change of
Control (including, but not limited to, information with respect to PRO
FORMA historical financial information after giving effect to such Change
of Control, information regarding the Persons acquiring control and such
Person's business plans going forward, in each such case to the extent
available and not subject to confidentiality restrictions).
On the Change of Control Payment Date, the Company shall (i) accept
for payment Securities or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Securities or portions thereof so tendered and accepted
and (iii) deliver to the Trustee the Securities so accepted together with an
Officers' Certificate setting forth the Securities or portions thereof tendered
to and accepted for payment by the Company. The Paying Agent shall promptly
mail or deliver to the Holders of Securities so accepted payment in an amount
equal to the purchase price, and the Trustee shall promptly authenticate and
mail or deliver to such Holders a new Security equal in principal amount to any
unpurchased portion
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of the Security surrendered. Any Securities not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company will
publicly announce the results of the Change of Control Offer not later than the
first Business Day following the Change of Control Payment Date.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act, and any other securities laws
or regulations (including Rule 14e-1 under the Exchange Act) in connection with
the purchase of Securities pursuant to a Change of Control Offer. To the extent
that the provisions of any securities laws or regulations conflict with
provisions of this Section 4.15, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.15 by virtue thereof.
SECTION 4.16 WAIVER OF STAY; EXTENSION OF USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Securities as contemplated herein
or in the Securities, wherever enacted, now or at any time hereafter in force,
or that may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 4.17 MAINTENANCE OF INSURANCE.
The Company shall, and shall cause each of its Subsidiaries to, keep
at all times all of their respective properties and assets which are of an
insurable nature (as determined by reference to industry standards) insured
reasonably and appropriately as prudent business judgment would require against
loss or damage and shall obtain such other reasonable and appropriate insurance
as is required or so appropriate for the nature of the business and other risks
encountered by the Company and its Subsidiaries, in each case with insurers
reasonably and in good faith believed by the Company to be responsible
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and financially sound, to the extent that insurance of a similar character and
nature is usually so obtained by corporations similarly situated and that are
at any such time conducting business substantially similar to that of the
Company and its Subsidiaries in accordance with prudent business practices.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 LIMITATION ON MERGERS, CONSOLIDATIONS OR SALES OF
ASSETS.
The Company shall not in a single transaction or a series of related
transactions consolidate with or merge with or into another Person, or directly
or indirectly sell, transfer, lease or convey substantially all of its
properties and assets to another Person (except any Restricted Subsidiary;
PROVIDED that in connection with any merger of the Company with any such
Restricted Subsidiary, no consideration (other than common stock in the
surviving corporation or the Company) shall be issued or distributed to the
stockholders of the Company), or permit any Person to merge with or into it
unless: (i) the Company shall be the continuing Person, or the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or to which the properties and assets of the Company are transferred
shall be a corporation or partnership organized and existing under the laws of
the United States or any State thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture, executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, all of the obligations
of the Company under the Securities and this Indenture; (ii) immediately before
and immediately after giving effect to such transaction or series of
transactions, no Default or Event of Default under this Indenture shall have
occurred and be continuing; and (iii) immediately before and immediately after
giving effect to such transaction or series of transactions on a PRO FORMA basis
(including, without limitation, any Indebtedness incurred or assumed in
anticipation of or in connection with such transaction or series of
transactions), the Company could incur $1.00 of additional Indebtedness under
the first paragraph of Section 4.9 (without giving effect to clauses (i) through
(xvi) of the second paragraph thereof).
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SECTION 5.2 SUCCESSOR ENTITY SUBSTITUTED.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.1,
the successor Person formed by such consolidation or into which the Company is
merged or to which such transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company
herein; and thereafter, except in the case of a lease, the Company shall be
discharged from all obligations and covenants under this Indenture and the
Securities.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT.
"Event of Default", whenever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether or
not it shall be occasioned or prohibited by the provisions of Article X 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):
(i) a default in the payment of interest on any Security when the
same shall become due and payable and the continuance of such default for a
period of 30 days or more; or
(ii) a default in the payment of all or any part of the principal
of any Security when and as the same shall become due and payable at
maturity, or upon acceleration, redemption, or otherwise, including default
in the payment of the purchase price required to be offered in a Net
Proceeds Offer and a Change of Control Offer; or
(iii) a failure by the Company and its Subsidiaries to comply with
any of the other agreements or covenants in or provisions of the Securities
or this Indenture which failure continues for the period and after the
notice specified below;
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(iv) a default under any mortgage, indenture or instrument under
which there may be issued or evidenced any Indebtedness for borrowed money
by the Company or any of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Restricted Subsidiaries)
whether such Indebtedness or guarantee is now existing or hereafter created
if either (x) such default results from the failure to pay the final
scheduled principal installment in an amount of at least $15.0 million in
respect of any such Indebtedness on the stated maturity date thereof (after
giving effect to any applicable grace periods) or (y) as a result of such
default the maturity of such Indebtedness has been accelerated prior to its
express maturity, and the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness with respect to
which the principal amount remains unpaid upon its final maturity (after
giving effect to any extension of such maturity date by the holder of such
Indebtedness and the expiration of any applicable grace period) or the
maturity of which has been so accelerated, aggregates $15.0 million or
more;
(v) a final judgment or final judgments for the payment of money,
or the issuance of any warrant of attachment against any portion of the
property or the assets of the Company or any of its Restricted
Subsidiaries, that in the aggregate, equal or exceed $15.0 million at any
one time shall be entered against the Company or any of its Restricted
Subsidiaries and such judgment or judgments or warrant of attachment shall
not be discharged, satisfied, stayed, annulled or rescinded within 60 days
of being entered, or in the case of any final judgment which provides for
payment over time, from any applicable payment date;
(vi) the Company or any Significant Restricted Subsidiary pursuant
to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding;
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(B) consents to the entry of an order for relief against it
in an involuntary case or proceeding;
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property;
(D) makes a general assignment for the benefit of its
creditors;
(E) files an answer or consent seeking reorganization or
relief; or
(F) shall generally not pay its debts as such debts become
due or shall admit in writing its inability to pay its debts
generally; or
(vii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Restricted Subsidiary as a debtor in an involuntary case or
proceeding;
(B) appoints a Custodian of the Company or any Significant
Restricted Subsidiary or a Custodian for all or substantially all of
their respective properties; or
(C) orders the liquidation of the Company or any
Significant Restricted Subsidiary;
and in each case the order or decree remains unstayed and in effect
for 60 days.
A Default under clause (iii) is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal amount
of the then outstanding Securities notify the Company and the Trustee, in
writing of the Default and the Company does not cure the Default within 45 days
after receipt of the notice. The notice must specify the Default, demand that
it be remedied and state that the notice is a "Notice of Default."
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SECTION 6.2 ACCELERATION.
If an Event of Default (other than an Event of Default specified in
Section 6.1(vi) or (vii) above with respect to the Company) occurs and is
continuing, then, and in every such case, unless the principal of all the
Securities shall have already become due and payable, either the Trustee or the
Holders of not less than 25% in aggregate principal amount of the then
outstanding Securities, by notice in writing to the Company (and to the Trustee
if given by Holders), may declare all of the unpaid principal of and accrued
interest thereon to be due and payable immediately. In the event of a
declaration of acceleration because of an Event of Default described in clause
(iv) of Section 6.1 above has occurred and is continuing, such declaration of
acceleration shall be automatically annulled if such payment default is cured or
waived or the holders of the Indebtedness which is the subject of such event of
default have rescinded their declaration of acceleration in respect of such
Indebtedness within 60 days thereof and the Trustee has received written notice
of such cure, waiver or rescission and no other Event of Default described in
clause (iv) of Section 6.1 above has occurred that has not been cured or waived
within 60 days of the declaration of such acceleration in respect thereof and if
(i) the repayment of Indebtedness or annulment of such acceleration, as the case
may be, would not conflict with any judgment or decree of a court of competent
jurisdiction and (ii) all existing Events of Default, except non-payment of
principal or interest which have become due solely due to such acceleration,
have been cured or waived. If an Event of Default specified in Section 6.1(vi)
or (vii) with respect to the Company occurs, all unpaid principal of and accrued
interest due and payable on all the outstanding Securities shall IPSO FACTO
become and be immediately due and payable without any declaration, notice or
other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained, the
Holders of a majority in aggregate principal amount of the then outstanding
Securities, by written notice to the Company and the Trustee, may waive, on
behalf of all Holders, a Default or an Event of Default if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all overdue interest on all Securities, (ii) the
principal of any Securities which would become due otherwise than by such
declaration of acceleration, and interest thereon at the rate borne by the
Securities, (iii) to the extent that payment of such interest is lawful,
interest on overdue interest at the rate borne by the
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Securities and (iv) all sums paid or advanced by the Trustee under this
Indenture and the compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the principal
of the Securities which have become due solely by such declaration of
acceleration, have been cured or waived. Notwithstanding the previous
sentence, no waiver shall be effective for any Default or Event of Default
in the payment of the principal of or interest on any Security held by a
nonconsenting Holder or any Default or Event of Default with respect to any
covenant or provision which cannot be modified or amended without the
consent of the Holder of each then outstanding Security, unless all such
affected Holders agree, in writing, to waive such Default or Event of
Default. No such waiver shall cure or waive any subsequent default or
impair any right consequent thereon.
In the event that the maturity of the Securities is accelerated
pursuant to this Section 6.2, 100% of the principal amount thereof plus accrued
interest to the date of payment shall become due and payable.
SECTION 6.3 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding, 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 judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
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SECTION 6.4 WAIVER OF PAST DEFAULT.
Subject to Sections 6.7 and 9.2, prior to the declaration of
acceleration of the maturity of the Securities, the Holder or Holders of not
less than a majority in aggregate principal amount of the Securities at the time
outstanding by written notice to the Company and the Trustee may waive on behalf
of all the Holders any past default under this Indenture and its consequence,
except a default in the payment of principal of or interest on any Security or a
default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding Security affected
pursuant to Section 9.2.
SECTION 6.5 CONTROL BY MAJORITY.
The Holders of a majority in aggregate principal amount of the then
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it, including, without limitation, any remedies provided for
in Section 6.3. However, the Trustee may refuse to follow any direction that
conflicts with law, the Securities or this Indenture, or that the Trustee
determines may be unduly prejudicial to the rights of another Securityholder or
that may involve the Trustee in personal liability.
SECTION 6.6 LIMITATION ON SUITS.
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(a) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to pursue a
remedy;
(c) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity reasonably satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 30 days after
receipt of the request and the offer of indemnity; and
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(e) during such 30-day period the Holders of at least a majority in
principal amount of the then outstanding Securities do not give the Trustee
a direction which is inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Security, on or
after the respective due dates expressed in the Security, or to bring suit for
the enforcement of any such payment on or after such respective dates, is
absolute and unconditional and shall not be impaired or affected without the
consent of such Holder.
SECTION 6.8 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(i) or (ii) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company or any other obligor on the Securities
for the whole amount of principal and accrued interest remaining unpaid,
together with interest overdue on principal and, to the extent that payment of
such interest is lawful, interest on overdue installments of interest, in each
case at the interest rate and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee shall be entitled and empowered to file such proofs of
claim and other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Securityholders allowed in any judicial proceedings
relative to the Company or any of its Subsidiaries (or any other obligor upon
the Securities), its creditors or its property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each
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Securityholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.7. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding.
SECTION 6.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article VI, it
shall pay out such money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Securityholders pursuant to this
Article VI.
SECTION 6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by any Holder, or
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group of Holders, holding in the aggregate more than 10% in principal amount of
the outstanding Securities.
SECTION 6.12 RIGHTS AND REMEDIES CUMULATIVE.
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 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 6.13 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security
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 VI 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.
ARTICLE VII
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties as are specifically
set forth in this Indenture or the TIA and no others and no implied
covenants or obligations shall be read into this Indenture against the
Trustee.
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(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. However,
in the case of any such certificate or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine such certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1.
(ii) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Sections 6.4 and 6.5.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
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SECTION 7.2 RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any document reasonably believed by it to be
genuine and to have been signed or presented by the proper Person. 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,
debenture, note, other evidence of indebtedness or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(b) Before the Trustee acts or refrains from acting with respect to
any matter contemplated by this Indenture, it may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to the provisions
of Section 11.5. The Trustee shall not be liable for any action it takes
or omits to take in good faith in reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent (other
than the negligence or willful misconduct of an agent who is an employee of
the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith and without negligence which it reasonably believes
to be authorized or within its rights or powers conferred upon it by this
Indenture or the TIA.
(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, order or
direction of any of the Holders, pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
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SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual capacity or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the
Company, or its Subsidiaries and Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However,
the Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.4 TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company in this Indenture, or any statement
in the Securities other than the Trustee's certificate of authentication.
SECTION 7.5 NOTICE OF DEFAULTS.
If a Default or an Event of Default with respect to the Securities
occurs and is continuing and is known to a Trust Officer, the Trustee shall mail
to each Holder a notice of the Default or Event of Default within 30 days after
it occurs or, if later, within 10 days after such Default or Event of Default
becomes known to the Trustee, unless such Default or Event of Default has been
cured. Except in the case of a Default or Event of Default in the payment of
principal of or interest on any Security, including an acceleration, and the
failure to make payment when required by Sections 4.12 and 4.15, the Trustee may
withhold the notice to the Holders if and so long as a committee of its Trust
Officers determines in good faith that withholding the notice is in the interest
of the Holders.
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with May 15, 1999, the
Trustee shall transmit to each Securityholder a report dated as of May 15 of the
relevant year that complies with the requirements of TIA Section 313(a). The
Trustee also shall comply with TIA Section 313(b) and TIA Section 313(c) and
(d). A copy of such report at the time of its transmission to Securityholders
shall be filed with the SEC, if required, with each stock exchange, if any, on
which the Securities are listed and with the Company.
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The Company shall promptly notify the Trustee if the Securities become
listed on any stock exchange and the Trustee shall comply with TIA Section
313(d).
SECTION 7.7 COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee, the Paying Agent and the
Registrar from time to time reasonable compensation for their respective
services rendered hereunder. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket
disbursements, expenses and advances (including reasonable fees and expenses of
counsel) incurred or made by each of them in connection with the performance of
its duties under this Indenture. Such expenses shall include the reasonable
compensation, reasonable out-of-pocket disbursements and reasonable expenses of
the Trustee's agents and counsel.
The Company shall indemnify and hold harmless the Trustee and its
agents, employees, officers, directors and shareholders against any claim,
demand, expense (including but not limited to attorneys' fees and expenses),
loss or liability incurred by it arising out of or in connection with the
administration of its duties under this Indenture. The Trustee shall notify the
Company promptly of any claim asserted against it for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall provide
reasonable cooperation at the Company's expense in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel; PROVIDED that the Company will not be required to pay such fees
and expenses if it assumes the Trustee's defense and there is no conflict of
interest between the Company and the Trustee in connection with such defense.
The Company need not pay for any settlement made without its written consent.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through the Trustee's own willful misconduct,
negligence or bad faith.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by it in its capacity as Trustee, except money or property held in
trust to pay principal of or interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(vi) or (vii)
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occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
SECTION 7.8 REPLACEMENT OF TRUSTEE.
The Trustee may resign at any time by so notifying the Company in
writing, such resignation to be effective upon the appointment of a successor
Trustee. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Trustee in writing and may
appoint a successor Trustee with the Company's consent which consent shall not
be unreasonably withheld. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee (subject to the lien provided in Section 7.7), the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 25% in
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principal amount of then outstanding Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association without any further act
shall be the successor Trustee; PROVIDED such corporation shall be otherwise
qualified and eligible under this Article VII.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (2). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b); PROVIDED that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met. The provisions of TIA Section 310 shall apply to the
Company, as obligor of the Securities.
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
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ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1 TERMINATION OF THE COMPANY'S OBLIGATIONS.
The Company may terminate its obligations under the Securities and
this Indenture, except those obligations referred to in the penultimate
paragraph of this Section 8.1, if all Securities previously authenticated and
delivered (other than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment U.S. Legal Tender has
theretofore been deposited with the Trustee or the Paying Agent in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company, as provided in Section 8.5) have been delivered to the Trustee for
cancellation and the Company has paid all sums payable by it hereunder, or if:
(a) either (i) pursuant to Article III, the Company shall have given
notice to the Trustee and mailed a notice of redemption to each Holder of
the redemption of all of the Securities under arrangements satisfactory to
the Trustee for the giving of such notice or (ii) all Securities have
otherwise become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the benefit
of the Holders for that purpose, U.S. Legal Tender in such amount as is
sufficient without consideration of reinvestment of interest, to pay
principal of, premium, if any, and interest on the outstanding Securities
to maturity or redemption; PROVIDED that the Trustee shall have been
irrevocably instructed to apply such U.S. Legal Tender to the payment of
said principal, premium, if any, and interest with respect to the
Securities and, PROVIDED, FURTHER, that from and after the time of deposit,
the money deposited shall not be subject to the rights of holders of Senior
Indebtedness pursuant to the provisions of Article X;
(c) no Default or Event of Default with respect to this Indenture or
the Securities shall have occurred and be continuing on the date of such
deposit or shall occur
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immediately after giving effect to such deposit and such deposit will not
result in a breach or violation of, or constitute a default under, any
other instrument to which the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for or relating to the termination of the Company's
obligations under the Securities and this Indenture have been complied
with. Such Opinion of Counsel shall also state that such satisfaction and
discharge does not result in a default under the Credit Agreement (if then
in effect) or any other material agreement or material instrument then
known to such counsel that binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.5, 2.6, 2.7, 4.1, 4.2, 7.7, 8.5 and 8.6 shall survive until the
Securities are no longer outstanding pursuant to the last paragraph of Section
2.8. After the Securities are no longer outstanding, the Company's obligations
in Sections 7.7, 8.5 and 8.6 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Securities and this Indenture except for those surviving obligations
specified above.
SECTION 8.2 LEGAL DEFEASANCE AND COVENANT DEFEASANCE.
(a) The Company may, at its option by Board Resolution of the Board
of Directors of the Company, at any time, elect to have either paragraph (b) or
(c) below be applied to all outstanding Securities upon compliance with the
conditions set forth in Section 8.3.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.3, be deemed to have been
discharged from its obligations with respect to all outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and dis-
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charged the entire Indebtedness represented by the outstanding Securities, which
shall thereafter be deemed to be "outstanding" only for the purposes of Section
8.4 hereof and the other Sections of this Indenture referred to in (i) and (ii)
below, and to have satisfied all its other obligations under such Securities and
this Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), and Holders of the
Securities and any amounts deposited under Section 8.3 hereof shall cease to be
subject to any obligations to, or the rights of, any holder of Senior
Indebtedness under Article X or otherwise, except for the following provisions,
which shall survive until otherwise terminated or discharged hereunder: (i) the
rights of Holders of outstanding Securities to receive solely from the trust
fund described in Section 8.4 hereof, and as more fully set forth in such
Section, payments in respect of the principal of and interest on such Securities
when and to the extent such payments are due, (ii) the Company's obligations
with respect to such Securities under Article II and Section 4.2 hereof, (iii)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Company's obligations in connection therewith, including Section 7.7 hereof
and (iv) this Article VIII. Subject to compliance with this Article VIII, the
Company may exercise its option under this paragraph (b) notwithstanding the
prior exercise of its option under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.3 hereof, be released from
its obligations under the covenants contained in Sections 4.8 through 4.15 and
Article V hereof with respect to the outstanding Securities on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Securities shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes hereunder
(it being understood that such Securities shall not be deemed outstanding for
accounting purposes) and Holders of the Securities and any amounts deposited
under Section 8.3 hereof shall cease to be subject to any obligations to, or the
rights of, any holder of Senior Indebtedness under Article X or otherwise. For
this purpose, such Covenant Defeasance means that, with respect to the
outstanding Securities, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by
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reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
or Default under Section 6.1(iii) hereof, but, except as specified above, the
remainder of this Indenture and such Securities shall be unaffected thereby. In
addition, upon the Company's exercise under paragraph (a) hereof of the option
applicable to this paragraph (c), subject to the satisfaction of the conditions
set forth in Section 8.3 hereof, Sections 6.1(iii), 6.1(iv) and 6.1(v) shall not
constitute Events of Default.
SECTION 8.3 CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2(b) or 8.2(c) hereof to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, U.S. Legal Tender or U.S. Government
Obligations which through the scheduled payment of principal and interest
in respect thereof in accordance with their terms, will provide, not later
than one day before the due date of any payment on the Securities, U.S.
