<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number: 0-24954
U.S. FOODSERVICE
(Exact name of registrant as specified in its charter)
Delaware 52-1634568
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9755 Patuxent Woods Drive 21046
Columbia, Maryland (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (410) 312-7100
Not Applicable
--------------
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--------- ---------
The number of shares of the registrant's common stock, par value $.01 per
share, outstanding at November 6, 1998 was 47,287,425 shares.
<PAGE>
U.S. FOODSERVICE
INDEX
-----
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
--------
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
June 27, 1998 and September 26, 1998 1
Condensed Consolidated Statements of Operations
Three months ended September 27, 1997
and September 26, 1998 2
Condensed Consolidated Statements of Cash Flows
Three months ended September 27, 1997
and September 26, 1998 3
Notes to Condensed Consolidated Financial Statements 4 - 5
Item 2. Management's Discussion and Analysis of Financial 6 - 9
Condition and Results of Operations
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds 10
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
U.S. FOODSERVICE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS JUNE 27, SEPTEMBER 26,
1998* 1998
--------------- -------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 57,817 $ 57,648
Receivables, net 322,040 389,717
Inventories 349,583 366,991
Other current assets 28,548 32,052
Deferred income taxes 39,294 39,319
---------- ----------
Total current assets 797,282 885,727
Property and equipment, net 437,265 431,473
Goodwill and other noncurrent assets 583,244 580,404
---------- ----------
Total assets $1,817,791 $1,897,604
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 604 $ 401
Current obligations under capital leases 6,933 5,891
Accounts payable 381,151 401,433
Accrued expenses 120,778 110,226
---------- ----------
Total current liabilities 509,466 517,951
Noncurrent liabilities
Long-term debt 650,679 635,445
Obligations under capital leases 29,946 29,515
Deferred income taxes 6,064 6,064
Other noncurrent liabilities 36,916 100,531
---------- ----------
Total liabilities 1,233,071 1,289,506
---------- ----------
Commitments and contingent liabilities
Stockholders' equity 584,720 608,098
---------- ----------
Total liabilities and stockholders' equity $1,817,791 $1,897,604
========== ==========
</TABLE>
* Amounts were derived from the Company's audited consolidated balance sheet.
SEE ACCOMPANYING NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1
<PAGE>
U.S. FOODSERVICE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
SEPTEMBER 27, SEPTEMBER 26,
1997 1998
---------- ----------
<S> <C> <C>
Net sales $ 1,338,828 $ 1,478,370
Cost of sales 1,082,582 1,208,393
----------- -----------
Gross profit 256,246 269,977
Operating expenses 216,845 221,008
Amortization of intangible assets 3,681 3,930
----------- -----------
Income from operations 35,720 45,039
Interest expense 18,927 16,196
----------- -----------
Income before income taxes 16,793 28,843
Provision for income taxes 7,002 11,931
----------- -----------
Net income $ 9,791 $ 16,912
=========== ===========
Basic earnings per common share $ 0.22 $ 0.36
=========== ===========
Basic weighted average common
shares outstanding 45,247,000 46,542,000
Diluted earnings per common share $ 0.22 $ 0.36
=========== ===========
Diluted weighted average common
shares outstanding 45,518,000 47,171,000
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
2
<PAGE>
U.S. FOODSERVICE AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
SEPTEMBER 27, SEPTEMBER 26,
1997 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 9,791 $ 16,912
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 15,621 15,053
Other adjustments (1,349) (721)
Changes in net operating assets, net of effects
from acquisitions (41,192) (22,813)
-------- --------
Net cash (used in) provided by operating activities (17,129) 8,431
-------- --------
Cash flows from investing activities
Additions to property and equipment (26,360) (17,612)
Cost of businesses acquired, net of cash acquired 483
Proceeds from disposals of property 745 4,873
Proceeds from sale of manufacturing division assets 20,755
-------- --------
Net cash (used in) provided by investing activities (25,615) 8,499
-------- --------
Cash flows from financing activities
Increase (decrease)under revolving credit line, net 15,000 (2,200)
Increase (decrease) in long-term debt, net 6,195 (17,587)
Principal payments under capital lease obligations (3,060) (1,630)
Proceeds from employee stock purchases 9,010 4,738
Other (270) (420)
-------- --------
Net cash provided by (used in) financing activities 26,875 (17,099)
-------- --------
Net decrease in cash and cash equivalents (15,869) (169)
Cash and cash equivalents:
Beginning of period 74,432 57,817
-------- --------
End of period $ 58,563 $ 57,648
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
U.S. FOODSERVICE AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements of U.S. Foodservice and its
consolidated subsidiaries (the "Company") at September 26, 1998 and for the
three months ended September 27, 1997 and September 26, 1998, included herein
are unaudited, but include all adjustments (consisting only of normal recurring
entries) which the Company's management believes to be necessary for the fair
presentation of the financial position, results of operations and cash flows of
the Company as of and for the periods presented. Interim results are not
necessarily indicative of results that may be expected for the full year.
On December 23, 1997, Rykoff-Sexton, Inc. ("Rykoff-Sexton") was merged into a
wholly owned subsidiary of U.S. Foodservice (the "Acquisition"). The transaction
was accounted for under the pooling of interests method of accounting.
Accordingly, the condensed consolidated statement of operations and the
condensed consolidated statement of cash flows for the three months ended
September 27, 1997 have been restated to include consolidated information for
Rykoff-Sexton.
Net sales and net income previously reported by the separate enterprises and the
combined amounts presented in the accompanying condensed consolidated statement
of operations for the three-month period ended September 27, 1997 are as follows
(dollars in thousands):
Net sales:
Rykoff-Sexton $ 870,938
U.S. Foodservice 467,890
----------
Combined $1,338,828
==========
Net income:
Rykoff-Sexton $ 2,849
U.S. Foodservice 6,942
----------
Combined $ 9,791
==========
NOTE 2 RESTRUCTURING COSTS
In connection with the Acquisition, the Company recorded a $56.7 million
restructuring charge during the year ended June 27, 1998. The restructuring
costs consisted primarily of $26.8 million for change in control payments to
former executives of Rykoff-Sexton and $12.7 million for severance and benefits,
$10.3 million for future lease commitments and $6.9 million for idle facility
and facility closure costs related to the Company's plan to consolidate and
realign certain operating units and consolidate various overhead functions.
During the current fiscal quarter, the Company charged $2.0 million against the
restructuring liability primarily for severance and lease commitments. At
September 26, 1998, $6.2 million of severance and benefits, $9.8 million of
lease commitments and $4.9 million of idle facility and facility closure costs
have yet to be expended.
NOTE 3 OUTSOURCING OF THE MANUFACTURING DIVISION
On August 28, 1998, the Company completed the outsourcing of the Rykoff-Sexton
Manufacturing Division through the sale of its assets to a third party and
entered in to a six-year supply agreement to purchase products from the new
company. Gross proceeds from the supply agreement and asset sale totaled $101
million. Net proceeds, in excess of the net book value of assets sold in the
transaction of approximately $78 million, have been attributed to a six-year
supply agreement consummated in connection with the transaction. Such amount
will be recognized as a reduction to cost of sales as earned over the life of
the supply agreement.
4
<PAGE>
NOTE 4 - CONTINGENCIES
From time to time, the Company is involved in litigation and proceedings arising
out of the ordinary course of business. There are no pending material legal
proceedings or environmental investigations to which the Company is a party or
to which the property of the Company is subject as of the date of this report.
NOTE 5 SUBSEQUENT EVENTS
Haar Acquisition
- ----------------
Effective October 23, 1998, the Company completed the acquisition of J. H. Haar
& Sons, L.L.C. ("Haar"), a broadline foodservice distributor serving the New
York Metropolitan market. Annual sales for Haar for its fiscal year ended
September 30, 1998 totaled $57.0 million. Under the terms of the acquisition,
the Company acquired all of the membership interests of Haar in exchange for
550,543 shares of the Company's common stock. The transaction will be accounted
for as a pooling of interests.
Webb Acquisition
- ----------------
Effective October 30, 1998, the Company signed a definitive purchase agreement
for the acquisition of Joseph Webb Foods, Inc ("Webb"), a broadline foodservice
distributor serving the San Diego and Southern California markets. Annual sales
for Webb for its fiscal year ended December 31, 1997 were $157.4 million.
Subject to customary regulatory approvals and certain other conditions, it is
anticipated that the transaction will close by the end of November 1998. Under
the terms of the stock purchase agreement, the Company will acquire 100% of the
stock of Webb in exchange for approximately 940,000 shares of the Company's
common stock and $100,000 in cash. In addition, the agreement includes a
provision for future stock payments to the selling shareholders contingent upon
achievement of future sales performance targets. The transaction will be
accounted for as a purchase.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Forward-Looking Statements
- ---------------------------
Statements in this Management's Discussion and Analysis of Financial Condition
and Results of Operations with respect to management's expectations regarding
the Company's liquidity needs and resources constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These statements are
subject to risks and uncertainties that could cause the Company's actual results
to differ materially. Such risks and uncertainties include the sensitivity of
the Company's business to national and regional economic conditions, the effects
of inflation and deflation in food prices, the highly competitive markets in
which the Company operates and the Company's ability to integrate acquired
businesses. The Company's Annual Report on Form 10-K for the fiscal year ended
June 27, 1998, filed with the Securities and Exchange Commission on September
25, 1998, discusses some of the important factors that could cause the Company's
actual results to differ materially from those in such forward-looking
statements.
Overview
- --------
Effective December 23, 1997, Rykoff-Sexton was merged into a wholly owned
subsidiary of U.S. Foodservice (the "Acquisition"). The transaction was
accounted for under the pooling of interests method. Accordingly, the condensed
consolidated statements of operations and cash flows for the three-month period
ended September 27, 1997 have been restated to include consolidated information
for Rykoff-Sexton.
Net Sales
- ---------
The Company's net sales of $1.48 billion for the three months ended September
26, 1998 (the "1999 fiscal quarter") represented a 10.4% increase from the $1.34
billion net sales level achieved for the three months ended September 27, 1997
(the "1998 fiscal quarter"). The acquisitions of Outwest Meat Company
("Outwest") in the second quarter of fiscal 1998 and Sorrento Food Service, Inc.
("Sorrento") and Westlund Provisions, Inc. ("Westlund") in the third quarter of
fiscal 1998 accounted for sales growth of 4.0 % for the 1999 fiscal quarter.
Growth in both chain account and street sales contributed to the increase in
sales. Chain account sales increased 15.3% for the 1999 fiscal quarter. A
significant portion of this increase was related to the expansion of sales to
existing chain customers resulting from the national distribution capability
created through the Acquisition. Street sales increased 7.3% for the 1999
fiscal quarter principally from the growth of the street sales force and
improved sales force productivity. Because chain sales grew at a faster rate
than street sales, the street sales mix (street sales as a percentage of total
net sales) decreased to 59.6 % in the 1999 fiscal quarter from 61.3% in the 1998
fiscal quarter.
Gross Profit
- ------------
The Company's gross profit margin decreased to 18.3% in the 1999 fiscal quarter
from 19.1% in the 1998 fiscal quarter. The decrease was primarily attributable
to a continuing shift in product mix from certain high-margin items to higher
turnover, lower-margin items ("center-of-the-plate" entree products) in the
former Rykoff-Sexton operations, as well as an increase in chain sales as a
percentage of net sales in the 1999 fiscal quarter. The effects of this shift
were offset in part by the growth of the Company's private and signature brand
product sales in the 1999 fiscal quarter. Sales of these products, which
generally have higher gross margins than national brand products of comparable
quality, increased by 3.0% in the 1999 fiscal quarter over the prior
corresponding quarter.
Operating Expenses
- ------------------
Operating expenses increased by 1.9% ($4.2 million) in the 1999 fiscal quarter
over the 1998 fiscal quarter. As a percentage of net sales, operating expenses
decreased to 14.9% in the 1999 fiscal quarter from 16.2% in the 1998 fiscal
quarter. The decrease was primarily attributable to operating efficiencies
resulting from the Acquisition restructuring plan, cost reductions achieved
through the consolidation of the Company's general and administrative functions,
and an increase in the average size of customer deliveries resulting from the
shift in sales mix to increased chain account sales and the shift in product mix
toward "center-of-the plate" items.
Income from Operations
- ----------------------
Income from operations (after amortization charges of $3.9 million in the 1999
fiscal quarter and $3.7 million in the 1998 fiscal quarter) increased 26.1%
($9.3 million) in the 1999 fiscal quarter from the 1998 fiscal quarter. The
increase was attributable to the increase in sales and the reduction of
operation expenses as a percentage of sales.
6
<PAGE>
Interest Expense
- ----------------
Interest expense for the 1999 fiscal quarter decreased $2.7 million or 14.4%
from the 1998 fiscal quarter. The reduced interest expense was attributable to
lower overall interest rates under the credit facility established in connection
with the Acquisition.
Provision for Income Taxes
- --------------------------
During the three-month periods ending September 26, 1998 and September 27, 1997,
the Company recognized tax expense at effective rates of 41.4% and 41.7%,
respectively.
Liquidity and Capital Resources
- -------------------------------
As of September 26, 1998, the Company's total long-term indebtedness, including
current portion, was $671.2 million, with an overall weighted average interest
rate of 6.9% (excluding deferred financing costs). Long-term borrowing decreased
by $21.4 million during the three months ended September 26, 1998 primarily as a
result of receipt of $30.4 million of net cash proceeds from the sale of assets
and employee stock purchases and cash provided by operating activities of $8.4
million offset by capital expenditures of $17.6 million.
The Company's working capital balance (excluding current portion of long-term
debt) of $374.1 million at September 26, 1998 increased by $78.7 million from
the balance at June 27, 1998. The higher working capital balances were
primarily attributable to increased net sales and seasonal increases in
inventory and receivables.
The Company made $17.6 million of capital expenditures in the three months ended
September 26, 1998 primarily for facility expansion projects and the upgrading
of management information systems. During the quarter, the Company realized $4.4
million from the sale of redundant facilities. The current net book value of
assets held for sale at September 26, 1998 exceeds $15 million.
From time to time, the Company acquires other foodservice businesses. Any such
business may be acquired for cash, common stock of the Company, or a combination
of cash and common stock.
As of September 26, 1998, $500.0 million of borrowings and $35.9 million of
letters of credit were outstanding under the Company's credit facility and an
additional $213.1 million remained available to finance the Company's working
capital needs and to meet the Company's other liquidity requirements. The
Company believes that the combination of the cash flow generated by its
operations, additional leasing activity, sales of duplicate assets and
borrowings under the credit facility will be sufficient to enable it to finance
its growth and meet its currently projected capital expenditures and other
liquidity requirements.
Information Systems and the Impact of the Year 2000
- ---------------------------------------------------
The Year 2000 issue results from a programming convention in which computer
programs use two digits rather than four to define the applicable year.
Software and hardware may recognize a date using ``00'' as the year 1900, rather
than the year 2000. Such an inability of computer programs to recognize a year
that begins with "20" could result in system failures, miscalculations or errors
causing disruptions of operations or other business problems, including, among
others, a temporary inability to process transactions, send invoices or engage
in similar normal business activities.
The Company's Program. The Company has undertaken a program to address the Year
2000 issue with respect to the following: (i) the Company's information
technology and operating systems (including its billing, accounting and
financial reporting systems); (ii) the Company's non-information technology
systems (such as buildings, equipment, telephone systems and other
infrastructure systems that may contain embedded microcontroller technology);
(iii) certain systems of the Company's major vendors and material service
providers (insofar as such systems relate to the Company's business activities
with such parties); and (iv) the Company's material customers (insofar as the
Year 2000 issue relates to the Company's ability to provide services to such
customers). As described below, the Company's Year 2000 program involves (i) an
assessment of the Year 2000 problems that may affect the Company, (ii) the
development of remedies to address the problems discovered in the assessment
phase, (iii) the testing of such remedies and (iv) the preparation of
contingency plans to deal with worst case scenarios.
7
<PAGE>
Assessment Phase. In order to determine the extent to which its internal
systems are vulnerable to the Year 2000 issue, the Company is currently
evaluating the systems that are date sensitive. The Company's 37 distribution
centers and corporate headquarters currently use various information systems to
process transactions and meet financial reporting needs. Most of these systems
are not fully Year 2000 compliant. As of October 31, 1998, information systems
used by ten of the distribution centers are Year 2000 compliant. The Company's
data processing systems represent its most significant challenge with respect to
Year 2000 compliance. The Company expects that its evaluation of its internal
systems will be completed by December 31, 1998. In addition, in the second
quarter of fiscal 1999, the Company will complete sending letters to certain of
its significant hardware, software and other equipment vendors and other
material service providers, as well as to its significant customers, requesting
them to provide the Company with detailed, written information concerning
existing or anticipated Year 2000 compliance by their systems insofar as the
systems relate to such parties' business activities with the Company. The
Company expects that it will complete its distribution of these inquires by
December 31, 1998.
Remediation and Testing Phase. The activities conducted during the remediation
and testing phase are intended to address potential Year 2000 problems in
Company-developed computer software and in its other information technology and
non-information technology systems in an attempt to demonstrate that this
software will be made substantially Year 2000 compliant on a timely basis. In
this phase, the Company has evaluated the program applications and identified
the Year 2000 problems and is in the process of taking steps to attempt to
remediate such problems and individually test the applications to confirm that
the remediating changes are effective and have not adversely affected the
functionality of the applications. The Company is undertaking similar
remediation and testing with respect to the hardware and other equipment that
runs or is run by the software. After the individual applications and system
components have undergone remediation and testing phases, the Company will
conduct integrated testing for the purpose of demonstrating functional
integrated systems operation. Following completion of its internal, integrated
systems testing, the Company intends to conduct laboratory-simulated integrated
systems testing in an attempt to demonstrate substantial Year 2000 compliance of
the Company's systems as they interface with external systems and equipment of
major vendors, other material service providers and material customers.
During fiscal 1998, among other activities, the Company replaced information
processing systems (consisting of hardware and software) at five distribution
centers, initiated software remediation efforts at 15 locations, and installed
new payroll and human resources information systems at 14 locations. As of the
date of this report, the Company has initiated software and hardware remediation
efforts at the remaining distribution centers and its corporate headquarters.
The Company currently seeks to have most of its software remediated by December
1998 and to have all of its information systems at its distribution centers and
its corporate headquarters Year 2000 compliant by July 1999.
Contingency Plans. The Company is developing contingency plans to handle its
most reasonably likely worst case Year 2000 scenarios, which it has not yet
identified fully. The Company intends to complete its determination of worst
case scenarios after it has received and analyzed responses to substantially all
of the inquiries it has made of third parties. The Company intends to complete
its contingency plans by January 1999.
Costs Related to the Year 2000 Issue. To date, the Company has incurred
approximately $0.8 million in costs for its Year 2000 program. It has also
expended approximately $10.0 million of capital expenditures on new information
processing systems that are already Year 2000 compliant. The Company currently
estimates that it will incur additional costs, which are not expected to exceed
approximately $5.0 million, to complete its Year 2000 compliance work with
respect to the Company's major information systems. Of such additional costs,
approximately $3.0 million are expected to be incurred during fiscal 1999 and
approximately $2.0 million are expected to be incurred during fiscal 2000.
These costs will be expensed as incurred. The Company currently believes that
the costs to resolve compliance issues with respect to other information systems
and its non-information technology systems will not be material. However, there
can be no assurance that the foregoing cost estimate will not change as the
Company completes its assessment.
8
<PAGE>
Risks Related to the Year 2000 Issue. Although the Company's Year 2000 efforts
are intended to minimize the adverse effects of the Year 2000 issue on the
Company's business and operations, the actual effects of the issue and the
success or failure of the Company's efforts described above cannot be known
until the year 2000. Failure by the Company and its major vendors, other
material service providers and material customers to address adequately their
respective Year 2000 issues in a timely manner (insofar as such issues relate to
the Company's business) could have a material adverse effect on the Company's
business, results of operations and financial condition.
Changes in Accounting Standards
- -------------------------------
During 1997 and 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard (SFAS) No. 130, Reporting Comprehensive Income,
SFAS No. 131, Disclosures About Segments of an Enterprise and Related
Information, and SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activity. SFAS No. 130 and 131 generally require additional financial statement
disclosure. SFAS No. 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities and requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. The Company expects to adopt SFAS
No. 130 and No. 131 during fiscal 1999 and SFAS No. 133 during fiscal 2000, in
accordance with the pronouncements, and is currently evaluating the impact, if
any, that SFAS No. 133 will have on its consolidated financial statements.
Quantitative and Qualitative Disclosures About Market Risk
- ----------------------------------------------------------
The following information constitutes forward-looking information. See
"Forward-Looking Statements."
The Company's major market risk exposure is to changing interest rates. The
Company's policy is to manage interest rates through the use of a combination of
fixed and floating rate debt. The Company uses interest rate swap, cap and
collar contracts to manage its exposure to fluctuations in interest rates on
floating long-term debt. Certain management monitoring processes are designed
to minimize the impact of sudden and sustained changes in interest rates. As of
September 26, 1998, the Company's long-term indebtedness consists of fixed rate
and variable rate debt of $111,215 and $524,631, respectively. Substantially
all of the Company's floating rate debt is based on LIBOR. The Company had
effectively capped its interest rate exposure at 7.85% on approximately $400.0
million of its floating rate debt through June 30, 1999.
In addition, the Company sells $250.0 million of accounts receivable on a
revolving basis under accounts receivable securitization arrangements. The
proceeds received from sales of receivables under these arrangements, which are
accounted for under SFAS No. 125, are based to a large extent on LIBOR. The
Company also uses fixed-rate capital leases to finance certain of its trucks and
trailers.
Currently, the Company does not use foreign currency forward contracts or
commodity contracts and does not have any material foreign currency exposure.
9
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
(c) On July 6, 1998, the Company issued 51,049 shares of its common stock
valued at approximately $1.8 million to C. Donald Stahl. Mr. Stahl was the sole
stockholder of Lone Star Institutional Grocers, Inc. a company U.S. Foodservice
acquired in consideration of its issuance of shares of common stock. In
connection with such issuance, the Company relied on the exemption from
registration under the Securities Act of 1933 provided in Section 4(2) of such
Act. U.S. Foodservice did not engage in any advertising or general solicitation
in connection with the offer and sale of the securities. In addition, the
Company provided or made available information concerning the Company and the
common stock, obtained investment representations from the selling stockholder
and placed restrictive legends on the certificates evidencing such securities.
Item 6. Exhibits and Reports on Form 8-K.
(a) The Company files herewith the following exhibits:
10.1 1994 Stock Incentive Plan, as amended.
10.2 Stock Option Plan for Outside Directors, as amended.
10.3 Indenture, dated as of November 1, 1993, between Rykoff-
Sexton, Inc. and Norwest Bank Minnesota, N.A., as trustee.
(b) The following Current Report on Form 8-K was filed by U.S.
Foodservice during the period covered by this report:
Date of Report Item Reported
-------------- -------------
September 9, 1998 Item 5 (Outsourcing of Manufacturing
Division)
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. FOODSERVICE
(Registrant)
DATE: November 10, 1998 /s/ Lewis Hay, III
----------------- ----------------------------------------
Lewis Hay, III, Executive Vice President
and Chief Financial Officer
(Duly Authorized and Principal
Financial Officer)
11
<PAGE>
Exhibit 10.1
U.S. FOODSERVICE
1994 STOCK INCENTIVE PLAN
(AS AMENDED)
1. Purpose.
The purpose of the U.S. Foodservice 1994 Stock Incentive Plan is to promote
the long-term growth of U.S. Foodservice and its subsidiaries by rewarding key
management employees of U.S. Foodservice and its subsidiaries with a proprietary
interest in U.S. Foodservice for outstanding long-term performance and to
attract, motivate and retain highly qualified and capable management employees.
2. DEFINITIONS.
Unless the context clearly indicates otherwise, the following terms shall
have the following meanings:
2.1 "Award" means an award granted to a Participant under the Plan in the
form of an Option, Restricted Stock, Restricted Stock Units, a Stock
Appreciation Right, or any combination of the foregoing.
2.2 "Board" means the Board of Directors of the Corporation.
2.3 "Change of Control" has the meaning set forth in Section 10.2.
2.4 "Commission" means the Securities and Exchange Commission or any
successor agency.
2.5 "Committee" means the committee administering the Plan as set forth in
Section 3, or, if such a committee has not been appointed, the Board.
2.6 "Corporation" means U.S. Foodservice, a Delaware corporation, or any
successor thereto.
2.7 "Disability" means total disability as defined from time to time under
the U.S. Foodservice Long-Term Disability Plan.
2.8 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.9 "Fair Market Value" means the opening price of the Shares reported on
the New York Stock Exchange ("NYSE") on the date Fair Market Value is being
determined, provided that if there should be no opening price reported on such
date, the Fair Market Value of a Share on such date shall be deemed equal to the
closing price as reported by the NYSE for the last preceding date on which sales
of Shares
<PAGE>
were reported. Notwithstanding the foregoing, in the event that the Shares are
listed upon more than one established stock exchange, "Fair Market Value" means
the opening price of the Shares reported on the exchange that trades the largest
volume of Shares on the Option Grant Date.
2.10 "Incentive Stock Option" means an Option which meets the requirements
of Section 422 of the Internal Revenue Code of 1986, as amended, or any
successor law.
2.11 "Non-Qualified Stock Option" means an Option which does not meet the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended, or
any successor law.
2.12 "Option" means an option awarded under Section 7 to purchase Shares.
An Option may be either an Incentive Stock Option or a Non-Qualified Stock
Option.
2.13 "Option Exercise Period" means the period from the Option Grant Date
to the date on which an Option expires.
2.14 "Option Grant Date" means the date upon which the Committee grants an
Option to an Optionee.
2.15 "Optionee" means an employee of the Corporation or any Subsidiary to
whom an Option has been granted.
2.16 "Participant" means an employee of the Corporation or any Subsidiary
to whom an Award has been granted which has not terminated, expired or been
fully exercised.
2.17 "Plan" means this U.S. Foodservice 1994 Stock Incentive Plan, as it
may be amended and restated from time to time.
