SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MAY 13, 1997
FRENCH FRAGRANCES, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 1-6370 59-0914138
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
14100 N.W. 60TH AVENUE
MIAMI LAKES, FLORIDA 33014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 818-8000
---------------------------------------------------------------
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On May 13, 1997, French Fragrances, Inc. (the "Company"),
consummated the private placement pursuant to the Securities Act of 1933, as
amended, of $115 million principal amount of 10-3/8% Senior Notes due 2007
(the "Notes"). Approximately $48.6 million of the net proceeds from the sale
of the Notes was used to repay all of the outstanding indebtedness under the
Company's credit facility and an additional $14.4 million of the net
proceeds was used to repay an equivalent principal amount of subordinated
debentures of the Company. In addition, the Company applied approximately
$4.2 million to the acquisition of the 50% interest in Fine Fragrances, Inc.
("Fine Fragrances") not owned by the Company and the repayment of all of the
outstanding indebtedness under Fine Fragrances' credit facility. Fine
Fragrances is the exclusive distributor in the United States and Canada of
the Salvador Dali, Cafe, Taxi and Watt fragrance brands and following the
acquisition of the 50% interest, its operations will be consolidated with
those of the Company.
The balance of the net proceeds from the offering of the
Notes will be used to provide the Company with additional working capital
support, as well as increased operational and financial flexibility to take
advantage of expansion opportunities, through acquisitions or new product
distribution arrangements.
The Notes have not been registered under the Act and may
not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements. The Notes are expected
to be exchanged for new notes containing identical terms which will be
registered under the Act. The exchange offer will be made only by means of a
prospectus.
In connection with the offering of the Notes, the Company
entered into a new $40 million standby credit facility which will be
available for additional working capital support.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit
Number Description
------ -------------------------------------------------------------
4.1 Indenture, dated as of May 13, 1997, between the Company and
Marine Midland Bank, as trustee.
4.2 Registration Rights Agreement, dated May 13, 1997, among the
Company, Donaldson, Lufkin & Jenrette Securities Corporation
and TD Securities (USA) Inc.
4.3 Credit Agreement, dated as of May 13, 1997, between the
Company and Fleet National Bank.
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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 hereunto duly authorized.
FRENCH FRAGRANCES, INC.
/S/ WILLIAM J. MUELLER
----------------------
Date: May 14, 1997 William J. Mueller
Vice President - Operations and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
------ -------------------------------------------------------------
4.1 Indenture, dated as of May 13, 1997, between the Company and
Marine Midland Bank, as trustee.
4.2 Registration Rights Agreement, dated May 13, 1997, among the
Company, Donaldson, Lufkin & Jenrette Securities Corporation
and TD Securities (USA) Inc.
4.3 Credit Agreement, dated as of May 13, 1997, between the
Company and Fleet National Bank.
EXHIBIT 4.1
French Fragrances, Inc.
$115,000,000
Aggregate Principal Amount
of 10 3/8% Senior Notes due 2007
INDENTURE
Dated as of May 13, 1997
Marine Midland Bank
Trustee
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<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
<S> <C> <C>
310 (a)(1)................................................................ 7.10
(a)(2)................................................................ 7.10
(a)(3) ............................................................... N.A.
(a)(4)................................................................ N.A.
(a)(5)................................................................ 7.10
(b)................................................................... 7.10
(c)................................................................... N.A.
311 (a)................................................................... 7.11
(b)................................................................... 7.11
(c)................................................................... N.A.
312 (a)................................................................... 2.05
(b)................................................................... 11.03
(c)................................................................... 11.03
313 (a)................................................................... 7.06
(b)(1)................................................................ N.A.
(b)(2)................................................................ 7.06
(c)................................................................... 7.06;11.02
(d)................................................................... 7.06
314 (a)................................................................... 4.03;11.05
(b)................................................................... N.A.
(c)(1)................................................................ 11.04
(c)(2)................................................................ 11.04
(c)(3)................................................................ N.A.
(d)................................................................... N.A.
(e)................................................................... 11.05
(f)................................................................... N.A.
315 (a)................................................................... 7.01
(b)................................................................... 7.05,11.02
(c)................................................................... 7.01
(d)................................................................... 7.01
(e)................................................................... 6.11
316 (a)(last sentence).................................................... N.A.
(a)(1)(A)............................................................. 6.05
(a)(1)(B)............................................................. 6.04
(a)(2)................................................................ N.A.