Legal Tender, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
on the Securities on the stated date for payment thereof or on the
applicable redemption date, as the case may be, of such principal or
installment of principal of or interest on the Securities; PROVIDED that
the Trustee shall have received an irrevocable written order from the
Company instructing the Trustee to apply such U.S. Legal Tender or the
proceeds of such U.S. Government Obligations to said payments with respect
to the Securities;
(b) in the case of an election under Section 8.2(b) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this
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Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders of the Securities will not
recognize income, gain or loss for federal income tax purposes as a result
of such Legal 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 Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.2(c) hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders of the Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) no Default or Event of Default or event which with notice or
lapse of time or both would become a Default or an Event of Default with
respect to the Securities shall have occurred and be continuing on the date
of such deposit (other than a Default or Event of Default resulting from
the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Securities pursuant to this Article VIII
concurrently with such incurrence) or insofar as Sections 6.1(vi) and
6.1(vii) hereof are concerned, at any time in the period ending on the 91st
day after the date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of or constitute a default under this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others;
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(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with; and
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) the trust funds will not be subject to any
rights of any holders of Senior Indebtedness, including, without
limitation, those arising under this Indenture, and (ii) assuming no
intervening bankruptcy or insolvency of the Company between the date of
deposit and the 91st day following the deposit and that no Holder is an
insider of the Company, after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable Bankruptcy Law.
Notwithstanding the foregoing, the Opinion of Counsel required by
clause (b) above of this Section 8.3 need not be delivered if all Securities not
theretofore delivered to the Trustee for cancellation (i) have become due and
payable, (ii) will become due and payable on the Maturity Date within one year
or (iii) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company.
SECTION 8.4 APPLICATION OF TRUST MONEY.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to this Article VIII, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of principal of and
interest on the Securities. The Trustee shall be under no obligation to invest
said U.S. Legal Tender or U.S. Government Obligations except as it may agree
with the Company.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.3 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company
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from time to time upon the Company's request any U.S. Legal Tender or U. S.
Government Obligations held by it as provided in Section 8.3 hereof which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.5 REPAYMENT TO THE COMPANY.
Subject to this Article VIII, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years; PROVIDED that the
Trustee or such Paying Agent, before being required to make any payment, may at
the expense of the Company cause to be published once in a newspaper of general
circulation in the City of New York or mail to each Holder entitled to such
money notice that such money remains unclaimed and that after a date specified
therein which shall be at least 30 days from the date of such publication or
mailing any unclaimed balance of such money then remaining will be repaid to the
Company. After payment to the Company, Holders entitled to such money must look
to the Company for payment as general creditors unless an applicable law
designates another Person.
SECTION 8.6 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with this Article VIII by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article VIII until such time as the Trustee or Paying Agent is
permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in
accordance with this Article VIII; PROVIDED that if the Company has made any
payment of interest on or principal of any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the U.S. Legal
Tender or
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U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by
resolutions of its Board of Directors (copies of which shall be delivered to
the Trustee) and the Trustee may amend or supplement this Indenture or the
Securities without notice to any Holder for any of the following purposes:
(a) to cure any ambiguity, defect or inconsistency herein;
(b) to add to the covenants of the Company for the benefit of the
Holders, or surrender any right or power herein conferred upon the Company;
(c) to provide for collateral for the Securities;
(d) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(e) to effect or maintain the qualification of this Indenture under
the TIA;
(f) to evidence the succession in accordance with Article V hereof of
another Person to the Company and the assumption by any such successor of
the covenants of the Company herein and in the Securities; or
(g) to make any other change that does not adversely affect the
rights of any Holder; PROVIDED that in making such change, the Trustee may
rely upon an Opinion of Counsel stating that such change does not adversely
affect the rights of any Holder.
SECTION 9.2 WITH CONSENT OF HOLDERS.
Subject to Section 6.7 and the provisions of this Section 9.2, the
Company, when authorized by resolution of its Board of Directors (copies of
which shall be delivered to the Trustee), and the Trustee may amend or
supplement this Indenture with the written consent of the Holders of at least a
ma-
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jority in aggregate principal amount of the Securities then outstanding.
Subject to Section 6.7 and the provisions of this Section 9.2, the Holders
of, in the aggregate, at least a majority in principal amount of the then
outstanding Securities affected may waive compliance by the Company with any
provision of this Indenture without notice to any other Securityholder.
However, without the consent of each Securityholder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.4 may not:
(a) reduce the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver of any provision
of this Indenture or the Securities;
(b) reduce the rate or extend the time for payment of interest on any
Security;
(c) reduce the principal amount of any Security, or reduce the
redemption price or the repurchase price pursuant to Section 4.12 or 4.15;
(d) change the Maturity Date, the Net Proceeds Payment Date (other
than in accordance with Section 4.12) or Change of Control Payment Date
(other than in accordance with Section 4.15) of any Security;
(e) alter the redemption provisions of Article III in a manner
adverse to any Holder;
(f) make any changes in the provisions concerning waivers of Defaults
or Events of Default by Holders of the Securities or the rights of Holders
to recover the principal of, interest on, or redemption payment with
respect to, any Security;
(g) make any changes in Section 6.4, 6.7 or this clause (g);
(h) make the principal of, or the interest on, any Security payable
with anything or in any manner other than as provided for in this Indenture
and the Securities as in effect on the Issue Date;
(i) waive a Default or an Event of Default in the payment of
principal of or interest on the Securities or that resulted from failure to
make the payments required by Section 4.12 or 4.15;
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(j) make any change to the subordination provisions of this Indenture
and the Securities in a manner that adversely affects the Holders; or
(k) make any changes relating to (i) the right of the Trustee to file
proof of claim in any bankruptcy or similar proceeding, or (ii) the
limitation on the right of Holders to direct the Trustee to institute legal
proceedings with respect to this Indenture or to such provision.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
Notwithstanding the foregoing, no amendment shall modify any provision
of Article X of the Indenture without the consent of each holder of any then
outstanding Designated Senior Indebtedness.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to or supplement of this Indenture or the Securities
shall be set forth in a supplemental indenture that complies with the TIA as
then in effect.
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of that Security or portion of that Security that evidences the same debt
as the consenting Holder's Security, even if notation of the consent is
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not made on any Security. However, any such Holder or subsequent Holder may
revoke the consent as to his Security or portion of a Security. Such revocation
shall be effective only if the Trustee receives the notice of revocation before
the date the amendment, supplement or waiver becomes effective. Notwithstanding
the above, nothing in this paragraph shall impair the right of any
Securityholder under Section 316(b) of the TIA.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver which record date shall be at least 10 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the second and third sentences of the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to consent to
such amendment, supplement or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such record date. Such
consent shall be effective only for actions taken within 90 days after such
record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder unless it makes a change described in any of clauses
(a) through (k) of Section 9.2. In that case the amendment, supplement or
waiver shall bind each Holder of a Security who has consented to it.
SECTION 9.5 NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may (in accordance with the specific direction of the Company)
request the Holder of the Security to deliver it to the Trustee. The Trustee
may (in accordance with the specific direction of the Company) place an
appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or issue a new Security shall not affect the validity
and effect of such amendment, supplement or waiver.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article IX if the amendment,
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supplement or waiver does not adversely affect the rights, duties or immunities
of the Trustee. If it does, the Trustee may, but need not, sign it. In signing
any amendment, supplement or waiver, the Trustee shall be entitled to receive,
if requested, an indemnity reasonably satisfactory to it and to receive, and
shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article IX is authorized or permitted by this
Indenture. The Company may not sign an amendment until its Board of Directors
approves it.
ARTICLE X
SUBORDINATION
SECTION 10.1 SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company, for itself and its successors, and each Holder, by his
acceptance of Securities, agrees that the payment of the principal of and
interest on the Securities is subordinated, to the extent and in the manner
provided in this Article X, to the prior payment in full in cash or cash
equivalents of all Senior Indebtedness, whether outstanding on the Issue Date or
thereafter incurred, including any interest accruing subsequent to a bankruptcy
or other similar proceeding whether or not such interest is an allowed claim
enforceable against the Company in a bankruptcy case under Title 11 of the
United States Code.
This Article X shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
SECTION 10.2 NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) No direct or indirect payment by or on behalf of the Company of
principal of or interest on the Securities whether pursuant to the terms of the
Securities or upon acceleration or otherwise shall be made if, at the time of
such payment, there exists a default in the payment of all or any portion of
principal of or interest on any Senior Indebtedness, and such default shall not
have been cured or waived or the
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benefits of this sentence waived by or on behalf of the holders of the Senior
Indebtedness. In addition, during the continuance of any other 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 Securities,
the date of such acceleration, no such payment may be made by or on behalf of
the Company upon or in respect of the Securities 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 the Designated
Senior Indebtedness or their Representative who delivered such notice).
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. Not more than one Payment Blockage Period may be
commenced with respect to the Securities during any period of 360 consecutive
days. For all purposes of this paragraph, 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.
(b) In furtherance of the provisions of Section 10.1, in the event
that, notwithstanding the foregoing provisions of this Section 10.2, any payment
on account of principal of or interest on the Securities or to redeem (or make a
deposit in redemption of), defease or acquire any of the Securities shall be
made by or on behalf of the Company and received by the Trustee, by any Holder
or by any Paying Agent (or, if the Company is acting as its own Paying Agent,
money for any such payment shall be segregated and held in trust), at a time
when such payment was prohibited by the provisions of this Section 10.2, then,
unless and until such payment is no longer prohibited by this Section 10.2, such
payment (subject to the provisions of Section 10.6) shall be received and held
in trust by the Trustee or such Holder or Paying Agent for the
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benefit of the holders of Senior Indebtedness or their Representative, ratably
according to the respective amounts of the Senior Indebtedness held or
represented by each, and shall be paid over or delivered to the holders of the
Senior Indebtedness remaining unpaid to the extent necessary to enable payment
in full in cash and cash equivalents to the holders of Senior Indebtedness of
all Senior Indebtedness remaining unpaid, after giving effect to all concurrent
payments and such distributions to or for the holders of Senior Indebtedness.
The Company shall give prompt written notice to the Trustee of any
default or event of default, and any cure or waiver thereof, or any acceleration
under any Senior Indebtedness or under any agreement pursuant to which Senior
Indebtedness may have been issued.
SECTION 10.3 SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
INDEBTEDNESS ON DISSOLUTION, LIQUIDATION OR
REORGANIZATION OF COMPANY.
Upon any distribution of assets of the Company of any kind or
character, whether in cash, property or securities upon any dissolution, winding
up, total or partial liquidation or reorganization of the Company (including,
without limitation, in bankruptcy, insolvency or receivership proceedings or
upon any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company):
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full in cash or cash equivalents of all amounts payable
under Senior Indebtedness (including interest after the commencement of any
such proceeding at the rate specified in the applicable Senior Indebtedness
whether or not such interest is an allowed claim against the Company in any
such proceeding), before the Holders or the Trustee on behalf of the
Holders are entitled to receive any payment on account of the principal of
or interest on the Securities;
(b) any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities,
to which the Holders or the Trustee on behalf of the Holders would be
entitled except for the provisions of this Article X, shall be paid by the
Company or by any liquidating trustee or agent or other Person making such
a payment or distribution, directly to the holders of Senior Indebtedness
or their Representa-
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tive, ratably according to the respective amounts of Senior Indebtedness
held or represented by each, to the extent necessary to make payment in
full in cash or cash equivalents of all Senior Indebtedness remaining
unpaid after giving effect to all concurrent payments and distributions to
or for the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities, shall be received by
the Trustee or the Holders or any Paying Agent (or, if the Company is
acting as its own Paying Agent, money for any such payment or distribution
shall be segregated or held in trust) on account of principal of or
interest on the Securities before all Senior Indebtedness is paid in full
in cash or cash equivalents, such payment or distribution (subject to the
provisions of Section 10.6) shall be received and held in trust by the
Trustee or such Holder or Paying Agent for the benefit of the holders of
the Senior Indebtedness or their Representative, ratably according to the
respective amounts of Senior Indebtedness held or represented by each, and
shall be paid over or delivered to the holders of the Senior Indebtedness
remaining unpaid to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid after giving effect to all concurrent
payments and distributions to or for the holders of such Senior
Indebtedness.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company or
assignment for the benefit of creditors by the Company.
SECTION 10.4 HOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS.
Subject to the payment in full in cash or cash equivalents of all
Senior Indebtedness, the Holders of Securities shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Securities shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of Senior
Indebtedness by or on behalf of the Company, or by or behalf of the Holders by
virtue of this Article X, which otherwise would have been made to the Holders,
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shall, as between the Company and the Holders, be deemed to be payment by the
Company to or on account of the Senior Indebtedness, it being understood that
the provisions of this Article X are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article X shall have been
applied, pursuant to the provisions of this Article X, to the payment of amounts
payable under the Senior Indebtedness, then the Holders shall be entitled to
receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness in full in cash or cash equivalents.
SECTION 10.5 OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article X or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as between the Company and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or any Holder from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article X, of the holders
of Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy. Upon any distribution of assets
or securities of the Company referred to in this Article X, the Trustee, subject
to the provisions of Sections 7.1 and 7.2, and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding up, liquidation or reorganization proceedings
are pending, or a certificate of the liquidating trustee or agent or other
Person making any distribution to the Trustee or to the Holders for the purpose
of ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts per-
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tinent thereto or to this Article X. Nothing in this Section 10.5 shall apply
to the claims of, or payments to, the Trustee under or pursuant to Section 7.7.
SECTION 10.6 TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Trustee or any Paying Agent shall not at any time be charged with
the knowledge of the existence of any facts which would prohibit the making of
any payment to or by the Trustee or Paying Agent, unless and until the Trustee
or Paying Agent shall have received written notice thereof from the Company or
one or more holders of Senior Indebtedness or from any trustee or agent
therefor, and, prior to the receipt of any such written notice, the Trustee or
paying agent shall be entitled to assume conclusively that no such facts exist.
Unless at least three Business Days prior to the date on which by the terms of
this Indenture any moneys are to be deposited by the Company with the Trustee or
any Paying Agent (whether or not in trust) for any purpose (including, without
limitation, the payment of the principal, the interest or other amounts due on
any Security), the Trustee or Paying Agent shall have received with respect to
such moneys the notice provided for in the preceding sentence, the Trustee or
Paying Agent shall have full power and authority to receive such moneys and to
apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such date. The foregoing shall not apply to the Paying Agent if the Company is
acting as Paying Agent. Nothing contained in this Section 10.6 shall limit the
right of the holders of Senior Indebtedness to recover payments as contemplated
by Section 10.2.
SECTION 10.7 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS
OF COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.
(a) No right of any present or future holders of any Senior
Indebtedness to enforce subordination provisions contained in this Article X
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Company with the terms of
this Indenture, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with.
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(b) Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the holders of any Indebtedness of the
Company, without incurring responsibility to the holders of any Indebtedness of
the Company and without impairing or releasing the subordination provisions
contained in this Article X, or the obligations hereunder of the holders of the
Indebtedness of the Company do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness or fail to perfect or delay the perfection of any
such lien; (iii) release any Person liable in any manner for the collection of
Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
SECTION 10.8 HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION
OF SECURITIES.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article X and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company) tending towards
liquidation of the business and assets of the Company, the immediate filing of a
claim for the unpaid balance of his securities in the form required in said
proceedings and cause said claim to be approved. If the Trustee does not file a
proper claim or proof of debt in the form required in such proceeding prior to
30 days before the expiration of the time to file such claim or claims, then the
holders of the Senior Indebtedness or their Representative are or is hereby
authorized to have the right to file and are or is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said Securities. Nothing
herein contained shall be deemed to authorize the Trustee or the holders of
Senior Indebtedness or their Representative to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization, ar-
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rangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee or the holders of Senior
Indebtedness or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 10.9 RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all of the rights set forth in this
Article X in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
SECTION 10.10 ARTICLE X NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of or interest
on the securities by reason of any provision of this Article X shall not be
construed as preventing the occurrence of a Default or an Event of Default under
Section 6.1.
SECTION 10.11 NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR
INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or negligence) if it shall in good faith
mistakenly pay over or distribute to the Holders of Securities or the Company or
any other Person, cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article X or otherwise.
Nothing in this Section 10.11 shall affect the obligation of any other such
Person to hold such payment for the benefit of, and to pay such payment over to,
the holders of Senior Indebtedness or their Representative.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 TRUST INDENTURE ACT CONTROLS.
The provisions of TIA Sections 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included unless
expressly excluded by this Indenture)
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are a part of and govern this Indenture, whether or not physically contained
herein.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by the above paragraph, the imposed duties shall control.
SECTION 11.2 NOTICES.
Any notice or communication shall be sufficiently given if in writing
and delivered in Person or mailed by first-class mail or by telecopier, followed
by first-class mail, or by overnight service guaranteeing next-day delivery,
addressed as follows:
(a) if to the Company:
BIG FLOWER PRESS HOLDINGS, INC.
3 East 54th Street
17th Floor
New York, New York 10022
Attention: Secretary
Telecopier Number: (212) 521-1640
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Robert E. Buckholz, Jr., Esq.
Telecopier Number: (212) 558-3588
(b) if to the Trustee:
State Street Bank and Trust Company
Goodwin Square, 23rd Floor
225 Asylum Street
Hartford, Connecticut 06103
Attention: Corporate Trust Administration
Telecopier Number: (860) 244-1889
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
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Any notice or communication mailed to a Securityholder, including any
notice delivered in connection with TIA Section 310(b), TIA Section 313(c), TIA
Section 314(a) and TIA Section 315(b), shall be mailed to such Holder,
first-class postage prepaid, at his address as it appears on the registration
books of the Registrar and shall be sufficiently given to such Holder if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. Except for a notice to the Trustee, which is deemed given only
when received, if a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.3 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
SECTION 11.4 CERTIFICATE AND OPINION OF COUNSEL AS TO CONDITIONS
PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee at the
request of the Trustee (a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with (which officer signing
such certificate may rely, as to matters of law, on an Opinion of Counsel), (b)
an Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of counsel, all such conditions have been
complied with (which counsel, as to factual matters, may rely on an Officers'
Certificate and certificates of public officials) and (c) where applicable, a
certificate or opinion by an independent certified public accountant
satisfactory to the Trustee that complies with TIA Section 314(c).
<PAGE>
-93-
SECTION 11.5 STATEMENTS REQUIRED IN CERTIFICATE AND OPINION OF
COUNSEL.
Each certificate and Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or rendering
such Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements contained in such certificate or
Opinion of Counsel are based;
(c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 11.6 RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Securityholders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.7 LEGAL HOLIDAYS.
If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 11.8 GOVERNING LAW.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE
SECURITIES WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY AGREES
TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
<PAGE>
-94-
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE
SECURITIES.
SECTION 11.9 NO RECOURSE AGAINST OTHERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Securities.
SECTION 11.10 SUCCESSORS.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 11.11 COUNTERPARTS.
The parties may sign any number of counterparts of this Indenture.
Each such counterpart shall be an original, but all of them together represent
the same agreement.
SECTION 11.12 SEVERABILITY.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim therefor against any party hereto.
SECTION 11.13 TABLE OF CONTENTS, HEADINGS, ETC.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, and are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 11.14 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its
<PAGE>
-95-
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 11.15 BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture or the Securities.
SECTION 11.16 INDEPENDENCE OF COVENANTS.
All covenants and agreements in this Indenture shall be given
independent effect so that if any particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
<PAGE>
-96-
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
BIG FLOWER PRESS HOLDINGS, INC.,
as Issuer
By: /s/ IRENE B. FISHER
---------------------------------
Name: Irene B. Fisher
Title: Vice President
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ CAUNA M. SILVA
---------------------------------
Name: Cauna M. Silva
Title: Assistant Vice President
<PAGE>
EXHIBIT A-1
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) AND IT IS ACQUIRING THIS SECURITY FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER OR (B) IT IS NOT A
U.S. PERSON (AND IS NOT PURCHASING FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON)
AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION PURSUANT TO REGULATION
S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO BIG FLOWER PRESS HOLDINGS, INC. (THE "COMPANY"), (B)
INSIDE THE UNITED STATES TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT)
(AN "ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 (IF AVAILABLE), OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3)
AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED
<PAGE>
-2-
STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.
THIS SECURITY AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON AND PROCEDURES FOR
RESALES AND OTHER TRANSFERS OF THIS SECURITY TO REFLECT ANY CHANGE IN APPLICABLE
LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO
THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS
SECURITY SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY TO HAVE AGREED TO
ANY SUCH AMENDMENT OR SUPPLEMENT.