2.18 "Reload Option" means the right, upon exercise of and satisfaction of
an Option through the delivery of shares, automatically to be granted a new Non-
Qualified Stock Option subject to the terms and provisions of Section 7.
2.19 "Restricted Period" means the period of time, which may be a single
period or multiple periods, during which Restricted Stock or any Restricted
Stock Unit awarded to a Participant remains subject to the Restrictions imposed
on such Awards, as determined by the Committee.
2.20 "Restricted Stock" means an Award of Shares on which are imposed
Restricted Periods and Restrictions which subject the Shares to a "substantial
risk of forfeiture" as defined in Section 83 of the Internal Revenue Code of
1986, as amended, or any successor law.
-2-
<PAGE>
2.21 "Restricted Stock Agreement" means a written agreement between a
Participant and the Corporation evidencing an Award of Restricted Stock.
2.22 "Restricted Stock Award Date" means the date on which the Committee
awards Restricted Stock to a Participant.
2.23 "Restricted Stock Unit" means a unit awarded to a Participant which
represents a conditional right to receive a Share in the future, and which is
subject to restrictions and to a risk of forfeiture.
2.24 "Restricted Stock Unit Agreement" means a written agreement between a
Participant and the Corporation evidencing an award of Restricted Stock Units.
2.25 "Restricted Stock Unit Award Date" means the date on which the
Committee awards Restricted Stock Units to the Participant.
2.26 "Restrictions" means the restrictions and conditions imposed on any
Restricted Stock Award, Restricted Stock Unit Award or Stock Appreciation Right
Award to a Participant, as determined by the Committee, which must be satisfied
in order for the Restricted Stock Award, Restricted Stock Unit Award or Stock
Appreciation Right Award to vest, in whole or in part, in the Participant.
Restrictions in addition to or other than continuous employment may include the
satisfaction of corporate, divisional or individual performance objectives,
which may be applicable to all or any portion of the Restricted Stock Award,
Restricted Stock Unit Award or Stock Appreciation Right Award. Such performance
objectives shall be established in writing by the Committee prior to the
ninetieth day of the year in which the Award is made and while the outcome is
substantially uncertain. Performance objectives shall be based on earnings per
share, total shareholder return, operating earnings, growth in assets, return on
equity, return on capital, Share price, net income, cash flow, sales growth (in
general, by type of product and by type of customer), retained earnings and
completion of acquisitions. Performance objectives may include positive
results, maintaining the status quo or limiting economic losses.
2.27 "Retirement" means retirement from active employment with the
Corporation or any Subsidiary pursuant to the terms and conditions of the
pension or retirement plans of the Corporation or such Subsidiary applicable to
the Participant.
2.28 "Shares, except as specifically provided in Section 6, means shares
of the common stock, par value $0.01 per share, of the Corporation.
2.29 "Stock Appreciation Right" means a right to receive the spread or
difference between the Fair Market Value of Shares subject to an Option and the
Option exercise price, either in stock or in cash, or in a combination thereof.
-3-
<PAGE>
2.30 "Stock Appreciation Rights Agreement" means a written agreement
between a Participant and the Corporation evidencing an Award of Stock
Appreciation Rights.
2.31 "Stock Option Agreement" means a written agreement between a
Participant and the Corporation evidencing an Award of an Option.
2.32 "Subsidiary" means any domestic or foreign corporation or entity of
which the Corporation owns, directly or indirectly, at least 50% of the total
combined voting power of such corporation or other entity.
2.33 "Ten Percent Shareholder" means an Optionee who, at the time an
Incentive Stock Option is granted, owns stock possessing more than 10% of the
total voting power of all classes of stock of the Corporation or any Subsidiary.
3. ADMINISTRATION OF THE PLAN.
3.1 Administrator of Plan. The Plan shall be administered by the
---------------------
Compensation Committee of the Board, which shall be composed of at least two (2)
directors who are "non-employee directors" as defined in Rule 16b-3 under the
Exchange Act or any successor rule of the Commission.
3.2 Authority of Committee. The Committee shall have full power and
----------------------
authority to:
(i) designate the Participants to whom Options, Restricted Stock,
Restricted Stock Units or Stock Appreciation Rights may be awarded
from time to time;
(ii) determine the type of Award to be granted to each Participant under
the Plan and the number of Shares subject thereto;
(iii) determine the duration of the Restricted Period and the Restrictions
to be imposed with respect to each Award;
(iv) interpret and construe the Plan and adopt such rules and regulations
as it shall deem necessary and advisable to implement and administer
the Plan;
(v) approve the form and terms and conditions of the Restricted Stock
Agreement, Restricted Stock Unit Agreement, Stock Option Agreement,
or Stock Appreciation Rights Agreement, as the case may be, between
the Corporation and the Participant; and
(vi) designate persons other than members of the Committee to carry out
its responsibilities, subject to such limitations, restrictions and
-4-
<PAGE>
conditions as it may prescribe, provided that the Committee may not
delegate its authority (a) with respect to the granting of Awards to
persons subject to Sections 16(a) and 16(b) of the Exchange Act or
(b) if such delegation would cause the Plan not to comply with the
requirements of Rule 16b-3 under the Exchange Act or any successor
rule of the Commission.
The foregoing determinations shall be made in accordance with the Committee's
best business judgment as to the best interests of the Corporation and its
stockholders and in accordance with the purposes of the Plan.
3.3 Determinations of Committee. A majority of the Committee shall
---------------------------
constitute a quorum at any meeting of the Committee, and all determinations of
the Committee shall be made by a majority of its members. Any action which the
Committee shall take through a written instrument signed by all of its members
shall be as effective as though it had been taken at a meeting duly called and
held. The Committee shall report all actions taken by it to the Board.
3.4 Delegation. The Committee may delegate such non-discretionary
----------
administrative duties under the Plan to one or more agents as it shall deem
necessary and advisable.
3.5 Effect of Committee Determinations. No member of the Committee or
----------------------------------
the Board shall be personally liable for any action or determination made in
good faith with respect to the Plan, any Award or any settlement of any dispute
between a Participant and the Corporation. Any decision made or action taken by
the Committee or the Board with respect to an Award or the administration or
interpretation of the Plan shall be conclusive and binding upon all persons.
4. AWARDS UNDER THE PLAN.
Awards to a Participant under the Plan may be in the form of a Non-
Qualified Stock Option, an Incentive Stock Option, Restricted Stock, Restricted
Stock Units, a Stock Appreciation Right, or a combination thereof, at the
discretion of the Committee. If an Option is designated as an Incentive Stock
Option, the terms of such Option shall be in conformance with Section 422 of the
Internal Revenue Code of 1986, as amended, or any successor law.
5. ELIGIBILITY.
The Participants in the Plan shall be the officers and key management
employees of the Corporation and its Subsidiaries designated by the Committee.
A Participant who has been granted an Award under the Plan may be granted
additional Awards under the Plan under such circumstances, and at such times, as
the Committee may determine.
-5-
<PAGE>
6. SHARES SUBJECT TO PLAN.
Subject to adjustment as provided in Section 15, the aggregate number of
Shares which may be issued and released from Restrictions upon the exercise of
Options or Stock Appreciation Rights and the vesting of Restricted Stock and
Restricted Stock Units, respectively, is 2,600,000. Any portion of such Shares
may be issued under Incentive Stock Options pursuant to the Plan. Subject to
adjustment as provided in Section 15, the aggregate number of Shares which may
be granted pursuant to Options or Stock Appreciation Rights under this Plan to
any one Participant during the life of this Plan shall be twenty percent (20%)
of the total number of Shares subject to this Plan. If all or any portion of
any outstanding Award under the Plan for any reason expires or is terminated,
the Shares allocable to the unexercised portion of such Award may again be
subject to an Award under the Plan.
7. OPTIONS.
7.1 Terms of Options. Options granted under the Plan shall be subject to
----------------
the following terms and conditions:
(a) Option Price. The option price per Share under each Option granted by
------------
the Committee (the "Option Price") may not be less than 100% (110% in the case
of an Incentive Stock Option granted to a Ten Percent Shareholder) of the Fair
Market Value per Share on the Option Grant Date. In no event shall the Option
Price be less than the par value of such Share on the Option Grant Date.
(b) Vesting of Options. Except as provided in this Section 7.1 and Section
------------------
10.1, one-third of each Option granted by the Committee shall vest on each of
the first, second, and third anniversary dates of the Option Grant Date,
provided the Optionee is employed on such date. The Committee may accelerate
the vesting of any Option in its discretion.
(c) Exercise of Options. Each Option shall be exercisable on the dates and
-------------------
for the number of Shares as shall be provided in the related Stock Option
Agreement, provided that (i) no Option shall be exercisable earlier than six
months after the Option Grant Date, and (ii) in no event shall the Option
Exercise Period exceed ten years from the Option Grant Date (five years in the
case of an Incentive Stock Option granted to a Ten Percent Shareholder).
Options may be exercised (in full or in part) only by written notice
delivered to the Corporation at its principal executive office, accompanied by
payment of the Option Price for the Shares as to which such Option is exercised.
The Option Price of each Share shall be paid in full at the time of exercise (i)
in cash, (ii) with Shares owned by the Participant, (iii) by delivery to the
Corporation of (x) irrevocable instructions to deliver directly to a broker the
stock certificates representing the
-6-
<PAGE>
Shares for which the Option is being
exercised, and (y) irrevocable instructions to such broker to sell such Shares
and promptly deliver to the Corporation the portion of the proceeds equal to the
Option Price, or (iv) any combination thereof. For purposes of making payment
in Shares, such Shares shall be valued at their Fair Market Value on the date of
exercise of the Option and shall have been held by the Participant for at least
six months.
(d) Reload Options. A Non-Qualified Option shall include the right to
--------------
acquire a Reload Option which shall entitle the Participant, upon exercise of
the original Option (in whole or in part) prior to termination of the
Participant's employment and satisfaction of the Option Price in Shares, to
receive a new Non-Qualified Stock Option. In addition to any other terms and
conditions the Committee deems appropriate, the Reload Option shall be subject
to the following terms: (i) the number of Shares shall not exceed the number of
whole Shares used to satisfy the Option Price of the original Option and the
number of whole Shares, if any, withheld by the Corporation as payment for
withholding taxes in accordance with Section 12; (ii) the Option Grant Date
shall be the date of the exercise of the original Option; (iii) the Option Price
per share shall be the Fair Market Value on the Option Grant Date; (iv) the
Reload Option shall be exercisable no earlier than six months after the Option
Grant Date; (v) the Reload Option term shall not extend beyond the term of the
original Option; and (vi) the Reload Option shall otherwise meet all conditions
of this Section 7.
(e) Compliance with Rule 16b-3. To the extent that the provisions in
--------------------------
subparagraphs (c) and (d) above on the number of Shares that can be issued under
the Plan do not conform with Rule 16b-3 under the Exchange Act as adopted and
interpreted by the Commission, the Committee shall make such modification in the
determination of Share usage and issuance so as to conform the Plan and any
Options granted hereunder to the Rule's requirements, provided, however, that
any such modifications shall not increase the number of Shares subject to the
Plan beyond the number of Shares specified in Section 6.
(f) Termination of Employment of Optionee. The Committee shall have
-------------------------------------
authority to determine the circumstances under which Awards of Restricted Stock,
Restricted Stock Units and Stock Appreciation Rights will vest upon termination
of employment of the Optionee for any reason. Unless the optionee terminates
employment by reason of Retirement, death or Disability, in the case of any Non-
Qualified Stock Option, including those granted as a result of the exercise of a
Reload Option, the Committee shall provide that vesting of the Option shall
cease on the date of termination of employment and the Option shall terminate on
the date which is six months after the date on which the Optionee terminates
employment. In the event an Optionee terminates employment by reason of the
Optionee's death, Disability or Retirement, the Committee shall provide that
Non-Qualified Stock Options shall continue to vest for one year following the
date on which the Optionee dies, incurs a Disability or retires, and the Option
shall
-7-
<PAGE>
terminate three years after the date on which the Optionee terminates
employment. In any event, Non-Qualified Stock Options shall terminate ten years
after the Option's Grant Date. Unless otherwise determined by the Committee, in
the case of any Incentive Stock Option, the Committee shall provide that the
Option shall terminate on the date three months (one year, in the event the
Optionee terminates employment by reason of the Optionee's death or Disability)
after the date on which the Optionee terminates employment, or, if earlier, ten
years after the Option Grant Date (five years in the case of an Incentive Stock
Option granted to a Ten Percent Stockholder). Such provisions shall be
contained in the Option Agreement given to each Optionee.
(g) Rights as a Stockholder. An Optionee or a transferee of an Option
-----------------------
shall have no rights as a stockholder with respect to any Shares covered by any
Option until the date of the issuance of a stock certificate to such person
evidencing such Shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 15.
(h) Investment Purpose. The Corporation shall not be obligated to sell or
------------------
issue any Shares pursuant to any Option unless the Shares with respect to which
the Option is being exercised are at that time registered or exempt from
registration under the Securities Act of 1933, as amended.
(i) Assumption of Options. The Corporation may issue or assume any stock
---------------------
option in any transaction or transactions upon such terms and conditions and, in
the case of any option so assumed, with such modifications or adjustments
therein, as shall be determined by the Committee. Any such option so issued or
assumed shall be deemed to be an Option granted under this Plan, notwithstanding
that any provision of this Plan would not, except for this Section 7, permit the
grant of an option having the terms and conditions, including the option price,
of such option as so issued or assumed.
(j) Incentive Stock Options. In the case of an Incentive Stock Option
-----------------------
granted under the Plan, the aggregate Fair Market Value (determined at the
Option Grant Date) of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by an Optionee during any calendar year may
not exceed $100,000.
8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS.
8.1 Terms of Restricted Stock and Restricted Stock Unit Awards. Subject
----------------------------------------------------------
to and consistent with the provisions of the Plan, with respect to each Award of
Restricted Stock and Restricted Stock Units to a Participant, the Committee
shall determine:
-8-
<PAGE>
(a) the terms and conditions of the Restricted Stock Agreement or
Restricted Stock Unit Agreement between the Corporation and the Participant
evidencing the Award;
(b) the Restricted Period for all or a portion of the Award;
(c) the Restrictions applicable to the Award, including, but not limited
to, continuous employment with the Corporation or any of its Subsidiaries for a
specified term or the attainment of specific corporate, divisional or individual
performance standards or goals, which Restricted Period and Restrictions may
differ with respect to each Participant;
(d) whether the Participant shall receive the dividends and other
distributions paid with respect to an Award of Restricted Stock or Restricted
Stock Units as declared and paid to the holders of the Shares during the
Restricted Period or shall be withheld by the Corporation for the account of the
Participant until the Restricted Periods have expired or the Restrictions have
been satisfied, and whether interest shall be paid on such dividends and other
distributions withheld, and if so, the rate of interest to be paid, or whether
such dividends may be reinvested in Shares;
(e) the percentage of the Award which shall vest in the Participant in the
event of such Participant's death, Disability or Retirement prior to the
expiration of the Restricted Period or the satisfaction of the Restrictions
applicable to an Award of Restricted Stock or Restricted Stock Units; or
(f) notwithstanding the Restricted Period and the Restrictions imposed on
the Restricted Shares, as set forth in a Restricted Stock Agreement or
Restricted Stock Unit Agreement, whether to shorten the Restricted Period or
waive any Restrictions, if the Committee concludes that it is in the best
interests of the Corporation to do so.
8.2 Delivery of Shares. Upon an Award of Restricted Stock to a
------------------
Participant, the stock certificate representing the Restricted Stock shall be
issued and transferred to and in the name of the Participant, whereupon the
Participant shall become a stockholder of the Corporation with respect to such
Restricted Stock and shall be entitled to vote the Shares. Such stock
certificate shall be held in custody by the Corporation, together with stock
powers executed by the Participant in favor of the Corporation, until the
Restricted Period expires and the Restrictions imposed on the Restricted Stock
are satisfied.
8.3 Rights of Holders of Restricted Stock Units. Unless the Committee
-------------------------------------------
otherwise provides in an Award, holders of Restricted Stock Units shall have no
rights as stockholders of the Corporation. Upon the expiration or termination
of the Restricted Period and the satisfaction of any other conditions prescribed
by the Committee, the restrictions applicable to Shares of Restricted Stock
Units shall
-9-
<PAGE>
lapse, and a certificate evidencing such Shares shall be delivered, free of all
such restrictions, to the Participant or the Participant's beneficiary or
estate, as the case may be.
9. STOCK APPRECIATION RIGHTS.
9.1 Grants of Stock Appreciation Rights. Stock Appreciation Rights
-----------------------------------
("SARs") may be granted in conjunction with all or a part of any Option granted
under the Plan, either at the time of the grant of such Option or at any
subsequent time prior to the expiration of such Option; provided, however, that
SARs shall not be offered or granted in connection with a prior Option without
the consent of the holder of such Option. SARs may not be exercised by an
Optionee who is a director or officer (within the meaning of Rule 16a-1(f) under
the Exchange Act) of the Corporation within six months after the SAR is granted,
except that this limitation shall not be applicable in the event of the death or
Disability of such Optionee occurring prior to the expiration of such six-month
period.
9.2 Terms of Stock Appreciation Rights. All SARs shall be subject to the
----------------------------------
following terms and conditions:
(a) SARs shall be exercisable only at such time and to the extent that the
Option to which they relate (the "Related Option") shall be exercisable, and the
Committee may provide additional Restrictions on exercisability applicable to
the Award, including, but not limited to, continuous employment with the
Corporation or any of its Subsidiaries for a specified term or the attainment of
specific corporate, divisional or individual performance standards or goals,
which Restrictions may differ with respect to each Participant. SARs and the
Related Option may be exercised concurrently only when the Related Option is a
Non-Qualified Stock Option.
(b) Upon exercise of a SAR, the Optionee shall be entitled to the
difference between the Fair Market Value of one Share and the Option Price of
one Share specified in the Related Option times the number of Shares in respect
of which the SARs shall have been exercised (the "Economic Value"). An
Optionee, upon the exercise of SARs, shall receive the Economic Value thereof,
and the Committee in its sole discretion shall determine the form in which
payment of such Economic Value will be made, whether in cash, Shares or any
combination thereof. For purposes of this Section 9.2(b), the Fair Market Value
of the Shares shall be determined as of the date of exercise of the SAR.
(c) An SAR may be exercised without exercising the Related Option, but the
Related Option shall be canceled for all purposes under the Plan to the extent
of the SAR exercise. A Related Option may be exercised without exercising the
SAR, but the SAR shall be canceled for all purposes under the Plan to the extent
of the Related Option exercise.
-10-
<PAGE>
(d) In addition to the conditions set forth above, SARs issued in
connection with Incentive Stock Options shall meet the following conditions:
(i) Each SAR must expire not later than the expiration of the Related
Option.
(ii) The SAR shall be transferable only when the Related Option is
transferable and under the same conditions.
(iii) The SAR may be exercised only when the Fair Market Value of the
Shares subject to the Related Option exceeds the exercise price of
the Related Option.
10. CHANGE OF CONTROL.
10.1 Effect of Change of Control. Upon the occurrence of an event
---------------------------
constituting a "Change of Control," as defined below:
(a) any and all outstanding Options and Stock Appreciation Rights shall
become immediately exercisable;
(b) the Restricted Period and Restrictions imposed on the Restricted Stock
and Restricted Stock Units shall lapse, and the Restricted Stock and Restricted
Stock Units shall vest in the Participant to the extent determined by the
Committee; and
(c) within ten business days after the occurrence of a Change of Control,
the certificates representing the Restricted Stock and Restricted Stock Units so
vested, without any restrictions or legend referring to the Plan thereon, shall
be delivered to the Participant, and any dividends and distributions paid with
respect to the Restricted Stock and Restricted Stock Units which were escrowed
during the Restricted Period and the earnings thereon shall be paid to the
Participant.
10.2 Definition of Change of Control. A "Change of Control" shall occur
-------------------------------
when:
(a) a "person" or "group" (which terms, when used in this Section 10.2,
shall have the meaning they have when used in Section 13(d) of the Exchange Act)
(other than the Corporation, any trustee or other fiduciary holding securities
under an employee benefit plan of the Corporation, or any corporation, owned,
directly or indirectly, by the shareholders of the Corporation in substantially
the same proportions as their ownership of Voting Stock (as defined below) of
the Corporation) is or becomes (other than solely by reason of a repurchase
of Voting Stock by the Corporation), the "beneficial owner" (as defined in Rule
1 3d-3 under the Exchange Act), directly or indirectly, of 50% or more of the
total outstanding Voting Stock of the Corporation; or
-11-
<PAGE>
(b) the Corporation consolidates with or merges with or into another
corporation or partnership or conveys, transfers or leases, in any transaction
or series of transactions, all or substantially all of its assets to any
corporation or partnership, or any corporation or partnership consolidates with
or merges with or into the Corporation, in any event pursuant to a transaction
in which the outstanding Voting Stock of the Corporation is reclassified or
changed into or exchanged for cash, securities or other property, other than any
such transaction where (I) the outstanding Voting Stock of the Corporation is
changed into or exchanged for voting stock of the surviving corporation and (II)
no "person" or "group" who did not beneficially own 50% or more of the total
outstanding Voting Stock of the Corporation immediately prior to such
transaction beneficially owns immediately after such transaction 50% or more of
the total outstanding voting stock of the surviving corporation, or the
Corporation is liquidated or dissolved or adopts a plan of liquidation or
dissolution; or
(c) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board (together with any new directors
whose election by the Board or whose nomination for election by the stockholders
of the Corporation was approved by a vote of 66-2/3% of the directors then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board then in office.
The term "Voting Stock" means all capital stock of the Corporation which by
its terms is entitled under ordinary circumstances to vote in the election of
directors.
11. NON-TRANSFERABILITY OF AWARDS.
Awards granted under the Plan shall not be transferable by the Participant
during the Participant's lifetime and may not be assigned, exchanged, pledged,
transferred or otherwise encumbered or disposed of except pursuant to a
qualified domestic relations order, by will or by the applicable laws of descent
and distribution. Options and Stock Appreciation Rights shall be exercisable
during the Participant's lifetime only by the Participant or by the
Participant's guardian or legal representative.
12. WITHHOLDING OF TAXES.
Federal, state or local law may require the withholding of taxes applicable
to gains resulting from an Award. The Committee may, in its discretion and
subject to such rules as it may adopt, permit the Participant to pay all or a
portion of the federal, state or local withholding taxes arising in connection
with an Award by electing to (i) have the Corporation withhold Shares, (ii)
tender back Shares received in connection with such Award or (iii) deliver other
previously owned
-12-
<PAGE>
Shares, under each election such Shares having a Fair Market Value on the date
specified in the rules adopted by the Committee equal to the amount to be
withheld.
13. NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan nor the granting of an Award shall
confer upon any Participant any right to continue in the employ of the
Corporation or any of its Subsidiaries or interfere in any way with the right of
the Corporation or any of its Subsidiaries to terminate such employment at any
time. No Award shall be deemed to be salary or compensation for the purpose of
computing benefits under any employee benefit, pension or retirement plans of
the Corporation or any of its Subsidiaries, unless the Committee shall determine
otherwise.
14. AMENDMENT.
14.1 Amendment and Termination of Awards. The terms and conditions
-----------------------------------
applicable to any Award may thereafter be amended or modified by mutual
agreement between the Corporation and the Participant or such other persons as
may then have an interest therein. Also, by mutual agreement between the
Corporation and a Participant in the Plan or under any other present or future
plan of the Corporation, Options or other Awards may be granted to a Participant
in substitution and exchange for, and in cancellation of, any Awards previously
granted to the Participant under the Plan, or under any other future plan of the
Corporation.
14.2 Amendment and Termination of Plan. The Board may amend the Plan
---------------------------------
from time to time, except that, without approval of the stockholders of the
Corporation, no such revision or amendment shall change the number of Shares
subject to the Plan, change the designation of the class of employees eligible
to receive Options, decrease the price at which Options may be granted or remove
the administration of the Plan from the Committee. The Plan shall terminate on
the tenth anniversary of its effective date.
15. CHANGES IN CAPITALIZATION.
Subject to any required action by the stockholders, the number of Shares
covered by each outstanding Option and the price per each such Share shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares of the Corporation resulting from a subdivision or consolidation of
Shares or the payment of a stock dividend (but only on the Shares) or any other
increase or decrease in the number of such Shares effected without receipt of
consideration by the Corporation.
If the Corporation merges or is consolidated with another corporation,
whether or not the Corporation is a surviving corporation, or if the Corporation
is
-13-
<PAGE>
liquidated or sells or otherwise disposes of substantially all of its assets
while unexercised Options remain outstanding under the Plan, (i) after the
effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, each holder of an outstanding Option shall be
entitled, upon exercise of that Option, to receive, in lieu of Shares, the
number and class or classes of shares of stock or other securities or property
to which the holder would have been entitled if, immediately prior to the
merger, consolidation, liquidation, sale or other disposition, the holder had
been the holder of record of a number of Shares equal to the number of Shares as
to which that Option may be exercised; or (ii) if Options have not already
become exercisable, the Board of Directors may waive any limitations set forth
in or imposed pursuant to the Plan so that all Options, from and after a date
prior to the effective date of that merger, consolidation, liquidation, sale or
other disposition, as the case may be, specified by the Board, shall be
exercisable in full.
In the event of a change of all of the Corporation's authorized Shares with
par value into the same number of Shares with a different par value or without
par value, the Shares resulting from any such change shall be deemed to be the
Shares within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities
of the Corporation, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive; provided,
that each Option which, upon grant of the Option, is specifically designated as
an Incentive Stock Option shall not be adjusted in a manner that causes the
Option to fail to continue to qualify as an Incentive Stock Option.
Except as hereinbefore expressly provided in this Section 15, the Optionee
shall have no rights (i) by reason of any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class, or (ii) by reason of
any dissolution, liquidation, merger, or consolidation, spin-off of assets or
stock of another corporation, or any issue by the Corporation of shares of stock
of any class, nor shall any of these actions affect, or cause an adjustment to
be made with respect to, the number or price of Shares subject to any Option.