(b)................................................................... 6.07
(c)................................................................... 2.13
317 (a)(1)................................................................ 6.08
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(a)(2)................................................................ 6.09
(b)................................................................... 2.04
318 (a)................................................................... 11.01
(b)................................................................... N.A.
(c)................................................................... 11.01
.........
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
</TABLE>
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
Section 1.01. Definitions...............................................................................1
Section 1.02. Other Definitions........................................................................16
Section 1.03. Incorporation by Reference of Trust Indenture Act........................................17
Section 1.04. Rules of Construction....................................................................18
ARTICLE 2 THE SENIOR NOTES......................................................................................18
Section 2.01. Form and Dating..........................................................................18
Section 2.02. Execution and Authentication.............................................................21
Section 2.03. Registrar and Paying Agent...............................................................22
Section 2.04. Paying Agent to Hold Money in Trust......................................................23
Section 2.05. Lists of Holders of the Senior Notes.....................................................23
Section 2.06. Transfer and Exchange....................................................................23
Section 2.07. Replacement Senior Notes.................................................................24
Section 2.08. Outstanding Senior Notes.................................................................24
Section 2.09. Treasury Senior Notes....................................................................25
Section 2.10. Temporary Senior Notes...................................................................25
Section 2.11. Cancellation.............................................................................25
Section 2.12. Defaulted Interest.......................................................................26
Section 2.13. Record Date..............................................................................26
Section 2.14. CUSIP Number.............................................................................26
Section 2.15. Book-Entry Provisions For Global Security................................................26
Section 2.16. Special Transfer Provisions..............................................................28
ARTICLE 3 REDEMPTION............................................................................................34
Section 3.01. Notices to Trustee.......................................................................34
Section 3.02. Selection of Senior Notes to Be Redeemed.................................................34
Section 3.03. Notice of Redemption.....................................................................35
Section 3.04. Effect of Notice of Redemption...........................................................36
Section 3.05. Deposit of Redemption Price..............................................................36
Section 3.06. Senior Notes Redeemed in Part............................................................36
Section 3.07. Optional Redemption......................................................................36
Section 3.08. Mandatory Redemption.....................................................................37
Section 3.09. Offer to Purchase by Application of Excess Proceeds......................................37
ARTICLE 4 COVENANTS.............................................................................................39
Section 4.01. Payment of Senior Notes..................................................................39
Section 4.02. Maintenance of Office or Agency..........................................................39
Section 4.03. Reports..................................................................................40
Section 4.04. Compliance Certificate...................................................................41
Section 4.05. Taxes....................................................................................42
Section 4.06. Stay, Extension and Usury Laws...........................................................42
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Section 4.07. Restricted Payments......................................................................42
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries...........................44
Section 4.09. Incurrence of Indebtedness and Issuance of Disqualified Stock............................45
Section 4.10. Asset Sales..............................................................................46
Section 4.11. Transactions with Affiliates.............................................................47
Section 4.12. Liens....................................................................................48
Section 4.13. Sale and Leaseback Transactions..........................................................48
Section 4.14. Limitation on Issuances and Sales of Capital Interests of Wholly Owned Subsidiaries......49
Section 4.15. Limitations on Issuances of Guarantees of Indebtedness...................................49
Section 4.16. Subsidiary Guarantees....................................................................50
Section 4.17. Business Activities......................................................................50
Section 4.18. Offer to Repurchase Upon Change of Control...............................................50
Section 4.19. Corporate Existence......................................................................51
Section 4.20. Payments for Consent.....................................................................51
Section 4.21. Limitation on Preferred Stock or Preferred Equity Interests of Subsidiaries..............51
ARTICLE 5 SUCCESSORS............................................................................................52
Section 5.01. Merger, Consolidation, or Sale of Assets.................................................52
Section 5.02. Successor Corporation Substituted........................................................52
ARTICLE 6 DEFAULTS AND REMEDIES.................................................................................53
Section 6.01. Events of Default........................................................................53
Section 6.02. Acceleration.............................................................................55
Section 6.03. Other Remedies...........................................................................56
Section 6.04. Waiver of Past Defaults..................................................................56
Section 6.05. Control by Majority......................................................................56
Section 6.06. Limitation on Suits......................................................................57