THE HOLDER OF THIS SECURITY IS SUBJECT TO, AND ENTITLED TO THE
BENEFITS OF, A REGISTRATION RIGHTS AGREEMENT, DATED AS OF DECEMBER 9, 1998,
ENTERED INTO BY THE COMPANY FOR THE BENEFIT OF CERTAIN HOLDERS FROM TIME TO TIME
OF SECURITIES.
<PAGE>
-3-
No. $
BIG FLOWER PRESS HOLDINGS, INC.
8 5/8% SENIOR SUBORDINATED NOTE DUE 2008
BIG FLOWER PRESS HOLDINGS, INC. promises to pay to
or registered assigns the principal sum of
Dollars on December 1, 2008.
Interest Payment Dates: January 1 and July 1
Record Dates: June 15 and December 15
BIG FLOWER PRESS HOLDINGS, INC.,
as Issuer
By:
--------------------------------
Authorized Signature
By:
--------------------------------
Authorized Signature
Dated: December 9, 1998
CERTIFICATE OF AUTHENTICATION
This is one of the 8 5/8% Senior Subordinated Notes due 2008 referred
to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
--------------------------------
Authorized Signature
<PAGE>
-4-
(REVERSE OF SECURITY)
8 5/8% SENIOR SUBORDINATED NOTE DUE 2008
1. INTEREST. BIG FLOWER PRESS HOLDINGS, INC., a Delaware
corporation (the "Company", which term shall include any successor thereto in
accordance with the Indenture), promises to pay, until the principal hereof is
paid or made available for payment, interest (including any Accrued Bankruptcy
Interest) on the principal amount set forth on the reverse side hereof at a rate
of 8 5/8% PER ANNUM. Interest on the Securities will accrue from and including
the most recent date to which interest has been paid or, if no interest has been
paid, from and including the date of issuance of such Securities through but
excluding the date on which interest is paid. Interest shall be payable in
arrears on January 1 and July 1 (each an "Interest Payment Date"), commencing
July 1, 1999. Interest will be computed on the basis of a 360-day year of
twelve full 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the
Securities (except defaulted interest) to the Persons who are registered Holders
of Securities at the close of business on the June 15 and December 15
immediately preceding the Interest Payment Date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company will
pay principal, premium, if any, and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts.
At the Company's option, interest may be paid by check mailed to the registered
address of the Holder of this Security.
3. PAYING AGENT AND REGISTRAR. Initially, Sate Street Bank and
Trust Company (the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-Registrar without notice.
4. INDENTURE. The Company issued the Securities under an
Indenture dated as of December 9, 1998 (the "Indenture") between the Company and
the Trustee. This Security is one of an issue of Securities of the Company
issued under the Indenture. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as amended from time
to time. The Securities are subject to all such terms, and Securityholders are
referred to the
<PAGE>
-5-
Indenture and such Act for a statement of them. Capitalized terms used herein
and not otherwise defined have the meanings set forth in the Indenture. The
Securities are general unsecured obligations of the Company limited in aggregate
principal amount to $350,000,000.
5. OPTIONAL REDEMPTION. The Company, at its option, may redeem
all or any of the Securities, in whole or in part, at any time on or after
December 1, 2003 at the redemption prices (expressed in percentages of principal
amount) set forth below plus accrued and unpaid interest thereon to the
Redemption Date, if redeemed during the 12-month period beginning December 1 of
the years indicated below:
YEAR PERCENTAGE
---- ----------
2003......................... 104.313%
2004......................... 102.875%
2005......................... 101.438%
2006 and thereafter.......... 100.000%
In addition, at any time prior to December 1, 2001, the Company may
redeem up to 35% of the principal amount of the Securities originally issued
with the net proceeds from issuances of Equity Interests of the Company (other
than Redeemable Stock) at a redemption price equal to 108.625% of the principal
thereof, plus accrued and unpaid interest to the Redemption Date; PROVIDED that
at least 65% of the aggregate principal amount of the Notes issued under this
Indenture shall remain outstanding after each such redemption. Any such
redemption shall occur on or prior to 180 days after the receipt of the proceeds
of such issuances of Equity Interests.
In addition, at any time prior to December 1, 2003, upon the
occurrence of a Change of Control that has been approved by a majority of the
Board of Directors of the Company as such Board of Directors was constituted
immediately prior to the transaction giving rise to such Change of Control, the
Company may redeem the Securities, in whole but not in part, at a redemption
price equal to the principal amount thereof plus the Applicable Premium plus
accrued and unpaid interest, if any, to the date of redemption. Notice of
redemption of the Securities pursuant to this paragraph shall be mailed to
holders of the Securities not more than 30 days following the occurrence of a
Change of Control. The Company may not redeem Securities pursuant to this
paragraph if it has made an offer to repurchase the Securities in accordance
with the Indenture with respect to such Change of Control.
<PAGE>
-6-
"Applicable Premium" means, with respect to a Security, the greater of
(i) 4.313% of the then outstanding principal amount of such Security and (ii)(a)
the present value of all remaining required interest and principal payments due
on such Security and all premium payments relating thereto assuming a redemption
date of December 1, 2003, computed using a discount rate equal to the Treasury
Rate plus 75 basis points minus (b) the then outstanding principal amount of
such Security minus (c) accrued interest required to be paid on the redemption
date. The Applicable Premium will be stated in an Officers' Certificate, on
which the Trustee will be able to rely conclusively.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two business days prior to the date fixed
for redemption (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the then
remaining term to December 1, 2003; PROVIDED, HOWEVER, that if the then
remaining term to December 1, 2003 is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the then
remaining term to December 1, 2003 is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
holder of Securities to be redeemed at his registered address. On and after the
Redemption Date, unless the Company defaults in making the redemption payment,
interest ceases to accrue on Securities or portions thereof called for
redemption.
7. OFFERS TO PURCHASE. Sections 4.12 and 4.15 of the Indenture
provide that after an Asset Sale, or upon the occurrence of a Change of Control,
and subject to further limitations contained therein, the Company shall make an
offer to purchase certain amounts of Securities in accordance with the
procedures set forth in the Indenture.
<PAGE>
-7-
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Securities in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay to it any
taxes and fees required by law or permitted by the Indenture. The Registrar
need not transfer or exchange any Security or portion of a Security selected for
redemption, or transfer or exchange any Securities for a period of 15 days
before a selection of Securities to be redeemed.
9. PERSONS DEEMED OWNERS. The registered holder of a Security
may be treated as the owner of it for all purposes.
10. UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company at its request. After that, Holders entitled to
the money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another Person.
11. AMENDMENT, SUPPLEMENT, WAIVER. The Company and the Trustee
may, without the consent of the holders of any outstanding Securities, amend,
waive or supplement the Indenture or the Securities for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
Indenture Act of 1939 or making any other change that does not adversely affect
the rights of any Holder. Other amendments and modifications of the Indenture
or the Securities may be made by the Company and the Trustee with the consent of
the Holders of not less than a majority in aggregate principal amount of the
outstanding Securities, subject to certain exceptions requiring the consent of
the Holders of the particular Securities (and, in certain cases, holders of
Designated Senior Indebtedness) to be affected.
12. SUCCESSOR CORPORATION. When a successor corporation assumes
all the obligations of its predecessor under the Securities and the Indenture
and the transaction complies with the terms of Article V of the Indenture, the
predecessor corporation will, subject to certain exceptions, be released from
those obligations.
13. DEFAULTS AND REMEDIES. Events of Default include: default in
payment of interest on any Security for 30 days; default in payment of principal
of or premium on the Se-
<PAGE>
-8-
curities at maturity, or upon acceleration, redemption or otherwise; failure by
the Company and its Subsidiaries for 45 days after written notice to it from the
Trustee or Holders of at least 25% in principal amount of the then outstanding
Securities, to comply with any of the other agreements or covenants in or
provisions of the Indenture or the Securities; certain defaults under other
Indebtedness; certain final judgments that remain undischarged for 60 days after
being entered; and certain events of bankruptcy or insolvency with respect to
the Company and its Significant Restricted Subsidiaries. If an Event of Default
occurs and is continuing (and has not been waived in accordance with the
provisions of the Indenture), the Trustee or the Holders of at least 25% in
aggregate principal amount of the then outstanding Securities may declare all
the Securities to be immediately due and payable for an amount equal to 100% of
the principal amount of the Securities plus accrued interest to the date of
payment, except that in the case of an Event of Default arising from certain
events of bankruptcy or insolvency, all outstanding Securities become due and
payable immediately without further action or notice, subject to the rights of
holders of Senior Indebtedness. Holders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Securities may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders notice of any continuing
Default or Event of Default (except a Default or an Event of Default in payment
of principal, premium, if any, or interest) if and so long as a committee of its
Trust Officers determines in good faith that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
14. RESTRICTIVE COVENANTS. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to, among other
things, pay dividends and make distributions with respect to or repurchase or
otherwise acquire or retire for value any of their Equity Interests, make
certain Investments, incur additional Indebtedness, enter into transactions with
Affiliates, incur Liens, sell assets, merge or consolidate with any other Person
and sell, lease, transfer or otherwise dispose of substantially all of their
properties or assets. The limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
<PAGE>
-9-
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS. No past, present or future
director, officer, employee, incorporator or stockholder of the Company, as
such, shall have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
17. DISCHARGE OF INDENTURE; DEFEASANCE. The Indenture contains
provisions for defeasance at any time, upon compliance with certain conditions
set forth therein, of (i) the entire indebtedness of this Security or (ii)
certain restrictive covenants and Events of Default with respect to this
Security.
18. AUTHENTICATION. This Security shall not be valid until the
Trustee signs the certificate of authentication on the other side of this
Security.
19. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Securityholder or an assignee, such as: TEN COM (= tenants in
common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
20. SUBORDINATION. The Securities are subordinated to all Senior
Indebtedness, which includes any Indebtedness permitted to be incurred pursuant
to the terms of the "Limitation on Additional Indebtedness" covenant in the
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities. Notwithstanding anything to the contrary, Senior
Indebtedness shall not include (i) Indebtedness that is expressly subordinated
or junior in right of payment to any Indebtedness of the Company, (ii)
Indebtedness that is represented by Redeemable Stock, (iii) any liability for
federal, state, or local taxes owed or owing by the Company, (iv) Indebtedness
of the Company to any Subsidiary of the Company, (v) trade payables and (vi)
Indebtedness that
<PAGE>
-10-
is incurred in violation of the Indenture. To the extent provided in the
Indenture, Senior Indebtedness must be paid before the Securities may be paid.
The Company agrees, and each Holder by accepting a Security consents and agrees,
to the subordination provided in the Indenture and authorizes the Trustee to
give it effect.
21. REGISTRATION RIGHTS. Pursuant to the Registration Rights
Agreement, the Company will be obligated to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Security for Securities of a separate series issued under the Indenture (or
a trust indenture substantially identical to the Indenture in accordance with
the terms of the Registration Rights Agreement) which have been registered under
the Securities Act, in like principal amount and having identical terms as this
Security. The Holders of the Securities shall be entitled to receive certain
additional interest payments in the event such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Registration Rights Agreement.
22. GOVERNING LAW. THE INDENTURE AND THIS SECURITY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
The provisions of this Security are expressly made subject to the more
detailed provisions set forth in the Indenture and the Registration Rights
Agreement, which shall for all purposes be controlling. The Company will
furnish to any Holder upon written request and without charge a copy of the
Indenture. Requests may be made to:
BIG FLOWER PRESS HOLDINGS, INC.
3 East 54th Street
17th Floor
New York, New York 10022
Attention: Secretary
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:______________ Your signature:____________________________________
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:___________________________________________________
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to
Section 4.12 or 4.15 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 4.12 or 4.15 of the Indenture, state the amount:
$
=============
Date:________________ Your Signature:_____________________________________
(Sign exactly as your name appears on
the other side of this Security)
Signature Guarantee: _______________________
<PAGE>
[FORM OF SERIES B SECURITIES]
Exhibit A-2
No. $
BIG FLOWER PRESS HOLDINGS, INC.
8 5/8% SENIOR SUBORDINATED NOTE DUE 2008
BIG FLOWER PRESS HOLDINGS, INC. promises to pay to or
registered assigns the principal sum of Dollars
on December 1, 2008.
Interest Payment Dates: January 1 and July 1
Record Dates: June 15 and December 15
BIG FLOWER PRESS HOLDINGS, INC.,
as Issuer
By:
---------------------------------
Authorized Signature
By:
---------------------------------
Authorized Signature
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the 8 5/8% Senior Subordinated Notes due 2008 referred
to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
---------------------------------
Authorized Signature
<PAGE>
-2-
(REVERSE OF SECURITY)
8 5/8% SENIOR SUBORDINATED NOTE DUE 2008
1. INTEREST. BIG FLOWER PRESS HOLDINGS, INC., a Delaware
corporation (the "Company", which term shall include any successor thereto in
accordance with the Indenture), promises to pay, until the principal hereof is
paid or made available for payment, interest (including any Accrued Bankruptcy
Interest) on the principal amount set forth on the reverse side hereof at a rate
of 8 5/8% PER ANNUM. Interest on the Securities will accrue from and including
the most recent date to which interest has been paid or, if no interest has been
paid, from and including the date of issuance of such Securities through but
excluding the date on which interest is paid. Interest shall be payable in
arrears on January 1 and July 1 (each an "Interest Payment Date"), commencing
July 1, 1999. Interest will be computed on the basis of a 360-day year of
twelve full 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the
Securities (except defaulted interest) to the Persons who are registered Holders
of Securities at the close of business on the June 15 and December 15
immediately preceding the Interest Payment Date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company will
pay principal, premium, if any, and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts.
At the Company's option, interest may be paid by check mailed to the registered
address of the Holder of this Security.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and
Trust Company (the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-Registrar without notice.
4. INDENTURE. The Company issued the Securities under an
Indenture dated as of December 9, 1998 (the "Indenture") between the Company and
the Trustee. This Security is one of an issue of Securities of the Company
issued under the Indenture. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as amended from time
to time. The Securities are subject to all such terms, and Securityholders are
referred to the
<PAGE>
-3-
Indenture and such Act for a statement of them. Capitalized terms used herein
and not otherwise defined have the meanings set forth in the Indenture. The
Securities are general unsecured obligations of the Company limited in aggregate
principal amount to $350,000,000.
5. OPTIONAL REDEMPTION. The Company, at its option, may redeem
all or any of the Securities, in whole or in part, at any time on or after
December 1, 2003 at the redemption prices (expressed in percentages of principal
amount) set forth below plus accrued and unpaid interest thereon to the
Redemption Date, if redeemed during the 12-month period beginning of the
years indicated below:
YEAR PERCENTAGE
---- ----------
2003.................... 104.313%
2004.................... 102.875%
2005.................... 101.438%
2006 and thereafter..... 100.000%
In addition, at any time prior to December 1, 2001, the Company may
redeem up to 35% of the principal amount of the Securities originally issued
with the net proceeds from issuances of Equity Interests of the Company (other
than Redeemable Stock) at a redemption price equal to 108.625% of the principal
thereof, plus accrued and unpaid interest to the Redemption Date; PROVIDED that
at least 65% of the aggregate principal amount of the Notes issued under the
Indenture shall remain outstanding after each such redemption. Any such
redemption shall occur on or prior to 180 days after the receipt of the proceeds
of such issuances of Equity Interests.
In addition, at any time prior to December 1, 2003, upon the
occurrence of a Change of Control that has been approved by a majority of the
Board of Directors of the Company as such Board of Directors was constituted
immediately prior to the transaction giving rise to such Change of Control, the
Company may redeem the Securities, in whole but not in part, at a redemption
price equal to the principal amount thereof plus the Applicable Premium plus
accrued and unpaid interest, if any, to the date of redemption. Notice of
redemption of the Securities pursuant to this paragraph shall be mailed to
holders of the Securities not more than 30 days following the occurrence of a
Change of Control. The Company may not redeem Securities pursuant to this
paragraph if it has made an offer to repurchase the Securities in accordance
with the Indenture with respect to such Change of Control.
<PAGE>
-4-
"Applicable Premium" means, with respect to a Security, the greater of
(i) 4.313% of the then outstanding principal amount of such Security and (ii)(a)
the present value of all remaining required interest and principal payments due
on such Security and all premium payments relating thereto assuming a redemption
date of December 1, 2003, computed using a discount rate equal to the Treasury
Rate plus 75 basis points minus (b) the then outstanding principal amount of
such Security minus (c) accrued interest required to be paid on the redemption
date. The Applicable Premium will be stated in an Officers' Certificate, on
which the Trustee will be able to rely conclusively.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two business days prior to the date fixed
for redemption (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the then
remaining term to December 1, 2003; PROVIDED, HOWEVER, that if the then
remaining term to December 1, 2003 is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the then
remaining term to December 1, 2003 is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
holder of Securities to be redeemed at his registered address. On and after the
Redemption Date, unless the Company defaults in making the redemption payment,
interest ceases to accrue on Securities or portions thereof called for
redemption.
7. OFFERS TO PURCHASE. Sections 4.12 and 4.15 of the Indenture
provide that after an Asset Sale, or upon the occurrence of a Change of Control,
and subject to further limitations contained therein, the Company shall make an
offer to purchase certain amounts of Securities in accordance with the
procedures set forth in the Indenture.
<PAGE>
-5-
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Securities in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay to it any
taxes and fees required by law or permitted by the Indenture. The Registrar
need not transfer or exchange any Security or portion of a Security selected for
redemption, or transfer or exchange any Securities for a period of 15 days
before a selection of Securities to be redeemed.
9. PERSONS DEEMED OWNERS. The registered holder of a Security
may be treated as the owner of it for all purposes.
10. UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company at its request. After that, Holders entitled to
the money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another Person.
11. AMENDMENT, SUPPLEMENT, WAIVER. The Company and the Trustee
may, without the consent of the holders of any outstanding Securities, amend,
waive or supplement the Indenture or the Securities for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
Indenture Act of 1939 or making any other change that does not adversely affect
the rights of any Holder. Other amendments and modifications of the Indenture
or the Securities may be made by the Company and the Trustee with the consent of
the Holders of not less than a majority in aggregate principal amount of the
outstanding Securities, subject to certain exceptions requiring the consent of
the Holders of the particular Securities (and, in certain cases, holders of
Designated Senior Indebtedness) to be affected.
12. SUCCESSOR CORPORATION. When a successor corporation assumes
all the obligations of its predecessor under the Securities and the Indenture
and the transaction complies with the terms of Article V of the Indenture, the
predecessor corporation will, subject to certain exceptions, be released from
those obligations.
13. DEFAULTS AND REMEDIES. Events of Default include: default in
payment of interest on any Security for 30 days; default in payment of principal
of or premium on the Se-
<PAGE>
-6-
curities at maturity, or upon acceleration, redemption or otherwise; failure by
the Company or its Subsidiaries for 45 days after written notice to it from the
Trustee or Holders of at least 25% in principal amount of the then outstanding
Securities, to comply with any of the other agreements or covenants in or
provisions of the Indenture or the Securities; certain defaults under other
Indebtedness; certain final judgments that remain undischarged for 60 days after
being entered; and certain events of bankruptcy or insolvency with respect to
the Company and its Significant Restricted Subsidiaries. If an Event of Default
occurs and is continuing (and has not been waived in accordance with the
provisions of the Indenture), the Trustee or the Holders of at least 25% in
aggregate principal amount of the then outstanding Securities may declare all
the Securities to be immediately due and payable for an amount equal to 100% of
the principal amount of the Securities plus accrued interest to the date of
payment, except that in the case of an Event of Default arising from certain
events of bankruptcy or insolvency, all outstanding Securities become due and
payable immediately without further action or notice, subject to the rights of
holders of Senior Indebtedness. Holders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Securities may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders notice of any continuing
Default or Event of Default (except a Default or an Event of Default in payment
of principal, premium, if any, or interest) if and so long as a committee of its
Trust Officers determines in good faith that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
14. RESTRICTIVE COVENANTS. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to, among other
things, pay dividends and make distributions with respect to or repurchase or
otherwise acquire or retire for value any of their Equity Interests, make
certain Investments, incur additional Indebtedness, enter into transactions with
Affiliates, incur Liens, sell assets, merge or consolidate with any other Person
and sell, lease, transfer or otherwise dispose of substantially all of their
properties or assets. The limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
<PAGE>
-7-
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS. No past, present or future
director, officer, employee, incorporator or stockholder of the Company, as
such, shall have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
17. DISCHARGE OF INDENTURE; DEFEASANCE. The Indenture contains
provisions for defeasance at any time, upon compliance with certain conditions
set forth therein, of (i) the entire indebtedness of this Security or (ii)
certain restrictive covenants and Events of Default with respect to this
Security.