The grant of any Option pursuant to the Plan shall not affect in any way
the right or power of the Corporation (i) to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, (ii) to merge or consolidate, (iii) to dissolve, liquidate, or sell
or transfer all or any part of its business or assets or (iv) to issue any
bonds, debentures, preferred or other preference stock ahead of or affecting the
Shares. If any action described in the preceding sentence results in a
fractional Share for any Optionee under any Option hereunder, such fraction
shall be completely disregarded and the Optionee shall only be entitled to the
whole number of Shares resulting from such adjustment.
-14-
<PAGE>
16. GOVERNING LAW.
The Plan and each Stock Option Agreement, Restricted Stock Agreement,
Restricted Stock Unit Agreement and Stock Appreciation Rights Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware.
17. NON-COMPETITION
The Corporation may retain in a Stock Option Agreement, Restricted Stock
Agreement, Restricted Stock Unit Agreement or Stock Appreciation Rights
Agreement the right and remedy, in addition to, and not in lieu of, any other
rights and remedies available to the Corporation under law or in equity, to have
the non-competition provisions in such agreement specifically enforced by any
court having equity jurisdiction, including, without limitation, the right to an
entry against the Participant of restraining orders and injunctions
(preliminary, mandatory, temporary and permanent) against violations, threatened
or actual, and whether or not then continuing, of the non-competition provisions
of such agreement or cause a forfeiture of the Shares or gain realized by a
Participant.
18. EFFECTIVE DATE.
The Plan shall become effective on the date and at the time of the initial
closing of the Corporation's initial public offering of Shares, subject to the
approval of the Plan on or before such date by a majority of the voting shares
represented and entitled to vote.
-15-
<PAGE>
Exhibit 10.2
U.S. FOODSERVICE
STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
(AS AMENDED)
1. PURPOSE. The purpose of the U.S. Foodservice Stock Option Plan for
Outside Directors is to promote the long-term growth of U.S. Foodservice (the
"Corporation") by rewarding directors of the Corporation for outstanding long-
term performance and to attract, motivate and retain highly qualified and
capable outside directors (the "Directors"). All stock options ("Options")
granted under the Plan are non-statutory options that do not qualify as
incentive stock options intended to meet the requirements of Section 422 of the
Internal Revenue Code of 1986 or any successor provisions. The Plan conforms to
the provisions of Rule 16b-3 ("Rule 16b-3") of the Securities Exchange Act of
1934 (the "Exchange Act"), as presently in effect.
2. ELIGIBILITY AND GRANT OF OPTIONS. Subject to approval of the Plan by
the shareholders of the Corporation:
(a) No director of the Corporation who is an employee of the Corporation
or who is a nominee of Merrill Lynch Capital Partners, Inc. is eligible to
participate in this Plan. Each other director of the Corporation is
eligible to participate in the Plan.
(b) Each eligible Director shall receive an Option to purchase 5,000
shares of Common Stock, $0.01 par value, of the Corporation ("Common
Stock"), on the date of such person's initial appointment or election to
the position of Director; provided, however, that each Director who is a
nominee of Rykoff-Sexton, Inc. shall receive an Option to purchase 775
shares of Common Stock on the date of such person's initial appointment or
election to the position of Director.
(c) Each eligible Director who has received an initial grant shall receive
an annual grant of an Option to purchase 2,000 shares of Common Stock on
each anniversary of the initial grant of an Option to such Director.
The option price for each Option shall be determined as of the date of grant,
pursuant to Section 4. The Corporation shall effect the grant of Options under
the Plan by the execution and delivery of written option agreements between the
Corporation and the Directors receiving the Options ("Optionees"). No Option,
nor anything contained in this Plan, shall confer upon any Optionee any right to
continue as a Director of the Corporation nor limit in any way the ability of
the Board of Directors or the shareholders of the Corporation to terminate such
Optionee's service as a Director at any time.
<PAGE>
3. STOCK. The Corporation has reserved an aggregate of 200,000 shares of
Common Stock for issuance pursuant to the exercise of Options granted under the
Plan. The aggregate number of shares of Common Stock reserved (i) is subject to
future adjustments as provided in Section 8 and (ii) shall be reduced by the
issuance of shares upon the exercise of Options, but shall not be reduced if
Options, for any reason, expire or terminate unexercised. The Corporation shall
not be required to issue or deliver any certificate for shares of Common Stock
purchased upon the exercise of any part of an Option before (i) the admission of
such shares to listing on any stock exchange on which the Common Stock may then
be listed or the approval of such shares for quotation on any automated
quotation system on which the Common Stock may then be quoted, (ii) receipt of
any required representations by the Optionee or completion of any required
registration or other qualification of such shares under any state or federal
law or regulation that the Corporation's counsel shall determine is necessary or
advisable, and (iii) receipt of advice by the Corporation's counsel that all
applicable legal requirements have been satisfied.
4. PRICE. Except as provided below, the purchase price of each share of
Common Stock covered by an Option (the "Option Price") shall be equal to the
fair market value, as hereinafter defined, of one share of Common Stock on the
date the Option is granted (the "Option Grant Date"). If the Common Stock is
listed on the New York Stock Exchange ("NYSE"), its fair market value shall be
the opening price of the Common Stock reported by the NYSE on the Option Grant
Date, provided that if there should be no opening price reported on such date,
the fair market value shall be deemed equal to the closing price as reported by
the NYSE for the last preceding date on which sales of Common Stock were
reported. Notwithstanding the foregoing, in the event the Common Stock is
listed upon more than one established stock exchange, the fair market value
shall be the opening price of the Common Stock on the exchange that trades the
largest volume of Common Stock on the Option Grant Date. In no event shall the
Option Price be less than the par value of the Common Stock.
Payment of the Option Price may be made (i) in cash, (ii) by the surrender
of shares of Common Stock owned by the Director exercising the Option and having
a fair market value on the date of exercise equal to the aggregate Option Price,
or (iii) any combination thereof. Shares of Common Stock surrendered in payment
of the Option Price shall be valued at the fair market value thereof, as defined
above, on the date of exercise.
5. TERM AND LIMITATIONS ON EXERCISE. Options may be exercised, in whole
or in part, but only with respect to whole shares of Common Stock, as set forth
below, by giving timely written notice to the Corporation.
(a) The term of any Option shall be ten years from the Option Grant Date.
No Option may be exercised after the expiration of its term or after the
date set forth in subsection (c), (d), or (e) below, if earlier.
-2-
<PAGE>
(b) Options are exercisable only to the extent they are vested. One-fourth
of each Option granted shall vest on the Option Grant Date and an
additional one-fourth of such Option shall vest on each of the first,
second, and third anniversary dates of the Option Grant Date provided that
the Optionee is a Director on such date. No Options shall be exercisable
unless and until the shareholders of the Corporation approve the Plan. No
Option may be exercised during the first six months after the Option Grant
Date, unless the Optionee dies or becomes disabled (as determined under
Title 11 of the Social Security Act, 42 U.S.C. Sections 301 et seq.) before
the expiration of the six-month period.
(c) If an Optionee ceases to be a Director after the Optionee attains age
sixty-five or on account of the Optionee's death or disability, all
outstanding Options granted to such Optionee shall vest and the Optionee
(or the Optionee's legatees or distributees or the personal representative
of the Optionee's estate, in the event of the Optionee's death) may
exercise the Optionee's outstanding Options at any time until the first to
occur of (x) the date that is two years after the date on which the
Optionee ceases to be a Director or (y) the date on which such outstanding
Options expire according to their terms.
(d) If an Optionee ceases to be a Director for any reason other than
described in subsection (c) above, the Optionee may exercise the Optionee's
outstanding Options to the extent vested at any time (subject to the
limitations of subsection (b) above) until the first to occur of (x) the
date that is three months after the date on which the Optionee ceases to be
a Director or (y) the date on which such outstanding Options expire
according to their terms.
(e) If an Optionee dies after the Optionee ceases to be a Director, but
within the time period during which the Optionee's outstanding Options are
still exercisable, the Director's outstanding Options may be exercised by
the Optionee's legatees or distributees or the personal representative of
the Optionee's estate. Such outstanding Options may be exercised at any
time (subject to the limitations of subsection (b) above) until the first
to occur of (x) the date that is two years after the date on which the
Optionee ceases to be a Director or (y) the date on which such outstanding
Options expire according to their terms.
(f) Notwithstanding the foregoing, in the event of a Change in Control (as
defined below) of the Corporation, each Option that has been outstanding
for at least six months after the Option Grant Date shall vest and the
Option shall be fully exercisable.
(g) Definition of Change of Control. A "Change of Control" shall occur
when:
-3-
<PAGE>
(i) a "person" or "group" (which terms, when used in this Section 5,
shall have the meaning they have when used in Section 13(d) of the
Exchange Act) (other than the Corporation, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Corporation, or any corporation, owned, directly or indirectly, by the
shareholders of the Corporation in substantially the same proportions
as their ownership of Voting Stock (as defined below) of the
Corporation) is or becomes (other than solely by reason of a
repurchase of Voting Stock by the Corporation), the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% or more of the total outstanding Voting Stock of
the Corporation; or
(ii) the Corporation consolidates with or merges with or into another
corporation or partnership or conveys, transfers or leases, in any
transaction or series of transactions, all or substantially all of its
assets to any corporation or partnership, or any corporation or
partnership consolidates with or merges with or into the Corporation,
in any event pursuant to a transaction in which the outstanding Voting
Stock of the Corporation is reclassified or changed into or exchanged
for cash, securities or other property, other than any such
transaction where (A) the outstanding Voting Stock of the Corporation
is changed into or exchanged for voting stock of the surviving
corporation and (B) no "person" or "group" who did not beneficially
own 50% or more of the total outstanding Voting Stock of the
Corporation immediately prior to such transaction beneficially owns,
immediately after such transaction, 50% or more of the total
outstanding voting stock of the surviving corporation, or the
Corporation is liquidated or dissolved or adopts a plan of liquidation
or dissolution; or
(iii) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board (together with any new
directors whose election by the Board or whose nomination for election
by the stockholders of the Corporation was approved by a vote of 66
2/3% of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the Board then in office.
The term "Voting Stock" means all capital stock of the Corporation
which by its terms is entitled under ordinary circumstances to vote in
the election of directors.
(h) Notwithstanding anything herein to the contrary, Options shall be
granted and exercised in such a manner as to conform to the provisions of
Rule 16b-3, or any replacement rule adopted pursuant to the provisions of
-4-
<PAGE>
the Exchange Act, as the same now exists or may, from time to time, be
amended.
(i) The exercise of any Option and delivery of the Option shares shall be
contingent upon the receipt by the Corporation of the Option Price in cash
or shares of Common Stock as provided in Section 4.
6. NON-TRANSFERABILITY OF OPTIONS. Options, by their terms, shall not be
transferable by the Optionee during the Optionee's lifetime and may not be
assigned, exchanged, pledged, transferred, or otherwise encumbered or disposed
of except pursuant to a qualified domestic relations order, by will or by the
applicable laws of descent and distribution. Options shall be exercisable
during the Optionee's lifetime only by the Optionee or the Optionee's guardian
or legal representative.
7. TAX WITHHOLDING. To the extent required by applicable federal, state,
local or foreign law, an Optionee shall make arrangements acceptable to the
Corporation for the satisfaction of any withholding tax obligations that arise
by reason of the exercise of an Option or any sale of the shares of Common Stock
acquired upon exercise of an Option. The Corporation shall not be required to
issue shares until such obligations are satisfied. The Corporation may permit
such obligations to be satisfied by having the Corporation withhold a
portion of the shares of Common Stock that otherwise would be issued to the
Optionee upon exercise of the Option.
8. EFFECT OF STOCK DIVIDENDS AND OTHER CHANGES. Appropriate adjustments
shall be made to the Option Price and the number of shares subject to Options if
there are any changes in the Common Stock by reason of stock dividends, stock
splits, reverse stock splits, recapitalizations, mergers, or consolidations.
9. ADMINISTRATION OF THE PLAN. The Board of Directors shall be
responsible for the proper implementation of the Plan.
10. EXPIRATION AND TERMINATION OF THE PLAN. Options may be granted under
the Plan at any time until the Plan is terminated by the Board of Directors or
until such earlier date on which termination of the Plan shall be required by
applicable law. If not sooner terminated, the Plan shall terminate
automatically on November 4, 2004, which is ten years from the date on which the
Plan was originally approved by the Board of Directors. Options granted under
the Plan prior to its termination shall remain outstanding following the Plan's
termination and shall be exercisable in accordance with their terms.
11. AMENDMENTS. The Board of Directors may from time to time make such
changes in and additions to the Plan as it may deem proper, provided that, if
and to the extent required by applicable law or regulation, no change in an
addition to the Plan shall be made unless such change in or addition to the Plan
is
-5-
<PAGE>
authorized by the shareholders. The termination of the Plan or any change or
addition to the Plan shall not, without the consent of any Optionee who is
adversely affected thereby, alter any Options previously granted to the Optionee
pursuant to the Plan.
12. GOVERNING LAW. The Plan and each Option granted under the Plan shall
be governed by, and construed in accordance with, the laws of the State of
Delaware.
13. EFFECTIVE DATE. The Plan shall be effective on the date and at the
time of the initial closing of the Corporation's initial public offering of
Common Stock, subject to the approval of the Plan on or before such date by a
majority of the voting shares represented and entitled to vote. Any amendment
to the Plan requiring shareholder approval shall be effective on the date and at
the time such amendment is approved by a majority of the voting shares
represented and entitled to vote.
14. RELOAD OPTIONS. An Option may include the right to acquire an option
(the "Reload Option") which shall entitle the Optionee, upon exercise of the
original Option (in whole or in part) prior to termination of the Optionee's
services and satisfaction of the Option Price in shares of Common Stock, to
receive a new non-qualified stock option. In addition to any other terms and
conditions the Board of Directors deems appropriate, the Reload Option shall be
subject to the following terms: (i) the number of shares of Common Stock shall
not exceed the number of whole shares used to satisfy the Option Price of the
original Option and the number of whole shares of Common Stock, if any, withheld
by the Corporation as payment for withholding taxes in accordance with Section
7; (ii) the Option Grant Date shall be the date of the exercise of the original
Option; (iii) the Option Price per share shall be the Fair Market Value on the
Option Grant Date; (iv) the Reload Option shall be exercisable no earlier than
six months after the Option Grant Date; (v) the Reload Option term shall not
extend beyond the term of the original Option; and (vi) the Reload Option shall
otherwise meet all conditions of this Plan.
-6-
<PAGE>
Exhibit 10.3
RYKOFF-SEXTON, INC.,
Issuer
and
NORWEST BANK MINNESOTA, N.A.,
Trustee
------------
INDENTURE
Dated as of November 1, 1993
------------
$130,000,000
8-7/8% Senior Subordinated Notes due 2003
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1)..................................... 7.10
(a)(2)..................................... 7.10
(a)(3)..................................... N.A.
(a)(4)..................................... N.A.
(a)(5)..................................... 7.10
(b)........................................ 7.8;
7.10;
13.2
(c)........................................ N.A.
311(a)........................................ 7.11
(b)........................................ 7.11
(c)........................................ N.A.
312(a)........................................ 2.5
(b)........................................ 13.3
(c)........................................ 13.3
313(a)........................................ 7.6
(b)(1)..................................... N.A.
(b)(2)..................................... 7.6
(c)........................................ 7.6;
13.2
(d)........................................ 7.6
314(a)........................................ 4.7;
4.8;
13.2
(b)........................................ N.A.
(c)(1)..................................... 2.2;
7.2;
13.4
(c)(2)..................................... 7.2;
13.4
(c)(3)..................................... N.A.
(d)........................................ N.A.
(e)........................................ 13.5
(f)........................................ N.A.
</TABLE>
<PAGE>
TIA Indenture
Section Section
- ------- ---------
315(a)................................................................. 7.1(b)
(b)................................................................. 7.5;
7.6;
13.2
(c)................................................................. 7.1(a)
(d)................................................................. 6.12;
7.1(c)
(e)................................................................. 6.14
316(a)(last sentence).................................................. 2.9
(a)(1)(A)........................................................... 6.12
(a)(1)(B)........................................................... 6.13
(a)(2).............................................................. N.A.
(b)................................................................. 6.13;
6.8
317(a)(1).............................................................. 6.3
(a)(2).............................................................. 6.4
(b)................................................................. 2.4
318(a)................................................................. 13.1
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemded to be
a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.............................................. 1
Section 1.2 Incorporation by Reference of TIA........................ 23
Section 1.3 Rules of Construction.................................... 24
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating.......................................... 24
Section 2.2 Execution and Authentication............................. 25
Section 2.3 Registrar and Paying Agent............................... 26
Section 2.4 Paying Agent to Hold Assets in Trust..................... 26
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............................................. 29
Section 2.12 Defaulted Interest....................................... 29
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption...................................... 30
Section 3.2 Applicability of Article................................. 30
Section 3.3 Election to Redeem; Notice to Trustee.................... 30
Section 3.4 Selection by Trustee of Securities to Be Redeemed........ 30
Section 3.5 Notice of Redemption..................................... 31
Section 3.6 Deposit of Redemption Price.............................. 32
Section 3.7 Securities Payable on Redemeption Date................... 32
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities.................................... 33
Section 4.2 Maintenance of Office or Agency.......................... 33
Section 4.3 Limitation on Restricted Payments........................ 34
Section 4.4 Corporate Existence...................................... 38
Section 4.5 Payment of Taxes and Other Claims........................ 38
Section 4.6 Maintenance of Properties and Insurance.................. 38
Section 4.7 Compliance Certificate; Notice of Default................ 39
Section 4.8 Provision of Financial Statements........................ 40
Section 4.9 Waiver of Stay, Extension or Usury Laws.................. 41
Section 4.10 Limitation on Transactions with Affiliates............... 41
Section 4.11 Limitation on Indebtedness............................... 42
Section 4.12 Limitations on Certain Other Indebtedness................ 43
Section 4.13 Limitation on Liens with Respect to Pari Passu or
Subordinated Indebtedness................................ 43
Section 4.14 Limitation on Sale of Assets............................. 44
Section 4.15 Limitation on Issuances of Guarantees of and Pledges
for Indebtedness......................................... 47
Section 4.16 Limitation on Capital Stock of Subsidiaries.............. 49
Section 4.17 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries................................... 49
Section 4.18 Payments for Consent..................................... 50
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 When Company May Merge, Etc.............................. 50
Section 5.2 Successor Corporation Substituted........................ 53
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default........................................ 53
Section 6.2 Acceleration of Maturity Date; Rescission and Annulment.. 56
Section 6.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.................................................. 57
Section 6.4 Trustee May File Proofs of Claim......................... 58
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 6.5 Trustee May Enforce Claims Without Possession of
Securities............................................... 59
Section 6.6 Application of Money Collected........................... 60
Section 6.7 Limitation on Suits...................................... 60
Section 6.8 Unconditional Right of Holders to Receive Principal and
Interest................................................. 61
Section 6.9 Restoration of Rights and Remedies....................... 62
Section 6.10 Rights and Remedies Cumulative........................... 62
Section 6.11 Delay or Omission Not Waiver............................. 62
Section 6.12 Control by Holders....................................... 63
Section 6.13 Waiver of Past Default................................... 63
Section 6.14 Undertaking for Costs.................................... 64
Section 6.15 Waiver of Stay or Extension Laws......................... 64
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee........................................ 65
Section 7.2 Rights of Trustee........................................ 66
Section 7.3 Individual Rights of Trustee............................. 67
Section 7.4 Trustee's Disclaimer..................................... 67
Section 7.5 Notice of Default........................................ 67
Section 7.6 Reports by Trustee to Holders............................ 68
Section 7.7 Compensation and Indemnity............................... 68
Section 7.8 Replacement of Trustee................................... 69
Section 7.9 Successor Trustee by Merger, Etc. ....................... 70
Section 7.10 Eligibility; Disqualification............................ 71
Section 7.11 Preferential Collection of Claims against Company........ 71
ARTICLE VIII
DEFEASANCE, SATISFACTION AND DISCHARGE
Section 8.1 Option to Effect Defeasance or Covenant Defeasance....... 71
Section 8.2 Defeasance and Discharge................................. 71
Section 8.3 Covenant Defeasance...................................... 72
Section 8.4 Conditions to Defeasance or Covenant Defeasance.......... 72
Section 8.5 Satisfaction and Discharge of Indenture.................. 75
Section 8.6 Survival of Certain Obligations.......................... 76
Section 8.7 Acknowledgement of Discharge by Trustee.................. 76
Section 8.8 Application of Trust Assets.............................. 76
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 8.9 Repayment to the Company................................. 77
Section 8.10 Reinstatement............................................ 77
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplemental Indentures Without Consent of Holders....... 78
Section 9.2 Amendments, Supplemental Indentures and Waivers with
Consent of Holders....................................... 79
Section 9.3 Compliance with TIA...................................... 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
MEETINGS OF SECURITYHOLDERS
Section 10.1 Purposes for Which Meetings May Be Called................ 83
Section 10.2 Manner of Calling Meetings............................... 83
Section 10.3 Call of Meetings by Company or Holders................... 84
Section 10.4 Who May Attend and Vote at Meetings...................... 84
Section 10.5 Regulations May Be Made by Trustee; Conduct of the
Meeting; Voting Rights; Adjournment...................... 84
Section 10.6 Voting at the Meeting and Record to Be Kept.............. 85
Section 10.7 Exercise of Rights of Trustee or Securityholders May
Not Be Hindered or Delayed by Call of Meeting............ 86
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
Section 11.1 Repurchase of Securities at Option of the Holder Upon
Change of Control........................................ 86
ARTICLE XII
SUBORDINATION
Section 12.1 Securities Subordinated to Senior Indebtedness........... 89
Section 12.2 No Payment on Securities in Certain Circumstances........ 89
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 12.3 Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or
Reorganization of Company................................ 91
Section 12.4 Securityholders to Be Subrogated to Rights of Holders
of Senior Indebtedness................................... 93
Section 12.5 Obligations of the Company Unconditional................. 93
Section 12.6 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice........................................ 94
Section 12.7 Application by Trustee of Assets Deposited with It....... 94
Section 12.8 Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness......... 95
Section 12.9 Securityholders Authorize Trustee to Effectuate
Subordination of Securities.............................. 95
Section 12.10 Right of Trustee to Hold Senior Indebtedness............. 96
Section 12.11 Article Twelve Not to Prevent Events of Default.......... 96
Section 12.12 No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness............................................. 96
ARTICLE XIII
MISCELLANEOUS
Section 13.1 TIA Controls............................................. 97
Section 13.2 Notices.................................................. 97
Section 13.3 Communications by Holders with Other Holders............. 98
Section 13.4 Certificate and Opinion as to Conditions Precedent....... 98
Section 13.5 Statements Required in Certificate or Opinion............ 99
Section 13.6 Rules by Trustee, Paying Agent, Registrar................ 99
Section 13.7 Legal Holidays........................................... 99
Section 13.8 Governing Law............................................ 100
Section 13.9 No Adverse Interpretation of Other Agreements............ 100
Section 13.10 No Recourse against Others............................... 101
Section 13.11 Successors............................................... 101
Section 13.12 Duplicate Originals...................................... 101
Section 13.13 Severability............................................. 101
Section 13.14 Table of Contents, Headings, Etc. ....................... 101
SIGNATURES............................................................... 102
EXHIBIT A -- FORM OF NOTE............................................. A-1
EXHIBIT B -- FORM OF INDENTURE GUARANTEE.............................. B-1
</TABLE>
v
<PAGE>
INDENTURE, dated as of November 1, 1993, between RYKOFF-SEXTON, INC., a
Delaware corporation (the "Company"), and NORWEST BANK MINNESOTA, N.A., as
Trustee.
Each party hereto agrees as follows for the benefit of each other party
and for the equal and retable benefit of the Holders of the Company's 8-7/8%
Senior Subordinated Notes due 2003:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Acquired Indebtedness" means Indebtedness of a person (i) existing at
the time such person becomes a Subsidiary of any other person or (ii) assumed in
connection with the acquisition of assets from any other person, in each case,
other than Indebtedness incurred in connection with, or in contemplation of,
such person becoming a Subsidiary of such other person or such acquisition.
Acquired Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any person or the date the acquired person becomes a
Subsidiary of such other person.
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For purposes of this
definition, "control," when used with respect to any specified person, means the
power to direct the management and policies of such person directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Applicable Premium" means, with respect to a Security, the greater of
(i) 1.0% 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, 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 and unpaid interest paid on the
Redemption Date.
1
<PAGE>
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer"),
directly or indirectly, in one or a series of related transactions, of (i) any
Capital Stock of any Subsidiary of the Company; (ii) all or substantially all of
the properties and assets of any division or line of business of the Company or
its Subsidiaries; or (iii) any other properties or assets of the Company or any
Subsidiary of the Company, other than in the ordinary course of business. For
the purpose of this definition, the term "Asset Sale" shall not include (x) any
transfer of (A) properties and assets that is governed by the provisions
described under Article Five; or (B) properties and assets of the Company to any
Wholly Owned Subsidiary of the Company, or of any Subsidiary of the Company to
the Company or any Wholly Owned Subsidiary, (y) exchanges of property by the
Company for equivalent property of equivalent value that will be used in the
businesses of the Company or its Subsidiaries existing on the date of this
Indenture or reasonably related thereto (as determined by the Board of Directors
of the Company and, in the case of property with a value in excess of
$1,000,000, evidenced in a Board Resolution) or (z) any transfer of properties
or assets to a Joint Venture in exchange for an interest in such Joint Venture
to the extent that the Company or any Subsidiary is able to make a "Permitted
Investment" in such Joint Venture pursuant to clause (vii) of the definition of
Permitted Investments.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by
(ii) the sum of all such principal payments.
"Bank Credit Facility" means the Credit Agreement dated as of October
25, 1993 between Rykoff-Sexton, Inc. and Bank of America National Trust and
Savings Association, as such agreement, in whole or in part, may be amended,
renewed, extended, substituted, refunded, refinanced, restructured, replaced,
supplemented or otherwise modified from time to time (including, without
limitation, any successive renewals, extensions, substitutions, refinancings,
restructurings, replacements, supplementations or other modifications of the
foregoing).