Section 6.07. Rights of Holders of Senior Notes to Receive Payment.....................................57
Section 6.08. Collection Suit by Trustee...............................................................57
Section 6.09. Trustee May File Proofs of Claim.........................................................58
Section 6.10. Priorities...............................................................................58
Section 6.11. Undertaking for Costs....................................................................59
ARTICLE 7 TRUSTEE 59
Section 7.01. Duties of Trustee........................................................................59
Section 7.02. Rights of Trustee........................................................................60
Section 7.03. Individual Rights of Trustee.............................................................61
Section 7.04. Trustee's Disclaimer.....................................................................61
Section 7.05. Notice of Defaults.......................................................................62
Section 7.06. Reports by Trustee to Holders of the Senior Notes........................................62
Section 7.07. Compensation and Indemnity...............................................................63
Section 7.08. Replacement of Trustee...................................................................63
Section 7.09. Successor Trustee by Merger, etc.........................................................65
Section 7.10. Eligibility; Disqualification............................................................65
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Section 7.11. Preferential Collection of Claims Against Company........................................65
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................................65
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.................................65
Section 8.02. Legal Defeasance and Discharge...........................................................65
Section 8.03. Covenant Defeasance......................................................................66
Section 8.04. Conditions to Legal or Covenant Defeasance...............................................67
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions..........................................................................68
Section 8.06. Repayment to Company.....................................................................69
Section 8.07. Reinstatement............................................................................69
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER......................................................................70
Section 9.01. Without Consent of Holders of Senior Notes...............................................70
Section 9.02. With Consent of Holders of Senior Notes..................................................71
Section 9.03. Compliance with Trust Indenture Act......................................................72
Section 9.04. Revocation and Effect of Consents........................................................72
Section 9.05. Notation on or Exchange of Senior Notes..................................................73
Section 9.06. Trustee to Sign Amendments, etc..........................................................73
ARTICLE 10 GUARANTEE OF SENIOR NOTES............................................................................73
Section 10.01. Subsidiary Guarantee....................................................................73
Section 10.02. Limitation of the Subsidiary Guarantors' Liability......................................75
Section 10.03. Release of the Subsidiary Guarantors....................................................75
Section 10.04. Merger, Consolidation or Sale of Assets.................................................76
Section 10.05. Execution and Delivery of Subsidiary Guarantees.........................................76
ARTICLE 11 MISCELLANEOUS........................................................................................77
Section 11.01. Trust Indenture Act Controls............................................................77
Section 11.02. Notices.................................................................................77
Section 11.03. Communication by Holders of Senior Notes with Other Holders of Senior Notes.............78
Section 11.04. Certificate and Opinion as to Conditions Precedent......................................79
Section 11.05. Statements Required in Certificate or Opinion...........................................79
Section 11.06. Rules by Trustee and Agents.............................................................79
Section 11.07. No Personal Liability of Directors, Officers, Employees, Partners and Stockholders......80
Section 11.08. Governing Law...........................................................................80
Section 11.09. No Adverse Interpretation of Other Agreements...........................................80
Section 11.10. Successors..............................................................................80
Section 11.11. Severability............................................................................80
Section 11.12. Counterpart Originals...................................................................80
Section 11.13. Table of Contents, Headings, etc........................................................81
Section 11.14. Agent for Service of Process; Consent to Jurisdiction...................................81
</TABLE>
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<TABLE>
<CAPTION>
EXHIBITS
<S> <C> <C>
Exhibit A - Form of Initial Senior Note
Exhibit B - Form of Exchange Senior Note
Exhibit C - Form of Subsidiary Guarantee
Exhibit D - Form of Supplemental Indenture
Exhibit E - Form of certification to be given by the holders of beneficial interest in a temporary
Regulation S global security to Euroclear or CEDEL
Exhibit F - Form of certification to be given by Euroclear operator or CEDEL
Exhibit G - Form of certification to be given by transferee of beneficial interest in a temporary
Regulation S global security
Exhibit H - Form of certification for transfer or exchange of restricted global security to
temporary Regulation S global security
Exhibit I - Form of certification for transfer or exchange of restricted global security to
permanent Regulation S global security
Exhibit J - Form of certification for transfer or exchange of temporary Regulation S global security
or permanent Regulation S global security to restricted global security
Exhibit K - Form of certification for transfer or exchange of non-global restricted security to
restricted global security
Exhibit L - Form of certification for transfer or exchange of non-global restricted security to
permanent Regulation S global security or temporary Regulation S global security
Exhibit M-1 - Form of certification for transfer or exchange of
non-global permanent Regulation S security to
restricted global security
Exhibit M-2 - Form of certification for transfer or exchange of
non-global permanent Regulation S security to permanent
Regulation S global security
Exhibit N - Form of Transferee Letter of Representation
Exhibit O - Form of Legend for Book-Entry Securities
</TABLE>
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INDENTURE dated as of May 13, 1997 between French Fragrances,
Inc., a Florida corporation (the "COMPANY"), and Marine Midland Bank, a New York
banking corporation and trust company, as trustee (the "TRUSTEE").