18. AUTHENTICATION. This Security shall not be valid until the
Trustee signs the certificate of authentication on the other side of this
Security.
19. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Securityholder or an assignee, such as: TEN COM (= tenants in
common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
20. SUBORDINATION. The Securities are subordinated to all Senior
Indebtedness, which includes any Indebtedness permitted to be incurred pursuant
to the terms of the "Limitation on Additional Indebtedness" covenant in the
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities. Notwithstanding anything to the contrary, Senior
Indebtedness shall not include (i) Indebtedness that is expressly subordinated
or junior in right of payment to any Indebtedness of the Company, (ii)
Indebtedness that is represented by Redeemable Stock, (iii) any liability for
federal, state, or local taxes owed or owing by the Company, (iv) Indebtedness
of the Company to any Subsidiary of the Company, (v) trade payables and (vi)
Indebtedness that
<PAGE>
-8-
is incurred in violation of the Indenture. To the extent provided in the
Indenture, Senior Indebtedness must be paid before the Securities may be paid.
The Company agrees, and each Holder by accepting a Security consents and agrees,
to the subordination provided in the Indenture and authorizes the Trustee to
give it effect.
21. GOVERNING LAW. THE INDENTURE AND THIS SECURITY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
The provisions of this Security are expressly made subject to the more
detailed provisions set forth in the Indenture, which shall for all purposes be
controlling. The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
BIG FLOWER PRESS HOLDINGS, INC.
3 East 54th Street
17th Floor
New York, New York 10022
Attention: Secretary
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:______________ Your signature:____________________________________
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:___________________________________________________
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to
Section 4.12 or 4.15 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 4.12 or 4.15 of the Indenture, state the amount:
$
=============
Date:________________ Your Signature:_____________________________________
(Sign exactly as your name appears on
the other side of this Security)
Signature Guarantee: _______________________
<PAGE>
EXHIBIT B
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, DATED AS OF DECEMBER 9, 1998,
ENTERED INTO BY THE COMPANY AND THE TRUSTEE NAMED THEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
___________, ____
State Street Bank and Trust
Company
Goodwin Square, 23rd Floor
225 Asylum Street
Hartford, CT 06103
Attention: Corporate Trust Administration Department
Re: Big Flower Press Holdings, Inc. (the
"Company") 8 5/8% Senior Subordinated
Notes due 2008 (the "Securities")
-------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of $_______ aggregate
principal amount of the Securities, we confirm that:
1. We have received a copy of the Offering Memorandum (the
"Offering Memorandum"), dated December 2, 1998, relating to the Securities and
such other information as we deem necessary in order to make our investment
decision. We acknowledge that we have read and agreed to the matters stated in
the section entitled "Transfer Restrictions" of the Offering Memorandum,
including the restrictions on duplication and circulation of the Offering
Memorandum.
2. We understand that any subsequent transfer of the Securities
is subject to certain restrictions and conditions set forth in the Indenture
dated as of December 9, 1998 relating to the Securities (the "Indenture") and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have
not been registered under the Securities Act, and that the Securities may not be
offered or sold except as permitted in the following sentence. We agree, on our
own behalf
<PAGE>
-2-
and on behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell or otherwise transfer any Securities prior to the date
which is two years after the original issuance of the Securities, we will do so
only (i) to the Company, (ii) inside the United States in accordance with Rule
144A under the Securities Act to a person whom we reasonably believe is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act), (iii) inside the United States to an accredited investor (as defined
below) that, prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to you a signed letter containing certain
representations and agreements relating to the restrictions on transfer of the
Securities, (iv) outside the United States in an offshore transaction in
accordance with Rule 904 of Regulation S under the Securities Act, (v) pursuant
to the exemption from registration provided by Rule 144 under the Securities Act
(if available), or (vi) pursuant to an effective registration statement under
the Securities Act, and we further agree to provide to any Person purchasing any
of the Securities from us a notice advising such purchaser that resales of the
Securities are restricted as stated herein.
4. We understand that, on any proposed resale of any Securities,
we will be required to furnish to you and the Company such certification, legal
opinions and other information as you and the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Securities purchased by us will bear a legend to the
foregoing effect.
5. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)(an
"accredited investor") and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Securities, and we and any accounts for which we are acting
are each able to bear the economic risk of our or their investment, as the case
may be.
6. We are acquiring the Securities purchased by us for our
account or for one or more accounts (each of which is an accredited investor) as
to each of which we exercise sole investment discretion.
<PAGE>
-3-
You and the Company are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
-----------------------------
Authorized Signature
<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
-----------------------------------
______________, ____
State Street Bank and Trust
Company
Goodwin Square, 23rd Floor
225 Asylum Street
Hartford, CT 06103
Attention: Corporate Trust Administration
Re: Big Flower Press Holdings, Inc. (the
"Company") 8 5/8% Senior Subordinated
Notes due 2008 (the "Securities")
-------------------------------------
Dear Sirs:
In connection with our proposed sale of $___________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a Person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any Person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any Person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable;
<PAGE>
-2-
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-------------------------------
Authorized Signature
<PAGE>
Exhibit 4.3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of December 9, 1998
By and Among
BIG FLOWER PRESS HOLDINGS, INC.
and
BT ALEX. BROWN INCORPORATED,
CHASE SECURITIES INC. and
GOLDMAN, SACHS & CO.
as Initial Purchasers
8 5/8% Senior Subordinated Notes due 2008
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. Additional Interest. . . . . . . . . . . . . . . . . . . . . . . . . . .11
5. Registration Procedures. . . . . . . . . . . . . . . . . . . . . . . . .13
6. Registration Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .23
7. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
8. Rules 144 and 144A . . . . . . . . . . . . . . . . . . . . . . . . . . .29
9. Underwritten Registrations . . . . . . . . . . . . . . . . . . . . . . .29
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
(a) No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . .30
(b) Adjustments Affecting Registrable Notes. . . . . . . . . . . . . .30
(c) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . .30
(d) Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
(e) Successors and Assigns . . . . . . . . . . . . . . . . . . . . . .32
(f) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(g) Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(h) GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . .32
(i) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .32
(j) Securities Held by the Company or its Affiliates . . . . . . . . .33
(k) Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . .33
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is dated as of
December 9, 1998, by and among BIG FLOWER PRESS HOLDINGS, INC., a Delaware
corporation (the "Company"), and BT ALEX. BROWN INCORPORATED, CHASE SECURITIES
INC. and GOLDMAN, SACHS & CO. (collectively, the "INITIAL PURCHASERS").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of December 2, 1998, by and among the Company and the
Initial Purchasers (the "PURCHASE AGREEMENT"), which provides for the sale by
the Company to the Initial Purchasers of $250,000,000 aggregate principal amount
of its 8 5/8% Senior Subordinated Notes due 2008 (the "NOTES"). In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement for
the benefit of the Initial Purchasers and any subsequent holder or holders of
the Notes. The execution and delivery of this Agreement is a condition to the
Initial Purchasers' obligation to purchase the Notes under the Purchase
Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
ADDITIONAL INTEREST: See Section 4(a) hereof.
ADVICE: See the last paragraph of Section 5 hereof.
AGREEMENT: See the introductory paragraphs hereto.
APPLICABLE PERIOD: See Section 2(b) hereof.
COMPANY: See the introductory paragraphs hereto.
EFFECTIVENESS DATE: With respect to (i) the Exchange Offer
Registration Statement, the 120th day after the Issue Date and (ii) any Shelf
Registration Statement, the 60th day after the Filing Date with respect thereto.
EFFECTIVENESS PERIOD: See Section 3(a) hereof.
EVENT DATE: See Section 4(b) hereof.
<PAGE>
-2-
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
EXCHANGE NOTES: See Section 2(a) hereof.
EXCHANGE OFFER: See Section 2(a) hereof.
EXCHANGE OFFER REGISTRATION STATEMENT: See Section 2(a) hereof.
FILING DATE: (A) If no Registration Statement has been filed by the
Company pursuant to this Agreement, the 60th day after the Issue Date; and (B)
in any other case (which may be applicable notwithstanding the consummation of
the Exchange Offer), the 30th day after the delivery of a Shelf Notice.
HOLDER: Any holder of a Registrable Note or Registrable Notes.
INDEMNIFIED PERSON: See Section 7(c) hereof.
INDEMNIFYING PERSON: See Section 7(c) hereof.
INDENTURE: The Indenture, dated as of December 9, 1998, between the
Company and State Street Bank and Trust Company, as Trustee thereunder, pursuant
to which the Notes are issued, as amended or supplemented from time to time in
accordance with the terms thereof.
INITIAL PURCHASERS: See the introductory paragraphs hereto.
INITIAL SHELF REGISTRATION: See Section 3(a) hereof.
INSPECTORS: See Section 5(n) hereof.
ISSUE DATE: December 9, 1998, the date of original issuance of the
Notes.
NASD: See Section 5(s) hereof.
NOTES: See the introductory paragraphs hereto.
PARTICIPANT: See Section 7(a) hereof.
PARTICIPATING BROKER-DEALER: See Section 2(b) hereof.
<PAGE>
-3-
PERSON: An individual, trustee, corporation, partnership, joint stock
company, trust, unincorporated association, union, business association, firm or
other legal entity.
PRIVATE EXCHANGE: See Section 2(b) hereof.
PRIVATE EXCHANGE NOTES: See Section 2(b) hereof.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
under the Securities Act and any term sheet filed pursuant to Rule 434 under the
Securities Act), as amended or supplemented by any prospectus supplement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
PURCHASE AGREEMENT: See the introductory paragraphs hereto.
RECORDS: See Section 5(n) hereof.
REGISTRABLE NOTES: Each Note upon its original issuance and at all
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original issuance and at all times subsequent thereto and
each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until (i) a Registration Statement (other than, with respect
to any Exchange Note as to which Section 2(c)(iv) hereof is applicable, the
Exchange Offer Registration Statement) covering such Note, Exchange Note or
Private Exchange Note has been declared effective by the SEC and such Note,
Exchange Note or such Private Exchange Note, as the case may be, has been
disposed of in accordance with such effective Registration Statement, (ii) such
Note has been exchanged pursuant to the Exchange Offer for an Exchange Note or
Exchange Notes that may be resold without restriction under federal securities
laws, (iii) such Note, Exchange Note or Private Exchange Note, as the case may
be, ceases to be outstanding for purposes of the Indenture or (iv) such Note,
Exchange Note or Private Exchange Note, as the case may be, may be resold
without restriction pursuant to Rule 144 under the Securities Act.
REGISTRATION STATEMENT: Any registration statement of the Company
that covers any of the Notes, the Exchange Notes
<PAGE>
-4-
or the Private Exchange Notes filed with the SEC under the Securities Act,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
RULE 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of the Company of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
RULE 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
RULE 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
SHELF NOTICE: See Section 2(b) hereof.
SHELF REGISTRATION: See Section 3(b) hereof.
SHELF REGISTRATION STATEMENT: Any Registration Statement relating to
a Shelf Registration.
SUBSEQUENT SHELF REGISTRATION: See Section 3(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
TRUSTEE: The trustee under the Indenture.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
<PAGE>
-5-
2. EXCHANGE OFFER
(a) To the extent not prohibited by applicable laws, rules,
regulations or applicable interpretations of the staff of the SEC, the Company
shall file with the SEC, no later than the Filing Date, a Registration Statement
(the "EXCHANGE OFFER REGISTRATION STATEMENT") on an appropriate registration
form with respect to a registered offer (the "EXCHANGE OFFER") to exchange any
and all of the Registrable Notes for the same aggregate principal amount of
notes (the "EXCHANGE NOTES") of the Company that are identical in all material
respects to the Notes except that the Exchange Notes shall contain no
restrictive legend thereon. The Exchange Offer shall comply with all applicable
tender offer rules and regulations under the Exchange Act and other applicable
laws. The Company shall use its reasonable best efforts to (x) cause the
Exchange Offer Registration Statement to be declared effective under the
Securities Act on or before the Effectiveness Date; (y) keep the Exchange Offer
open for not less than 20 business days (or longer if required by applicable
law) after the date that notice of the Exchange Offer is mailed to Holders; and
(z) consummate the Exchange Offer on or prior to the 45th day following the date
on which the Exchange Offer Registration Statement is declared effective by the
SEC. If, after the Exchange Offer Registration Statement is initially declared
effective by the SEC, the Exchange Offer or the issuance of the Exchange Notes
thereunder is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, the Exchange
Offer Registration Statement shall be deemed not to have become effective for
purposes of this Agreement.
Each Holder that participates in the Exchange Offer will be required
to represent that any Exchange Notes to be received by it will be acquired in
the ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes in violation of
the provisions of the Securities Act, and that such Holder is not an affiliate
of the Company within the meaning of the Securities Act.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, solely with
respect to Registrable Notes that are Private Exchange Notes, Exchange Notes as
to which Section 2(c)(iv) is applicable and Exchange Notes held by Participating
Broker-Dealers, and the Company shall have no fur-
<PAGE>
-6-
ther obligation to register Registrable Notes (other than Private Exchange Notes
and other than in respect of any Exchange Notes as to which clause 2(c)(iv)
hereof applies) pursuant to this Agreement. No securities other than the
Exchange Notes shall be included in the Exchange Offer Registration Statement.
(b) The Company shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Holders, which shall contain such information as
the Initial Purchasers shall reasonably request.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as is necessary to comply with applicable
law in connection with any resale of the Exchange Notes covered thereby;
PROVIDED, HOWEVER, that such period shall not exceed 180 days after such
Exchange Offer Registration Statement is declared effective (or such longer
period if extended pursuant to the last paragraph of Section 5 hereof) (the
"APPLICABLE PERIOD").
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by them that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Exchange
Offer, the Company upon the request of any such Holder shall simultaneously with
the delivery of the Exchange Notes in the Exchange Offer, issue and deliver to
any such Holder, in exchange (the "PRIVATE EXCHANGE") for such Notes held by any
such Holder, the same principal amount of notes (the "PRIVATE EXCHANGE NOTES")
of the Company that are identical in all material respects to the Exchange Notes
(except that they may bear a customary legend with respect to restrictions on
transfer). The Private Exchange Notes shall be issued pursuant to the same
indenture as the Exchange Notes. The Company shall use its reasonable best
efforts to cause the Private Exchange Notes, subsequent to the sale thereof
pursuant to an effective Shelf Registration (as defined in Section 3(b) hereof)
and removal of any legends restricting the transfer of such Private Exchange
Notes, to bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes will
accrue from (A) the later of (i) the last in-
<PAGE>
-7-
terest payment date on which interest was paid on the Notes surrendered in
exchange therefor or (ii) if the Notes are surrendered for exchange on a date in
a period which includes the record date for an interest payment date to occur on
or after the date of such exchange and as to which interest will be paid, the
date of such interest payment or (B) if no interest has been paid on the Notes,
from the Issue Date.
In connection with the Exchange Offer, the Company shall:
(1) mail, or cause to be mailed, to each Holder entitled to
participate in the Exchange Offer a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) keep the Exchange Offer open for not less than 20 business days
after the date that notice of the Exchange Offer is mailed to Holders (or
longer if required by applicable law);
(3) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York;
(4) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last business day on which the
Exchange Offer shall remain open; and
(5) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer and the
Private Exchange, if any, the Company shall:
(1) accept for exchange all Registrable Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer and the Private
Exchange, if any;
(2) deliver to the Trustee for cancellation all Registrable Notes so
accepted for exchange; and
(3) cause the Trustee to authenticate and deliver to each Holder of
Notes, Exchange Notes or Private Exchange
<PAGE>
-8-
Notes, as the case may be, equal in principal amount to the Notes of such
Holder so accepted for exchange.
The Exchange Offer and the Private Exchange shall not be subject to
any conditions, other than that (i) the Exchange Offer or Private Exchange, as
the case may be, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) no action or proceeding shall have
been instituted or threatened in any court or by any governmental agency which
would be reasonably likely to materially impair the ability of the Company to
proceed with the Exchange Offer or the Private Exchange, and no material adverse
development shall have occurred in any existing action or proceeding with
respect to the Company and (iii) all governmental approvals shall have been
obtained, which approvals the Company deems necessary for the consummation of
the Exchange Offer or Private Exchange.
The Exchange Notes and the Private Exchange Notes shall be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture and which, in either case, has been qualified under the TIA or
is exempt from such qualification and shall provide that the Exchange Notes
shall not be subject to the transfer restrictions set forth in the Indenture.
The Indenture or such indenture shall provide that the Exchange Notes, the
Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that none of the Exchange Notes, the Private Exchange
Notes or the Notes will have the right to vote or consent as a separate class on
any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Company is not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not consummated within 180 days
of the Issue Date, (iii) the Initial Purchasers or any holder of Private
Exchange Notes so requests in writing to the Company at any time after the
consummation of the Exchange Offer, or (iv) in the case of any Holder that
participates in the Exchange Offer, such Holder does not receive Exchange Notes
on the date of the exchange that may be sold without restriction under state and
federal securities laws (other than due solely to the status of such Holder as
an affiliate of the Company within the meaning of the Securities Act) and so
notifies the Company within 30 days after such Holder first becomes aware of
such restrictions, in the case of each of clauses (i) to and including (iv) of
this sentence, then the Company shall promptly deliver to the Holders and the
Trustee written notice thereof (the "SHELF
<PAGE>
-9-
NOTICE") and as promptly as possible shall file a Shelf Registration pursuant to
Section 3 hereof.
3. SHELF REGISTRATION
If at any time a Shelf Notice is delivered as contemplated by Section
2(c) hereof, then:
(a) SHELF REGISTRATION. The Company shall as promptly as possible
file with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable Notes not
permitted to be exchanged in the Exchange Offer in accordance with the terms of
this Agreement, Private Exchange Notes and Exchange Notes as to which Section
2(c)(iv) is applicable (the "INITIAL SHELF REGISTRATION"). The Company shall
use its reasonable best efforts to file with the SEC the Initial Shelf
Registration on or before the applicable Filing Date. The Initial Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by Holders in the manner or
manners designated by them (including, without limitation, one or more
underwritten offerings). The Company shall not permit any securities other than
the Registrable Notes to be included in the Initial Shelf Registration or any
Subsequent Shelf Registration (as defined below).
The Company shall use its reasonable best efforts to cause the Initial
Shelf Registration to be declared effective under the Securities Act on or prior
to the Effectiveness Date and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date which is the
earlier of two years after the Issue Date (the "EFFECTIVENESS PERIOD"), or such
shorter period ending when all Registrable Notes covered by the Shelf
Registration have been sold in the manner set forth and as contemplated in the
Initial Shelf Registration or, if applicable, a Subsequent Shelf Registration;
PROVIDED, HOWEVER, that the Effectiveness Period in respect of the Initial Shelf
Registration shall be extended to the extent required to permit dealers to
comply with the applicable prospectus delivery requirements of Rule 174 under
the Securities Act and as otherwise provided herein and shall be subject to
reduction to the extent that the applicable provisions of Rule 144(k) are
amended or revised to reduce the two year holding period set forth therein.
No holder of Registrable Notes may include any of its Registrable
Notes in any Shelf Registration Statement pursuant to this Agreement unless and
until such holder furnishes to the
<PAGE>
-10-
Company in writing, within 15 business days after receipt of a request therefor,
such information as the Company may reasonably request for use in connection
with any Shelf Registration Statement or Prospectus or preliminary prospectus
included therein. No holder of Registrable Notes shall be entitled to
Additional Interest pursuant to Section 4 hereof unless and until such holder
shall have provided all such reasonably requested information. Each holder of
Registrable Notes as to which any Shelf Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make information previously furnished to the Company by
such Holder not materially misleading.