"Bankruptcy Law" means Title 11 of the United States Code, as amended,
or any similar United States Federal or state law relating to bankruptcy,
2
<PAGE>
insolvency, receivership, winding-up, liquidation, reorganization or relief of
debtors or any amendment to, succession to or change in any such law.
"Bank Senior Indebtedness" means Senior Indebtedness constituting a
monetary obligation of the Company owed under the Bank Credit Facility.
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such person.
"Business Day" means a day that is not a Legal Holiday.
"Capital Lease Obligation" of any person means any obligations of such
person and its subsidiaries on a consolidated basis under any capital lease or
real or personal property which, in accordance with GAAP, is required to be
recorded as a capitalized lease obligation.
"Capital Stock" in any person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such person, including any Preferred Stock, and any rights (other than debt
securities convertible into corporate stock), warrants or options exchangeable
for or convertible into such corporate stock or partnership interests.
"Change of Control" means the occurrence of any of the following events:
(i) any "person" or "group" (as such terms are used for purposes of Sections
13(d) and 14(d) of the Exchange Act), is or becomes the "beneficial owner" (as
that term is used in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all shares that such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 40% of
the total voting power of all classes of Voting Stock of the Company; (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company (together with any
new members of the Board of Directors of the Company whose election to such
Board
3
<PAGE>
or whose nomination for election by the holders of Voting Stock of the Company
was approved by a vote of at least 66-2/3% of the members of the Board of
Directors of the Company then still in office who were either members of the
Board of Directors of the Company at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of such Board of Directors of the Company then
in office; (iii) the Company consolidates with or merges with or into any person
or conveys, transfers or leases, in any transaction or series of related
transactions, all or substantially all of its assets to any person or group of
affiliated persons, or any corporation or partnership consolidates with or
merges into or with the Company, in any such event pursuant to a transaction in
which the outstanding Voting Stock of the Company is reclassified or changed
into or exchanged for cash, securities or other property, other than any such
transaction where the outstanding Voting Stock of the Company is not
reclassified or changed or exchanged at all (except to the extent necessary to
reflect a change in the jurisdiction of incorporation of the Company or where
(A) the outstanding Voting Stock of the Company is changed into or exchanged for
Voting Stock of the surviving corporation (other than Redeemable Capital Stock)
and (B) no "person" or "group" who did not beneficially own 40% or more of the
total outstanding Voting Stock of the Company immediately prior to such
transaction beneficially own, immediately after such transaction, directly or
indirectly, more than 40% of the total outstanding Voting Stock of the surviving
corporation); or (iv) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution other than in a transaction which complies with the
provisions described in Article Five.
"Change of Control Offer" shall have the meaning specified in
Section 11.1.
"Change of Control Purchase Date" shall have the meaning specified in
Section 11.1.
"Change of Control Purchase Price" shall have the meaning specified in
Section 11.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or if at any time after the
execution of this Indenture such Commission is not existing and performing
4
<PAGE>
the duties now assigned to it under the TIA, then the body performing such
duties at such time.
"Common Stock" shall mean the common stock, par value $.10 per share, of
the Company, now or hereafter issued.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Consolidated EBITDA" means, for any period, as applied to any person,
the sum of Consolidated Net Income (Loss), Consolidated Fixed Charges,
Consolidated Income Tax Expense and Consolidated Non-Cash Charges deducted in
computing Consolidated Net Income (Loss), in each case for such period of such
person and its Subsidiaries on a consolidated basis, determined in accordance
with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, as
applied to any person, the ratio of Consolidated EBITDA for such period of such
person to the Consolidated Fixed Charges for such period of such person;
provided that in making such computation, (i) the Consolidated Interest Expense
attributable to interest on any Indebtedness computed on a pro forma basis and
(A) bearing a floating interest rate shall be computed as if the rate in effect
on the date of computation had been the applicable rate for the entire period
and (B) which was not outstanding during the period for which the computation is
being made but which bears, at the option of such person, a fixed or floating
rate of interest, shall be computed by applying at the option of such person,
either the fixed or floating rate, (ii) the Consolidated Interest Expense of
such person attributable to interest or any Indebtedness under a revolving
credit facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period, (iii)
the one-time restructuring charge of $31 million incurred during the fiscal year
ended May 1, 1993 shall be excluded from the computation of Consolidated Net
Income (Loss) for purposes of this definition, to the extent it would otherwise
be included therein, and (iv) the Fixed Charges of any consolidated Subsidiary
whose net income is excluded from Consolidated Net Income (Loss) pursuant to
clause (vi) of the definition thereof shall be excluded from the computation of
Consolidated Fixed Charges for the purposes of this definition to the extent of
the excluded net income.
5
<PAGE>
"Consolidated Fixed Charges" means, for any period, as applied to any
person, the sum of Consolidated Interest Expense and one-third of Consolidated
Rental Payments, in each case for such period of such person.
"Consolidated Income Tax Expense" means, for any period, as applied to
any person, the provision for federal, state, local and foreign income taxes of
such person and its consolidated Subsidiaries for such period as determined in
accordance with GAAP.
"Consolidated Interest Expense" of any person means, without
duplication, for any period, as applied to any person, the sum of (a) the
interest expense of such person and its consolidated Subsidiaries for such
period, on a consolidated basis, including, without limitation, (i) amortization
of debt discount, (ii) the net cost under Interest Rate Agreements (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation which in accordance with GAAP is required to be reflected on an
income statement, (iv) all commissions, discounts and other fees and charges
owned with respect to letters of credit and bankers' acceptance financing and
(v) accrued interest, plus (b) the interest expense attributable to Capital
Lease Obligations paid, accrued or scheduled to be paid or accrued by such
person and its consolidated Subsidiaries during such period (but without
inclusion of the same obligation more than once), and excluding amortization of
financing fees relating to the issuance of the Securities and the execution of
the Bank Credit Facility substantially concurrently therewith, in each case as
determined in accordance with GAAP.
"Consolidated Net Income (Loss)" of any person means, for any period,
the consolidated net income (or loss) of such person and its consolidated
Subsidiaries for such period as determined in accordance with GAAP, adjusted to
the extent included in calculating such net income (loss), by excluding, without
duplication, (i) all extraordinary gains and losses (less all fees and expenses
relating thereto), net of taxes, (ii) the portion of net income (or loss) of
such person and its consolidated Subsidiaries allocable to minority interests in
unconsolidated persons to the extent that cash dividends or distributions have
not actually been received by such person or one of its consolidated
Subsidiaries, (iii) net income (or loss) of any person combined with such person
or any of its subsidiaries on a "pooling of interests" basis attributable to any
period prior to the date of combination, (iv) any gain or loss, net of taxes,
realized upon the termination of any employee pension benefit plan, (v) net
gains or losses (less all fees and expenses relating thereto), net of taxes, in
respect of dispositions of assets other than in the ordinary course of business
or (vi) the net income of any
6
<PAGE>
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulations applicable to that Subsidiary or its shareholders ("Applicable
Obligations") (provided that net income of such Subsidiary shall not be so
excluded to the extent of the principal amount of any bona fide debt obligation
owing to the parent of such Subsidiary that is payable on demand (but only to
the extent that such Subsidiary is not prohibited by any Applicable Obligations
from making payments to its parent under such debt obligations)).
"Consolidated Net Worth" of any person means the consolidated
stockholders' equity (excluding Redeemable Capital Stock) of such person and its
Subsidiaries, as determined in accordance with GAAP.
"Consolidated Non-Cash Charges" of any person means, for any period, the
aggregate depreciation, amortization and other non-cash expenses of such person
and its consolidated Subsidiaries for such period, as determined in accordance
with GAAP.
"Consolidated Rental Payments" means, for any period, as applied to any
person, the aggregate amount of all rents paid or scheduled to be paid by such
person and its Subsidiaries as lessee during such period under all leases of any
property (other than any lease that constitutes a Capital Lease Obligation).
"Currency Protection Obligation" means all monetary obligations of every
nature under or in respect of currency exchange contracts relating to exchange
and currency risks associated with payments denominated in foreign currencies
arising in the ordinary course of business.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any bankruptcy or similar law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Disinterested Director" of any person means, with respect to any
transaction or series of related transactions, a member of the Board of
Directors of such person who does not have any material direct or indirect
financial interest in or with respect to such transaction or series of related
transactions.
7
<PAGE>
"Event of Default" shall have the meaning specified in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Commission thereunder.
"Existing Joint Ventures" means the Joint Ventures in the countries of
Mexico and India involving the Company and Tone Brothers, respectively, in each
case in existence on the date of this Indenture.
"Final Change of Control Put Date" shall have the meaning specified in
Section 11.1.
"Final Put Date" shall have the meaning specified in Section 4.14.
"GAAP" means generally accepted accounting principles in the United
States, consistently applied, which are in effect on the date of this Indenture.
"Guarantee" means the guarantee by any Guarantor of the Indenture
Obligations.
"Guaranteed Debt" of any person means, without duplication, all
Indebtedness of any other person guaranteed directly or indirectly in any manner
by such person, or in effect guaranteed directly or indirectly by such person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to
supply funds to, or in any other manner invest in, the debtor (including any
agreement to pay for property or services without requiring that such property
be received or such services be rendered), (iv) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net worth, solvency
or other financial condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "guarantee" shall not include endorsements
for collection or deposit, in either case in the ordinary course of business.
"Guarantor" means any guarantor of all or any portion of the Indenture
Obligations.
8
<PAGE>
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
"Incur" shall have the meaning specified in Section 4.11.
"Indebtedness" means, with respect to any person, without duplication,
(i) all indebtedness of such person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities arising in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of such
person in connection with any letters of credit issued under letter of credit
facilities, and in connection with any agreement to purchase, redeem, exchange,
convert or otherwise acquire for value any Capital Stock of such person now or
hereafter outstanding, (ii) all obligations of such person evidenced by bonds,
notes, debentures or other similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade payables arising in
the ordinary course of business, (iv) all obligations under Interest Rate
Agreements of such person, (v) all Capital Lease Obligations of such person,
(vi) all Indebtedness referred to in clauses (i) through (v) above of other
persons and all dividends of other persons, the payment of which is secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien, upon or with respect to property
(including, without limitation, accounts and contract rights) owned by such
person, even through such person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligations being deemed to be
the lesser of the value of such property or asset or the amount of the
obligation so secured), (vii) all Guaranteed Debt of such person, (viii) all
Redeemable Capital Stock (valued at the greater of book value and voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends),
and (ix) any amendment, supplement, modification, deferral, renewal, extension,
refunding or refinancing of any liability of the types referred to in clauses
(i) through (viii) above. For purposes hereof, (x) the "maximum fixed repurchase
price" of any Redeemable Capital Stock which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Redeemable
Capital Stock as if such Redeemable Capital Stock were purchased on any date on
which Indebtedness shall be required to be determined pursuant to this
Indenture, and if such price is based upon, or measured by, the fair market
value of such Redeemable Capital Stock, such fair market value to be determined
9
<PAGE>
in good faith by the Board of Directors of the issuer of such Redeemable Capital
Stock, and (y) Indebtedness is deemed to be incurred pursuant to a revolving
credit facility each time an advance is made thereunder.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Indenture Guarantee" means a guarantee, substantially in the form of
Exhibit B hereto, fully and unconditionally guaranteeing the due and punctual
payment of all amounts due under this Indenture, when and if they become due,
which guarantee is subordinated to the claims against the issuer thereof in
respect of Indebtedness of such issuer that, if such Indebtedness of such issuer
that, if such Indebtedness of such issuer were Indebtedness of the Company,
would be Senior Indebtedness to the same extent as the Securities are
subordinate to Senior Indebtedness under this Indenture.
"Indenture Obligations" means the obligations of the Company and any
other obligor under this Indenture or under the Securities, including any
Guarantor, to pay principal, premium, if any, and interest when due and payable,
and all other amounts due or to become due under or in connection with this
Indenture, the Securities and the performance of all other obligations to the
Trustee and the Holders under this Indenture and the Securities, according to
the terms thereof.
"Interest Payment Date" means the stated due date of an installment of
interest on the Securities.
"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest rate
protection agreements (including, without limitation, interest rate swaps, caps,
floors, collars and similar agreements) and/or other types of interest rate
hedging agreements from time to time.
"Investments" means, with respect to any person, directly or indirectly,
any advance, loan (including guarantees), 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, acquisition or ownership by such person of any Capital
Stock, bonds, notes, debentures or other securities issued or owned by any
other person and all other items that are or would be classified as investments
on a balance sheet prepared in accordance with GAAP. "Investments" shall exclude
extensions of trade credit on commercially reasonable terms in accordance with
normal trade
10
<PAGE>
practices. For purposes of the definition of "Unrestricted Subsidiary" and
Section 4.3 only, (i) "Investment" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair market value of
the net assets of any Subsidiary of the Company at the time that such Subsidiary
is designated an Unrestricted Subsidiary of the Company and shall exclude the
portion (proportionate to the Company's equity interest in such Unrestricted
Subsidiary) of the fair market value of the net assets of any Unrestricted
Subsidiary of the Company at the time that such Unrestricted Subsidiary is
designated a Subsidiary of the Company; and (ii) any property transferred to or
from an Unrestricted Subsidiary of the Company or an Existing Joint Venture
shall be valued at its fair market value at the time of such transfer, in each
case as determined by the Board of Directors of the Company in good faith.
"Issue Date" means the date of first issuance of the Securities under
this Indenture.
"Joint Venture" means a partnership or comparable or similar enterprise
or association between a person and one or more (but fewer than ten) other
persons formed for the conduct of a business activity, but shall not include a
Subsidiary.
"Legal Holiday" shall have the meaning provided for in section 13.7.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"Los Angeles Facility" means the Company's existing facilities in Los
Angeles, California, together with the adjoining real property, or any interest
therein.
"Material Subsidiary" of a person means a Subsidiary which, together
with its consolidated Subsidiaries, has assets or revenues equal to or greater
than five percent (5%) of the assets or revenues, respectively, of the Company
and its Subsidiaries on a consolidated basis.
"Maturity" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein provided
or as provided in this Indenture, whether at Stated Maturity, the Offer Date or
11
<PAGE>
the Redemption Date and whether by declaration of acceleration, Offer in respect
of Excess Proceeds, Change of Control, call for redemption or otherwise.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any
person, the proceeds thereof in the form of cash or cash equivalents including
payments in respect of deferred payment obligations when received in the form
of, or stock or other assets when disposed for, cash or cash equivalents (except
to the extent that such obligations are financed or sold with recourse to the
Company or any Subsidiary of the Company) net of (i) brokerage commissions and
other reasonable fees and expenses (including reasonable fees and expenses of
counsel and investment bankers) related to such Asset Sale, (ii) provisions for
all taxes payable as a result of such Asset Sale, (iii) payments made to retire
indebtedness where payment of such indebtedness is secured by the assets or
properties that are the subject of such Asset Sale, (iv) amounts required to be
paid to any person (other than the Company or any Subsidiary of the Company)
owning beneficial interest in the assets subject to the Asset Sale and (v)
appropriate amounts to be provided by the Company or any Subsidiary of the
Company, as the case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the Company or any
Subsidiary of the Company, as the case may be, after such Asset sale, including,
without limitation, pension and post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected in an Officers'
Certificate delivered to the Trustee and (b) with respect to any issuance or
sale of Capital Stock or options, warrants or rights to purchase Capital Stock,
or debt securities or Redeemable Capital Stock that have been converted into or
exchanged for Qualified Capital Stock, as referred to under Section 4.3, the
proceeds of such issuance or sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations when received in
the form of, or stock or other assets when disposed for, cash or cash
equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Subsidiary of the Company), net of
attorney's fees, accountant's fees and brokerage, consultation, underwriting and
other fees and expenses actually incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof.
"Offer" means any offer made by the Company to Holders of the Securities
pursuant to the provisions of Section 4.14.
"Offer Date" shall have the meaning specified in Section 4.14.
12
<PAGE>
"Offered Price" shall have the meaning specified in Sections 4.14.
"Officer" means, with respect to the Company, the President, any Vice
President, the Chief Financial Officer, the Treasurer, the Chief Accounting
Officer, the Controller, or the Secretary of the Company.
"Officers' Certificate" means, with respect to the Company, a
certificate signed by the two Officers of by an Officer and an Assistant
Secretary of the Company and other wise complying with the requirements of
Sections 13.4 and 13.5.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
13.4 and 13.5. Unless otherwise required by the Trustee, the counsel may be
inside counsel to the Company.
"Pari Passu Debt Amount" shall have the meaning specified in Section
4.14.
"Pari Passu Indebtedness" means any Indebtedness of the Company that is
pari passu in right of payment to the Securities.
"Pari Passu Offer" shall have the meaning specified in Section 4.14.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Payment Default" shall have the meaning specified in Section 6.1.
"Permitted Indebtedness" means the following:
(i) Indebtedness of the Company under the Bank Credit Facility
in an aggregate principal amount at any one time outstanding not to
exceed $100,000,000 (less the amount of any permanent reductions in
commitments or forth under sections 4.14); and Indebtedness of the
Company under reimbursement obligations relating to letters of credit
issued under the Bank Credit Facility in an aggregate amount at any one
time outstanding not to exceed $15,000,000;
(ii) Indebtedness of the Company pursuant to the Securities and
Indebtedness of any Subsidiary pursuant to any Guarantee;
13
<PAGE>
(iii) Indebtedness of the Company and its Subsidiaries
oustanding on the date of this Indenture;
(iv) Indebtedness of the Company owing to a Subsidiary of the
Company; provided that any such Indebtedness is subordinated in right of payment
and performance of the Company's obligations under the Securities; provided
further that (a) any deposition, pledge or transfer of any such Indebtedness to
a person (other than a Subsidiary of the Company) shall be deemed to be an
incurrence of such Indebtedness by the obligor not permitted by this clause (iv)
and (b) any transaction pursuant to which any Subsidiary, to which the Company
owes any Indebtedness, ceases to be a Subsidiary of the Company shall be deemed
to be the incurrence of Indebtedness by the Company that is not permitted by
this clause (iv);
(v) Indebtedness of a Subsidiary owing to the Company or another
Subsidiary of the Company outstanding on the date of this Indenture or incurred
in the ordinary course of business consistent with past practice; provided that
any (a) Indebtedness of a Guarantor owing to a Subsidiary which is not a
Guarantor shall be subordinated in right of payment and performance of such
Subsidiary obligations under its Guarantee; (b) any deposition, pledge or
transfer of any such Indebtedness to a person (other than the Company or a
Subsidiary) shall be deemed an incurrence of such Indebtedness by the obligor
not permitted by this clause (v); and (c) any transaction pursuant to which any
Subsidiary, ceases to be a Subsidiary shall be deemed to be the incurrence of
such Indebtedness by such Subsidiary, that is not permitted by this clause (v);
(vi) obligations of the Company entered into the ordinary course
of business pursuant to Interest Rate Agreements designed to protect the Company
or any Subsidiary of the Company against fluctuations in interest rates in
respect of Indebtedness of the Company or any of its Subsidiaries, which
obligations, do not exceed the aggregate principal amount of such Indebtedness;
(vii) Indebtedness of the Company and any Subsidiary of the
Company under reimbursement obligations relating to trade letters of credit
issued in the ordinary course of business;
14
<PAGE>
(viii) Indebtedness of the Company or any of its Subsidiaries
incurred pursuant to Currency Protection Obligations in amounts not in excess
of the amounts reasonably necessary to limit the Company's or such Subsidiary's
exposure to foreign currency fluctations with respect to sales or expenses to
sales or expenses of the Company or such Subsidiary dominated in such foreign
currenices and expected to be received or paid within the succeeding year.
(ix) Indebtedness of the Company or any Subsidiary incurred to
finance the acquisition and construction of a new distribution facility in the
Los Angeles area in an aggregate principal amount outstanding at any given time
not to exceed $45,000,000;
(x) Indebtedness of the Company or any Subsidiary incurred to
finance the acquisition and construction of a new manufacturing facility (and
ofr related equipment) for Tone Brothers, in an aggregate principal amount
oustanding at any given time not to exceed $20,000,000 less the amount of such
Indebtedness incurred prior to the date of this Indenture;
(xi) Indebtedness of any Subsidiary that if ofrmed solely for
the purpose of holding accounts receivable of the Company, in an amount not to
exceed 85% of the book value of such accounts receivable, provided that such
Indebtedness is non-recourse to the Company and any of its Subsidiaries;
(xii) Indebtedness of the Company or any Subsidiary that is
evidenced by letters of credit issued in the ordinary course of business
consistent with past practice to support the Company's or any Subsidiary's
insurance or self-insurance obligations (including to secure workers'
compensation and other similar insurance coverage) or to support surety bonds or
appeal bonds provided by the Company or a Subidiary in the ordinary course of
business;
(xiii) Indebtedness of the Company or any Subsidiary (which may
be Acquired Indebtedness) in addition to that described in clauses (i) through
(xii) of this definition of "Permitted Indebtedness" in an aggregate principal
amount outstanding at any given time not to exceed $30,000;
15
<PAGE>
(xiv) Guarantees of any Subsidiary of the Company made in
accordance with the provisions of Section 4.15; and
(xv) any renewals, extensions, substitutions, refundings,
refinancings or replacements (collectively, a "refinancing") of any Indebtedness
described in clauses (ii), (iii), (ix) and (x) of this definition of "Permitted
Indebtedness" including any successive refinancings so long as the obligors with
respect to such refinancing Indebtedness are the same as those with respect to
the Indebtedness refinanced thereby and the aggregate principal amount (or, if
such Indebtedness being refinanced provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of determination) so
refinanced plus accrued interest on such Indebtedness at the time of refinancing
plus the lesser of (I) the stated amount of any premium or other payment
required to be paid in connection with such a refinancing pursuant to the terms
of the Indebtedness being refinanced or (II) the amount of premium or other
payment actually paid at such time to refinance the Indebtedness, plus, in
either case, the amount of expenses of the Company incurred in connection with
such refinancing and, in the case of Pari Passu or Subordinated Indebtedness,
such refinancing does not reduce the Average Life to Stated Maturity or the
Stated Maturity of such Indebtedness.
"Permitted Investments" means (i) Investments in any Wholly Owned
Subsidiary or any person which, as a result of such Investment, becomes a Wholly
Owned Subsidiary; (ii) Investments in the Securities; (iii) Indebtedness of the
Company owing to a Subsidiary of the Company permitted under clause (iv) of the
definition of "Permitted Indebtedness" and Indebtedness of a Wholly Owned
Subsidiary owing to the Company or another Wholly Owned Subsidiary permitted
under clause (v) of the definition of "Permitted Indebtedness;" (iv) Temporary
Cash Investments; (v) Investments in existence on the date of this Indenture;
(vi) loans or advances provided by the Company in the ordinary course of its
business to its officers and employees consistent with past practices; and (vii)
Investment in any person in addition to that described in clauses (i) through
(vi) of this definition of "Permitted Investments" not to exceed $10,000,000 in
the aggregate at any time outstanding.
"Permitted Payment" shall have the meaning specified in Section 4.3.
16
<PAGE>
"person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.
"Preferred Stock" means, with respect to any person, any Capital Stock
of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such persons, over
Capital Stock of any other class in such person.
"principal" of any Indebtedness (including the Securities) means the
principal of such Indebtedness plus the premium, if any, on such Indebtedness.
"property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Qualified Capital Stock" of any person means any and all Capital Stock
of such person other than Redeemable Capital Stock.
"Record Date" means the Record Dates specified in the Securities whether
or not such Record Date is a Business Day.
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of an event or passage of
time would be, required to be redeemed prior to any Stated Maturity of the
principal of the Securities or is redeemable at the option of the holder thereof
at any time prior to any such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to Paragraph 5
in the form of Security.
"Registrar" shall have the meaning specified in Section 2.3.
17
<PAGE>
"Reorganization Distribution" shall have the meaning specified in
Section 12.2.
"Restricted Payment" means, with respect to any person, (a) any
declaration or payment of any dividend on, or any distribution to holders of,
the Company's Capital Stock (other than dividends or distributions payable in
Qualified Capital Stock of the Company); (b) any purchase, redemption or other
acquisition or retirement for value of, directly or indirectly, any Capital
Stock of the Company or any Affiliate of the Company (other than any Wholly
Owned Subsidiary of the Company); (c) any principal payments on, or repurchase,
redemption, defeasance, retirement or other acquisition for value of, directly
or indirectly, prior to any scheduled principal payment, sinking fund or
maturity, any Subordinated Indebtedness (provided, that the exercise of any
right of holders of such Subordinated Indebtedness to elect to have such
Subordinated Indebtedness repaid or repurchased, whether upon the happening of
any event or otherwise, shall be considered a purchase or redemption prior to
the scheduled principal payment or maturity of such Subordinated Indebtedness);
(d) any declaration or payment of any dividend or distribution on any Capital
Stock of any Subsidiary of the Company to any person (other than, with respect
to any such Capital Stock held by the Company or any of its Wholly Owned
Subsidiaries, to the owners of such Capital Stock) or purchase, redemption or
other acquisition or retirement for value of any Capital Stock of any Subsidiary
of the Company held by any person (other than the Company or any of its Wholly
Owned Subsidiaries); (e) any creation, issuance, assumption or other direct or
indirect liability for or with respect to or other incurrence of any guarantee
of Indebtedness of any Affiliate of the Company (other than a Subsidiary of the
Company); or (f) any Investment in any person (other than any Permitted
Investments); provided, however, that the term "Restricted Payment" does not
include any action that is a Permitted Payment under Section 4.3 hereof.
"Securities" means the 8-7/8% Senior Subordinated Notes due 2003, as
supplemented from time to time in accordance with the terms hereof, issued under
this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Security Amount" shall have the meaning specified in Section 4.14.