The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the 10
3/8% Senior Notes due 2007, Series A, of the Company (the "INITIAL SENIOR
NOTES") and the 10 3/8% Senior Notes due 2007, Series B, of the Company (the
"EXCHANGE SENIOR NOTES" and, together with the Initial Senior Notes, the "SENIOR
NOTES"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS
"ACQUIRED DEBT" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, PROVIDED
that such Indebtedness was not incurred in contemplation of such other Person
merging with or into or becoming a Subsidiary of such specified Person, and (ii)
Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person, PROVIDED that such Indebtedness was not incurred in contemplation of
such acquisition.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
PROVIDED that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"ASSET SALE" means (a) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback or by way of merger, consolidation or similar transaction) other than
sales of inventory in the ordinary course of business consistent with past
practices (PROVIDED that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole shall be governed by the provisions of Section 4.18 and/or Section 5.01
hereof
<PAGE>
and not by the provisions of Section 4.10 hereof), (b) the issuance by
any Subsidiary of Equity Interests of such Subsidiary and (c) the disposition by
the Company or any of its Subsidiaries of Equity Interests of any of the
Company's Subsidiaries, in the case of either clause (a), (b) or (c), whether in
a single transaction or a series of related transactions, (i) that have a fair
market value in excess of $1.0 million or (ii) for net proceeds in excess of
$1.0 million. Notwithstanding the foregoing, (a) a transfer of assets by the
Company to a Wholly Owned Subsidiary that is a Subsidiary Guarantor or by a
Wholly Owned Subsidiary to the Company or to another Wholly Owned Subsidiary,
(b) an issuance of Equity Interests by a Wholly Owned Subsidiary to the Company
or to another Wholly Owned Subsidiary, (c) a Restricted Payment that is
permitted by Section 4.07 hereof, (d) any sale and leaseback transaction
otherwise permitted pursuant to Section 4.13 hereof, and (e) sales of accounts
receivable in the ordinary course of business consistent with past practices for
the purpose of insuring against the risk of uncollectibility pursuant to the
Heller Arrangement (or any replacement thereof on terms that are no less
favorable to the Company), will not be deemed to be Asset Sales.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"BOARD OF DIRECTORS" means the Board of Directors of the
Company or any authorized committee of the Board of Directors, except that for
the purposes of the definitions of the terms "Change of Control" and "Continuing
Directors," the term "Board of Directors" means the entire Board of Directors of
the Company and not any authorized committee of the Board of Directors.
"BOOK-ENTRY SECURITY" means any Senior Notes bearing the
legend specified in Exhibit O evidencing all or a part of a series of Senior
Notes, authenticated and delivered to the Depository for such series or its
nominee, and registered in the name of such Depository or nominee.
"BORROWING BASE" means, as of any date, an amount equal to (a)
85% of the face amount of all accounts receivable owned by the Company and its
Subsidiaries as of such date that are not more than 90 days past due, PLUS (b)
65% of the book value (calculated on an average cost basis) of all inventory
owned by the Company and its Subsidiaries as of such date, MINUS (c) any amount
applied pursuant to Section 4.10(b) hereof to permanently reduce Indebtedness
permitted to be incurred pursuant to Section 4.09(b)(i) hereof, all calculated
on a consolidated basis and in accordance with GAAP. To the extent that
information is not available as to the amount of accounts receivable or
inventory as of a specific date, the Company may utilize the most recent
available information for purposes of calculating the Borrowing Base.
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"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL INTERESTS" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or other business entity,
any and all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock, (iii) in the case of a partnership,
partnership interests (whether general or limited) and (iv) any other interest
or participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"CAPITAL LEASE OBLIGATION" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"CASH EQUIVALENTS" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less from
the date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits or demand deposits, in each case with any
lender party to any Credit Facility or with any domestic commercial bank having
capital and surplus in excess of $1.0 billion, (iv) repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc., and in each case maturing within six months after
the date of acquisition and (vi) investments in money market funds all of whose
assets comprise securities of the types described in clauses (i), (ii) and (iii)
above.