(b) SUBSEQUENT SHELF REGISTRATIONS. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the securities registered thereunder), the Company shall use its
reasonable best efforts to obtain the prompt withdrawal of any order suspending
the effectiveness thereof, and in any event shall within 30 days of such
cessation of effectiveness amend the Initial Shelf Registration in a manner to
obtain the withdrawal of the order suspending the effectiveness thereof, or file
an additional Shelf Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes covered by and not sold under the Initial Shelf
Registration or an earlier Subsequent Shelf Registration (each, a "SUBSEQUENT
SHELF REGISTRATION"). If a Subsequent Shelf Registration is filed, the Company
shall use its reasonable best efforts to cause the Subsequent Shelf Registration
to be declared effective under the Securities Act as soon as practicable after
such filing and to keep such subsequent Shelf Registration continuously
effective for a period equal to the number of days in the Effectiveness Period
less the aggregate number of days during which the Initial Shelf Registration or
any Subsequent Shelf Registration was previously continuously effective. As
used herein the term "SHELF REGISTRATION" means the Initial Shelf Registration
and any Subsequent Shelf Registration.
(c) SUPPLEMENTS AND AMENDMENTS. The Company shall promptly
supplement and amend any Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement or by any underwriter
of such Registrable Notes.
<PAGE>
-11-
(d) WITHDRAWAL OF STOP ORDERS. If the Shelf Registration ceases to
be effective for any reason at any time during the Effectiveness Period (other
than because of the sale of all of the securities registered thereunder), the
Company shall use its reasonable best efforts to obtain the prompt withdrawal of
any order suspending the effectiveness thereof.
4. ADDITIONAL INTEREST
(a) The Company and the Initial Purchasers agree that the Holders
will suffer damages if the Company fails to fulfill its obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, the Company agrees to pay,
as liquidated damages, additional interest on the Notes ("ADDITIONAL INTEREST")
under the circumstances and to the extent set forth below (each of which shall
be given independent effect):
(i) if (A) neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration has been filed on or prior to the Filing
Date applicable thereto (i.e., 60 days after the Issue Date) or (B)
notwithstanding that the Company has consummated or will consummate the
Exchange Offer, the Company is required to file a Shelf Registration and
such Shelf Registration is not filed on or prior to the Filing Date
applicable thereto, then, commencing on the day after any such Filing Date,
Additional Interest shall accrue on the principal amount of the Notes at a
rate of 0.50% per annum for the first 90 days immediately following such
applicable Filing Date, and such Additional Interest rate shall increase by
an additional 0.25% per annum at the beginning of each subsequent 90-day
period; or
(ii) if (A) neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration is declared effective by the SEC on or prior
to the Effectiveness Date applicable thereto (i.e., 120 days after the
Issue Date) or (B) notwithstanding that the Company has consummated or will
consummate the Exchange Offer, the Company is required to file a Shelf
Registration and such Shelf Registration is not declared effective by the
SEC on or prior to the Effectiveness Date applicable to such Shelf
Registration, then, commencing on the day after such Effectiveness Date,
Additional Interest shall accrue on the principal amount of the Notes at a
rate of 0.50% per annum for the first 90 days immediately following the day
after such
<PAGE>
-12-
Effectiveness Date, and such Additional Interest rate shall increase by an
additional 0.25% per annum at the beginning of each subsequent 90-day
period; or
(iii) if (A) the Company has not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 45th day after the date on which the Exchange Offer
Registration Statement relating thereto was declared effective or (B) if
applicable, a Shelf Registration has been declared effective and such Shelf
Registration ceases to be effective at any time during the Effectiveness
Period, then Additional Interest shall accrue on the principal amount of
the Notes at a rate of 0.50% per annum for the first 90 days commencing on
the (x) 46th day after such effective date, in the case of (A) above, or
(y) the day such Shelf Registration ceases to be effective in the case of
(B) above, and such Additional Interest rate shall increase by an
additional 0.25% per annum at the beginning of each such subsequent 90-day
period;
PROVIDED, HOWEVER, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 1.0% per annum; PROVIDED, FURTHER, HOWEVER,
that (1) upon the filing of the applicable Exchange Offer Registration Statement
or the applicable Shelf Registration as required hereunder (in the case of
clause (i) above of this Section 4), (2) upon the effectiveness of the Exchange
Offer Registration Statement or the applicable Shelf Registration Statement as
required hereunder (in the case of clause (ii) of this Section 4), or (3) upon
the exchange of the Exchange Notes for all Notes tendered (in the case of clause
(iii)(A) of this Section 4), or upon the effectiveness of the applicable Shelf
Registration Statement which had ceased to remain effective (in the case of
(iii)(B) of this Section 4), Additional Interest on the Notes in respect of
which such events relate as a result of such clause (or the relevant subclause
thereof), as the case may be, shall cease to accrue.
(b) The Company shall notify the Trustee within one business day
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 will be payable in cash semi-annually on each January 1 and July 1 (to the
holders of record on the December 15 and June 15 immediately preceding such
dates), commencing with the first such date occurring after any such Additional
Interest commences to
<PAGE>
-13-
accrue. The amount of Additional Interest will be determined by multiplying the
applicable Additional Interest rate by the principal amount of the Registrable
Notes, multiplied by a fraction, the numerator of which is the number of days
such Additional Interest rate was applicable during such period (determined on
the basis of a 360-day year comprised of twelve 30-day months and, in the case
of a partial month, the actual number of days elapsed), and the denominator of
which is 360.
5. REGISTRATION PROCEDURES
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof. The Company shall effect such registrations to
permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Company hereunder the
Company shall:
(a) Prepare and file with the SEC prior to the applicable Filing
Date, a Registration Statement or Registration Statements as prescribed by
Sections 2 or 3 hereof, and use its reasonable best efforts to cause each
such Registration Statement to become effective and remain effective as
provided herein; PROVIDED, HOWEVER, that, if (1) such filing is pursuant to
Section 3 hereof or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period relating thereto,
before filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Company shall furnish to and afford the Holders of
the Registrable Notes covered by such Registration Statement or each such
Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, a reasonable opportunity to review copies of
all such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in each
case at least five business days prior to such filing, or such later date
as is reasonable under the circumstances). The Company shall not file any
Registration Statement or Prospectus or any amendments or supplements
thereto if the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement, their counsel, or
the managing underwriters, if any, shall reasonably object.
<PAGE>
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(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the Effectiveness
Period or the Applicable Period or until consummation of the Exchange
Offer, as the case may be; cause the related Prospectus to be supplemented
by any Prospectus supplement required by applicable law, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions
then in force) promulgated under the Securities Act; and comply with the
provisions of the Securities Act and the Exchange Act applicable to it with
respect to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and with
respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus.
(c) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to
sell Exchange Notes during the Applicable Period relating thereto from whom
the Company has received written notice that it will be a Participating
Broker-Dealer in the Exchange Offer, notify the selling Holders of
Registrable Notes, or each such Participating Broker-Dealer, as the case
may be, their counsel and the managing underwriters, if any, promptly (but
in any event within two business days), and confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or
any post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, at the sole expense of the Company, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or
deemed to be incorporated by reference therein and exhibits), (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a prospectus is required by the
Securities Act to be delivered in connection with
<PAGE>
-15-
sales of the Registrable Notes or resales of Exchange Notes by
Participating Broker-Dealers the representations and warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated by Section 5(m) hereof cease to be true and correct in all
material respects, (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer for
offer or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event, the
existence of any condition or any information becoming known that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes
in or amendments or supplements to such Registration Statement, Prospectus
or documents so that, in the case of the Registration Statement, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the Prospectus,
it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and (vi) of any of the Company's determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to
sell Exchange Notes during the Applicable Period, use its reasonable best
efforts to prevent the issuance of any order suspending the effectiveness
of a Registration Statement or of any order preventing or suspending the
use of a Prospectus or suspending the qualification (or exemption from
qualification) of any of the Registrable Notes or the Exchange Notes to be
sold by any Participating Broker-Dealer, for sale in any jurisdiction, and,
if any such order is issued, to use its best efforts to obtain the
<PAGE>
-16-
withdrawal of any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any), the Holders
of a majority in aggregate principal amount of the Registrable Notes being
sold in connection with an underwritten offering or any Participating
Broker-Dealer, (i) promptly as commercially practicable incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriter or underwriters (if any), such Holders, any
Participating Broker-Dealer or counsel for any of them reasonably request
to be included therein, (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as commercially
practicable after the Company has received notification of the matters to
be incorporated in such prospectus supplement or post-effective amendment,
and (iii) supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to
sell Exchange Notes during the Applicable Period, furnish to each selling
Holder of Registrable Notes and to each such Participating Broker-Dealer
who so requests and to counsel and each managing underwriter, if any, at
the sole expense of the Company, one conformed copy of the Registration
Statement or Registration Statements and each post-effective amendment
thereto, including financial statements and schedules, and, if requested,
all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to
sell Exchange Notes during the Applicable Period, deliver to each selling
Holder of Registrable Notes, or each such Participating Broker-Dealer, as
the case may be, their respective counsel, and the underwriters, if any, at
the sole expense of the Company, as many copies of the Prospectus or
Prospectuses (including each form of pre-
<PAGE>
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liminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Company
hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Registrable Notes or
each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in connection with
the offering and sale of the Registrable Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such
Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Offer Registration Statement by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, to use its reasonable best efforts to register or
qualify, and to cooperate with the selling Holders of Registrable Notes or
each such Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Notes for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the
United States as any selling Holder, Participating Broker-Dealer, or the
managing underwriter or underwriters reasonably request in writing;
PROVIDED, HOWEVER, that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Company agrees to cause its counsel to perform
Blue Sky investigations and file registrations and qualifications required
to be filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all
other acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Exchange Notes held by Participating Broker-Dealers or
the Registrable Notes covered by the applicable Registration Statement;
PROVIDED, HOWEVER, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C)
subject itself to taxa-
<PAGE>
-18-
tion in excess of the dollar amount in any such jurisdiction where it is
not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Notes to be sold,
which certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust Company; and enable
such Registrable Notes to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or Holders may
request.
(j) Use its reasonable best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be reasonably
necessary to enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Notes, except as may be required solely as a consequence of the nature of
such selling Holder's business, in which case the Company will cooperate in
all reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to
sell Exchange Notes during the Applicable Period, upon the occurrence of
any event contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly
as commercially practicable prepare and (subject to Section 5(a) hereof)
file with the SEC, at the sole expense of the Company, a supplement or
post-effective amendment to the Registration Statement or a supplement to
the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes
being sold thereunder or to the purchasers of the Exchange Notes to whom
such Prospectus will be delivered by a Participating Broker-Dealer, any
such Prospectus will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of
<PAGE>
-19-
the circumstances under which they were made, not misleading.
(l) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Registrable Notes or Exchange Notes, as the case may
be, in a form eligible for deposit with The Depository Trust Company and
(ii) provide a CUSIP number for the Registrable Notes or Exchange Notes, as
the case may be.
(m) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the
Notes in form and substance reasonably satisfactory to the Company and take
all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the
registration or the disposition of such Registrable Notes and, in such
connection, (i) make such representations and warranties to, and covenants
with, the underwriters with respect to the business of the Company and its
subsidiaries and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in
each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and confirm
the same in writing if and when requested in form and substance reasonably
satisfactory to the Company; (ii) obtain the written opinion of counsel to
the Company and written updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters,
addressed to the underwriters covering the matters customarily covered in
opinions reasonably requested in underwritten offerings of debt securities
similar to the Notes and such other matters as may be reasonably requested
by the managing underwriter or underwriters; (iii) use its reasonable best
efforts to obtain "cold comfort" letters and updates thereof in form, scope
and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by
the Company for which financial statements and financial data are, or are
required to be, included or incorporated by reference in the Registration
Statement), addressed to the underwriter, such letters to
<PAGE>
-20-
be in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with underwritten offerings of debt
securities similar to the Notes and such other matters as reasonably
requested by the managing underwriter or underwriters as permitted by the
Statement on Auditing Standards No. 72; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable to the sellers and
underwriters, if any, than those set forth in Section 7 hereof (or such
other provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of Registrable Notes covered by such
Registration Statement and the managing underwriter or underwriters or
agents, if any). The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(n) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to
sell Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Notes being sold, or
each such Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Notes, if any, and any
attorney, accountant or other agent retained by any such selling Holder or
each such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "INSPECTORS"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents and instruments of the Company and its
subsidiaries (collectively, the "RECORDS") as shall be reasonably necessary
to enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Company and their
subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement and Prospectus.
Each Inspector shall agree in writing that it will keep the Records
confidential and that it will not disclose any of the Records unless (i)
the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement or Prospectus, (ii)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, (iii) disclosure of such
information
<PAGE>
-21-
is necessary or advisable, in the opinion of counsel for any Inspector, in
connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such Inspector and arising
out of, based upon, relating to, or involving this Agreement or the
Purchase Agreement, or any transactions contemplated hereby or thereby or
arising hereunder or thereunder, or (iv) the information in such Records
has been made generally available to the public. Each selling Holder of
such Registrable Notes and each such Participating Broker-Dealer will be
required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Company unless
and until such is made generally available to the public. Each selling
Holder of such Registrable Notes and each such Participating Broker-Dealer
will be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company to undertake appropriate
action to prevent disclosure of the Records deemed confidential at the
Company's expense.
(o) Provide the Trustee for the Registrable Notes or the Exchange
Notes, as the case may be, and cause the Indenture or the trust indenture
provided for in Section 2(a) hereof, as the case may be, to be qualified
under the TIA not later than the effective date of the first Registration
Statement relating to the Registrable Notes; and in connection therewith,
cooperate with the trustee under any such indenture and the Holders of the
Registrable Notes, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms
of the TIA; and execute, and use its reasonable best efforts to cause such
trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the
SEC to enable such indenture to be so qualified in a timely manner.
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to their respective securityholders earnings
statements satisfying the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commenc-
<PAGE>
-22-
ing at the end of any fiscal quarter in which Registrable Notes are sold to
underwriters in a firm commitment or best efforts underwritten offering and
(ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the effective
date of a Registration Statement, which statements shall cover said
12-month periods.
(q) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Company (or to
such other Person as directed by the Company) in exchange for the Exchange
Notes or the Private Exchange Notes, as the case may be, the Company shall
mark, or cause to be marked, on such Registrable Notes that such
Registrable Notes are being cancelled in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be; in no event shall such
Registrable Notes be marked as paid or otherwise satisfied.
(r) Use its best efforts to cause the Registrable Notes covered by a
Registration Statement or the Exchange Notes, as the case may be, to be
rated with the appropriate rating agencies, if so requested by the Holders
of a majority in aggregate principal amount of Registrable Notes covered by
such Registration Statement or the Exchange Notes, as the case may be, or
the managing underwriter or underwriters, if any.
(s) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
(t) Use its reasonable best efforts to take all other steps
reasonably necessary to effect the registration of the Exchange Notes
and/or Registrable Notes covered by a Registration Statement contemplated
hereby.
The Company may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Registrable Notes as the
Company may, from time to time, reasonably request. The Company may exclude
from such registration the Registrable Notes of any seller so long
<PAGE>
-23-
as such seller fails to furnish such information within a reasonable time after
receiving such request. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such seller not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by its acquisition of such Registrable Notes or Exchange Notes to be sold
by such Participating Broker-Dealer, as the case may be, that, upon actual
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised in writing (the "ADVICE") by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event that the Company shall give any such
notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Notes covered by such Registration Statement or Exchange Notes to be
sold by such Participating Broker-Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(k) hereof or (y) the Advice.
6. REGISTRATION EXPENSES
All reasonable fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer Registration Statement or any Shelf
Registration Statement is filed or becomes effective or the Exchange Offer is
consummated, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibil-
<PAGE>
-24-
ity of the Registrable Notes or Exchange Notes for investment under the laws of
such jurisdictions (x) where the holders of Registrable Notes are located, in
the case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in
the case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) reasonable printing expenses,
including, without limitation, reasonable expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is reasonably requested by the managing underwriter or
underwriters, if any, by the Holders of a majority in aggregate principal amount
of the Registrable Notes included in any Registration Statement or in respect of
Exchange Notes to be sold by any Participating Broker-Dealer during the
Applicable Period, as the case may be, (iii) reasonable messenger, telephone and
delivery expenses, (iv) reasonable fees and disbursements of counsel for the
Company and, in the case of a Shelf Registration, reasonable fees and
disbursements of one special counsel for all of the sellers of Registrable Notes
(exclusive of any counsel retained pursuant to Section 7 hereof), (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(m)(iii) hereof (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (vi) Securities Act liability insurance, if the Company desires
such insurance, (vii) fees and expenses of all other Persons retained by the
Company, (viii) internal expenses of the Company (including, without limitation,
all salaries and expenses of officers and employees of the Company performing
legal or accounting duties), (ix) the expense of any annual audit, (x) the fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, and the obtaining of a rating of the
securities, in each case, if applicable, and (xi) the reasonable expenses
relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, indentures and any other documents
necessary in order to comply with this Agreement.
7. Indemnification
(a) The Company agrees to indemnify and hold harmless each Holder
of Registrable Notes and each Participating Broker-Dealer selling Exchange Notes
during the Applicable Period, the officers, directors, employees and agents of
each such Person, and each Person, if any, who controls any such Person within
the meaning of either Section 15 of the Securi-
<PAGE>
-25-
ties Act or Section 20 of the Exchange Act (each, a "PARTICIPANT"), from and
against any and all losses, claims, damages, judgments, liabilities and expenses
(including, without limitation, the reasonable legal fees and other expenses
actually incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) or Prospectus (as amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) or
any preliminary prospectus, or caused by, arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the case of the
Prospectus in the light of the circumstances under which they were made, not
misleading, EXCEPT insofar as such losses, claims, damages or liabilities are
caused by, arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Participant furnished to the Company in writing
by such Participant expressly for use therein; provided, however, that the
Company will not be liable if such untrue statement or omission or alleged
untrue statement or omission was contained or made in any preliminary prospectus
and corrected in the final Prospectus or any amendment or supplement thereto and
any such loss, liability, claim, or damage or expense suffered or incurred by
the Participants resulted from any action, claim or suit by any Person who
purchased Registrable Notes or Exchange Notes which are the subject thereof from
such Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the final Prospectus (as
amended or supplemented) to such Person with or prior to the confirmation of the
sale of such Registrable Notes or Exchange Notes sold to such Person if required
by applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and its employees and agents and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to each Participant, but only with reference to information
relating to such Participant furnished to the Company in writing by such
Participant ex-
<PAGE>
-26-
pressly for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary prospectus. The liability of any
Participant under this paragraph shall in no event exceed the proceeds received
by such Participant from sales of Registrable Notes or Exchange Notes giving
rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "INDEMNIFIED PERSON") shall promptly
notify the Persons against whom such indemnity may be sought (the "INDEMNIFYING
PERSONS") in writing, and the Indemnifying Persons, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Persons may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; PROVIDED, HOWEVER, that the failure to so notify the
Indemnifying Persons shall not relieve any of them of any obligation or
liability which any of them may have hereunder or otherwise except to the extent
it is materially prejudiced by such failure. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Persons and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Persons shall have failed
within a reasonable period of time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both any Indemnifying Person and the
Indemnified Person or any affiliate thereof and representation of both parties
by the same counsel would be inappropriate due to actual or potential
conflicting interests between them. It is understood that, unless there exists
a conflict among Indemnified Persons, the Indemnifying Persons shall not, in
connection with such proceeding or separate but substantially similar related
proceeding in the same jurisdiction arising out of the same general allegations,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Participants and such control Persons of Participants shall be designated in
writing by Participants who sold a majority in interest of Registrable Notes and
Exchange Notes sold by all such Participants and any
<PAGE>
-27-
such separate firm for the Company, its directors, its officers and such control
Persons of the Company shall be designated in writing by the Company and shall
be reasonably acceptable to the Holders. The Indemnifying Persons shall not be
liable for any settlement of any proceeding effected without its prior written
consent (which consent shall not be unreasonably withheld or delayed), but if
settled with such consent or if there be a final non-appealable judgment for the
plaintiff for which the Indemnified Person is entitled to indemnification
pursuant to this Agreement, each of the Indemnifying Persons agrees to indemnify
and hold harmless each Indemnified Person from and against any loss or liability
by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for reasonable fees and
expenses actually incurred by counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement; PROVIDED, HOWEVER, that the Indemnifying Person shall
not be liable for any settlement effected without its consent pursuant to this
sentence if the Indemnifying Person is contesting, in good faith, the request
for reimbursement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Persons (which consent shall not be unreasonably
withheld or delayed), effect any settlement or compromise of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party, or indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (A) includes an unconditional written
release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of such
Indemnified Person.