18
<PAGE>
"Senior Indebtedness" means the principal of, and premium, if any, and
interest (including interest accruing after the filing of a petition initiating
any proceeding under any state, federal or foreign bankruptcy laws whether or
not allowable in such proceeding) fees and charges on, any Indebtedness of the
Company (other than as otherwise provided in this definition), whether
outstanding on the date of this Indenture or thereafter created, incurred or
assumed, whether at any time owing, actually or contingent, unless, in the case
of any particular Indebtedness, the instrument creating or evidencing the same
or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Securities. As it
relates to Bank Senior Indebtedness, Senior Indebtedness includes the costs and
expenses, if any, reasonably incurred by holders of Bank Senior Indebtedness in
negotiating and consummating such Indebtedness, renewals, extensions,
substitutions, refundings, refinancings or replacements of, or enforcement or
collection of, Bank Senior Indebtedness (including, without limitation, either
the reasonable estimate of the allocated cost of in-house counsel and staff or
the cost of outside counsel) to the extent the Company is obligated therefor.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include (i)
Indebtedness evidenced by the Securities, (ii) Indebtedness that is subordinate
or junior in right of payment to any other Indebtedness of the Company, (iii)
Indebtedness which, when incurred and without respect to the effect of
Section 1111(b) of Title 11 United States Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Redeemable Capital Stock,
(v) any liability for foreign, federal, state, local or other taxes owed or
owing by the Company, (vi) Indebtedness of the Company to a Subsidiary or any
other Affiliate of the Company and (vii) that portion of any Indebtedness which
at the time of incurrence, is incurred in violation of this Indenture.
"Specified Senior Debt" means (i) all Bank Senior Indebtedness and (ii)
any other Senior Indebtedness of the Company having an initial principal amount
(or, if such Senior Indebtedness is issued at a discount, an initial issue
price) of at least $20,000,000 and designated by the Company as Specified Senior
Debt in a notice to the Trustee pursuant to the terms of this Indenture, which
notice shall indicate the amount of such Specified Senior Debt and the trustee
or representative thereof (if any).
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the dates specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
19
<PAGE>
"Subordinated Indebtedness" means, with respect to the Company,
Indebtedness of the Company, and with respect to any Guarantor, Indebtedness of
such Guarantor, in each case subordinated in right of payment to the Securities.
"subsidiary," with respect to any person, means any other person a
majority of the equity ownership or the Voting Stock of which is at the time
owned, directly or indirectly, by such person or by one or more other
subsidiaries, or by such person and one or more other subsidiaries.
"Subsidiary," with respect to any person, means any other person a
majority of the equity ownership or the Voting Stock of which is at the time
owned, directly or indirectly, by such person or by one or more other
Subsidiaries, or by such person and one or more other Subsidiaries; provided
that an Unrestricted Subsidiary of any person (and subsidiaries of such an
Unrestricted Subsidiary) shall not be deemed a Subsidiary of such person for
purposes of this Indenture.
"Surviving Entity" shall have the meaning specified in Section 5.1(a).
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturity not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof, and
guaranteed fully as to principal, premium, if any, and interest by the United
States of America, (ii) any certificate of deposit maturing not more than one
year after the date of acquisition, issued by, or time deposit of, a commercial
banking institution that is a member of the Federal Reserve System and that has
combined capital and surplus and undivided profits of not less than
$500,000,000, (iii) commercial paper, maturing not more than one year after the
date of acquisition, issued by a corporation (other than an Affiliate or
Subsidiary of the Company) organized and existing under the laws of the United
States of America with a rating, at the time as of which any investment therein
is made, of "P-1" (or higher) according to Moody's or "A-1" (or higher)
according to S&P, (iv) any money market deposit accounts issued or offered by a
domestic commercial bank having capital and surplus in excess of $500,000,000,
(v) marketable direct obligations of any state, city or municipality or any
agency thereof maturing not more than one year from the date of acquisition and
rated AA or AAA according to S&P and Aaa or Aa according to Moody's and (vi)
investments in money market funds substantially all of whose assets are
comprised of Temporary Cash Investments described in clauses (i) through (v).
20
<PAGE>
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code 77aaa-77bbbb)
as in effect on the date of the execution of this Indenture.
"Tone Brothers" means Tone Brothers, Inc., an Iowa corporation.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled by,
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 of the Securities following a Change of Control (or, if
such Statistical Release is no longer published, any publicly available source
of similar market data)) most nearly equal to the then remaining Average Life to
Stated Maturity of the Securities 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 Average
Life to Stated Maturity of the Securities 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.
"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 any officer within the corporate trust department
(or any successor group) of the Trustee including any vice president, assistant
vice president, assistant secretary or any other officer or assistant officer of
the Trustee customarily performing functions similar to those performed by the
persons who at that time shall be such officers, and also means, with respect to
a particular corporate trust matter, any other officer of the corporate trust
department (or any successor group) of the Trustee to whom such trust matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Unrestricted Subsidiary" of any person means any subsidiary of such
person that would but for this definition of "Unrestricted Subsidiary" be a
Subsidiary of such person organized or acquired after the date of this Indenture
as to which all of the following conditions apply: (a) neither such person nor
any of its other Subsidiaries provides credit support for any Indebtedness of
such
21
<PAGE>
subsidiary (including any undertaking, agreement or instrument evidencing such
Indebtedness); (b) such subsidiary is not liable, directly or indirectly, with
respect to any Indebtedness other than Unrestricted Subsidiary Indebtedness;
(c) neither such person nor any of its Subsidiaries has made an Investment in
such subsidiary unless such Investment was permitted by the provisions described
under Section 4.3; and (d) the Board of Directors of such person, as provided
below, shall have designated such subsidiary to be an Unrestricted Subsidiary on
or prior to the date of organization or acquisition of such subsidiary. Any
such designation by the Board of Directors of such person shall be evidenced to
the Trustee by filing with the Trustee a Board Resolution giving effect to
such designation complies with the foregoing conditions. The Board of Directors
of any person may designate any Unrestricted Subsidiary of such person as a
Subsidiary of such person; provided that (i) immediately after giving pro forma
effect to such designation, such person could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the restriction
under Section 4.11; or, if it could not incur such additional Indebtedness, the
Consolidated Fixed Charge Coverage Ratio of the person immediately after such
designation would be no less than it was immediately prior to such redesignation
and (ii) all Indebtedness of such Unrestricted Subsidiary shall be deemed to be
incurred by the person on the date such Unrestricted Subsidiary becomes a
Subsidiary. Any subsidiary of an Unrestricted Subsidiary shall be an
Unrestricted Subsidiary for purposes of this Indenture.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary of
any person means Indebtedness of such Unrestricted Subsidiary (a) as to which
neither such person nor any Subsidiary of such person is directly or indirectly
liable (by virtue of such person or any such Subsidiary being the primary
obligor on, guarantor of, or otherwise liable in any respect to, such
Indebtedness) and (b) which, upon the occurrence of a default with respect
thereto, does not result in, or permit any holder of any Indebtedness of such
person or any Subsidiary of such person to declare, a default on such
Indebtedness of such person or any Subsidiary of such person or cause the
payment thereof to be accelerated or payable prior to its Stated Maturity.
"U.S. Government Obligations" means direct non-callable obligations of,
or noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
22
<PAGE>
"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.
"Voting Stock" means Capital Stock of the class or classes pursuant to
which the holders thereof have (i) in respect of a corporation, the general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of a corporation (irrespective of
whether or not at the time Capital Stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency)
or (ii) in respect of a partnership, the general voting power under ordinary
circumstances to elect the board of directors or other governing board of such
partnership.
"Wholly Owned Subsidiary" means a Subsidiary of the Company all the
outstanding Capital Stock (other than directors' qualifying shares) of which are
owned by the Company or another Wholly Owned Subsidiary.
Section 1.2 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.
23
<PAGE>
Section 1.3 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "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
(7) references to Sections or Articles means reference to such Section
or Article in this Indenture unless stated otherwise.
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating.
The Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, which is part of this Indenture.
The Securities may have notations, legends or endorsements required by law,
stock exchange rule or usage. The Company shall approve the form of the
Securities and any notation, legend or endorsement on them. Any such notations,
legends or endorsements not contained in the form of Security attached as
Exhibit A hereto shall be delivered in writing to the Trustee. Each Security
shall be dated the date of its authentication.
The terms and provisions contained in the forms of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
24
<PAGE>
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Section 2.2 Execution and Authentication.
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary shall attest
to, the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but 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 an authorized signatory of 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 Securities for original issue in the
aggregate principal amount of up to $130,000,000 upon a written order of the
Company in the form of an Officers' Certificate. The Officers' Certificate
shall specify the amount of Securities to be authenticated and the date on which
the Securities are to be authenticated. The aggregate principal amount of
Securities outstanding at any time may not exceed $130,000,000, except as
provided in Section 2.7 or 2.8. Upon the written order of the Company in the
form of an Officer's Certificate, the Trustee shall authenticate Securities in
substitution of Securities originally issued to reflect any name change of the
Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
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. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
25
<PAGE>
Section 2.3 Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
where Securities may be presented for payment ("Paying Agent") and an office or
agency where notices and demands to or upon the Company in respect of the
Securities may be served. The Company may act as its own Registrar or Paying
Agent, except that for the purposes of Articles Three, Eight, Eleven and
Section 4.14 neither the Company nor any Affiliate of the Company shall act as
Paying Agent. 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 initially appoints the Trustee as
Registrar and Paying Agent.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
Section 2.4 Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities (whether such assets have been
distributed to it by the Company, any Guarantor or any other obligor on the
Securities), and shall notify the Trustee in writing of any Default by the
Company or any Guarantor (or any other obligor on the Securities) in making any
such payment. If the Company or any Affiliate of the Company acts as Paying
Agent, it shall segregate such assets and hold them as a separate trust fund for
the benefit of the Holders or the Trustee. The Company at any time may require
a Paying Agent to distribute all assets held by it to the Trustee and account
for any assets disbursed and the Trustee may at any time during the continuance
of any Payment Default, upon written request to a Paying Agent, require such
Paying Agent to distribute all assets held by it to the Trustee and to account
for any assets distributed. Upon distribution to the Trustee of all assets that
shall have been
26
<PAGE>
delivered by the Company to the Paying Agent, the Paying Agent (if other than
the Company) shall have no further liability for such assets.
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
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment Date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee may reasonably require of the names and
addresses of Holders.
Section 2.6 Transfer and Exchange.
When Securities are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities of other authorized
denominations, the Registrar or co-Registrar shall register the transfer or make
the exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's or co-Registrar's
request. No service charge shall be made for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge payable upon
exchanges or transfers pursuant to Section 2.2, 2.10, 4.14 or 11.1). The
Registrar or co-Registrar shall not be required to register the transfer of or
exchange of (a) any Security selected for redemption in whole or in part
pursuant to Article Three, except the unredeemed portion of any Security being
redeemed in part, or (b) any Security for a period beginning 15 Business Days
before the mailing of a notice of an offer to repurchase or redeem Securities
and ending at the close of business on the day of such mailing.
27
<PAGE>
Section 2.7 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims and submits an affidavit or other evidence, satisfactory to
the Trustee, to the Trustee to the effect that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, such Holder must provide an indemnity
bond or other indemnity, sufficient in the judgment of both the Company, any
Guarantor and the Trustee, to protect the Company, any Guarantor, the Trustee or
any Agent from any loss which any of them may suffer if a Security is replaced.
The Company may charge such Holder for its reasonable, out-of-pocket expenses in
replacing a Security.
Every replacement Security is an additional obligation of the Company
and any Guarantor.
Section 2.8 Outstanding Securities.
Securities outstanding at any time are all the Securities that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section 2.8 as not outstanding. A
Security does not cease to be outstanding because the Company or an Affiliate of
the Company holds the Security, except as provided in Section 2.9.
If a Security is replace pursuant to Section 2.7 (other than a mutilated
Security surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Security is held by
a bona fide purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds U.S. Legal Tender or U.S.
Government Obligations sufficient to pay all of the principal and interest due
on the Securities payable on that date and payment of the Securities called for
redemption is not otherwise prohibited, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
28
<PAGE>
Section 2.9 Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company and Affiliates of the Company shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any usch direction, amendment, supplement,
waiver or consent, only Securities that the Trustee knows or has reason to know
are so owned shall be disregarded.
Section 2.10 Temporary Securities.
Until defintive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but
may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities in exchange for temporary
Securities.
Section 2.11 Cancellation.
The comapny and any Guaurantor at any time may deliver Securities to the
Trustee for cancellation. The Registrar and the Paying Agent shall forward to
the Trustee any Securities surrendered to them for transfer, exchange or
payment. The Trustee, or at the direction of the Trustee, the Registrar or the
Paying Agent (other than the Company or an Affiliate of the Company), and no one
else, shall cancel and, at the written direction of the Company, shall dispose
of all Securities surrendered for transfer, exchange, payment or cancellation.
Subject to Section 2.7, the Company may not issue new Securities to replace
Securities it has paid or 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 lawful) any interest
payable on the defaulted interest, to the persons who are Holders on a
subsequent special record date, which 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 to each Holder with a
copy to the Trustee a notice that states
29
<PAGE>
the subsequent special record date, the payment date and the amount of defaulted
interest, and interest payable on such defaulted interest, if any, to be paid.
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption.
The Securities may be redeemed at the election of the Company, in whole
or in part, at any time on or after November 1, 1998, at the Redemption Prices
specified in paragraph 5 in the form of Security attached as Exhibit A, in each
case, together with accrued and unpaid interest to the Redemption Date.
The Securities may be redeemed at the election of the Company, in whole
or in part, at any time on or prior to November 1, 1998, within 180 days after a
Change of Control upon not less than 30 nor more than 60 days' prior notice at a
Redemption Price equal to the sum of (i) the principal amount thereof plus (ii)
accrued and unpaid interest, if any, to the Redemption Date plus (iii) the
Applicable Premium.
Section 3.2 Applicability of Article.
Redemption of Securities, as permitted or required by any provision of
this Indenture, shall be made in accordance with such provision and this Article
Three.
Section 3.3 Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to Section
3.1 shall be evidenced by a Board Resolution of the Company. In case of any
redemption at the election of the Company of less than all the Securities, the
Company shall, at least 30 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities to
be redeemed.
Section 3.4 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected no more than 60 days prior to the
Redemption
30
<PAGE>
Date by the Trustee, from the outstanding Securities not previously called for
redemption, pro rata, by lot or by any other method the Trustee shall deem fair
and reasonable and which may provide for the selection for redemption of
portions (equal to $1,000 or any integral multiple thereof) of the principal
amount of Securities of a denomination larger than $1,000.
The Trustee shall promptly notify the Company and each Registrar in
writing of the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 3.5 Notice of Redemption.
Notice of Redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the security register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued and unpaid
interest to be paid upon such redemption,
(3) if less than all the outstanding Securities are to be
redeemed, the identification (and, in case of partial redemption, the principal
amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and that interest thereon
will cease to accrue on and after said date,
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and
31
<PAGE>
(6) the CUSIP number of the Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 3.6 Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 2.4) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued and unpaid interest on, all the
Securities which are to be redeemed on that date.
Section 3.7 Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued and
unpaid interest) such Securities shall cease to bear interest. Upon surrender of
any such Security for redemption in accordance with said notice, such Security
shall be paid for by the Company at the Redemption Price, together with accrued
and unpaid interest to the Redemption Date; provided, however, that installments
of interest whose Interest Payment Date is on or prior to the Redemption Date
shall be payable to the Holders of such Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Sections 2.12.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear interest
from the Redemption Date at the rate borne by the Security.
32
<PAGE>
Section 4.1 Payment of Securities.
The Company shall pay the prinicpal of and interest on the Securities on
the dates and in the manner provided in the Securities. An installment of
principal of or interest on the Securities shall be considered paid on the date
it is due if the Trustee or Paying Agent (other than the Company or an Affiliate
of the Company) holds for the benefit of the Holders on that date U.S. Legal
Tender designated for amd sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, 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 presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange and notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish and demands may be made
thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section 13.2.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, 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
shall 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.
33
<PAGE>
Section 4.3 Limitation on Restricted Payments.
(a) The Company shall not, and the Company shall not permit any
of its Subsidiaries to, directly or indirectly, make any Restricted Payment,
unless after giving effect to the proposed Restricted Payment (the amount of any
such Restricted Payment, if other than cash, as determined in good faith by the
Board of Directors of the Company, whose determination shall be conclusive and
evidenced by a Board Resolution), (i) no Default or Event of Default shall have
occurred and be continuing and such Restricted Payment shall not be an event
whcih is, or after notice or lapse of time or both would be, an "event of
default" under the terms of any other Indebtedness of the Company or its
Subsidiaries in excess and $10,000,000 in principal amount outstanding; (ii)
immediately before and immediately after giving effect to such transaction on a
proforma basis, the Company could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the provisions described
under Section 4.11; and (iii) the aggregate amount of all such Restricted
Payments declared or made after the date this Indenture does not exceed the sum
of:
(A) 50% of the Consolidated Net Income of the Company
accrued on a cumulative basis during the period commencing on the date of this
Indenture and ending on the last day of the Company's fiscal quarter ending
immediately prior to the date of the Restricted Payment (or, if such
Consolidated Net Income shall be a loss, minus 100% of such loss);
(B) the aggregate Net Cash Proceeds received by the
Company after the date of this Indenture from issuance or sale (other than to
any of its Subsidiaries) of Qualified Capital Stock of the Company (except,
in each case, to the extent such proceeds are used to purchase, redeem ot
otherwise retire Capital Stock or Subordinated Indebtedness as set forth below);
(C) the aggregate Net Cash Proceeds received by the
Company after the date of this Indenture from the issuance or sale (other than
to any of its Subsidiaries) of any debt securities or Redeemable Capital Stock
of the Company to the extent such debt securities or Redeemable Capital Stock
were originally issued or sold for cash, plus any Net Cash Proceeds received by
the Company at the time of such conversion or exchange; and
34
<PAGE>
(D) an amount equal to the net reduction in Investments
in Unrestricted Subsidiaries or Existing Joint Ventures resulting from
payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other transfers of assets, in each case to the Company or
any Subsidiary of the Company from Unrestricted Subsidiaries of the
Company or Existing Joint Ventures, or from the redesignation of
Unrestricted Subsidiaries of the Company as Subsidiaries of the Company
(valued in each case as provided in the definition of "Investments" in
Section 1.1), or resulting from the receipt of proceeds from the sale or
other disposition of an Unrestricted Subsidiary of the Company or an
Existing Joint Venture, not to exceed in the case of any Unrestricted
Subsidiary of the Company or Existing Joint Venture the amount of
Investments previously made by the Company or any Subsidiary in such
Unrestricted Subsidiary or Existing Joint Venture and which was treated
as a Restricted Payment.
(b) Notwithstanding the foregoing, and so long as no Default or
Event of Default is continuing, the foregoing provisions shall not prohibit the
following actions (each being referred to as a "Permitted Payment"):
(i) The payment of any dividend or distribution within
60 days after the date of declaration thereof, if at such date of
declaration such payment would be permitted by the provisions of
paragraph (a) of this Section 4.3 and such payment shall be deemed to
have been paid on such date of declaration for purposes of the
calculation required by paragraph (a) of this Section 4.3;
(ii) the repurchase, redemption, or other acquisition or
retirement of any Capital Stock of the Company in exchange for
(including any such exchange pursuant to the exercise of a conversion
right or privilege where, in connection therewith, cash is paid in lieu
of the issuance of fractional shares or scrip), or in an amount not in
excess of the Net Cash Proceeds of, a substantially concurrent issuance
and sale for cash (other than to a Subsidiary of the Company) of
Qualified Capital Stock of the Company; provided that the Net Cash
Proceeds from the issuance of such shares of Qualified Capital Stock
shall, to the extent so utilized, be excluded from clause (iii)(B) of
paragraph (a) of this Section 4.3;
35
<PAGE>
(iii) any repurchase, redemption, defeasance, retirement or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or in an amount not in excess of the Net
Cash Proceeds of, a substantially concurrent issuance and sale for cash
(other than to any Subsidiary of the Company) of Qualified Capital Stock
or other Subordinated Indebtedness ((A) with a final maturity later than
that of the Securities, (B) with an Average Life to Stated Maturity
later than the Average Life to Stated Maturity of the Indebtedness
repurchased, redeemed, defeased, retired or acquired and (C) which is
not, and upon the happening of an event or the passage of time would not
be, redeemable pursuant to the terms thereof prior to any Stated
Maturity of the principal of the Securities and is not redeemable at the
option of the Holder thereof at any time prior to any such Stated
Maturity) of the Company; provided that the Net Cash Proceeds from the
issuance of such Qualified Capital Stock shall, to the extent so
utilized, be excluded from clause (iii)(B) of paragraph (a) of this
Section 4.3;
(iv) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of principal of any
Subordinated Indebtedness (other than Redeemable Capital Stock) (a
"refinancing") through the issuance of new Subordinated Indebtedness of
the Company, provided that any such new Subordinated Indebtedness
(1) shall be in a principal amount that does not exceed the principal
amount so refinanced (or, if the Subordinated Indebtedness being
refinanced provides for an amount less than the principal amount thereof
to be due and payable upon a declaration or acceleration thereof, then
such lesser amount as of the date of determination), plus the lesser of
(I) the stated amount of any premium or other payment required to be
paid in connection with such a refinancing pursuant to the terms of the
Indebtedness being refinanced or (II) the amount of premium or other
payment actually paid at such time to refinance the Indebtedness, plus,
in either case, the amount of expenses of the Company incurred in
connection with such refinancing; (2) has an Average Life to Stated
Maturity greater than or equal to the Average Life to Stated Maturity of
the Subordinated Indebtedness so refinanced; (3) has a Stated maturity
for its final scheduled principal payment not sooner than the Stated
Maturity of the Subordinated Indebtedness so
36
<PAGE>
refinanced; and (4) is expressly subordinated in right of payment to the
Securities pursuant to subordination provisions that are at least as
favorable to the holders of the Securities as the Subordinated
Indebtedness so refinanced;
(v) the repurchase of any Subordinated Indebtedness (x) at a
purchase price not greater than 101% of the principal amount of such
Indebtedness in the event of a Change of Control pursuant to a provision
similar to the provision described under Section 11.1; provided that
prior to such repurchase the Company has made the Change of Control
Offer if required by, and as provided under, Section 11.1 and has
repurchased all Securities validly tendered for payment in connection
with such Change of Control Offer and (y) at a purchase price not
greater than 100% of the principal amount of such Indebtedness in the
event of an Asset Sale pursuant to a provision similar to the provision
described under Section 4.14; provided that prior to such repurchase the
Company has made an Offer if required by, and as provided under, Section
4.14 and has repurchased all Securities validly tendered for payment in
connection with such Asset Sale;
(vi) guarantees by the Company of Indebtedness of any Affiliate
to the extent the Company is able to make a "Permitted Investment" in
such Affiliate pursuant to clause (vii) of the definition of "Permitted
Investments" in Section 1.1;
(vii) guarantees by the Company of Indebtedness of any Joint
Venture in an amount not to exceed $5,000,000;
(viii) the purchase of restricted stock from employees of the
Company upon the termination of employment of such employees, pursuant
to the terms of a restricted stock plan, in an amount not to exceed
$250,000 per year; and
(ix) Restricted Payments declared or made after the date of this
Indenture in an amount not to exceed $5,000,000.
37
<PAGE>
Section 4.4 Corporate Existence.
Subject to Article Five, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate or other existence of each of its Subsidiaries in
accordance with the respective organizational documents of each of them and the
rights (charter and statutory) and corporate franchises of the Company and each
of its Subsidiaries; provided, however, that the Company shall not be required
to preserve, with respect to itself, any right or franchise, and with respect to
any of its Subsidiaries, any such existence, right or franchise, if the Board of
Directors of the Company or such Subsidiary, as the case may be, shall determine
and set forth in a Board Resolution that the preservation thereof is no longer
desirable in the conduct of the business of the Company or any such Subsidiary,
as applicable, and that the loss thereof is not disadvantageous in any material
respect to the Holders.
Section 4.5 Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company or any of its
Subsidiaries or properties of the Company or any of its Subsidiaries and
(ii) all lawful claims, whether for labor, materials, supplies, services or
anything else, which have become due and payable and which by law have or may
become a Lien upon the property of the Company or any of its Subsidiaries;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts adequate reserves have
been established if and to the extent required in accordance with GAAP.
Section 4.6 Maintenance of Properties and Insurance.
The Company shall cause all material properties used or useful to the
conduct of its business or the business of each of its Subsidiaries 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, betterment and
improvements thereof, all as in its judgment may be necessary, so that the
38
<PAGE>
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section 4.6
shall prevent the Company from discontinuing any operation or maintenance of any
of such properties, or disposing of any of them, if such discontinuance or
disposal is, in the judgment of the Board of Directors of the Company or the
Subsidiary of the Company concerned and evidenced in a Board Resolution,
desirable in the conduct of the business of the Company or such Subsidiary, as
the case may be, and not disadvantageous in any material respect to the Holders.
The Company shall provide, or cause to be provided, for itself and each
of its Subsidiaries, insurance (including appropriate self-insurance) against
loss or damage of the kinds that, in the reasonable, good faith opinion of the
Company are adequate and appropriate for the conduct of the business of the
Company and such Subsidiaries in a prudent manner, with reputable insurers or
with the government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the reasonable, good faith opinion of the
Company and adequate and appropriate for the conduct of the business of the
Company and such Subsidiaries in a prudent manner for corporations similarly
situated in the industry.
Section 4.7 Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of its fiscal year, and Officers' Certificate complying with
Section 314(a)(4) of the TIA and stating that a review of its activities and the
activities 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 further stating, as to each such Officer signing such
certificate, whether or not the signer knows of any failure by the Company or
any Subsidiary of the Company to comply with any conditions or covenants in this
indenture and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with particularity. The Officers'
Certificate shall also notify the Trustee should the relevant fiscal year end on
any date other than the current fiscal year end date.
(b) The Company shall deliver to the Trustee within 120 days
after the end of its fiscal year a written report of a firm of independent
certified public accountants with an established national reputation stating
that in
39
<PAGE>
conducting their audit for such fiscal year, nothing has come to their attention
that caused them to believe that the Company or any Subsidiary of the Company
was not in compliance with the provisions set forth in Section 4.3, 4.11 or
4.14 of this Indenture.