"CEDEL" means Cedel Bank, Societe Anonyme (or any successor
securities clearing agency).
"CHANGE OF CONTROL" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Principals or their Related
Parties, (ii) the adoption of a plan relating to the liquidation or dissolution
of the Company, (iii) the consummation of any transaction or series of
transactions (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above) (other than the
Principals and their Related Parties) becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of (a) 35% or more of the voting Capital Interests of the Company
and (b) more of the voting Capital Interests of the Company than are, in the
aggregate, beneficially owned by the
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Principals and their Related Parties at the time of such consummation, or (iv)
the first day on which a majority of the members of the Board of Directors are
not Continuing Directors. For purposes of this definition, any transfer of an
equity interest of an entity that was formed for the purpose of acquiring voting
Capital Interests of the Company shall be deemed to be a transfer of such
portion of such voting Capital Interests as corresponds to the portion of the
equity of such entity that has been so transferred.
"CHIEF OPERATING OFFICER COMPENSATION AGREEMENT" means the
compensation agreement, dated as of April 1, 1997, between the Company and ESB.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Common Stock, par value $.01, of the
Company.
"COMPANY" has the meaning provided in the preamble to this
Indenture.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for
any period, the Consolidated Net Income of such Person and its Subsidiaries for
such period PLUS (i) an amount equal to any extraordinary loss plus any net loss
realized in connection with an Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions) (to the extent such
losses were deducted in computing such Consolidated Net Income), PLUS (ii) the
provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, PLUS (iii) consolidated
interest expense of such Person and its Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, PLUS (iv)
all items classified as "depreciation" or "amortization" on such Person's
statement of operations and other non-cash charges (including non-cash,
equity-based compensation charges, but excluding any non-cash charge to the
extent that it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash charges were deducted in
computing such Consolidated Net Income. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash charges of, a Subsidiary of the referent Person
shall be added to Consolidated Net Income to compute Consolidated Cash Flow only
to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in
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calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Subsidiary without prior approval (that has
not been obtained), pursuant to the terms of its organizational documents and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED that (i) the Net Income (but not loss) of any Person that is
not a Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii)
the Net Income of any Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that Net Income is not at the date of determination permitted without prior
approval (that has not been obtained) pursuant to the terms of its
organizational documents and all agreements, instruments, judgments, decrees,
orders, statutes, rules or governmental regulations applicable to that
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, (v) Consolidated Net Income shall not
include any gain (but shall include any loss), together with any related
provision for taxes on such gain (but not such loss), realized in connection
with (A) any Asset Sale (including, without limitation, dispositions pursuant to
sale and leaseback transactions) or (B) the disposition of any securities by
such Person or any of its Subsidiaries or the extinguishment of any Indebtedness
of such Person or any of its Subsidiaries and (vi) Consolidated Net Income shall
not include any extraordinary or nonrecurring gain (but shall include any loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not such loss).
"CONSOLIDATED NET WORTH" means, with respect to any Person,
the sum of (i) the consolidated equity of the holders of common Equity Interests
in such Person and its consolidated Subsidiaries PLUS (ii) the respective
amounts reported on such Person's most recent balance sheet with respect to any
series of preferred stock or preferred Equity Interests; PROVIDED that the
preferred stock or the preferred Equity Interests, as the case may be, shall be
included in Consolidated Net Worth only if such preferred stock or preferred
Equity Interests are not Disqualified Stock, LESS (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within twelve months after the
acquisition of such business) subsequent to the date of the most recently
completed fiscal quarter in the book value of any asset owned by such Person or
a consolidated Subsidiary of such Person, (y) all investments in unconsolidated
Subsidiaries and in Persons that are not Subsidiaries (except, in each case,
investments in marketable securities), and (z) all unamortized debt discount and
expense and
-5-
<PAGE>
unamortized deferred financing charges, all of the foregoing determined in
accordance with GAAP.
"CONTINUING DIRECTORS" means, as of any date of determination,
any member of the Board of Directors who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the approval of (a) a majority of the Principals
who were beneficial owners of voting Capital Interests of the Company at the
time of such nomination or election or (b) a majority of the Continuing
Directors who were members of such Board of Directors at the time of such
nomination or election.