(d) If the indemnification provided for in clauses (a) and (b) of
this Section 7 is for any reason unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall
<PAGE>
-28-
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person or Persons
on the one hand and the Indemnified Person or Persons on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof) as well as any other relevant equitable considerations. The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Participant or such other
Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by PRO RATA allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages, judgments, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the Indemnifying Party to the Indemnified Party as
such losses,
<PAGE>
-29-
claims, damages, liabilities or expenses are incurred. The indemnity and
contribution agreements contained in this Section 7 and the representations and
warranties of the Company set forth in this Agreement shall remain operative and
in full force and effect, regardless of (i) any investigation made by or on
behalf of any Holder or any person who controls a Holder, the Company and its
directors, officers, employees or agents or any person controlling the Company,
and (ii) any termination of this Agreement.
(g) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. RULES 144 AND 144A
The Company covenants and agrees that, so long as Registrable Notes
remain outstanding, it will file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder in a timely manner in accordance with the requirements of the
Securities Act and the Exchange Act and, if at any time the Company is not
permitted to file such reports, the Company will, upon the request of any Holder
or beneficial owner of Registrable Notes, make publicly available annual reports
and such information, documents and other reports of the type specified in
Sections 13 and 15(d) of the Exchange Act. The Company further covenants for so
long as any Registrable Notes remain outstanding, to make available to any
Holder or beneficial owner of Registrable Notes in connection with any sale
thereof and any prospective purchaser of such Registrable Notes from such Holder
or beneficial owner the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Notes pursuant to
Rule 144A.
9. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Company.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder
<PAGE>
-30-
(a) agrees to sell such Holder's Registrable Notes on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. MISCELLANEOUS
(a) NO INCONSISTENT AGREEMENTS. As of the date hereof, the Company
has not entered into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of any of the Company's
other issued and outstanding securities. As of the date hereof, the Company has
not entered into any agreement with respect to any of its securities which will
grant to any Person piggy-back registration rights with respect to any
Registration Statement required to be filed by the Company pursuant to this
Agreement.
(b) ADJUSTMENTS AFFECTING REGISTRABLE NOTES. The Company shall not
knowingly, directly or indirectly, take any action with respect to the
Registrable Notes as a class that would adversely affect the ability of the
Holders of Registrable Notes to include such Registrable Notes in a registration
undertaken pursuant to this Agreement.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (I) the Company and (II)(A) the Holders of not less than a majority
in aggregate principal amount of the then outstanding Registrable Notes and (B)
in circumstances that would adversely affect the Participating Broker-Dealers,
the Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Notes held by all Participating Broker-Dealers;
PROVIDED, HOWEVER, that Section 7 and this Section 10(c) may not be amended,
modified or supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement) affected by any such
amendment, modification or supplement. Notwithstanding the foregoing, a waiver
or con-
<PAGE>
-31-
sent to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Notes whose securities are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect, impair, limit or compromise the rights of other Holders of
Registrable Notes may be given by Holders of at least a majority in aggregate
principal amount of the Registrable Notes being sold pursuant to such
Registration Statement.
(d) NOTICES. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(i) if to a Holder of the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture, with a copy in like manner to the Initial
Purchasers as follows:
BT Alex. Brown Incorporated
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Facsimile No: (212) 250-7200
Attention: Corporate Finance
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No: (212) 269-5420
Attention: William M. Hartnett, Esq.
(ii) if to the Initial Purchasers, at the address specified in
Section 10(d)(1);
(iii) if to the Company, at the address as follows:
Big Flower Press Holdings, Inc.
3 East 54th Street
New York, New York 10022
Facsimile No.: (212) 521-1640
Attention: Secretary
<PAGE>
-32-
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile No.: (212) 558-3588
Attention: Robert E. Buckholz, Jr.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and upon receiving
confirmation receipt by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, the Holders and the Participating Broker-Dealers, PROVIDED that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Registrable Notes in violation of the terms of the Purchase Agreement or the
Indenture.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(i) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforce-
<PAGE>
-33-
able, the remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(j) SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or any of its
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
(k) THIRD PARTY BENEFICIARIES. Holders of Registrable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement, and this Agreement may be enforced by such Persons.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BIG FLOWER PRESS HOLDINGS, INC.
By: /s/ IRENE B. FISHER
--------------------------------
Name: Irene B. Fisher
Title: Vice President
INITIAL PURCHASERS:
BT ALEX. BROWN INCORPORATED
By: /s/ LARRY ZIMMERMAN
--------------------------------
Name: Larry Zimmerman
Title: Principal
CHASE SECURITIES INC.
By: /s/ LAUREN CAMP
--------------------------------
Name: Lauren Camp
Title: Vice President
/s/ GOLDMAN, SACHS & CO.
-----------------------------------
(Goldman, Sachs & Co.)
<PAGE>
Exhibit 12.1
BIG FLOWER PRESS HOLDINGS, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS
<TABLE>
<CAPTION>
BIG FLOWER PRESS
------------------------------------------------------------------------------
NINE MONTHS NINE MONTHS SIX MONTHS
ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
9/30/98 9/30/97 12/31/97 12/31/96 12/31/95 6/30/95
------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
FIXED CHARGES AND PREFERRED DIVIDENDS:
Interest expense............................. $ 41,502 $ 29,309 $ 40,380 $ 34,965 $ 18,970 $ 37,452
Amortization of deferred financing costs..... 1,252 1,277 1,660 3,002 1,700 3,437
Capitalized interest......................... 1,098 500 1,463 168 -- 295
Interest component of rent expense........... 11,885 8,674 11,169 10,897 5,694 9,414
Preferred dividends of a subsidiary.......... -- -- -- -- 1,068 2,444
------------ ------------ ----------- ----------- ----------- -----------
Total fixed charges and preferred
dividends.................................. 55,737 39,760 54,672 49,032 27,432 53,042
Less: Capitalized interest................... 1,098 500 1,463 168 -- 295
------------ ------------ ----------- ----------- ----------- -----------
Adjusted fixed charges and preferred
dividends.................................. $ 54,639 $ 39,260 $ 53,209 $ 48,864 $ 27,432 $ 52,747
------------ ------------ ----------- ----------- ----------- -----------
------------ ------------ ----------- ----------- ----------- -----------
EARNINGS:
Income (loss) before income taxes and
extraordinary item......................... $ 45,073 $ 23,595 $ (10,330) $ 4,998 $ 12,694 $ 5,268
Adjusted fixed charges and preferred
dividends.................................. 54,639 39,260 53,209 48,864 27,432 52,747
------------ ------------ ----------- ----------- ----------- -----------
Adjusted earnings............................ $ 99,712 $ 62,855 $ 42,879 $ 53,862 $ 40,126 $ 58,015
------------ ------------ ----------- ----------- ----------- -----------
------------ ------------ ----------- ----------- ----------- -----------
Ratio of earnings to combined fixed charges
and preferred dividends.................... 1.8 1.6 0.8 1.1 1.5 1.1
------------ ------------ ----------- ----------- ----------- -----------
------------ ------------ ----------- ----------- ----------- -----------
<CAPTION>
PREDECESSOR TC
ADVERTISING
----------------------
323 DAYS 42 DAYS
ENDED ENDED YEAR ENDED
6/30/94 8/11/93 6/30/93
--------- --------- -----------
<S> <C> <C> <C>
FIXED CHARGES AND PREFERRED DIVIDENDS:
Interest expense............................. $ 19,735 $ 578 $ 6,792
Amortization of deferred financing costs..... 1,936 126 2,435
Capitalized interest......................... 260 -- 150
Interest component of rent expense........... 5,138 756 5,648
Preferred dividends of a subsidiary.......... 1,913 -- --
--------- --------- -----------
Total fixed charges and preferred
dividends.................................. 28,982 1,460 15,025
Less: Capitalized interest................... 260 -- 150
--------- --------- -----------
Adjusted fixed charges and preferred
dividends.................................. $ 28,722 $ 1,460 $ 14,875
--------- --------- -----------
--------- --------- -----------
EARNINGS:
Income (loss) before income taxes and
extraordinary item......................... $ (549) $ (228) $ 10,204
Adjusted fixed charges and preferred
dividends.................................. 28,722 1,460 14,875
--------- --------- -----------
Adjusted earnings............................ $ 28,173 $ 1,232 $ 25,079
--------- --------- -----------
--------- --------- -----------
Ratio of earnings to combined fixed charges
and preferred dividends.................... 1.0 0.8 1.7
--------- --------- -----------
--------- --------- -----------
</TABLE>
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Big Flower Press Holdings, Inc. on Form S-4 of our report dated February 9,
1998 appearing in the Annual Report on Form 10-K of Big Flower Press Holdings,
Inc. for the year ended December 31, 1997 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
DELOITTE & TOUCHE LLP
New York, New York
February 4, 1999
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
------------------------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) / /
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
<TABLE>
<CAPTION>
MASSACHUSETTS 04-1867445
- --------------------------------------------- ---------------------------------------------
<S> <C>
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 FRANKLIN STREET, BOSTON, MASSACHUSETTS 02110
(Address of principal executive offices) (Zip Code)
</TABLE>
JOHN R. TOWERS, ESQ. EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
225 FRANKLIN STREET, BOSTON, MASSACHUSETTS 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
------------------------
BIG FLOWER PRESS HOLDINGS, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 13-3768322
- --------------------------------------------- ---------------------------------------------
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
3 EAST 54TH STREET,
NEW YORK, NY 10022
(Address of principal executive offices) (Zip Code)
------------------------
8 5/8% SENIOR SUBORDINATED NOTES DUE 2008
(Title of indenture securities)
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH
IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts,
100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its parent,
State Street Boston Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as
Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to
commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No.
1 to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by reference
thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST
POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS SPECIFIED
IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange
Commission as Exhibit 3 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
1
<PAGE>
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to
the Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Eastern Edison
Company (File No. 33-37823) and is incorporated herein by
reference thereto.
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the Act
is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority is annexed hereto as Exhibit 7 and made a
part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 28th day of January, 1999.
STATE STREET BANK AND TRUST COMPANY
By: /s/ KATHY A. LARIMORE
--------------------------------------
Name: Kathy A. Larimore
Title: Assistant Vice President
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939, as amended, in connection with the proposed exchange offer by Big Flower
Press Holdings, Inc. of its 8 5/8% Senior Subordinated Notes due 2008, we hereby
consent that reports of examination by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ KATHY A. LARIMORE
----------------------------------------
Name: Kathy A. Larimore
Title: Assistant Vice President
Dated: January 28, 1999
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business June 30, 1998, published
in accordance with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act and in accordance with a
call made by the Commissioner of Banks under General Laws, Chapter 172, Section
22(a).
<TABLE>
<CAPTION>
THOUSANDS
OF
ASSETS DOLLARS
-----------
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin........................ 1,553,703
Interest-bearing balances................................................. 12,440,716
Securities...................................................................... 9,436,138
Federal funds sold and securities purchased under agreements to resell
in domestic offices of the bank and its Edge subsidiary................... 8,785,353
Loans and lease financing receivables:
</TABLE>
<TABLE>
<S> <C> <C>
Loans and leases, net of unearned income............... 6,633,608
Allowance for loan and lease losses.................... 92,999
Allocated transfer risk reserve........................ 0
</TABLE>
<TABLE>
<S> <C>
Loans and leases, net of unearned income and allowances................... 6,540,609
Assets held in trading accounts................................................. 1,267,679
Premises and fixed assets....................................................... 491,928
Other real estate owned......................................................... 100
Investments in unconsolidated subsidiaries...................................... 1,278
Customers' liability to this bank on acceptances outstanding.................... 68,312
Intangible assets............................................................... 231,294
Other assets.................................................................... 1,667,282
-----------
Total assets.................................................................... 42,484,392
-----------
-----------
LIABILITIES
Deposits:
In domestic offices....................................................... 12,553,371
</TABLE>
<TABLE>
<S> <C> <C>
Noninterest-bearing.............................. 10,204,405
Interest-bearing................................. 2,348,966
</TABLE>
<TABLE>
<S> <C>
In foreign offices and Edge subsidiary.................................... 16,961,571
</TABLE>
<TABLE>
<S> <C> <C>
Noninterest-bearing.............................. 154,792
Interest-bearing................................. 16,806,799
</TABLE>
<TABLE>
<S> <C>
Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge subsidiary................ 8,182,794
Demand notes issued to the U.S. Treasury and Trading Liabilities................ 0
Trading liabilities............................................................. 883,096
Other borrowed money............................................................ 361,141
Subordinated notes and debentures............................................... 0
Bank's liability on acceptances executed and outstanding........................ 68,289
Other liabilities............................................................... 1,017,284
-----------
Total liabilities............................................................... 40,027,546
-----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................... 0
Common stock.................................................................... 29,931
Surplus......................................................................... 455,288
Undivided profits and capital reserves/Net unrealized holding gains (losses).... 1,964,924
Net unrealized holding gains (losses) on available-for-sale securities.......... 15,557
Cumulative foreign currency translation adjustments............................. 8,854
Total equity capital............................................................ 2,456,846
-----------
Total liabilities and equity capital............................................ 42,484,392
-----------
-----------
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
----------------------------------------------------------------------
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
----------------------------------------------------------------------
David A. Spina
Marshall N. Carter
Truman S. Casner
5
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
8 5/8% SENIOR SUBORDINATED NOTES
OF
BIG FLOWER PRESS HOLDINGS, INC.
PURSUANT TO THE
EXCHANGE OFFER
IN RESPECT OF
ALL OF ITS OUTSTANDING UNREGISTERED
8 5/8% SENIOR SUBORDINATED NOTES DUE DECEMBER 1, 2008
FOR
REGISTERED 8 5/8% SENIOR SUBORDINATED NOTES DUE DECEMBER 1, 2008
---------------------
PURSUANT TO THE PROSPECTUS DATED , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999 UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION
DATE"). TENDERS OF PRIVATE NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION DATE.
TO: STATE STREET BANK AND TRUST COMPANY, EXCHANGE AGENT
<TABLE>
<CAPTION>
By Facsimile:
(For Eligible
By Mail: Institutions Only) By Hand or Overnight Courier:
<S> <C> <C>
State Street Bank and Trust (617) 664-5290 State Street Bank and Trust
Company Confirm by Telephone: Company
Corporate Trust Department (617) 664-5587 Corporate Trust Department
P.O. Box 778 4th Floor
Boston, MA 02102-0078 Two International Place
Attention: Kellie Mullen Boston, MA 02110
Attention: Kellie Mullen
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
TELEGRAM, TELEX OR FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE
A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES FOR THEIR PRIVATE
NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW)
THEIR PRIVATE NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
<PAGE>
By execution hereof, the undersigned acknowledges receipt of the Prospectus
(the "Prospectus"), dated February - , 1999, of Big Flower Press Holdings,
Inc., a Delaware corporation (the "Company"), and this Letter of Transmittal and
the instructions hereto (the "Letter of Transmittal").
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its sole discretion, in which event the term "Expiration
Date" shall mean the latest time and date to which the Exchange Offer is
extended. The Company shall notify the holders of the Private Notes of any
extension by means of a press release or other public announcement prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
This Letter of Transmittal is to be completed by a holder of Private Notes
either if certificates are to be forwarded herewith or if a tender of
certificates for Private Notes, if available, is to be made by book-entry
transfer to the account maintained by the Exchange Agent at The Depository Trust
Company (the "Book-Entry Transfer Facility") pursuant to the procedures set
forth in "The Exchange Offer--Book-Entry Transfer" section of the Prospectus.
Holders of Private Notes whose certificates are not readily available so you can
meet the Expiration Date deadline, or who are unable to deliver their
certificates or confirmation of the book-entry tender of their Private Notes
into the Exchange Agent's account at the Book-Entry Transfer Facility (a
"Book-Entry Confirmation") and all other documents required by this Letter of
Transmittal to the Exchange Agent on or prior to the Expiration Date, must
tender their Private Notes according to the guaranteed delivery procedures set
forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. See Instruction 1. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Private Notes must
complete this letter in its entirety.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR PRIVATE NOTES
MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
2
<PAGE>
List below the Private Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, list the certificate numbers and
principal amounts on a separately executed schedule and affix the schedule to
this Letter of Transmittal. Tenders of Private Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof.
<TABLE>
<S> <C> <C>
DESCRIPTION OF PRIVATE NOTES
<CAPTION>
CERTIFICATE
NUMBER(S)* AGGREGATE PRINCIPAL
NAME(S) AND ADDRESS(ES) OF HOLDER(S) (ATTACH SIGNED AMOUNT TENDERED (IF
(PLEASE FILL IN, IF BLANK) LIST IF NECESSARY) LESS THAN ALL)**
<S> <C> <C>
TOTAL PRINCIPAL AMOUNT OF PRIVATE NOTES TENDERED
</TABLE>
* Need not be completed by holders tendering by book-entry transfer.
** Need not be completed by holders who wish to tender with respect to all
Private Notes listed. See Instruction 2.
3
<PAGE>
<TABLE>
<S> <C>
/ / CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED BY DTC TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution ----------------------------------------------------------------------
DTC Book-Entry Account No.: ---------------------------------------------------------------------
Transaction Code No.: -----------------------------------------------------------------------------
</TABLE>
If holders desire to tender Private Notes pursuant to the Exchange Offer and (i)
certificates representing such Private Notes are not lost but are not readily
available, (ii) time will not permit this Letter of Transmittal, certificates
representing such Private Notes or other required documents to reach the
Exchange Agent prior to the Expiration Date or (iii) the procedures for
book-entry transfer cannot be completed prior to the Expiration Date, such
holders may effect a tender of such Private Notes in accordance with the
guaranteed delivery procedures set forth in the Prospectus under "The Exchange
Offer--Guaranteed Delivery Procedures."
<TABLE>
<S> <C>
/ / CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY
PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Holder(s) of Private Notes: --------------------------------------------------------------
Window Ticket No. (if any): ------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery: -------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery: -------------------------------------------------
If Delivered by Book-Entry Transfer:
Name of Tendering Institution: ---------------------------------------------------------------------
DTC Book-Entry Account No.: ---------------------------------------------------------------------
Transaction Code No.: -----------------------------------------------------------------------------
/ / CHECK HERE IF YOU ARE A BROKER-DEALER WHO HOLDS PRIVATE NOTES ACQUIRED FOR YOUR OWN ACCOUNT AS A RESULT OF
MARKET-MAKING OR OTHER TRADING ACTIVITIES AND WISH TO RECEIVE COPIES OF THE PROSPECTUS AND COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO FOR USE IN CONNECTION WITH RESALES OF EXCHANGE NOTES RECEIVED FOR YOUR OWN
ACCOUNT IN EXCHANGE FOR SUCH PRIVATE NOTES.
Name: ------------------------------------------------------------------------------------------
Address: -----------------------------------------------------------------------------------------
Aggregate Principal Amount of Private Notes so held: $ -------------------------------------------------
</TABLE>
4
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Big Flower Press Holdings, Inc., a
Delaware corporation (the "Company") the aggregate principal amount of Private
Notes indicated in this Letter of Transmittal, upon the terms and subject to the
conditions set forth in the Company's Prospectus dated February - , 1999 (the
"Prospectus"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal, which together constitute the Company's offer (the "Exchange
Offer") to exchange $1,000 principal amount of its 8 5/8% Senior Subordinated
Notes due December 1, 2008, which have been registered under the Securities Act
of 1933, as amended (the "Exchange Notes"), for each $1,000 principal amount of
its issued and outstanding 8 5/8% Senior Subordinated Notes due December 1,
2008, of which $250,000,000 aggregate principal amount was outstanding on the
date of the Prospectus (the "Private Notes" and, together with the Exchange
Notes, the "Notes"). The capitalized terms not defined herein are used herein as
defined in the Prospectus.
Subject to, and effective upon, the acceptance for exchange of the Private
Notes tendered hereby, the undersigned hereby sells, assigns and transfers to,
or upon the order of, the Company all right, title and interest in and to such
Private Notes as are being tendered hereby and hereby irrevocably constitutes
and appoints the Exchange Agent as attorney-in-fact of the undersigned with
respect to such Private Notes, with full power of substitution (such power of
attorney being an irrevocable power coupled with an interest), to:
(a) deliver such Private Notes in registered certificated form, or
transfer ownership of such Private Notes through book-entry transfer at the
Book-Entry Transfer Facility, to or upon the order of the Company, upon
receipt by the Exchange Agent, as the undersigned's agent, of the same
aggregate principal amount of Exchange Notes; and
(b) receive, for the account of the Company, all benefits and otherwise
exercise, for the account of the Company, all rights of beneficial ownership
of the Private Notes tendered hereby in accordance with the terms of the
Exchange Offer.