(c) the Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, within five Business Days after any
Officer becomes aware of any Default or Event of Default under this Indenture,
an Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto. The
Trustee shall not be deemed to have knowledge of a Default or an Event of
Default unless one of its Trust Officers receives notice of the Default giving
rise thereto from the Company or the Holders.
Section 4.8 Provision of Financial Statements.
(a) Whether or not the Company is then subject to Section 13(a)
or 15(d) of the Exchange Act, the Company will, to the extent permitted under
the Exchange Act, file with the Commission annual reports, quarterly reports and
other documents (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) which the Company would have
been required to file with the Commission pursuant to such Section 13(a) or
15(d) if the Company was so subject, such documents to be filed with the
Commission on or prior to the respective dates (the "Required Filing Dates") by
which the Company would have been required to file such documents if the Company
was so subject. The Company shall also provide copies of such reports to the
Holders and the Trustee within 15 days of each Required Filing Date. The Company
shall also comply with the other provisions of TIA Section 314(a).
(b) The Company shall cause its annual reports to stockholders
containing audited consolidated financial statements and any quarterly or other
financial reports furnished by it to stockholders pursuant to the Exchange Act,
if any, to be mailed to the Holders (no later than the date such materials are
mailed or made available to its stockholders) at their addresses appearing in
the register of Securities maintained by the Registrar and shall cause to be
disclosed in financial statements (or notes thereto) in each such report the
amount available for Restricted Payments pursuant to Section 4.3 hereof. If the
Company is not required to furnish annual or quarterly reports to its
stockholders pursuant to the Exchange Act, the Company shall cause its financial
statements referred to in Section 4.8(a) above, including any notes thereto
(and, in the case of a fiscal year
40
<PAGE>
end, an auditors' report by an independent certified public accounting firm of
established national reputation), to be so mailed to the Holders within 125 days
after the end of each of its fiscal years and within 50 days after the end of
each of the first three fiscal quarters of each fiscal year. If the Trustee (at
the Company's request and expense) is to mail the foregoing information to the
Holders, the Company shall supply such information to the Trustee at least three
Business Days prior thereto.
Section 4.9 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, 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 wherever enacted which would prohibit or forgive the Company from
paying all or any portion of the principal of or interest on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that they may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law insofar as such law applies to the
Securities, and covenants that it shall 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 4.10 Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate of the Company (other than the Company or a Wholly
Owned Subsidiary) unless (i) such transaction or series of transactions is in
writing on terms that are no less favorable to the Company or such Subsidiary,
as the case may be, than would be available in a comparable transaction in
arm's-length dealings with an unrelated third party, (ii) with respect to any
transaction or series of transactions involving aggregate payments in excess of
$5,000,000, the Company delivers an Officers' Certificate to the Trustee
certifying that such transaction or series of related transactions complies with
clause (i) above and such transaction or series of related transactions has been
approved by a majority of the Disinterested Directors of the Board of Directors
of the Company, and (iii) with respect to any transaction or series of
transactions involving aggregate payments in excess of $10,000,000, or in the
event no members of the Board of
41
<PAGE>
Directors of the Company are Disinterested Directors with respect to any
transaction or series of transactions included in clause (ii), the Company
delivers to the Trustee a written opinion of a nationally recognized investment
banking firm or independent appraiser stating that such transaction or
transactions is fair to the Company or such Subsidiary, as the case may be, from
a financial point of view; provided, further, that this provision shall not
restrict (a) the Company from paying reasonable and customary regular
compensation and fees to directors of the Company or any Subsidiary who are not
also employees of the Company or any Subsidiary or (b) transactions between the
Company or a Subsidiary of the Company and any Subsidiary or Joint Venture in
which no interest is held by an Affiliate that is not a Subsidiary.
Section 4.11 Limitation on Indebtedness.
The Company shall not, and the Company shall not permit any of its
Subsidiaries to, create, issue, assume, guarantee or otherwise in any manner
become directly or indirectly liable (contingently or otherwise) for or with
respect to or otherwise incur (individually and collectively, "incur"), any
Indebtedness, other than Permitted Indebtedness, from and after the Issue Date;
provided, however, that the Company and its Subsidiaries, on a consolidated
basis, will be permitted to incur Indebtedness if the Consolidated Fixed Charge
Coverage Ratio for the Company for the four full fiscal quarters immediately
preceding the incurrence of such Indebtedness, taken as one period, is at least
equal to 2.0:1.0; provided, however, that in the case of the incurrence of any
Indebtedness by any Subsidiary pursuant to clauses (ix), (x) or (xiii) of the
definition of Permitted Indebtedness in Section 1.1 or in compliance with the
foregoing Consolidated Fixed Charge Coverage Ratio, such Subsidiary has, prior
to or concurrently with such incurrence, executed and delivered a supplemental
indenture to this Indenture providing for an Indenture Guarantee. In computing
the Consolidated Fixed Charge Coverage Ratio for any period of four full fiscal
quarters, the Company shall give pro forma effect to (i) the incurrence of the
Indebtedness to the incurred and (if applicable) the application of the net
proceeds therefrom, including to refinance other Indebtedness, as if such
Indebtedness was incurred, and the application of such proceeds occurred, at the
beginning of such four-quarter period; (ii) the incurrence, repayment or
retirement of any other Indebtedness by the Company and its Subsidiaries since
the first day of such four-quarter period as if such Indebtedness was incurred,
repaid or retired at the beginning of such four-quarter period (except that, in
making such computation, the amount of such other Indebtedness under any
revolving credit facility shall be computed based upon the average daily balance
of such Indebtedness during such
42
<PAGE>
four-quarter period); (iii) in the case of Acquired Indebtedness, the related
acquisition; and (iv) any acquisition or disposition by the Company and its
Subsidiaries of any company or any business or any group of assets constituting
an operating unit, whether by merger, stock purchase or sale, or asset purchase
or sale, and any related repayment of Indebtedness, in each case since the first
day of such four-quarter period, as if such acquisition or disposition had been
consummated on the first day of such four-quarter period.
Section 4.12 Limitations on Certain Other Indebtedness.
The Company and any Guarantor shall not create, incur, issue, assume,
guarantee or otherwise in any manner become directly or indirectly liable for or
with respect to or otherwise permit to exist any Indebtedness that is
subordinate in right of payment to any Indebtedness of the Company or Guarantee
of such Guarantor unless such Indebtedness is either pari passu with the
Securities or subordinate in right of payment to the Securities pursuant to
subordination provisions that are at least as favorable to the holders of the
Securities as the subordination provision set forth in this Indenture with
respect to Senior Indebtedness, provided that the foregoing shall not prevent
the issuance of Indebtedness permitted pursuant to clause (xi) of the definition
of Permitted Indebtedness in Section 1.1.
Section 4.13 Limitation on Liens with Respect to Pari Passu or
Subordinated Indebtedness.
The Company shall not, and shall not permit any Subsidiary of the
Company to, create, incur, affirm or suffer to exist, as security for any Pari
Passu Indebtedness or Subordinated Indebtedness (including any assumption,
guarantee or other liability with respect thereto by any Subsidiary of the
Company), any Lien of any kind upon any property or assets (including any
intercompany notes) of the Company or any Subsidiary of the Company, or any
income or profits therefrom, unless the Securities are directly secured equally
and ratably with (or prior to in the case of Subordinated Indebtedness) the
obligation or liability secured by such Lien, except for any Lien securing
Acquired Indebtedness; provided that any such Lien only extends to the assets
that were subject to such Lien securing such Acquired Indebtedness prior to the
related acquisition by the Company, and provided further, that the foregoing
shall not prevent the issuance of Indebtedness permitted pursuant to clause (xi)
of the definition of Permitted Indebtedness in Section 1.1.
43
<PAGE>
Section 4.14 Limitation on Sale of Assets.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, consummate an Asset Sale unless (i) at least 75% of
the proceeds from such Asset Sale are received in cash or cash equivalents and
(ii) the Company or such Subsidiary receives consideration at the time of such
Asset Sale at least equal to the fair market value of the shares or assets sold
(as determined by the Board of Directors of the Company and, in the case of an
Asset Sale in excess of $1,000,000 evidenced in a Board Resolution); provided,
that, notwithstanding clause (i), in connection with any Asset Sale of the Los
Angeles Facility, at least 20% of such proceeds are received in cash or cash
equivalents.
(b) If all or a portion of the Net Cash Proceeds of any Asset Sale are
not applied to repay any Senior Indebtedness then outstanding (with a permanent
reduction in commitments or amounts available to be borrowed under the Senior
Indebtedness so repaid) or if no Senior Indebtedness is then outstanding, then
the Company may, within 12 months of the Asset Sale, invest such Net Cash
Proceeds in properties and assets that will be used in the businesses of the
Company or its Subsidiaries existing on the date of this Indenture or reasonably
related thereto, so long as the Company or such Subsidiary has notified the
Trustee in writing, within 360 days of such Asset Sale, that it has determined
to apply the Net Cash Proceeds from such Asset Sale to an investment in such
other properties and assets; provided that investments by the Company or any of
its Subsidiaries in properties or assets that are used in the businesses of the
Company or its Subsidiaries existing on the date of this Indenture or reasonably
related thereto that were made within three months prior to an Asset Sale, in
anticipation of the receipts of Net Cash Proceeds from such Asset Sale, shall
satisfy the foregoing requirement to the extent of the investment so made. The
amount of such Net Cash Proceeds neither used to permanently repay or prepay
Senior Indebtedness nor used or invested as set forth in this Subsection (b)
shall constitute "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals $10,000,000 or
more, the Company shall apply the Excess Proceeds to the repayment of the
Securities and any Pari Passu Indebtedness required to be repurchased under the
instrument governing such Pari Passu Indebtedness as follows: (i) the Company
shall make an offer to purchase (an "Offer") from all Holders of the Securities
in accordance with the procedures set forth in this Indenture the maximum
principal amount of Securities (rounded down to the
44
<PAGE>
nearest $1,000) that may be purchased with an amount (the "Security Amount")
equal to the product of such Excess Proceeds multiplied by a fraction, the
numerator of which is the outstanding principal amount of the Securities, and
the denominator of which is the outstanding principal amount of the Securities
and the amount required to repurchase all such Pari Passu Indebtedness
outstanding (subject to proration in the event such amount is less than the
aggregate Offered Price (as defined) of all Securities tendered) and (ii) to the
extent required by such Pari Passu Indebtedness to permanently reduce the
principal amount of such Pari Passu Indebtedness, the Company shall make an
offer to purchase or otherwise repurchase or redeem Pari Passu Indebtedness (a
"Pari Passu Offer") in an amount (the "Pari Passu Debt Amount") equal to the
excess of the Excess Proceeds over the Security Amount; provided that in no
event shall the Pari Passu Debt Amount exceed the principal amount of such Pari
Passu Indebtedness plus the amount of any premium required to be paid to
repurchase such Pari Passu Indebtedness. The offer price shall be payable in
cash in an amount equal to 100% of the principal amount of the Securities, plus
accrued and unpaid interest, if any, to the date (the "Offer Date") such Offer
is consummated (the "Offered Price"). In no event shall the Offer Date be more
than 25 Business Days following the first day on which the Excess Proceeds
exceed $10,000,000. To the extent that the aggregate Offered Price of the
Securities tendered pursuant to the Offer is less than the Security Amount or
the aggregate amount of Pari Passu Indebtedness that is purchased is less than
the Pari Passu Debt Amount (the amount of such shortfall, if any, constituting a
"Deficiency"), theCompany shall use such Deficiency in the business of the
Company and its Subsidiaries. Upon completion of the purchase of all the
Securities tendered pursuant to an Offer and repurchase of the Pari Passu
Indebtedness pursuant to a Pari Passu Offer, the amount of Excess Proceeds, if
any, shall be reset at zero.
(d) The Company shall comply with the applicable tender offer
rules, including Rule 14e-1 under the Exchange Act if and to the extent
applicable, any any other applicable securities laws or regulations in
connection with an Offer.
(e) The Company shall not, nad shall not permit any Subsidiary
to, create or permit to exist or become effective any restriction (other than
restrictions existing under Indebtedness as in effect on the date of this that
such Indebtedness may be refinanced from time to time, provided that usch
restrictions are no les favorable to the Holders of Securities than those
existing on the Indebtedness being refinanced on the ate of this Indenture) that
45
<PAGE>
would materially impair the ability of the Company to make an Offer to purchase
the Securities or, if such Offer is made, to pay for the Securities tendered for
purchase.
(f) Notice of an Offer shall be sent, at least 20 Business Days
prior to the close of business on the Final Put Date (as defined below), by
first-class mail, postage prepaid, by the Company to each Holder at its
registered address, with a copy to the Trustee. The notice to the Holders shall
contain all information, instructions and materials required by applicable law
or otherwise material to such Holders' decision to tender Securities pursuant to
the Offer. The notice, which shall govern the terms of the Offer, shall state:
(1) that the Offer is being made pursuant to such Security and this
Section 4.14;
(2) the Security Amount, the Offered Price (including the amount of
accrued and unpaid interest), the Final Put Date (as defined below), and the
Offer Date;
(3) that any Security or portion thereof not tendered or accepted for
payment will continue to accrue interest if interest is then accruing;
(4) that, unless the Company defaults in depositing U.S. Legal Tender
with the Paying Agent in accordance with the last paragraph of this clause (f),
any Security, or portion thereof, accepted for payment pursuant to the Offer
shall cease to accrue interest after the Offer Date;
(5) that Holders electing to have a Security, or portion thereof,
purchased pursuant to an Offer will be required to surrender the Security, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent (which may not for purposes of this
Section 4.14, notwithstanding any other provision of this Indenture, be the
Company or any Affiliate of the Company) at the address specified in the notice
prior to the close of business on the third Business Day prior to the Offer Date
(the "Final Put Date");
(6) that Holders will be entitled to withdraw their elections, in whole
or in part, if the Paying Agent (which may not for purposes of this Section
4.14, notwithstanding any other provision of this Indenture, be the Company or
any Affiliate of the Company) receives, prior to the close of business on the
Final
46
<PAGE>
Put Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Securities the Holder is
withholding and a statement that such Holder is withdrawing his election to have
such principal amount of Securities purchased;
(7) that if Securities in a principal amount in excess of the principal
amount of Securities to be acquired pursuant to the Offer are tendered and not
withdrawn pursuant to the Offer, the Company shall purchase Securities on a pro
rata basis (with such adjustments as may be deemed appropriate by the Company so
that only Securities in denominations of $1,000 or integral multiples of $1,000
shall be acquired);
(8) that Holders whose Securities were purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered; and
(9) the circumstances and relevant facts regarding such Asset Sale.
On or before an Offer Date, the Company shall (i) accept for payment
Securities or portions thereof properly tendered pursuant to the Offer on or
prior to the Final Put Date (on a pro rata basis if required pursuant to
paragraph (7) above), (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the Offered Price for all Securities or portions thereof so
accepted and (iii) deliver to the Trustee Securities so accepted together with
an Officers' Certificate stating the Securities or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail or deliver to
Holders of Securities so accepted payment in an amount equal to the Offered
Price for such Securities, 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 Offer on or as
soon as practicable after the Offer Date.
Section 4.15 Limitation on Issuances of Guarantees of and Pledges for
Indebtedness.
(a) The Company shall not permit any Subsidiary of the Company,
directly or indirectly, to secure the payment of any Senior Indebtedness of the
Company or pledge any intercompany notes representing obligations of any
Subsidiary of the Company to secure the payment of any Senior Indebted-
47
<PAGE>
ness unless (x) such Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for a guarantee of the
Securities by such Subsidiary, which guarantee need not be secured but shall
otherwise be on terms at least as favorable to the Holders of the Securities as
the Indenture Guarantee and (y) such Subsidiary waives and will not in any
manner whatsoever claim or take the benefit or advantage of any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Subsidiary of the Company as a result of any payment by such
Subsidiary under its guarantee.
(b) The Company shall not permit any Subsidiary of the Company,
directly or indirectly, to guarantee any Indebtedness of the Company unless
(i) such Subsidiary simultaneously executes and delivers a supplemental
indenture to this Indenture providing for a guarantee of the Securities by such
Subsidiary on terms at least as favorable to the Holders of the Securities as
the Indenture Guarantee except that (A) such guarantee need not be secured
unless required pursuant to Section 4.13, (B) if the Securities are subordinated
in right of payment to such Indebtedness, the guarantee under the supplemental
indenture shall be subordinated to the guarantee of such Senior Indebtedness to
the same extent as the Securities are subordinated to such Indebtedness under
this Indenture and (C) if such Indebtedness is by its terms expressly
subordinated to the Securities, any such guarantee of such Subsidiary with
respect to such Indebtedness shall be subordinated to such Subsidiary's
guarantee with respect to the Securities to the same extent as such Indebtedness
is subordinated to the Securities and (ii) such Subsidiary waives and will not
in any manner whatsoever claim or take the benefit or advantage of, any rights
of reimbursement, indemnity or subrogation or any other rights against the
Company or any other Subsidiary of the Company as a result of any payment by
such Subsidiary under its Guarantee.
(c) Each guarantee created pursuant to the provisions of
subsection (a) or (b) above is referred to as a "Guarantee" and the issuer of
each such Guarantee is referred to as a "Guarantor." Notwithstanding the
foregoing, any Guarantee by a Subsidiary of the Company of the Securities shall
provide by its terms that it shall be automatically and unconditionally released
and discharged upon (i) any sale, exchange or transfer, to any person not an
Affiliate of the Company, of all of the Company's Capital Stock in, or all or
substantially all the assets of, such Subsidiary, which is in compliance with
this Indenture or (ii) the release by the holders of the Indebtedness of the
Company described in subsections (a) and (b) above of their security interest or
their guarantee by such Subsidiary (including any deemed release upon payment in
full of all obligations under such Indebtedness), at a time when (A) no other
Indebtedness of the
48
<PAGE>
Company has been secured or guaranteed by such Subsidiary, as the case may be,
or (B) the holders of all such other Indebtedness which is secured or guaranteed
by such Subsidiary also release their security interest in, or guarantee by,
such Subsidiary (including any deemed release upon payment in full of all
obligations under such Indebtedness).
Section 4.16 Limitation on Capital Stock of Subsidiaries. The Company
shall not permit (i) any Subsidiary of the Company to issue any Capital Stock
(other than to the Company or any Wholly Owned Subsidiary) or (ii) any person
(other than the Company or a Wholly Owned Subsidiary) to acquire any Capital
Stock of any Subsidiary of the Company from the Company or any Wholly Owned
Subsidiary except upon the sale of all the outstanding Capital Stock of such
Subsidiary.
Section 4.17 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary of the Company to (a) pay dividends or make any other
distribution on its Capital Stock to the Company or any other Subsidiary of the
Company, (b) pay any Indebtedness owed to the Company or a Subsidiary of the
Company, (c) make any Investment in the Company or any Subsidiary of the Company
or (d) transfer any of its properties or assets to the Company or any Subsidiary
of the Company, except (i) any encumbrance or restriction, with respect to a
Subsidiary of the Company that is not a Subsidiary of the Company on the date of
this Indenture, in existence at the time such person becomes a Subsidiary of the
Company and not incurred in connection with, or in contemplation of, such person
becoming a Subsidiary of the Company; (ii) customary provisions restricting
subletting or assignment of any lease or assignment of any other contract to
which the Company or any Subsidiary of the Company is a party or to which any of
their respective properties or assets are subject; (iii) any encumbrance or
restriction contained in contracts for sales of assets permitted by Section 4.14
with respect to the assets to be sold pursuant to such contract; and (iv) any
encumbrance or restriction existing under any agreement that extends, renews or
replaces the agreements containing the encumbrances or restrictions in the
foregoing clause (i), provided that the terms and conditions of any such
encumbrances or restrictions are not materially less favorable to the Holders of
the Securities than those under or pursuant to the agreement so extended,
renewed or replaced.
49
<PAGE>
Section 4.18 Payments for Consent. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, pay or cause to
be paid any consideration, whether by way of interest, fee or otherwise, to any
Holder for or as an inducement to any consent, waiver or amendment of any of the
terms or provisions of this Indenture or the Securities unless such
consideration is paid to all Holders that provide such consent or so waive or
agree to amend.
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 When Company May Merge, Etc.
(a) The Company shall not, in a single transaction or a series
of related transactions, consolidate with or merge with or into any other person
or sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any person or group of
affiliated persons, or permit any of its Subsidiaries to enter into any such
transaction or transactions if such transaction or transactions, in the
aggregate, would result in a sale, assignment, conveyance, transfer, lease or
disposition of all or substantially all of the properties and assets of the
Company and its Subsidiaries on a consolidated basis to any other person or
group of affiliated persons, unless:
(1) either (i) the Company shall be the continuing
corporation or (ii) the person (if other than the Company) formed by such
consolidation or into which the Company is merged or the person which acquires
by sale, assignment, conveyance, transfer, lease or other disposition all or
substantially all of the properties and assets of the Company and its
Subsidiaries on a consolidated basis (the "Surviving Entity") shall be a
corporation organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia and such person expressly
assumes by a supplemental indenture, executed and delivered to the Trustee, in a
form reasonably satisfactory to the Trustee, all the obligations of the Company
under the Securities and this Indenture, and this Indenture and the Securities
shall remain in full force and effect;
(2) immediately before and after giving effect to such
transaction or series of transactions, no Default or Event of Default shall have
occurred and be continuing;
50
<PAGE>
(3) immediately after giving effect to such transaction on a pro forma
basis, the Consolidated Net Worth of the Company (or the Surviving Entity if the
company is not the continuing obligor under this Indenture) is equal to or
greater than the Consolidated Net Worth of the Company immediately prior to such
transaction;
(4) each Guarantor, if any, unless it is the other party to the
transactions described above, shall have by supplemental indenture confirmed
that its Guarantee shall apply to such person's obligations under this Indenture
and the Securities;
(5) if any of the property or assets of the Company or any of its
Subsidiaries would thereupon become subject to any Lien, the provisions of
Section 4.13 are complied with;
(6) the Company or the Surviving Entity, as the case may be, shall have
delivered, or caused to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion
of Counsel, each to the effect that such consolidation, merger, transfer, sale,
assignment, lease or other transaction and the supplemental indenture in
respect thereto comply with this Indenture and that all conditions precedent
provided for relating to such transaction have been complied with; and
(7) after giving effect to such transaction, on a pro forma basis (on
the assumption that the transaction occurred on the first day of the
four-quarter period ended immediately prior to the consummation of such
transaction with the appropriate adjustments with respect to the transaction
being included in such pro forma calculation) the Consolidated Fixed Charge
Coverage Ratio of the Company (or the Surviving Entity if the Company is not
the continuing obligor under this Indenture) shall be at least 1:1; provided,
however, that, if the consolidated Fixed Charge Coverage Ratio of the Company is
within the range set forth in Column A below immediately prior to such
transaction, then the Consolidated Fixed Charge Coverage Ratio of the Company
(or such Surviving Entity) on a pro forma basis immediately after giving effect
to such transaction shall be at least equal to the lesser of the percentage of
the pre-transaction Consolidated Fixed Charge Coverage Ratio of the Company set
forth in Column B below or the ratio set forth in Column C below:
51
<PAGE>
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C
-------- -------- --------
<S> <C> <C>
1:1 to 1.9999:1 90% 1.6:1
2:1 to 2.9999:1 80% 2.1:1
3:1 to 3.9999:1 70% 2.4:1
4:1 to 4.9999:1 60% 2.5:1
5:1 or more 50% 3.0:1
</TABLE>
and provided, further, that if the pro forma Consolidated Fixed Charge Coverage
Ratio of the Company (or such Surviving Entity) is 3:1 or more, the foregoing
calculation shall be inapplicable and such transaction shall be deemed to have
complied with the requirements of this clause (7).
(b) Each Guarantor shall not, and the Company shall not permit a
Guarantor to, in a single transaction or series of related transactions, merge
or consolidate with or into any other corporation (other than the Company or
any other Guarantor) or other entity, or sell, assign, convey, transfer, lease
or otherwise dispose of all or substantially all of its properties and assets on
a consolidated basis to any entity (other than the Company or any other
Guarantor) unless:
(1) either (i) such Guarantor shall be the continuing
corporation or (ii) the entity (if other than such Guarantor) formed by such
consolidation or into which such Guarantor is merged or the entity which
acquires by sale, assignment, conveyance, transfer, lease or disposition the
properties and assets of such Guarantor shall be a corporation duly organized
and validly existing under the laws of the United States, any state thereof or
the District of Columbia and shall expressly assume by a supplemental indenture,
executed and delivered to the Trustee, in a form reasonably satisfactory to the
Trustee, all the obligations of such guarantor under its Guarantee and this
Indenture and the Guarantee shall remain in full force and effect;
(2) immediately before and after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and
52
<PAGE>
(3) such Guarantor shall have delivered to the Trustee, in form
and substance reasonably satisfactory to the Trustee, an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and the supplemental
indenture in respect thereto comply with this Indenture, and that all conditions
precedent provided for relating to such transaction have been complied with.
(c) Notwithstanding the foregoing, any Guarantee of the Securities by a
Subsidiary of the Company shall provide by its terms that it shall be
automatically and unconditionally released in certain circumstances as described
under Section 4.15. The foregoing shall not prohibit (i) the merger of a Wholly
Owned Subsidiary into the Company or (ii) the sale, assignment, conveyance,
transfer, lease or other disposal of all or substantially all of its properties
and assets by a Wholly Owned Subsidiary to the Company.