"CORPORATE TRUST OFFICE" means the office of the Trustee in
New York, New York, at 140 Broadway, 12th Floor, New York, New York 10005 or
such other location designated by the Trustee by written notice.
"CREDIT FACILITY" means any credit facility entered into by
and among the Company, any Subsidiary Guarantor and the lending institutions
party thereto, including any credit agreement, related notes, Guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time.
"DEFAULT" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"DEPOSITORY" means The Depository Trust Company, its nominees
and successors.
"DISQUALIFIED STOCK" means any Equity Interest that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the 91st day after the date on which the Senior Notes mature.
"8.0% SECURED SUBORDINATED DEBENTURES" means the Company's
8.0% Secured Subordinated Debentures Series I Due 2005 and the Company's 8.0%
Secured Subordinated Debentures Series II Due 2005.
"8.5% SUBORDINATED DEBENTURES" means the Company's 8.5%
Subordinated Debentures Due 1999.
"EQUITY INTERESTS" means Capital Interests and all warrants,
options or other rights to acquire Capital Interests (but excluding any debt
security that is convertible into, or exchangeable for, Capital Interests).
-6-
<PAGE>
"ESB" means ESB Consultants, Inc., a corporation organized
pursuant to the laws of the Province of Ontario, Canada.
"EUROCLEAR" means the Euroclear Clearance System (or any
successor securities clearing agency).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"EXCHANGE OFFER" means the registration by the Company under
the Securities Act pursuant to a registration statement of the offer by the
Company to each Holder of the Initial Senior Notes to exchange all the Initial
Senior Notes held by such Holder for the Exchange Senior Notes in an aggregate
principal amount equal to the aggregate principal amount of the Initial Senior
Notes held by such Holder, all in accordance with the terms and conditions of
the Registration Rights Agreement.
"EXCHANGE SENIOR NOTES" has the meaning provided in the
preamble to this Indenture.
"EXISTING INDEBTEDNESS" means the aggregate principal amount
of Indebtedness of the Company and its Subsidiaries in existence on the date
hereof, until such amounts are repaid.
"FINE FRAGRANCES" means Fine Fragrances, Inc., a Delaware
corporation.
"FISCAL YEAR" means the fiscal year of the Company ending
January 31 of each year.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to the Fixed Charges of such Person and its
Subsidiaries for such period. In the event that the Company or any of its
Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than
borrowings under any Credit Facility) or issues or redeems preferred stock or
preferred Equity Interests subsequent to the commencement of the period for
which the Fixed Charge Coverage Ratio is being calculated but prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the "CALCULATION DATE"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock or
preferred Equity Interests, as if the same had occurred at the beginning of the
applicable four-quarter reference period. For purposes of making the computation
referred to above, (i) acquisitions that have been made by the Company or any of
its Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed
-7-
<PAGE>
to have occurred on the first day of the four-quarter reference period, (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges shall
not be obligations of the referent Person or any of its Subsidiaries following
the Calculation Date.
"FIXED CHARGES" means, with respect to any Person for any
period, the sum of (i) the consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations but
excluding amortization of deferred financing fees), (ii) the consolidated
interest expense of such Person and its Subsidiaries that was capitalized during
such period, (iii) any interest expense on Indebtedness of another Person that
is Guaranteed by such Person or one of its Subsidiaries or secured by a Lien on
assets of such Person or one of its Subsidiaries (whether or not such Guarantee
or Lien is called upon) and (iv) the product of (a) the amount of dividends or
distributions paid, whether or not in cash, in respect of preferred stock or
preferred Equity Interests of such Person, other than dividend payments on
Equity Interests payable solely in Equity Interests of the Company, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rates of
such Person, expressed as a decimal, in the case of clauses (i) through (iv),
determined on a consolidated basis and in accordance with GAAP.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date hereof.
"GLOBAL SECURITY" means, as the context may require, any or
all of the Temporary Regulation S Global Security, the Permanent Regulation S
Global Security and the Restricted Global Security.
"GOVERNMENT SECURITIES" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States of
America is pledged.
-8-
<PAGE>
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"GUARANTEED OBLIGATIONS" means, for the purposes of Article 10
hereof, Obligations under this Indenture, the Senior Notes and any Subsidiary
Guarantee.