The undersigned hereby represents and warrants to the Company that the
undersigned has full power and authority to tender, sell, assign and transfer
the Private Notes tendered hereby and that the Company will acquire good,
marketable and unencumbered title thereto, free and clear of all security
interests, liens, restrictions, charges, encumbrances, conditional sale
agreements or other obligations relating to their sale or transfer, and not
subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that any Exchange Notes acquired in
exchange for Private Notes tendered hereby will have been acquired in the
ordinary course of business of the person receiving such Exchange Notes, whether
or not such person is the undersigned, that neither the holder of such Private
Notes nor any such other person has an arrangement or understanding with any
person to participate in the distribution of such Exchange Notes and the
undersigned acknowledges and agrees that any person who is a broker-dealer
registered under the Exchange Act or is participating in the Exchange Offer for
the purposes of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale of the Exchange Notes acquired by such person
and cannot rely on the position of the staff of the Commission set forth in
certain no-action letters, and the undersigned further understands that such
secondary resale transaction and any resales of Exchange Notes obtained by the
undersigned in exchange for Private Notes acquired by such holder directly from
the Company should by covered by an effective registration statement containing
the selling security holder information required by Item 507 or Item 508, as
applicable, of Regulation S-K of the Commission, and the undersigned further
represents that neither the holder of such Private Notes nor any such other
person is an "affiliate", as defined in Rule 405 under the Securities Act of
1933, as amended (the "Securities Act"), of the Company. The undersigned has
read and agrees to all of the terms of the Exchange Offer.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the Exchange Notes issued in exchange for the Private Notes
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the provisions
of the Securities Act), provided that such Exchange Notes are acquired in the
ordinary course of such holders' business and such holders have no arrangement
with any person to participate in the distribution of such Exchange Notes.
However, the Company does not intend to request the SEC to consider, and the SEC
has not considered, the Exchange Offer in the context of a no-action letter, and
there can be no assurance that the staff of the SEC would make a similar
determination with respect to the Exchange Offer as in other circumstances.
5
<PAGE>
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes and has no arrangement or understanding to participate in a distribution
of Exchange Notes. If any holder is an affiliate of the Company, is engaged in
or intends to engage in or has any arrangement or understanding with respect to
the distribution of the Exchange Notes to be acquired pursuant to the Exchange
Offer, such holder (i) could not rely on the applicable interpretations of the
staff of the SEC and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Private Notes acquired as a result of
market-making or other trading activities (a "Participating Broker-Dealer"), it
hereby represents and warrants to the Company that the Private Notes to be
exchanged for the Exchange Notes were acquired by it as a result of
market-making or other trading activities and agrees that it will deliver a
prospectus in connection with any resale of such Exchange Notes; however, by so
agreeing and by delivering a prospectus, such Participating Broker-Dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The Company has agreed that, subject to the provisions of the Registration
Rights Agreement, the Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of Exchange Notes received in exchange for Private Notes which were acquired by
such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities, for a period ending 180 days after
the Expiration Date or, if earlier, when all such Exchange Notes have been
disposed of by such Participating Broker-Dealer. In that regard, each
Participating Broker-Dealer by tendering such Private Notes and executing this
Letter of Transmittal, agrees that, upon receipt of notice from the Company of
the occurrence of any event or the discovery of any fact which makes any
statement contained or incorporated by reference in the Prospectus untrue in any
material respect or which causes the Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
therein, in light of the circumstances under which they were made, not
misleading, such Participating Broker-Dealer will suspend the sale of Exchange
Notes pursuant to the Prospectus until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission and has furnished copies
of the amended or supplemented Prospectus to the Participating Broker-Dealer or
the Company has given notice that the sale of the Exchange Notes may be resumed,
as the case may be. If the Company gives such notice to suspend the sale of the
Exchange Notes, it shall extend the 180-day period referred to above during
which Participating Broker-Dealers are entitled to use the Prospectus in
connection with the resale of Exchange Notes by the number of days during the
period from and including the date of the giving of such notice to and including
the date when Participating Broker-Dealers shall have received copies of the
supplemented or amended Prospectus necessary to permit resales of the Exchange
Notes or to and including the date on which the Company has given notice that
the sale of Exchange Notes may be resumed, as the case may be.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Private Notes tendered hereby. All
authority conferred or agreed to be conferred in this Letter of Transmittal and
every obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in bankruptcy
and legal representatives of the undersigned and shall not be affected by, and
shall survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal of Tenders" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the Exchange Notes (and, if applicable,
substitute certificates representing Private Notes for any Private Notes not
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Private Notes, please credit the account indicated above maintained
at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under
the box entitled "Special Delivery Instructions" below, please send the Exchange
Notes (and, if applicable, substitute certificates representing Private Notes
for any Private Notes not exchanged) to the undersigned at the address shown
above in the box entitled "Description of Private Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF PRIVATE
NOTES" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE
TENDERED THE PRIVATE NOTES AS SET FORTH IN SUCH BOX ABOVE.
6
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF
PRIVATE NOTES REGARDLESS OF WHETHER PRIVATE NOTES ARE
BEING PHYSICALLY DELIVERED HEREWITH)
If a holder is tendering any Private Notes, this Letter of Transmittal must
be signed by the holder(s) as the name(s) appear(s) on the certificate(s) for
the Private Notes or on a securities position listing or by any person(s)
authorized to become (a) holder(s) by endorsements and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
officer or other person acting in a fiduciary or representative capacity, please
set forth full title. See Instruction 3.
<TABLE>
<S> <C>
X ----------------------------------------------- Date: --------------------------------------------
X ----------------------------------------------- Date: --------------------------------------------
SIGNATURE(S) OF OWNER
Name(s): ----------------------------------------- Address: -----------------------------------------
----------------------------------------- --------------------------------------------------
(Please Print) (Including Zip Code)
Capacity: ----------------------------------------- Area Code and Telephone No.: ---------------------
Social Security No.: --------------------------------
</TABLE>
SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
- --------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- --------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(PRINTED NAME)
- --------------------------------------------------------------------------------
(TITLE)
Date:
- --------------------------------------
7
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Private Notes not exchanged and/or
Exchange Notes are to be issued in the name of and sent to someone other than
the person or persons whose signature(s) appear(s) above on this Letter of
Transmittal, or if Private Notes delivered by book-entry transfer which are not
accepted for exchange are to be returned by credit to an account maintained at
the Book-Entry Transfer Facility other than the account indicated above.
Issue: Exchange Notes and/or Private Notes to:
Name(s): _______________________________________________________________________
(Please Type or Print)
________________________________________________________________________________
(Please Type or Print)
Address: _______________________________________________________________________
(Please Type or Print)
________________________________________________________________________________
Zip Code
Credit unexchanged Private Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
________________________________________________________________________________
(Book Entry Transfer Facility
Account Number, if applicable)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Private Notes not exchanged and/or
Exchange Notes are to be sent to someone other than the person or persons whose
signature(s) appear(s) above on this Letter of Transmittal or to such person or
persons at an address other than shown above in the box entitled "Description of
Private Notes" on this Letter of Transmittal.
Mail: Exchange Notes and/or Private Notes to:
Name(s): _______________________________________________________________________
(Please Type or Print)
________________________________________________________________________________
(Please Type or Print)
Address: _______________________________________________________________________
(Please Type or Print)
________________________________________________________________________________
Zip Code
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER OF BIG FLOWER PRESS
HOLDINGS, INC. TO EXCHANGE $250,000,000 OF ITS 8 5/8% SENIOR SUBORDINATED NOTES
DUE DECEMBER 1, 2008 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ALL OF ITS OUTSTANDING UNREGISTERED 8 5/8% SENIOR SUBORDINATED NOTES DUE
DECEMBER 1, 2008
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES; GUARANTEED DELIVERY
PROCEDURES
This Letter of Transmittal is to be completed by holders of Private Notes
either if certificates are to be forwarded herewith or if tenders are to be made
pursuant to the procedures for delivery by book-entry transfer set forth in "The
Exchange Offer--Book-Entry Transfer" section of the Prospectus. Certificates for
all physically tendered Private Notes, or Book-Entry Confirmation of tendered
Private Notes, as the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile hereof) and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent at the address set forth herein on or prior to the Expiration
Date, or the tendering holder must comply with the guaranteed delivery
procedures set forth below. Private Notes may only be tendered in a principal
amount of $1,000 and any integral multiple thereof.
Holders of Private Notes whose certificates for Private Notes are not
immediately available or who cannot deliver their certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date, or
who cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Private Notes pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined below), (ii) prior to the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form
provided by the Company (by telegram, telex, facsimile transmission, mail or
hand delivery), setting forth the name and address of the holder of Private
Notes and the amount of Private Notes tendered, stating that the tender is being
made thereby and guaranteeing that within five New York Stock Exchange ("NYSE")
trading days after the Expiration Date, the certificates for all physically
tendered Private Notes, or a Book-Entry Confirmation of such Private Notes, and
any other documents required by this Letter of Transmittal will be deposited by
the Eligible Institution with the Exchange Agent, and (iii) a properly executed
Letter of Transmittal, as well as the certificates for all physically tendered
Private Notes in proper form for transfer or Book-Entry Confirmation of such
Private Notes, as the case may be, and all other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within five NYSE
trading days after the Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE PRIVATE NOTES AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING
HOLDERS, BUT THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR
CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED
THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. DO NOT
SEND THIS LETTER OF TRANSMITTAL OR ANY PRIVATE NOTES TO THE COMPANY.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF PRIVATE NOTES WHO TENDER BY
BOOK-ENTRY TRANSFER); WITHDRAWAL RIGHTS
Tenders of Private Notes will be accepted only in the principal amount of
$1,000 and integral multiples thereof. If less than all of the Private Notes
evidenced by a submitted certificate are to be tendered, the tendering holder(s)
should fill in the aggregate principal amount of Private Notes to be tendered in
the box above entitled "Description of Private Notes--Aggregate Principal Amount
Tendered." A reissued certificate representing the balance of nontendered
Private Notes will be sent to such tendering holder, unless otherwise provided
in the appropriate box on this Letter of Transmittal, promptly after the
Expiration Date. ALL OF THE PRIVATE NOTES DELIVERED TO
9
<PAGE>
THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE
INDICATED.
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date. In order for a withdrawal to
be effective prior to that time, a written or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent at one of its addresses
set forth above prior to the Expiration Date. Any such notice of withdrawal must
specify the name of the person having deposited the Private Notes to be
withdrawn, the aggregate principal amount of Private Notes to be withdrawn and
(if certificates for such Private Notes have been tendered) the name of the
registered holder of the Private Notes as set forth on the certificate for the
Private Notes, if different from that of the person who tendered such Private
Notes. If certificates for the Private Notes have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such
certificates for the Private Notes, the tendering holder must submit the serial
numbers shown on the particular certificates for the Private Notes to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution, except in the case of Private Notes tendered for the
account of an Eligible Institution. If Private Notes have been tendered pursuant
to the procedures for book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus, the notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawal of Private Notes, in which case a
notice of withdrawal will be effective if delivered to the Exchange Agent by
written or facsimile transmission. Withdrawals of tenders of Private Notes may
not be rescinded. Private Notes properly withdrawn will not be deemed to have
been validly tendered for purposes of the Exchange Offer, and no Exchange Notes
will be issued with respect thereto unless the Private Notes so withdrawn are
validly retendered. Properly withdrawn Private Notes may be retendered at any
subsequent time on or prior to the Expiration Date by following the procedures
described in the Prospectus under "The Exchange Offer--Procedures for
Tendering."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Company, any employees, agents, affiliates or assigns of the
Company, the Exchange Agent nor any other person shall be under any duty to give
any notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give such notification. Any Private Notes which have
been tendered but which are withdrawn will be returned to the holder thereof
without cost to such holder as promptly as practicable after withdrawal.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES
If this Letter of Transmittal is signed by the holder of the Private Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates or on a securities position listing without any
change whatsoever.
If any tendered Private Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter of Transmittal.
If any tendered Private Notes are registered in different names on several
certificates or securities positions listings, it will be necessary to complete,
sign and submit as many separate copies of this Letter as there are different
registrations.
When this Letter of Transmittal is signed by the holder or holders of the
Private Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the Exchange
Notes are to be issued, or any nontendered Private Notes are to be reissued, to
a person other than the holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
In connection with any tender of Private Notes in definitive certificated
form, if this Letter of Transmittal is signed by a person other than the
registered holder or holders of any certificate(s) specified herein, such
certificate(s) must be endorsed or accompanied by appropriate bond powers, in
either case signed exactly as the name or names of the registered holder or
holders appear(s) on the certificate(s), and the signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
10
<PAGE>
persons should so indicate when signing, and, unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR PRIVATE NOTES OR SIGNATURES ON BOND POWERS
REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF
A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK OR TRUST COMPANY
HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES (AN "ELIGIBLE
INSTITUTION").
SIGNATURES ON THIS LETTER OF TRANSMITTAL NEED NOT BE GUARANTEED BY AN
ELIGIBLE INSTITUTION, PROVIDED THE PRIVATE NOTES ARE TENDERED: (I) BY A HOLDER
OF PRIVATE NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER, INCLUDES ANY
PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS ON A
SECURITY POSITION LISTING AS THE HOLDER OF SUCH PRIVATE NOTES) WHO HAS NOT
COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL DELIVERY
INSTRUCTIONS" ON THIS LETTER OR (II) FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Private Notes should indicate in the applicable box the
name and address to which Exchange Notes issued pursuant to the Exchange Offer
and/or substitute certificates evidencing Private Notes not exchanged are to be
issued or sent, if different from the name or address of the person signing this
Letter of Transmittal. In the case of issuance in a different name, the Employer
Identification or Social Security Number of the person named must also be
indicated. A holder of Private Notes tendering Private Notes by book-entry
transfer may request that Private Notes not exchanged be credited to such
account maintained at the Book-Entry Transfer Facility as such holder may
designate hereon. If no such instructions are given, such Private Notes not
exchanged will be returned to the name or address of the person signing this
Letter of Transmittal or credited to the account listed beneath the box entitled
"Description of Private Notes", as the case may be.
11
<PAGE>
5. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Private Notes to it or its order pursuant to the Exchange Offer. If, however,
Exchange Notes and/or substitute Private Notes not exchanged are to be delivered
to, or are to be registered or issued in the name of, any person other than the
holder of the Private Notes tendered hereby, or if tendered Private Notes are
registered in the name of any person other than the person signing this Letter
of Transmittal, or if a transfer tax is imposed for any reason other than the
transfer of Private Notes to the Company or its order pursuant to the Exchange
Offer, the amount of any such transfer taxes (whether imposed on the holder or
any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted
herewith, the amount of such transfer taxes will be billed directly to such
tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 5, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE PRIVATE NOTES SPECIFIED IN THIS LETTER
OF TRANSMITTAL.
12
<PAGE>
6. DETERMINATION OF VALIDITY.
The Company will determine, in its sole discretion, all questions as to the
form of documents, validity, eligibility (including time of receipt) and
acceptance for exchange of any tender of Private Notes, which determination
shall be final and binding on all parties. The Company reserves the absolute
right to reject any and all tenders determined by it not to be in proper form or
the acceptance of which, or exchange for which, may, in the view of counsel to
the Company, be unlawful. The Company also reserves the absolute right, subject
to applicable law, to waive any of the conditions of the Exchange Offer set
forth in the Prospectus under the caption "The Exchange Offer" or any conditions
or irregularity in any tender of Private Notes of any particular holder whether
or not similar conditions or irregularities are waived in the case of other
holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of Private Notes will be deemed to have been
validly made until all irregularities with respect to such tender have been
cured or waived. Although the Company intends to notify holders of defects or
irregularities with respect to tenders of Private Notes, neither the Company,
any employees, agents, affiliates or assigns of the Company, the Exchange Agent,
nor any other person shall be under any duty to give notification of any
irregularities in tenders or incur any liability for failure to give such
notification.
7. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Private Notes, by execution of this Letter of
Transmittal, shall waive any right to receive notice of the acceptance of their
Private Notes for exchange.
8. MUTILATED, LOST, STOLEN OR DESTROYED PRIVATE NOTES.
Any holder whose Private Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent, at the address and telephone number indicated
above.
13
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND ------------------------------
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW OR Social Security Number
------------------------------
Employer Identification Number
Department of the Treasury PART 2--Certification--Under Penalties of Perjury, I certify that:
Internal Revenue Service
Payer's Request for Taxpayer (1) The number shown on this form is my correct Taxpayer Identifi- PART 3--
Identification Number (TIN) cation Number (or I am waiting for a number to be issued to Awaiting TIN / /
me) and
(2) I am not subject to backup withholding because: (a) I am
exempt from backup withholding, (b) I have not been notified
by the Internal Revenue Service ("IRS") that I am subject to
backup withholding as a result of failure to report all
interest or dividends, or (c) the IRS has notified me that I
am no longer subject to backup withholding.
Certificate instructions--You must cross out item (2) in Part 2 above if you have been notified by
the IRS that you are subject to backup withholding because of under-reporting interest or
dividends on your tax return. However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS stating that you are no longer
subject to backup withholding, do not cross out item (2).
SIGNATURE ------------------------------------ DATE ------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO HOLDERS OF NEW NOTES PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number within 60 days, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------ ------------------------------------------
Signature Date
</TABLE>
14
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
8 5/8% SENIOR SUBORDINATED NOTES DUE DECEMBER 1, 2008
OF
BIG FLOWER PRESS HOLDINGS, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Big Flower Press Holdings, Inc., a Delaware corporation (the
"Company"), made pursuant to the Prospectus, dated February - , 1999 (the
"Prospectus"), if certificates for the outstanding 8 5/8% Senior Subordinated
Notes due December 1, 2008 of the Company (the "Private Notes") are not readily
available or if the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach State
Street Bank and Trust Company (the "Exchange Agent") on or prior to 5:00 p.m.,
New York City time, on the Expiration Date (as defined below) of the Exchange
Offer. This Notice of Guaranteed Delivery may be delivered or transmitted by
telegram, telex, facsimile transmission, mail or hand delivery to the Exchange
Agent as set forth below. See "The Exchange Offer-- Procedures for Tendering" in
the Prospectus. Capitalized terms used herein but not defined herein have the
respective meanings given to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
- , 1999 UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF
PRIVATE NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
The Exchange Agent:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<CAPTION>
By Mail: By Facsimile: By Hand or Overnight Courier:
<S> <C> <C>
State Street Bank and Trust Company (For Eligible Institutions Only) State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box 778 (617) 664-5290 4th Floor
Boston, MA 02102-0078 Two International Place
Attention: Kellie Mullen Confirm by Telephone: Boston, MA 02110
(617) 664-5587 Attention: Kellie Mullen
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION VIA TELEGRAM,
TELEX OR FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the aggregate principal
amount of Private Notes set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
<PAGE>
<TABLE>
<S> <C>
Signature(s) of Owner(s) or Authorized Signatory: ------- Name(s) of Holder(s):
- ------------------------------------------------------ ---------------------------------------------------
- ------------------------------------------------------ ---------------------------------------------------
- ------------------------------------------------------ ---------------------------------------------------
Principal Amount of Private Notes Tendered:* ----------- Address:
- ------------------------------------------------------ ----------------------------------------------
Certificate No(s). of Private Notes (if available): --------- ---------------------------------------------------
- ------------------------------------------------------ Area Code and Telephone No.:
- ------------------------------------------------------ -------------------------
Date: ------------------------------------------------ If Private Notes will be delivered by book-entry
transfer at The Depository Trust Company, insert
Depository Account No.:
---------------------------------------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the holder(s) of Private
Notes exactly as its (their) name(s) appear on certificates for Private Notes or
on a security position listing as the owner of Private Notes, or by person(s)
authorized to become holder(s) by endorsements and documents transmitted with
this Notice of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer or other person acting in a
fiduciary or representative capacity, such person must provide the following
information.
Please print name(s) and address(es)
Name(s): _____________________________________________________________________
_______________________________________________________________________
Capacity: ____________________________________________________________________
Address(es): ___________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Do not send Private Notes with this form. Notes should be sent to the Exchange
Agent together with a properly completed and duly executed Letter of
Transmittal.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial bank
or trust company having an office or a correspondent in the United States,
hereby (a) represents that each holder of Private Notes on whose behalf this
tender is being made "own(s)" the Private Notes covered hereby within the
meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended, (b)
represents that such tender of Private Notes complies with such Rule 14e-4, and
(c) guarantees that, within five New York Stock Exchange trading days after the
Expiration Date, a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), together with certificates representing the Private
Notes covered hereby in proper form for transfer (or confirmation of the
book-entry transfer of such Private Notes into the Exchange Agent's account at
The Depository Trust Company, pursuant to the procedure for book-entry transfer
set forth in the Prospectus) and required documents will be deposited by the
undersigned with the Exchange Agent.