Section 5.2 Successor Corporation Substituted.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in Section 5.1 in which the Company or any
Guarantor is not the continuing corporation, the successor person formed or
remaining shall succeed to, and be substituted for, and may exercise every right
and power of, the Company or such Guarantor, as the case may be, and the Company
or such Guarantor, as the case may be, would be discharged from all obligations
and covenants under this Indenture and the Securities.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest on any Security when
it becomes due and payable, and such default shall continue for a period of 30
days; or
53
<PAGE>
(2) default in the payment of the principal of any Security when
and as the same shall become due and payable at maturity, upon acceleration,
optional or mandatory redemption, required repurchase or otherwise, including
payment of the Change of Control Purchase Price in accordance with Article
Eleven or the Offered Price in accordance with Section 4.14; or
(3) default in the performance, or breach, of any covenant or
agreement of the Company or any Guarantor contained in the Securities or in this
Indenture (other than a default in the performance, or breach, of a covenant or
agreement which is specifically dealt with in clauses (1), (2) or (4) of this
Section 6.1), and such default or breach shall continue for a period of 30 days
after written notice has been given, by certified mail, (A) to the Company by
the Trustee or (B) to the Company and the Trustee by Holders of at least 25% in
aggregate principal amount of the outstanding Securities, specifying such
default or breach, requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder, or
(4) a default in the performance or breach of the provisions
described in Article Five; or
(5) a default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness of the Company or any of its Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of this
Indenture, which default (a) is caused by a failure to pay when due principal or
interest on such Indebtedness within the grace period provided in such
Indebtedness (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10,000,000 or more; or
54
<PAGE>
(6) any Guarantee shall for any reason cease to be, or be
asserted in writing by any responsible officer of any Subsidiary of the Company
or the Company not to be, in full force and effect, enforceable in accordance
with its terms, except to the extent contemplated by this Indenture and any such
Guarantee; or
(7) one or more judgments, orders or decrees for the payment of
money in excess of $10,000,000, either individually or in the aggregate, shall
be entered against the Company or any Subsidiary of the Company or any of their
respective properties ;and shall not be discharged, or enforcement of such
judgment or order, by reason of an appeal or otherwise, shall not have been
stayed, within 60 days after entry of such judgment or order; or
(8) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the Company or
any Material Subsidiary of the Company in an involuntary case or proceeding
under any applicable Bankruptcy Law or (b) a decree or order adjudging the
Company or any Material Subsidiary of the Company, bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company or any Material Subsidiary of the Company under any applicable
federal or state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or any Material
Subsidiary of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and any such decree or
order for relief shall continue to be in effect, or any such other decree or
order shall be unstayed and in effect, for a period of 60 consecutive days; or
(9) (a) the Company or any Material Subsidiary of the Company
commences a voluntary case or proceeding under any applicable Bankruptcy Law or
any other case or proceeding to be adjudicated bankrupt or insolvent, (b) the
Company or any Material Subsidiary of the Company consents to the entry of a
decree or order for relief in respect of the Company or such Material Subsidiary
of the Company in an involuntary case or
55
<PAGE>
proceeding under any applicable Bankruptcy Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, (c) the Company or any
Material Subsidiary of the Company files a petition or answer or consent seeking
reorganization or substantially comparable relief under any applicable federal
or state law, (d) the Company or any Material Subsidiary of the Company (x)
consents to the filing of such petition or the appointment of, or taking
possession by, a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or such Material Subsidiary or
of any substantial part of its property, (y) makes an assignment for the benefit
of creditors or (z) admits in writing its inability to pay its debts generally
as they become due or (e) the Company or any Material Subsidiary of the Company
takes any corporate action in furtherance of any such actions in this clause
(9).
Section 6.2 Acceleration of Maturity Date; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 6.1(8) or (9) with respect to the Company, any Guarantor or any
Subsidiary of the Company) occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of the outstanding Securities may
declare the Securities due and payable immediately at their principal amount
together with accrued and unpaid interest, if any, to the date the Securities
become due and payable by a notice in writing to the Company (and to the Trustee
if given by Holders) (an "Acceleration Notice") and upon any such declaration,
such principal and interest shall become due and payable. If an Event of Default
specified in Section 6.1(8) or (9) occurs with respect to the Company or any
Material Subsidiary of the Company and is continuing, then all the Securities
shall become immediately due and payable, in an amount equal to the principal
amount of the Securities, together with accrued and unpaid interest, if any, to
the date the Securities become due and payable without any declaration or other
act on the part of the Trustee or any Holder.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article Six provided, the Holders of a majority in aggregate principal amount of
Securities outstanding, by written notice to the Company and the Trustee, may
rescind such declaration if:
56
<PAGE>
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
(B) all overdue interest on all Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which has become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 6.13,
including, if applicable, any default in the covenants contained in
Section 11.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective for any Event of Default or Default with respect to any covenant or
provision which cannot be modified or amended without the consent of the Holder
of each outstanding Securities, unless all such affected Holders agree, in
writing, to waive such Event of Default or Default. No such waiver shall affect
any subsequent Default or impair any right consequent thereon.
Section 6.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company and any Guarantor covenants that if
(A) a default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
57
<PAGE>
(B) a default is made in the payment of the principal of
any Security at the Maturity Date thereof, including the payment of
the Offered Price on the Offer Date, and the payment of the Change of
Control Purchase Price on the Change of Control Purchase Date.
the Company and any Guarantor shall, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal and interest, and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and on any overdue interest, at the rate borne by the Securities, and,
in addition thereto, 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.
If the Company or any Guarantor, as the case may be, fails to pay such
amounts forthwith upon such demand, the Trustee, in its own name and as trustee
of an express trust, may institute a judicial proceeding for the collection of
the sums so due and unpaid, may prosecute such proceeding to judgment or final
decree and may enforce the same against the Company, any Guarantor or any other
obligor upon the Securities and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the Company, any
Guarantor or any other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, including, without limitation,
seeking recourse against any Guarantor pursuant to the terms of any Guarantee,
whether for the specific enforcement of any covenant or agreement in this
Indenture or any Guarantees or in aid of the exercise of any power granted
herein or therein, or to enforce any other proper remedy.
Section 6.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor, including each
Guarantor, upon the Securities or the property of the Company or of such other
58
<PAGE>
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions under the TIA, including
(i) to file and prove a claim for the whole amount of principal
(and premium, if any) and interest owing and unpaid in respect of the
Securities and to file such 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 agent and counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, 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 Holder in any such proceeding.
Section 6.5 Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and
59
<PAGE>
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.
Section 6.6 Application of Money Collected.
Any money collected by the Trustee pursuant to this Article Six shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 7.7;
SECOND: To the payment of the amounts then due and unpaid for principal
of and interest on the Securities in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities for
principal and interest, respectively; and
THIRD: To the payment of the remainder, if any, to whomsoever may be
lawfully entitled thereto, or as a court of competent jurisdiction may direct.
Section 6.7 Limitation on Suits.
No Holder of any Security shall have any right to, or to request, order
or direct the Trustee to, institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(A) such Holder has previously given
written notice to the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of the
outstanding
60
<PAGE>
Securities shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(C) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities to be incurred or reasonably probable to be incurred in
compliance with such request;
(D) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(E) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of
majority in principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 6.8 Unconditional Right of Holders to Receive Principal and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Security on the Maturity Dates
of such payments as expressed in such Security (in the case of redemption, the
Redemption Price on the applicable Redemption Date; in the case of the Change of
Control Purchase Price, on the applicable Change of Control Purchase Date; in
the case of the Offered Price on the Offer Date) and to institute suit for
61
<PAGE>
the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
Section 6.9 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture or the Guarantees and such proceeding
has been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then, and in every such case,
subject to any determination in such proceeding, the Company, each of the
Guarantors, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section 6.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in Section 2.7, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 6.11 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 Six 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
62
<PAGE>
Section 6.12 Control by Holders.
The Holders of a majority in aggregate principal amount of the
outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture or any Guarantee,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction, and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 6.13 Waiver of Past Default.
The Holders of at least a majority in aggregate principal amount of the
outstanding Securities may, on behalf of all Holders, prior to the declaration
of acceleration of the maturity of the Securities, waive any past default
hereunder and its consequences, except a default
(A) in the payment of the principal of or interest on
any Security as specified in clauses (1) and (2) of Section 6.1, or
(B) in respect of a covenant or provision hereof which,
under Article Nine, cannot be modified or amended without the consent of
the Holder of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
63
<PAGE>
Section 6.14 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 6.14 shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 25% in aggregate
principal amount of the outstanding Securities, or to any suit instituted by any
Holder for enforcement of the payment of principal of or interest on any
Security on or after the respective Stated Maturities expressed in such Security
(or, in the case of redemption, on or after the Redemption Date).
Section 6.15 Waiver of Stay or Extension Laws.
The Company and any Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company and
any Guarantor (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
64
<PAGE>
Section 7.1 Duties of Trustee.
(a) If a Default or 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 a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no covenants
or obligations shall be implied in or read into this Indenture which are
adverse to the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.12.
65
<PAGE>
(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 to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders 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), (d) and (f) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
Section 7.2 Rights of Trustee.
Section to Section 7.1:
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
which shall conform to Sections 13.4 and 13.5. 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 appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers.
66
<PAGE>
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, 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.
(f) 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.
Section 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company, its
subsidiaries or their respective 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 must comply with 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 in the Securities, other than the Trustee's
certificate of authentication, or the use or application of any funds received
by a Paying Agent other than the Trustee.
Section 7.5 Notice of Default.
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 Securityholder notice of
the uncured Default or Event of Default within 90 days after such Default or
Event of Default occurs. Except in the case of a Default or an Event of Default
in payment of principal of, or interest on, any Security (including the payment
of the Change of Control Purchase Price on the Change of Control Purchase Date
or the Offered Price on the Offer Date), the Trustee my withhold the notice if
and
67
<PAGE>
so long as a Trust Officer in good faith determines that withholding the notice
is in the interest of the Securityholders.
Section 7.6 Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, the Trustee shall mail to each Securityholder a brief
report dated as of such May 15 that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Sections 313(b) and 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the Commission and each stock
exchange, if any, on which the Securities are listed.
Section 7.7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. 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 disbursements, expenses
and advances incurred or made by it. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and counsel.
The Company shall indemnify the Trustee (in its capacity as Trustee) and
each of its officers, directors, attorneys-in-fact and agents for, and hold it
harmless against, any claim, demand, expense (including but not limited to
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel), loss or liability incurred by it without negligence or bad faith on
its part, arising out of or in connection with the administration of this trust
and its rights or duties hereunder including the reasonable costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee 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 of separate counsel if it assumes the
Trustee's defense and, in the reasonable judgment of both the Company and the
Trustee, there is no
68
<PAGE>
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 to the extent incurred by the Trustee through its negligence,
bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets 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(8) or (9) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy law.
The Company's obligations under this Section 7.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article Eight of this Indenture and any
rejection or termination of this Indenture under any bankruptcy law.
Section 7.8 Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing. The
Holder or Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
69
<PAGE>
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
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
and provided that all sums owing to the Trustee provided for in Section 7.7 have
been paid, the retiring Trustee shall transfer all property held by its 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
Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, 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, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
70
<PAGE>
Section 7.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA Section
310(a)(1) and TIA Section 310(a)(5). The Trustee shall have a combined capital
and surplus of at least $100,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA Section 310(b).
Section 7.11 Preferential Collection of Claims against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TLA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
DEFEASANCE, SATISFACTION AND DISCHARGE
Section 8.1 Option to Effect Defeasance or Covenant Defeasance.
The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either Section 8.2 or Section 8.3 be
applied to all of the outstanding Securities (the "Defeased Securities"), upon
compliance with the conditions set forth below in this Article Eight.
Section 8.2 Defeasance and Discharge.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.2, the Company and any Guarantor, if any, shall be deemed to
have been discharged from its obligations with respect to the Defeased
Securities on the date the conditions set forth below are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Company and any Guarantor shall be deemed to have paid and discharged the entire
indebtedness represented by the Defeased Securities, which shall thereafter be
deemed to be "outstanding" only for the purpose of the Sections of this
Indenture referred to in Section 8.6, and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Company, and upon written
request, shall execute proper instruments acknowledging the same). Subject to
compliance with this Article Eight, the Company may exercise its option under
this Section 8.2 notwithstanding the prior exercise of its option under Section
8.3 with respect to the Securities.
71
<PAGE>
Section 8.3 Covenant Defeasance.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.3, the Company and any Guarantor, if any, shall be released
from their obligations under Sections 4.3, 4.5, 4.6, 4.8,4.10 through 4.17,
5.1(a)(3), (5) and (7) and the provisions of Articles Eleven and Twelve, shall
not apply, with respect to the Defeased Securities on and after the date the
conditions set forth below are satisfied (hereinafter, "covenant defeasance"),
and the Defeased Securities shall thereafter be deemed to be 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
and the provisions of Article Twelve, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the Defeased Securities, the Company and
each Guarantor may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such Section or Article,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such Section or Article or by reason of any reference in any such Section or
Article to any other provision herein or in any other document and such omission
to comply shall not constitute a Default or an Event of Default under Section
6.1(3) or (4) (to the extent such Default or Event of Default results from
failure to comply with Section 5.1(a)(3), (5) or (7)), but, except as specified
above, the remainder of this Indenture and such Defeased Securities shall be
unaffected thereby.
Section 8.4 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
8.2 or Section 8.3 to the outstanding Securities:
(1) The Company shall have irrevocably deposited in trust with
the Trustee, pursuant to an irrevocable trust and security agreement in
form and substance reasonably satisfactory to the Trustee, (i) cash in
United States Legal Tender, (ii) U.S. Government Obligations or (iii) a
combination thereof after payment of all Federal, state and local taxes or
other charges or assessments in respect thereof payable by the Trustee,
which through the payment of principal and interest will provide, not later
than one day before the due date of payment in respect of the Securities,
money in an amount which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a
72
<PAGE>
written certification thereof (in form and substance reasonably
satisfactory to the Trustee) delivered to the Trustee, is sufficient
(without considering any reinvestment of amounts earned on U.S. Government
Obligations) to pay and discharge the principal of and each installment of
interest on the Securities then outstanding on the dates on which any such
payments are due and payable in accordance with the terms of this Indenture
and of the Securities.
(2) In the case of an election under Section 8.2, the Company
shall have delivered to the Trustee an Opinion of Counsel of independent
counsel in the United States to the effect 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 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 in the United States shall
confirm that, the holders of the outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
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 defeasance had not occurred.
(3) In the case of an election under Section 8.3, the Company
shall have delivered to the Trustee an Opinion of Counsel of independent
counsel in the United States to the effect that the Holders of the
outstanding Securities will not recognized 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.
(4) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as subsections 6.1(8)
or (9) are concerned, at any time during the period ending on the 91st day
after the date of deposit.
(5) Such defeasance or covenant defeasance shall not cause the
Trustee for the Securities to have a
73
<PAGE>
conflicting interest with respect to any securities of the Company or any
Guarantor.
(6) Such 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 Guarantor is a
party or by which it is bound.
(7) The Company shall have delivered to the Trustee an Opinion of
Counsel of independent counsel in the United States 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 this 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 of similar laws
affecting creditors' rights generally.
(8) 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 of the Securities or any Guarantor over the other
creditors of the Company or any Guarantors with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others.
(9) No event or condition shall exist that would prevent the Company
from making payments of the principal of and interest on the Securities on the
date of such deposit or at any times ending on the 91st day after the date of
such deposit.
(10) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel of independent counsel in the United
States, each stating that all conditions precedent relating to either the
defeasance under Section 8.2 or the covenant defeasance under Section 8.3 (as
the case may be) have been complied with.
74
<PAGE>
In the event all or any portion of the Securities are to be redeemed
through such irrevocable trust, the Company must make arrangements satisfactory
to the Trustee, at the time of such deposit, for the giving of the notice of
such redemption or redemptions by the Trustee in the name and at the expense of
the Company.
In the event that the Company takes the necessary action to comply with
the provisions described in this Section 8.4 and the Securities are declared due
and payable because of the occurrence of an Event of Default, the Company will
remain liable for all amounts due on the Securities at the time of acceleration
resulting from such Event of Default in excess of the amount of money and U.S.
Government Obligations deposited with the Trustee pursuant to this Section 8.4
at the time of such acceleration.
Section 8.5 Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of Securities, as
expressly provided for in this Indenture) as to all outstanding Securities, and
the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(a) either
(1) all Securities theretofore authenticated and delivered
(other than Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.7) have been delivered to the
Trustee for cancellation; or
(2) all such Securities 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 in U.S.
Legal Tender sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation, for the
principal of and interest on the Securities to the date of such deposit together
with irrevocable instructions to the Trustee from the Company directing the
Trustee to apply such funds to the payment thereof at maturity or redemption, as
the case may be;
75
<PAGE>
(b) the Company has paid all sums payable hereunder by the
Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the satisfaction and discharge of this
Indenture have been complied with.
Section 8.6 Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture and of
the Securities referred to in this Article Eight, the respective obligations of
the Company and the Trustee under Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.10,
2.11, 2.12, 4.1, 4.2, 4.4, 6.7, 6.8, 7.7, 7.8, 8.8, 8.9, 8.10, Article three and
this Section 8.6 shall survive until no Security is outstanding, and thereafter
the obligations of the company and the Trustee under Section 7.7, 7.8, 8.8, 8.9,
8.10 and this Section 8.6 shall survive. Nothing contained in this Article Eight
shall abrogate any of the obligations or duties of the Trustee under this
Indenture.
Section 8.7 Acknowledgment of Discharge by Trustee.
After (i) the conditions of Section 8.4 or 8.5 have been satisfied, (ii)
the Company has paid or caused to be paid all other sums payable hereunder by
the Company and (iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee, upon request,
shall acknowledge in writing the discharge of the Company's obligations under
this Indenture except for those surviving obligations specified in Section 8.6.
Section 8.8 Application of Trust Assets.
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it in the irrevocable trust established pursuant to
Section 8.4. The Trustee shall apply the deposited U.S. Legal Tender or U.S.
Government Obligations, together with earnings thereon, through the Paying Agent
(other than the Company or any Affiliate of the Company), in accordance with
this Indenture and the terms of the irrevocable trust agreement, to the payment
of principal of and interest on the Securities.
76
<PAGE>
Section 8.9 Repayment to the Company.
Upon termination of the trust established pursuant to Section 8.4, 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.
The Trustee and the Paying Agent shall pay to the Company upon request,
and, if applicable, in accordance with the irrevocable trust established
pursuant to Section 8.4, any U.S. Legal Tender or U.S. Government Obligations
held by them for the payment of principal of or interest on the Securities that
remain unclaimed for two years after the date on which such payment shall have
become due; provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may, at the expense of the Company,
and within thirty (30) days of the Company's request, cause to be published
once, in a newspaper customarily published on each Business Day and of general
circulation in the Borough of Manhattan. The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 60 days from the date of such publication, any unclaimed
balance of such money then remaining shall be repaid to the Company.
Section 8.10 Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender
or U.S. Government Obligations in accordance with Section 8.4 or 8.5 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
Section 8.4 or 8.5 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 Section 8.4 or 8.5; provided, however, that if the Company has made any
payment of principal of or interest on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the U.S. Legal
Tender or U.S. Government Obligations held by the Trustee or Paying Agent.
77
<PAGE>
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Company and any Guarantor, in
each case when authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental hereto
or agreements or other instruments with respect to any Security or Guarantee, in
form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another person to the Company
or any Guarantor, and the assumption by any such successor of the
obligations of the Company or such Guarantor, herein and in the Securities
in accordance with Article Five; or
(2) to add to the covenants of the Company or any Guarantor for
the benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or any Guarantor in this Indenture, in the
Securities or in any Guarantee; or
(3) to comply with the requirements of the Commission in order
to maintain the qualification of this Indenture under the TIA; or
(4) to secure the Securities or add a Guarantor pursuant to the
requirement of Section 4.11, 4.13 or 4.15 or otherwise; or
(5) to evidence and provide the acceptance of the appointment of
a successor Trustee under this Indenture; or
(6) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein in the Securities or in any Guarantee; provided that such
amendment or supplement or
78
<PAGE>
other instrument does not adversely affect the interests of any of the
Holders in any respect; or
(7) to make any other provisions with respect to matters or
questions arising under this Indenture, the Securities or any Guarantee,
provided that, in each case, such action pursuant to this clause (7) shall
not adversely affect the interests of any of the Holders in any respect.
Section 9.2 Amendments, Supplemental Indentures and Waivers with Consent
of Holders.
Subject to Section 6.8, with the consent of the Holders of a majority in
aggregate principal amount of the outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company and any Guarantor, in each
case when authorized by a Board Resolution, and the Trustee may amend this
Indenture, the Securities or any Guarantee or enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture,
the Securities or any Guarantee or of modifying in any manner the rights of the
Holders under this Indenture or the Securities or any Guarantee. Subject to
Section 6.8, the Holder or Holders of a majority in principal amount of the
outstanding Securities may waive compliance by the Company or any Guarantor with
any provision of this Indenture, the Securities or any Guarantee.
Notwithstanding any of the above, however, no such amendment, supplemental
indenture or waiver shall, without the consent of the Holder of each outstanding
Security affected thereby:
(1) change the Stated Maturity of the principal of or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or alter any redemption provisions
thereof, or change the coin or currency in which any Security or any
premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date);
(2) amend, change or modify the obligation of the Company to
make and consummate a Change of Control Offer in the event of a Change of
Control in accordance
79
<PAGE>
with Article Eleven or the obligation of the Company to make and consummate an
Offer with respect to any Asset Sale or Asset Sales in accordance with Section
4.14, including amending, changing or modifying any of the definitions related
thereto for purposes of such provisions, in any case in any manner adverse to
any of the Holders;
(3) reduce the percentage in principal amount of the
outstanding Securities, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver of compliance with certain provisions of this Indenture or
certain Defaults hereunder and their consequences provided for in this
Indenture;
(4) modify any of the provisions of this Section 9.2 relating
to supplemental indentures requiring the consent of Holders or Sections 6.8
or 6.13, except to increase the percentage of outstanding Securities
required for such actions or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the
Holder of each Security affected thereby;
(5) except as otherwise permitted under Article Five, consent
to the assignment or transfer by the Company or any Guarantor of any of
their rights and obligations under this Indenture;
(6) amend or modify any of the provisions of this Indenture
relating to the subordination of the Securities in any manner adverse to
the Holders of the Securities; or
(7) waive a default in payment with respect to the Securities
(other than a default in payment that is due solely because of
acceleration of the maturity of the Securities).
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 shall be sufficient if such consent approves the substance
thereof.
80
<PAGE>
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.
After an amendment, supplement or waiver under this Section 9.2 or 9.4
becomes effective, it shall bind each Holder.
Subject to Section 4.18, in connection with any amendment, supplement
or waiver under this Article Nine, 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 TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent Holder
of a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent
as to his Security or portion of his Security by written notice to the Company
or the person designated by the Company as the person to whom consents should be
sent received before the date on which the Trustee receives an Officers'
Certificate certifying that the Holders of the requisite principal amount of
Securities have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver.
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 the date so fixed by the
Company notwithstanding the provisions of Section 316(c) of the TIA. If a record
date is fixed, then notwithstanding the last sentence of the immediately
preceding paragraph, those persons who were Holders at such record date, and
81
<PAGE>
only those persons (or their duly designated proxies), shall be entitled to
revoke any consent previously given, whether or not such persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (7) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided, that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal and interest on a Security, on or after the respective dates set for
such amounts to become due and payable expressed in such Security, or to bring
suit for the enforcement of any such payment on or after such respective dates.
Section 9.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee
or require the Holder to put an appropriate notation on the Security. The
Trustee may 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. Any
failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment, supplement or waiver.
Section 9.6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article Nine; provided, that the Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture or any
Guarantee. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture.
82
<PAGE>
ARTICLE X
MEETINGS OF SECURITYHOLDERS
Section 10.1 Purposes for which Meetings May Be called.
A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article Ten for any of the following
purposes:
(a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to waive or to consent to the waiving of
any Default or Event of Default herewith and it s consequences, or to take any
other action authorized to be taken by Securityholders pursuant to any of the
provisions of Article Six;
(b) to remove the trustee or appoint a successor Trustee
pursuant to the provisions of Article Seven;
(c) to consent to an amendment, supplement or waiver pursuant to
the provisions of Section 9.2; or
(d) to take any other action (i) authorized to be taken by or on
behalf of the Holder or Holders of any specified aggregate principal amount of
the Securities under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate in
connection with the administration of this Indenture.
Section 10.2 Manner of Calling Meetings.
The Trustee may at any time call a meeting of Securityholders to take
any action specified in Section 10.1, to be held at such tie and at such place
in The City of New York, New York or elsewhere as the Trustee shall determine.
Notice of every meeting of Securityholders, setting forth the time and place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be mailed by the Trustee, first-class postage prepaid, to the
Company and to the Holders at their last addresses as they shall appear on the
registration books of the Registrar, not less than 10 nor more than 60 days
prior to the date fixed for a meeting.
83
<PAGE>
Any meeting of Securityholders shall be valid without notice if the
Holders of all Securities then outstanding are present in person or by proxy, or
if notice is waived before or after the meeting by the Holders of all Securities
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
Section 10.3 Call of Meetings by Company or Holders
In case at any time the Company, pursuant to a Board Resolution, or the
Holders of not less than 10% in aggregate principal amount of the Securities
then outstanding, shall have requested the Trustee to call a meeting of
Securityholders to take any action specified in Section 10.1, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of such meeting within
20 days after receipt of such request, then the Company or the Holders of
Securities in the amount above specified may determine the time and place in The
City of New York, New York or elsewhere for such meeting and may call such
meeting for the purpose of taking such action, by mailing or causing to be
mailed notice thereof as provided in Section 10.2, or by causing notice thereof
to be published at least once in each of two successive calendar weeks (on any
Business Day during such week) in a newspaper or newspapers printed in the
English language, customarily published at least five days a week of a general
circulation in the City of New York, State of New York, the first such
publication to be not less than 10 nor more than 60 days prior to the date fixed
for the meeting.
Section 10.4 Who May Attend and Vote at Meeting.
To be entitled to vote at any meeting of Securityholders, a person shall
(a) be a registered Holder of one or more Securities, or (b) be a person
appointed by an instrument in writing as proxy for the registered Holder or
Holders of Securities. The only persons who shall be entitled to be present or
to speak at any meeting of Securityholders shall be the persons entitled to vote
at such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
Section 10.5 Regulations May Be Made by Trustee; Conduct of the Meeting;
Voting Rights; Adjournment.
Notwithstanding any other provision of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any action by
84
<PAGE>
or any meeting of Securityholders, in regard to proof of the holding of
Securities and of the appointment of proxies, and in regard to the appointment
and duties of inspectors of votes, and submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think appropriate. Such
regulations may fix a record date and time for determining the Holders of record
of Securities entitled to vote at such meeting, in which case those and only
those persons who are Holders of Securities at the record date and time so
fixed, or their proxies, shall be entitled to vote at such meeting whether or
not they shall be such Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 10.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Holders of a majority
in principal amount of the Securities represented at the meeting and entitled to
vote.
At any meeting, each Securityholder or proxy shall be entitled to one
vote for each $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Securities challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the proxy to vote on
behalf of other Securityholders. Any meeting of Securityholders duly called
pursuant to the provisions of Section 10.2 or Section 10.3 may be adjourned from
time to time by vote of the Holder or Holders of a majority in aggregate
principal amount of the Securities represented at the meeting and entitled to
vote, and the meeting may be held as so adjourned without further notice.
Section 10.6 Voting at the Meeting and Record to Be Kept.
The vote upon any resolution submitted to any meeting of Securityholders
shall be by written ballots on which shall be subscribed the signatures of the
Holders of Securities or of their representatives by proxy and the principal
amount of the Securities voted by the ballot. The permanent chairman of the
meeting shall appoint two inspectors of votes, who shall count all
85
<PAGE>
votes cast at the meeting for or against any resolution and who shall make and
file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to such record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts, setting forth a
copy of the notice of the meeting and showing that such notice was mailed as
provided in Section 10.2 or published as provided in Section 10.3. The record
shall be signed and verified by the affidavits of the permanent chairman and the
secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7 Exercise of Rights of Trustee or Securityholders May Not
Be Hindered or Delayed by Call of Meeting.
Nothing contained in this Article Ten shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Securityholders or
any rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Securityholders under any of the provisions of
this Indenture or of the Securities.
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
Section 11.1 Repurchase of Securities at Option of the Holder Upon
Change of Control.
(a) If a Change of Control shall occur at any time, then each
Holder of Securities shall have the right to require that the Company purchase
such Holder's Securities in whole or in part in integral multiples of $1,000 at
a purchase price (the "Change of Control Purchase Price") in cash in an amount
equal to 101% of the principal amount of such Securities, plus accrued and
unpaid interest, if any, to the date of purchase (the "Change of Control
86
<PAGE>
Purchase Date"), pursuant to the offer described below (the "Change of Control
Offer") and the other procedures set forth in this Section 11.1.
(b) Within 30 Business Days following any Change of Control, the Company
shall notify the Trustee thereof and give written notice of such Change of
Control to each Holder of Securities, by first-class mail, postage prepaid, at
his address appearing in the security register, with a copy to the Trustee. The
notice to the Holders shall contain all instructions and materials required by
applicable law and shall contain or make available to Holders other information
material to such Holders' decision to tender Securities pursuant to the Change
of Control Offer. The notice, which shall govern the terms of the Change of
Control Offer, shall state:
(1) that the Change of Control Offer is being made pursuant to
this Section 11.1 and that all Securities, or portions thereof, tendered
will be accepted for payment;
(2) the Change of Control Pursuant Price (including the amount
of accrued and unpaid interest), the Change of Control Purchase Date
(which shall be a Business Day no earlier than 30 days nor later than 60
days from the date the notice to Holders is mailed, or such later date as
is necessary to comply with any applicable requirements under the Exchange
Act or any applicable securities laws or regulations) and the Final Change
of control Put Date (as defined below);
(3) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest if interest is then
accruing;
(4) that, unless the Company defaults in depositing U.S. Legal
Tender with the Paying Agent in accordance with the last paragraph of
this clause (b), any Security, or portion thereof, accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of control Purchase Date;
(5) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Change of Control Offer will be required
to surrender the Security, with the
87
<PAGE>
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent (which may not for purposes of this
Section 11.1, notwithstanding anything in this Indenture to the contrary,
be the Company or any Affiliate of the Company) at the address specified in
the notice prior to the close of business on the third Business Day prior
to the Change of Control Purchase Date (the "Final Change of Control Put
Date");
(6) that Holders will be entitled to withdraw their election, in
whole or in part, if the Paying Agent receives, prior to the close of
business on the Final Change of Control Put Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder is withdrawing and a
statement that such Holder is withdrawing his election to have such
principal amount of Securities purchased; and
(7) a brief description of the events resulting in such Change
of Control.
Any such Change of Control Offer shall comply with all applicable
provisions of Federal and state laws, including these regulating tender offers,
if applicable, and any provisions of this Indenture which conflict with such
laws shall be deemed to be superseded by the provisions of such laws. On or
before the Change of Control Purchase Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the Change
of Control Offer prior to the close of business on the Final Change of Control
Put Date, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Change of Control Purchase Price (together with accrued and unpaid interest)
of all Securities so tendered and (iii) deliver to the Trustee Securities so
accepted together with an Officers' Certificate listing the Securities or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to the Holders of Securities so accepted payment in an amount equal to the
Change of Control Purchase Price (together with accrued and unpaid interest),
and the Trustee shall promptly authenticate and mail or deliver to such Holders
a new Security surrendered. Any Securities not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date.
88
<PAGE>
ARTICLE XII
SUBORDINATION
Section 12.1 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 principal of and interest
on the Securities is subordinated in right of payment, to the extent and in the
manner provided in this Article Twelve, to the prior payment in full, in cash,
cash equivalents acceptable to the holders of such Senior Indebtedness or in any
other form acceptable to the holders of such Senior Indebtedness, of all Senior
Indebtedness and that these subordination provisions are for the benefit of the
holders of Senior Indebtedness.
This Article Twelve 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 12.2 No Payment on Securities in Certain Circumstances.
(a) No direct or indirect payments or distributions by or on
behalf of the Company on or with respect to the Securities (other than any such
payment or distribution (a "Reorganization Distribution") authorized by an order
or decree of a court of competent jurisdiction in a reorganization proceeding
under any Bankruptcy Law) shall be made if, at the time of such payment or
distribution, there exists a default (a "Payment Default") in payment of all or
any portion of any Senior Indebtedness (other than a payment default to the
extent it relates solely to penalties, fees, premiums, expense reimbursements,
indemnity obligations and other monetary obligations other than the payment of
principal or interest), and such Payment Default shall not have been cured or
waived or the benefits of this Section 12.2(a) waived in writing by or on behalf
of the holders of such Senior Indebtedness.
(b) During the Continuance of any event of default with respect
to Specified Senior Debt that would permit the acceleration of the maturity of
such Specified Senior Debt, other than a Payment Default, no direct or indirect
payments or distributions (other than a Reorganization Distribution) by or on
behalf of the Company on or with respect to the Securities may be made for a
89
<PAGE>
period (the "Payment Blockage Period") commencing on the date of receipt by the
Trustee of notice of such event of default under any Specified Senior Debt from
an agent for the lenders under the Bank Credit Facility (the "Bank Agent") or
the trustee or other similar representative for the holders of other Specified
Senior Debt (or the holders of at least 25% of the principal amount of such
other Specified Senior Debt), or, if such event of default results from the
acceleration of the Securities, on the earlier of the date of receipt of such
notice by the Trustee or the date of such acceleration, and ending on the
earliest of (a) the 179th day thereafter, (b) the date on or as of which (1)
such event of default has been cured or waived, (2) the Company has delivered to
the Trustee an Officers' Certificate to such effect and (3) the Bank Agent or
the trustee or other similar representative for the holders of other Specified
Senior Debt shall have endorsed on such Officers' Certificate that it does not
object to the form or substance of such Officers' Certificate, and (c) the date
on or as of which the Bank Agent or the trustee or other similar representative
for the holders of the other Specified Senior Debt shall have consented in
writing to the termination of such Payment Blockage Period. Upon the termination
of any Payment Blockage Period, the Company shall promptly resume making any and
all required payments in respect of the Securities, including any payments that
were previously not made pursuant to the foregoing payment blockage provisions.
Not more than one Payment Blockage Period may be commenced during any period of
360 consecutive days by or on behalf of Specified Senior Debt other than Bank
Senior Indebtedness. Notwithstanding the foregoing, in no event may the total
number of days during which any Payment Blockage Period or Payment Blockage
Periods may be in effect during any period of 360 consecutive days exceed 179
days (whether or not consecutive). No event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period shall
be, or be made, the basis for the commencement of a second Payment Blockage
Period by the Bank Agent or the trustee, representative or holders of such
Specified Senior Debt, 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.
(c) In the event that, notwithstanding the foregoing provisions
of this Section 12.2, any payment or distribution of assets of the Company,
whether in cash, property or securities (other than a Reorganization
Distribution), shall be received by the Trustee or the Holders on account of
principal of or interest on the Securities before all Senior Indebtedness is
paid in full or such payment duly is provided for, such payment or distribution
(subject to the provisions of Sections 12.6 and 12.7) shall be held in trust for
the benefit
90
<PAGE>
of the holders of Senior Indebtedness, and shall be paid or delivered by the
Trustee or such holders, as the case may be, to the holders of the Senior
Indebtedness remaining unpaid or unprovided for or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate amounts remaining unpaid on account
of the Senior Indebtedness held or represented by each, for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent necessary to
pay or to provide for the payment in full of all Senior Indebtedness after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness, but only to the extent that as to any holder of such Senior
Indebtedness, as promptly as practical following notice from the Trustee to the
holders of Senior Indebtedness that such prohibited payments has been received
by the Trustee or Holder(s), such holder (or a representative thereof) notifies
the Trustee of the amounts then due and owing on the Senior Indebtedness, if
any, held by such holder and only the amounts specified in such notices to the
Trustee shall be paid to 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 12.3 Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of Company.
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or its assets, or any liquidation,
dissolution or other winding up of the Company, whether voluntary or
involuntary, or any assignment for the benefit of creditors or other marshaling
of assets or liabilities of the Company:
(a) the holders of all Senior Indebtedness shall first be
entitled to receive payments in full, in cash, cash equivalents acceptable to
the holders of such Senior Indebtedness or in any other form acceptable to the
holders of such Senior Indebtedness (or to have such payment duly provided for
in cash or as acceptable to the holders of such Senior Indebtedness), of the
principal of and interest payment in respect thereof, before the Holders are
entitled to
91
<PAGE>
receive any payment (excluding a Reorganization Distribution) on account of the
principal of and interest on the Securities;
(b) any payment or distribution of assets 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 Twelve, shall be paid by the liquidating trustee or
agent or other person making such a payment or distribution, directly to the
holders of Senior Indebtedness, ratably according to the respective amounts of
Senior Indebtedness held by each, to the extent necessary to make payment in
full (or have such payment duly provided for) of all Senior Indebtedness
remaining unpaid after giving effect to any concurrent payment or distribution
to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company, whether in cash, property or
securities, shall be received by the Trustee or the Holders on account of
principal of or interest on the Securities before all Senior Indebtedness is
paid in full or such payment is duly provided for, such payment or distribution
(subject to the provisions of Sections 12.6 and 12.7) shall be held in trust by
the Trustee or such Holders 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, to the
extent necessary to make payment in full (except as such payment otherwise shall
have been provided for) of all Senior Indebtedness remaining unpaid after giving
effect to all concurrent payments and distributions and all provisions therefor
to the holders of such Senior Indebtedness, but only to the extent that as to
any holder of Senior Indebtedness, as promptly as practical following notice
from the Trustee to the holders of Senior Indebtedness that such prohibited
payment has been received by the Trustee or Holder(s), such holder (or a
representative therefor) notifies the Trustee of the amounts then due and owing
on the Senior Indebtedness, if any, held by such holder and only the amounts
specified in such notices to the Trustee shall be paid to the holders of 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.
92
<PAGE>
Section 12.4 Securityholders to Be Subrogated to Rights of Holders of
Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness in cash, cash
equivalents acceptable to the holders of such Senior Indebtedness or in any
other form acceptable to the holders of such Senior Indebtedness (or to have
such payment duly provided for in cash or as acceptable to the holders of such
Senior Indebtedness), the Holders of Securities shall be subrogated to the
rights of the holders of such 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 on behalf of the
Holders by virtue of this Article Twelve, which otherwise would have been made
to the Holders 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 Twelve 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 Twelve shall have been
applied, pursuant to the provisions of this Article Twelve, to the payment of
amounts payable under 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, cash equivalents acceptable to the holders of such
Senior Indebtedness or in any other form acceptable to the holders of such
Senior Indebtedness.
Section 12.5 Obligations of the Company Unconditional.
Nothing contained in this Article Twelve 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
93
<PAGE>
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 Twelve, of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy. Notwithstanding anything
to the contrary in this Article Twelve or elsewhere in this Indenture or in the
Securities, upon any distribution of assets of the Company referred to in this
Article Twelve, the Trustee, subject to the provisions of Section 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 pertinent
thereto or to this Article Twelve. Nothing in this Section 12.5 shall apply to
the claims of, or payments to, the Trustee under or pursuant to Section 7.7.
Section 12.6 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee shall have received,
no later than three Business Days prior to such payment, written notice thereof
from the Company or from one or more holders of Senior Indebtedness or from any
representative therefor and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Sections 7.1 and 7.2, shall be
entitled in all respects conclusively to assume that no such fact exists.
Section 12.7 Application by Trustee of Assets Deposited with It.
U.S. Legal Tender or U.S. Government Obligations deposited in trust with
the Trustee pursuant to and in accordance with Section 8.4 shall be for the sole
benefit of Securityholders and, to the extent (i) the making of such deposit by
the Company shall not have been in contravention of any term or provision of any
agreement creating or evidencing Senior Indebtedness and (ii) allocated for the
payment of Securities, shall not be subject to the subordination provisions of
this Article Twelve. Otherwise, any deposit of assets by the
94
<PAGE>
Company with the Trustee or any Paying Agent (whether or not in trust) for the
payment of principal of or interest on any Securities shall be subject to the
provisions of Section 12.1, 12.2, 12.3 and 12.4; provided, that if prior to the
second Business Day preceding the date on which by the terms of this Indenture
any such assets may become distributable for any purpose (including without
limitation, the payment of either principal of or interest on any Security) the
Trustee or such Paying Agent shall not have received with respect to such assets
the written notice provided for in Section 12.6, then the Trustee or such Paying
Agent shall have full power and authority to receive such assets 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.
Section 12.8 Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination provisions contained in this Article Twelve 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. The holders of Senior Indebtedness may extend, renew,
restate, supplement, modify or amend the terms of the Senior Indebtedness or any
security therefor and release, sell or exchange such security and otherwise deal
freely with the Company all without affecting the liabilities and obligations of
the parties to this Indenture or the Holders.
Section 12.9 Securityholders 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 in accordance
with the terms of this Indenture as may be necessary or appropriate to
effectuate the subordination provisions contained in this Article Twelve 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
95
95
<PAGE>
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 Securityholder any plan of
reorganization, arrangement, 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 Securityholder in any such proceeding.
Section 12.10 Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article Twelve 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 12.11 Article Twelve Not to Prevent Events of Default.
The failure to make payment on account of principal of or interest on
the Securities by reason of any provision of this Article Twelve shall not be
construed as preventing the occurrence of a Default or an Event of Default under
Section 6.1 or in any way prevent the Holders from exercising any right
hereunder other than the right to receive payment on the Securities.
Section 12.12 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 Twelve or otherwise. Nothing in
this
96
<PAGE>
Section 12.12 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 of their representative.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts with
the duties imposed by operation of Section 318(c) of the TIA, the imposed
duties, upon qualification of this Indenture under the TIA, shall control.
Section 13.2 Notices.
Any notices or other communications to the Company, any Guarantor or the
Trustee required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company or any Guarantor:
Rykoff-Sexton, Inc.
Executive Offices
761 Terminal Street
Los Angeles, California 90021
Attention: Mark Van Stekelenburg
Telecopy No.: (213) 486-9760
if to the Trustee:
Norwest Bank Minnesota, N.A.
Corporate Trust Department
Sixth & Marquette
Minneapolis, Minnesota 55479
Attention: Carter G. Dreblow
Telecopy No.: (612) 667-9825
97
<PAGE>
The Company or the Trustee by notice to each other party may designate
additional or different addresses as shall be furnished in writing by such
party. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered, if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and five Business Days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him 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. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 13.3 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 13.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (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; and
(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in
98
<PAGE>
the opinion of such counsel, all such conditions precedent have been complied
with.
Section 13.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
each such person, such condition or covenant has been complied with
provided, however, that with respect to matter of fact an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
Section 13.6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
Section 13.7 Legal Holidays.
A "Legal Holiday" used with respect to a particular place of payment is
a Saturday, a Sunday or a day on which banking institutions at such place are
not required to be open. If a payment date is a Legal Holiday at such
99
<PAGE>
place, payment may be made at such place on the next succeeding day that is not
a Legal Holiday, and no interest shall accrue for the intervening period.
Section 13.8 Governing Law.
THIS INDENTURE, THE SECURITIES AND ANY GUARANTEE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY AND ANY GUARANTOR HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES AND
ANY GUARANTEE, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY AND ANY GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THEY MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH
THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY OR ANY
GUARANTOR IN ANY OTHER JURISDICTION.
Section 13.9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
100
<PAGE>
Section 13.10 No Recourse against Others.
A director, officer, employee, stockholder or incorporator, as such, of
the Company or any Guarantor shall not have any liability for any obligations of
the Company or any Guarantor under the Securities, this Indenture or any
Guarantee or for any claim based on, in respect of or by reason of such
obligations or their creations. Each Securityholder by accepting a Security
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Securities.
Section 13.11 Successors.
All agreements of the Company and any Guarantor in this Indenture, the
Securities and any Guarantee shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
Section 13.12 Duplicate Originals.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
Section 13.13 Severability.
In case any one or more of the provisions in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 13.14 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
101
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
RYKOFF-SEXTON, INC.
By: /s/ Richard J. Martin
-----------------------
Name: Richard J. Martin
Title: Senior Vice President and
Chief Financial Officer
[Seal]
Attest: /s/
---------------------
NORWEST BANK MINNESOTA, N.A.,
as Trustee
By: /s/ Carter G. Dreblow
-----------------------
Name: Carter G. Dreblow
Title: Vice President
Attest: /s/
---------------------
102
<PAGE>
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Indenture Guarantee
103
<PAGE>
Exhibit A
[FORM OF NOTE]
RYKOFF-SEXTON, INC.
8-7/8% SENIOR SUBORDINATED NOTE
DUE 2003
No. $
RYKOFF-SEXTON, INC., a Delaware corporation (hereinafter called the
"Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to ____, or
registered assigns, the principal sum of ______ Dollars, on November 1, 2003.
Interest Payment Dates: May 1 and November 1.
Record Dates: April 15 and October 15.
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
A-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
Dated:
RYKOFF-SEXTON, INC.
By:
-------------------------
Attest:
- ------------------------
Secretary
[Seal]
A-2
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
NORWEST BANK MINNESOTA, N.A.,
as Trustee
By:
--------------------------
Authorized Signatory
Dated:
A-3
<PAGE>
RYKOFF-SEXTON, INC.
8-7/8% SENIOR SUBORDINATED NOTE
DUE 2003
1. Interest.
RYKOFF-SEXTON, INC., a Delaware corporation (the "Company"), promises to
pay interest on the principal amount of this Security at a rate of 8-7/8% per
annum. To the extent it is lawful, the Company promises to pay interest on
8-7/8% per annum compounded semi-annually.
The Company will pay interest semi-annually on May 1 and November 1 of
each year (each, an "Interest Payment Date"), commencing May 1, 1994. Interest
on the Securities will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from November 1, 1993. Interest
will be computed on the basis of a 360-day year for the actual number of days
elapsed.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders
must surrender Securities to a Paying Agent to collect principal payments.
Except as provided below, the Company shall pay principal and interest in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by wire transfer of Federal
funds, or interest by its check payable in U.S. Legal Tender. The Company may
deliver any such interest payment to the Paying Agent or the Company may mail
any such interest payment to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, Norwest Bank Minnesota, N.A. (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or any of
A-4
<PAGE>
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or co-Registrar.
4. Indenture
The Company issued the Securities under an Indenture, dated as of
November 1, 1993 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the TIA, as in
effect on the date of the Indenture. The Securities are subject to all such
terms, and Holders of Securities are referred to the Indenture and said Act for
a statement of them. The Securities are unsecured senior subordinated
obligations of the Company limited in aggregate principal amount to
$130,000,000.
5. Redemption.
The Securities may be redeemed at the election of the Company, in whole
or in part, at any time on and after November 1, 1998, at the Redemption Price
(expressed as a percentage of principal amount) set forth below with respect to
the twelve-month period beginning November 1 of the years indicated below, in
each case, together with any accrued but unpaid interest to the Redemption Date.
The Securities may not be so redeemed before November 1, 1998.
<TABLE>
<CAPTION>
<S> <C>
Year Redemption Price
- ---- ----------------
1998................................. 104.44%
1999................................. 102.96%
2000................................. 101.48%
2001 and thereafter.................. 100.00%
</TABLE>
The Securities may be redeemed at the election of the Company, in whole
or in part, at any time on or prior to November 1, 1998, within 180 days notice
at a redemption price equal to the sum of (i) the principal amount thereof plus
(ii) accrued and unpaid interest, if any, to the redemption date plus (iii) the
Applicable Premium.
Any such redemption will comply with Article Three of the Indenture.
A-5
<PAGE>
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail 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. Securities in denominations
larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Trustee or the Paying Agent on such Redemption
Date, the Securities called for redemption will cease to bear interest and the
only right of the Holders of such Securities will be to receive payment of the
Redemption Price and any accrued and unpaid interest to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations
of $1,000 and integral multiples of $1000. A Holder may register the transfer
of, or exchange Securities in accordance with, the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee and the Paying Agent(s) will pay the money back to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company at any time deposits into an irrevocable trust with the
Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay
A-6
<PAGE>
the principal of and interest on the Securities to redemption or maturity and
complies with the other provisions of the Indenture relating thereto, the
Company will be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding its obligation to
pay the principal of and interest on the Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of at least a majority in aggregate
principal amount of the Securities then outstanding. Without notice to or
consent of any Holder, the parties thereto may amend or supplement the Indenture
or the Securities to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Securities in addition to or in place
of certificated Securities, or make any other change that does not adversely
affect the rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the Company
and its Subsidiaries to, among other things, incur additional Indebtedness, make
payments in respect to its Capital Stock, 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 its
properties or assets. The limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on complaince with such limitations.
13. Ranking.
Payment of principal, premium, if any, and interest on the Securities is
subordinated, in the manner and to the extent set forth in the Indenture, to the
prior payment in full of all Senior Indebtedness.
A-7
<PAGE>
14. Change of Control
In the event there shall occur any Change of Control, each Holder of
Securities shall have the right, at such Holder's option but subject to the
limitations and conditions set forth in the Indenture, to require the Company to
purchase on the Change of Control Purchase Date in the manner specific in the
Indenture, all or any part (in integral multiples of $1,000) of such Holder's
Securities at a Change of Control Purchase Price equal to 101% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the Change
of Control Purchase Date.
15. Successors.
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
16. Defaults and Remedies.
In an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holder of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any continuing Default
or Event of Default (except a Default in payment of principal or interest), if
it determines that withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
A-8
<PAGE>
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such,
past, present or future, of the Company, any Guarantor or any successor
corporation shall have any liability for any obligation of the Company or any
Guarantor under the Securities, the Indenture or any Guarantee or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Security 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.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificates of authentication on the other side of this
Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST ( = Custodian), and U/G/M/A ( = Uniform
Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities.
No representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
A-9
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Security to
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
_______________ and irrevocably appoint _____________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Dated: Signed:
_________________ ______________________________________
____________________________________________________________________________
(Sign exactly as the name appears on
the other side of this Security)
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.14 or Article Eleven of the Indenture, check the
appropriate box:
[_] Section 4.14 [_] Article Eleven
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.14 or Article Eleven of the Indenture, as the case
may be, state the amount you want to be purchased: $________
Date: Signature:
----------------- -----------------------------------
(Sign exactly as your name appears
on the other side of this
Security)
Signature Guarantee:
---------------------------------------
A-11
<PAGE>
Exhibit B
[FORM OF INDENTURE GUARANTEE]
For value received,_________________________________, a ______________
corporation, hereby unconditionally guarantees to the Holder of the Note upon
which this Guarantee is endorsed the due and punctual payment, on a subordinated
basis, of the principal of, premium, if any, and interest on such Note when and
as the same shall become due and payable according to the terms of such Note and
the Indenture. The Guarantee of the Note upon which this Guarantee is endorsed
will not become effective until the Trustee signs the certificate of
authentication on such Note.
[GUARANTOR]
By:
----------------------------------------
Attest:
-------------------------------------
B-1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JUL-3-1999 JUN-27-1998
<PERIOD-START> JUN-28-1998 JUN-29-1997
<PERIOD-END> SEP-26-1998 SEP-27-1997
<CASH> 57,648 0
<SECURITIES> 0 0
<RECEIVABLES> 389,717 0
<ALLOWANCES> 0 0
<INVENTORY> 366,991 0
<CURRENT-ASSETS> 885,727 0
<PP&E> 431,473 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 1,897,604 0
<CURRENT-LIABILITIES> 517,951 0
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 608,098 0
<TOTAL-LIABILITY-AND-EQUITY> 1,897,604 0
<SALES> 1,478,370 1,338,828
<TOTAL-REVENUES> 1,478,370 1,338,828
<CGS> 1,208,393 1,082,582
<TOTAL-COSTS> 224,938 220,526
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 16,196 18,972
<INCOME-PRETAX> 28,843 16,793
<INCOME-TAX> 11,931 7,002
<INCOME-CONTINUING> 16,912 9,791
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 16,912 9,791
<EPS-PRIMARY> 0.36 0.22
<EPS-DILUTED> 0.36 0.22
</TABLE>