The undersigned acknowledges that it must deliver the Letter of Transmittal
and Private Notes tendered hereby to the Exchange Agent within the time period
set forth above and that failure to do so could result in financial loss to the
undersigned.
<TABLE>
<S> <C>
Name of Firm: ------------------------------------------------------
- ------------------------------------------------------ Authorized Signature
Address: ---------------------------------------------- Name: -----------------------------------------------
- ------------------------------------------------------ Title: -------------------------------------------------
Area Code and Telephone No.: ------------------------- Date: ------------------------------------------------
</TABLE>
- ------------------------
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
2
<PAGE>
EXHIBIT 99.3
- , 1999
EXCHANGE AGENT AGREEMENT
State Street Bank and Trust Company
Corporate Trust Department
225 Asylum Street, 23rd Floor
Hartford, CT 06103
Attention: Kathy Larimore
Assistant Vice President
Dear Ms. Larimore:
Big Flower Press Holdings, Inc., a Delaware corporation (the "Company"),
proposes to make an offer (the "Exchange Offer") to exchange up to $250,000,000
aggregate principal amount of its 8 5/8% Senior Subordinated Notes due December
1, 2008 (the "Exchange Notes"), for a like principal amount of its outstanding
8 5/8% Senior Subordinated Notes due December 1, 2008 (the "Private Notes"). The
terms and conditions of the Exchange Offer are set forth in a prospectus (the
"Prospectus") included in the Company's registration statement on Form S-4 (File
No. 333- - ), as amended (the "Registration Statement"), filed with the
Securities and Exchange Commission (the "SEC"), and proposed to be distributed
to all record holders of the Private Notes. The Private Notes and the Exchange
Notes are collectively referred to herein as the "Notes." Capitalized terms used
herein and not defined shall have the respective meanings ascribed to them in
the Prospectus or accompanying Letter of Transmittal.
The Company hereby appoints State Street Bank and Trust Company to act as
exchange agent (the "Exchange Agent") in connection with the Exchange Offer and
you hereby accept such appointment. References hereinafter to "you" shall refer
to State Street Bank and Trust Company.
The Exchange Offer is expected to be commenced by the Company on or about
- , 1999. The Letter of Transmittal accompanying the Prospectus is to be
used by the holders of the Private Notes to accept the Exchange Offer and
contains instructions with respect to the delivery of certificates for Private
Notes tendered.
The Exchange Offer shall expire at 5:00 P.M., New York City time, on - ,
1999, or on such later date or time to which the Company may extend the Exchange
Offer (the "Expiration Date"). Subject to the terms and conditions set forth in
the Prospectus, the Company expressly reserves the right to extend the Exchange
Offer from time to time and may extend the Exchange Offer by giving oral
(confirmed in writing) or written notice to you before 9:00 A.M., New York City
time, on the next business day after the previously scheduled Expiration Date.
The Company expressly reserves the right, in its sole discretion, to amend
or terminate the Exchange Offer, and not to accept for exchange any Private
Notes not theretofore accepted for exchange. The Company will give oral
(confirmed in writing) or written notice of any amendment, termination or
nonacceptance to you as promptly as practicable.
In carrying out your duties as Exchange Agent, you are to act in accordance
with the following instructions:
1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The
Exchange Offer", in the Letter of Transmittal accompanying the Prospectus or
as specifically set forth herein; provided, however, that in no way will
your general duty to act in good faith and without gross negligence or
willful misconduct be limited by the foregoing.
2. You will establish an account with respect to the Private Notes at
The Depository Trust Company (the "Book-Entry Transfer Facility") for
purposes of the Exchange Offer within two business days after the date of
the Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of the
Private Notes by causing
<PAGE>
the Book-Entry Transfer Facility to transfer such Private Notes into your
account in accordance with the Book-Entry Transfer Facility's procedures for
such transfer.
3. You are to examine each of the Letters of Transmittal and
certificates for Private Notes (and confirmation of book-entry transfers of
Private Notes into your account at the Book-Entry Transfer Facility) and any
other documents delivered or mailed to you by or for holders of the Private
Notes, to ascertain whether: (i) the Letters of Transmittal, certificates
and any such other documents are duly executed and properly completed in
accordance with instructions set forth therein and that such book-entry
confirmations are in due and proper form and contain the information
required to be set forth therein, and (ii) the Private Notes have otherwise
been properly tendered. In each case where the Letter of Transmittal or any
other document has been improperly completed or executed, or where
book-entry confirmations are not in due and proper form or omit certain
information, or any of the certificates for Private Notes are not in proper
form for transfer or some other irregularity in connection with the
acceptance of the Exchange Offer exists, you will endeavor to inform the
presenters of the need for fulfillment of all requirements and to take any
other action as may be necessary or advisable to cause such irregularity to
be corrected.
4. With the approval of the Chairman, the President and Chief Executive
Officer, any of the Executive Vice Presidents or Irene B. Fisher (such
approval, if given orally, to be confirmed in writing) or any other person
designated by such an officer in writing, you are authorized to waive any
irregularities in connection with any tender of Private Notes pursuant to
the Exchange Offer.
5. Tenders of Private Notes may be made only as set forth in the Letter
of Transmittal and in the section of the Prospectus captioned "The Exchange
Offer--Procedures for Tendering", and Private Notes shall be considered
properly tendered to you only when tendered in accordance with the
procedures set forth therein. Notwithstanding the provisions of this
paragraph 5, Private Notes which the Chairman, the President and Chief
Executive Officer, any of the Executive Vice Presidents or Irene B. Fisher
or any other officer of the Company designated by any such person shall
approve as having been properly tendered shall be considered to be properly
tendered (such approval, if given orally, shall be confirmed in writing).
6. You shall advise the Company with respect to any Private Notes
received subsequent to the Expiration Date and accept its instructions with
respect to disposition of such Private Notes.
7. You shall accept tenders:
(a) in cases where the Private Notes are registered in two or more
names only if signed by all named holders;
(b) in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative capacity only
when proper evidence of his or her authority so to act is submitted; and
(c) from persons other than the registered holder of Private Notes
provided that customary transfer requirements, including those regarding
any applicable transfer taxes, are fulfilled.
You shall accept partial tenders of Private Notes when so indicated and
as permitted in the Letter of Transmittal and deliver certificates for
Private Notes to the transfer agent for split-up and return any untendered
Private Notes to the holder (or such other person as may be designated in
the Letter of Transmittal) as promptly as practicable after expiration or
termination of the Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Company will notify you (such notice if given orally, to be
confirmed in writing) of its acceptance, promptly after the Expiration Date,
of all Private Notes properly tendered and you, on behalf of the Company,
will exchange such Private Notes for Exchange Notes and cause such Private
Notes to be canceled. Delivery of Exchange Notes will be made on behalf of
the Company by you at the rate of $1,000
2
<PAGE>
principal amount of Exchange Notes for each $1,000 principal amount of the
Private Notes tendered promptly after notice (such notice if given orally,
to be confirmed in writing) of acceptance of said Private Notes by the
Company; provided, however, that in all cases, Private Notes tendered
pursuant to the Exchange Offer will be exchanged only after timely receipt
by you of certificates for such Private Notes (or confirmation of book-entry
transfer into your account at the Book-Entry Transfer Facility), a properly
completed and, except as described in the section of the Prospectus
captioned "The Exchange Offer--Procedures for Tendering", duly executed
Letter of Transmittal (or facsimile thereof) with any required signature
guarantees and any other required documents. Unless otherwise instructed by
the Company, you shall issue Exchange Notes only in denominations of $1,000
or any integral multiple thereof.
9. Tenders, pursuant to the Exchange Offer are irrevocable, except
that, subject to the terms and upon the conditions set forth in the
Prospectus and the Letter of Transmittal, Private Notes tendered pursuant to
the Exchange Offer may be withdrawn at any time on or prior to the
Expiration Date in accordance with the terms of the Exchange Offer.
10. The Company shall not be required to exchange any Private Notes
tendered if any of the conditions set forth in the Exchange Offer are not
met. Notice of any decision by the Company not to exchange any Private Notes
tendered shall be given (and confirmed in writing) by the Company to you.
11. If, pursuant to the Exchange Offer, the Company does not accept for
exchange all or part of the Private Notes tendered because of an invalid
tender, the occurrence of certain other events set forth in the Prospectus
or otherwise, you shall as soon as practicable after the expiration or
termination of the Exchange Offer return those certificates for unaccepted
Private Notes (or effect appropriate book-entry transfer), together with any
related required documents and the Letters of Transmittal relating thereto
that are in your possession, to the persons who deposited them (or effected
such book-entry transfer).
12. All certificates for reissued Private Notes, unaccepted Private
Notes or for Exchange Notes (other than those effected by book-entry
transfer) shall be forwarded by (a) first-class certified mail, return
receipt requested, under a blanket surety bond obtained by you protecting
you and the Company from loss or liability arising out of the nonreceipt or
nondelivery of such certificates or (b) by registered mail insured by you
separately for the replacement value of each of such certificates.
13. You are not authorized to pay or offer to pay any concessions,
commissions or other solicitation fees to any broker, dealer, commercial
bank, trust company or other nominee or to engage or use any person to
solicit tenders.
14. As Exchange Agent hereunder, you:
(a) shall have no duties or obligations other than those specifically
set forth in the Prospectus, the Letter of Transmittal or herein or as
may be subsequently agreed to in writing by you and the Company;
(b) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness of
any of the certificates for the Private Notes deposited with you pursuant
to the Exchange Offer, and will not be required to and will make no
representation as to the validity, value or genuineness of the Exchange
Offer;
(c) shall not be obligated to take any legal action hereunder which
might in your reasonable judgment involve any expense or liability,
unless you shall have been furnished with reasonable indemnity;
3
<PAGE>
(d) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter,
telegram or other document or security delivered to you and reasonably
believed by you to be genuine and to have been signed by the proper party
or parties;
(e) may reasonably act upon any tender, statement, request, comment,
agreement or other instrument whatsoever not only as to its due execution
and validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which you shall
in good faith believe to be genuine or to have been signed or represented
by a proper person or persons;
(f) may rely on and shall be protected in acting upon written or oral
instructions from any officer of the company;
(g) may consult with your counsel with respect to any questions
relating to your duties and responsibilities, and the written opinion of
such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by you
hereunder in good faith and in accordance with the written opinion of
such counsel; and
(h) shall not advise any person tendering Private Notes pursuant to
the Exchange Offer as to whether to tender or refrain from tendering all
or any portion of Private Notes or as to the market value, decline or
appreciation in market value of any Private Notes that may or may not
occur as a result of the Exchange Offer or as to the market value of the
Exchange Notes; provided, however, that in no way will your general duty
to act in good faith and without gross negligence or willful misconduct
be limited by the foregoing.
15. You shall take such action as may from time to time be requested by
the Company or its counsel (and such other action as you may reasonably deem
appropriate) to furnish copies of the Prospectus, Letter of Transmittal and
the Notice of Guaranteed Delivery (as defined in the Prospectus) or such
other forms as may be approved from time to time by the Company to all
persons requesting such documents and to accept and comply with telephone
requests for information relating to the Exchange Offer, provided that such
information shall relate only to the procedures for accepting (or
withdrawing from) the Exchange Offer. The Company will furnish you with
copies of such documents at your request.
16. You shall advise by facsimile transmission or telephone, and
promptly thereafter confirm in writing to Michael S. Kraus of the Company
(telephone number (212) 521-1605, facsimile number (212) 223-4074) or Irene
B. Fisher of the Company (telephone number (212) 521-1622, facsimile number
(212) 715-4902) and such other person or persons as the Company may request,
daily (and more frequently during the week immediately preceding the
Expiration Date and if otherwise requested), up to and including the
Expiration Date, as to the aggregate principal amount of Private Notes which
have been duly tendered pursuant to the Exchange Offer and the items
received by you pursuant to the Exchange Offer and this Agreement,
separately reporting and giving cumulative totals as to items properly
received and items improperly received. In addition, you will also inform,
and cooperate in making available to, the Company or any such other person
or persons upon oral request made from time to time prior to the Expiration
Date of such other information as it or he or she reasonably requests. Such
cooperation shall include, without limitation, the granting by you to the
Company and such person as the Company may request of access to those
persons on your staff who are responsible for receiving tenders, in order to
ensure that immediately prior to the Expiration Date the Company shall have
received information in sufficient detail to enable it to decide whether to
extend the Exchange Offer. You shall prepare a final list of all persons
whose tenders were accepted, the aggregate principal amount of Private Notes
tendered, the aggregate principal amount of Private Notes accepted and the
identity of any Participating Broker-Dealers and the aggregate principal
amount of Exchange Notes delivered to each, and deliver said list to the
Company.
4
<PAGE>
17. Letters of Transmittal, book-entry confirmations and Notices of
Guaranteed Delivery received by you shall be preserved by you for a period
of time at least equal to the period of time you preserve other records
pertaining to the transfer of securities, or one year, whichever is longer,
and thereafter shall be delivered by you to the Company. You shall dispose
of unused Letters of Transmittal and other surplus materials as instructed
by the Company.
18. You hereby expressly waive any lien, encumbrance or right of set-off
whatsoever that you may have with respect to funds deposited with you for
the payment of transfer taxes by reasons of amounts, if any, borrowed by the
Company, or any of its subsidiaries or affiliates pursuant to any loan or
credit agreement with you or for compensation owed to you hereunder.
19. For services rendered as Exchange Agent hereunder, you shall be
entitled to such compensation as set forth on Schedule I attached hereto.
20. You hereby acknowledge receipt of the Prospectus and the Letter of
Transmittal and further acknowledge that you have examined each of them. Any
inconsistency between this Agreement, on the one hand, and the Prospectus
and the Letter of Transmittal (as they may be amended from time to time), on
the other hand, shall be resolved in favor of the latter two documents,
except with respect to the duties, liabilities and indemnification of you as
Exchange Agent, which shall be controlled by this Agreement.
21. The Company covenants and agrees to indemnify and hold you harmless
in your capacity as Exchange Agent hereunder against any loss, liability,
cost or expense, including attorneys' fees and expenses arising out of or in
connection with any act, omission, delay or refusal made by you in reliance
upon any signature, endorsement, assignment, certificate, order, request,
notice, instruction or other instrument or document reasonably believed by
you to be valid, genuine and sufficient and in accepting any tender or
effecting any transfer of Private Notes reasonably believed by you in good
faith to be authorized, and in delaying or refusing in good faith to accept
any tenders or effect any transfer of Private Notes; provided, however, that
anything in this Agreement to the contrary notwithstanding, the Company
shall not be liable for indemnification or otherwise for any loss,
liability, cost or expense to the extent arising out of your gross
negligence or willful misconduct. In no case shall the Company be liable
under this indemnity with respect to any claim against you unless the
Company shall be notified by you, by letter or cable or by facsimile which
is confirmed by letter, of the written assertion of a claim against you or
of any other action commenced against you, promptly after you shall have
received any such written assertion or notice of commencement of action. The
Company shall be entitled to participate, at its own expense, in the defense
of any such claim or other action, and, if the Company so elects, the
Company may assume the defense of any pending or threatened action against
you in respect of which indemnification may be sought hereunder, in which
case the Company shall not thereafter be responsible for the subsequently
incurred fees and disbursements of legal counsel for you under this
paragraph so long as the Company shall retain counsel reasonably
satisfactory to you to defend such suit; provided, that the Company shall
not be entitled to assume the defense of any such action if the named
parties to such action include both you and the Company and representation
of both parties by the same legal counsel would, in the written opinion of
your counsel, be inappropriate due to actual or potential conflicting
interests between you and the Company. You understand and agree that the
Company shall not be liable under this paragraph for the fees and expenses
of more than one legal counsel for you.
22. You shall arrange to comply with all requirements under the tax laws
of the United States, including those relating to missing Tax Identification
Numbers, and shall file any appropriate reports with the Internal Revenue
Service. The Company understands that you are required, in certain
instances, to deduct thirty-one percent (31%) with respect to interest paid
on the Exchange Notes and proceeds from the sale, exchange, redemption or
retirement of the Exchange Notes from holders who
5
<PAGE>
have not supplied their correct Taxpayer Identification Numbers or required
certification. Such funds will be turned over to the Internal Revenue
Service in accordance with applicable regulations.
23. You shall notify the Company of the amount of any transfer taxes
payable in respect of the exchange of Private Notes and, upon receipt of a
written approval from the Company, shall deliver or cause to be delivered,
in a timely manner to each governmental authority to which any transfer
taxes are payable in respect of the exchange of Private Notes, your check in
the amount of all transfer taxes so payable, and the Company shall reimburse
you for the amount of any and all transfer taxes payable in respect of the
exchange of Private Notes; provided, however, that you shall reimburse the
Company for amounts refunded to you in respect of your payment of any such
transfer taxes, at such time as such refund is received by you.
24. This Agreement and your appointment as Exchange Agent hereunder
shall be construed and enforced in accordance with the laws of the State of
New York applicable to agreements made and to be performed entirely within
such state, and without regard to conflicts of law principles.
25. This Agreement shall be binding upon and inure solely to the benefit
of each party hereto and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
Without limitation of the foregoing, the parties hereto expressly agree that
no holder of Private Notes or Exchange Notes shall have any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
26. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, and all of which taken together
shall constitute one and the same agreement.
27. In case any provision of this Agreement 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.
28. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a
written instrument signed by a duly authorized representative of the party
to be charged.
29. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including
facsimile or similar writing) and shall be given to such party, addressed to
it, at its address or telecopy number set forth below:
If to the Company, to:
Big Flower Press Holdings, Inc.
3 East 54th Street, 17th Floor
New York, New York 10022
Telephone: (212) 521-1621
Telecopy: (212) 521-1640
Attention: Mark A. Angelson,
Executive Vice President and
General Counsel
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Telephone: (212) 558-3876
Telecopy: (212) 558-3588
Attention: Robert E. Buckholz, Jr.
6
<PAGE>
If to the Exchange Agent, to:
State Street Bank and Trust Company
Corporate Trust Department
225 Asylum Street, 23rd Floor
Hartford, CT 06103
Telephone: (860) 244-1897
Telecopy: (860) 244-1832
Attention: Kathy Larimore
Assistant Vice President
30. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, paragraphs 17, 19, 21 and 23 shall survive the termination of
this Agreement. Upon any termination of this Agreement, you shall promptly
deliver to the Company any certificates for Notes, funds or property then
held by you as Exchange Agent under this Agreement.
31. This Agreement shall be binding and effective as of the date hereof.
Please acknowledge receipt of this Agreement and confirm the arrangements
herein provided by signing and returning the enclosed copy.
<TABLE>
<S> <C> <C>
BIG FLOWER PRESS HOLDINGS, INC.
By:
-----------------------------------------
Name: Irene B. Fisher
Title: Vice President
</TABLE>
Accepted as of the date
first above written:
STATE STREET BANK AND TRUST
COMPANY, as Exchange Agent
<TABLE>
<S> <C> <C> <C>
By: -------------------------
Name: Kathy A. Larimore
Title: Assistant Vice
President
</TABLE>
7
<PAGE>
SCHEDULE I
FEE SCHEDULE FOR
EXCHANGE AGENT SERVICES
<TABLE>
<CAPTION>
I. ACCEPTANCE FEE Waived
<C> <S> <C>
Our Acceptance Fee includes review of all relevant documentation, closing
of transaction, setting up records and opening accounts.
II. ADMINISTRATIVE FEE $3,000
Our administrative fee covers all duties of the Agent including
distributing exchange offer documents to DTC, receipt and examination of
required exchange offer documentation, reporting to the Company,
calculation of and delivery to participants and DTC. Fees shall be billed
upon closing.
III. OUT OF POCKET EXPENSES As Incurred
All out-of-pocket expenses including but not limited to postage, express
mail, telecopier, long distance telephone, wire transfer charges, courier
expenses, or other expense incurred by the State Street Bank and Trust
Company during its acceptance and administration shall be billed at cost
as incurred.
IV. EXTRAORDINARY SERVICES
Charges for the performance of any service not of a routine administrative
nature or not contemplated at closing and specifically covered elsewhere
in this schedule of fees will be determined by appraisal in amounts
commensurate with the service rendered.
</TABLE>
8