"GUARANTOR SENIOR INDEBTEDNESS" means any Indebtedness
permitted to be incurred by any Subsidiary Guarantor under the terms hereof,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is subordinated in right of payment to such Subsidiary
Guarantor's Subsidiary Guarantee. Notwithstanding the foregoing, Guarantor
Senior Indebtedness shall not include (i) any Obligation of such Subsidiary
Guarantor to any Subsidiary of such Subsidiary Guarantor, (ii) any liability for
federal, state, local or other taxes owed or owing by such Subsidiary Guarantor,
(iii) any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities), (iv) any Indebtedness, Guarantee or Obligation of
the Subsidiary Guarantor that is contractually subordinated or junior in any
respect to any other Indebtedness, Guarantee or Obligation of such Subsidiary
Guarantor or (v) any Indebtedness incurred in violation hereof.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, (ii) other agreements
or arrangements designed to protect such Person against fluctuations in interest
rates and (iii) agreements entered into for the purpose of fixing or hedging the
risks associated with fluctuations in foreign currency exchange rates.
"HELLER ARRANGEMENT" means the arrangement pursuant to an
agreement dated July 13, 1993 between the Company and Heller Intercredit
Company, a division of Heller Financial, Inc., pursuant to which the Company
insures from risk of uncollectibility a portion of the Company's accounts
receivable.
"HOLDER" means a Person in whose name a Senior Note is
registered.
"INDEBTEDNESS" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability upon
a balance sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether or
not such indebtedness is assumed by such Person)
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<PAGE>
and, to the extent not otherwise included, the Guarantee by such Person of any
indebtedness of any other Person.
"INDENTURE" means this Indenture, as amended or supplemented
from time to time.
"INITIAL PURCHASERS" means Donaldson, Lufkin & Jenrette
Securities Corporation and TD Securities (USA) Inc.
"INITIAL SENIOR NOTES" has the meaning provided in the
preamble to this Indenture.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that
is an "accredited investor" as the term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"INVESTMENTS" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including Guarantees of Indebtedness or other
obligations but excluding advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of such
Person or its Subsidiaries in accordance with GAAP), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration consisting of Indebtedness, Equity Interests or
other securities and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; PROVIDED that
an acquisition of assets, Equity Interests or other securities by the Company
for consideration consisting of common equity securities of the Company shall
not be deemed to be an Investment.
"ISSUE DATE" means the date the Initial Senior Notes are
initially issued.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York, in the city of the principal
corporate trust office of the Trustee or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday, payment may be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
-10-
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"LIQUIDATED DAMAGES" means all liquidated damages owing
pursuant to Section 5 of the Registration Rights Agreement.
"MIAMI LAKES FACILITY" means the land and buildings comprising
the Company's executive offices and distribution facility at 14100 N.W. 60th
Avenue, Miami Lakes, Florida 33014.
"NATIONAL TRADING FACILITY" means the land and buildings
leased by the Company from National Trading Manufacturing, Inc. located at 15595
N.W. 15th Avenue, Miami, Florida 33169.
"NET INCOME" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP.
"NET PROCEEDS" means the aggregate cash proceeds received by
the Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, regulatory compliance costs and sales commissions)
and any relocation expenses incurred as a result thereof, taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than Senior Revolving Debt) secured by a
Lien on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"NON-U.S. PERSON" means a person who is not a U.S. person, as
defined in Regulation S.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFICER" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
Controller, Secretary or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the principal
executive officer, principal operating officer, principal financial officer,
treasurer or principal accounting officer of the Company.
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<PAGE>
"OPINION OF COUNSEL" means an opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.
"PERMANENT REGULATION S SECURITY" means, after such time as
the Restricted Period shall have expired and an Owner Securities Certification
and a Depository Securities Certification shall have been provided, the
interests into which the Temporary Regulation S Global Securities shall have
been exchanged, whether or not such interest is a Global Security.
"PERMITTED INVESTMENTS" means (a) any Investments in the
Company or in a Wholly Owned Subsidiary of the Company that is engaged in the
same or a similar or related line of business as the Company and its
Subsidiaries were engaged in on the date hereof; (b) any Investments in Cash
Equivalents; (c) Investments by the Company or any Subsidiary of the Company in
a Person, if as a result of such Investment (i) such Person becomes a Wholly
Owned Subsidiary of the Company that is engaged in the same or a similar or
related line of business as the Company and its Subsidiaries were engaged in on
the date hereof or (ii) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Subsidiary of the Company that is
engaged in the same or a similar or related line of business as the Company and
its Subsidiaries were engaged in on the date hereof; (d) Investments made as a
result of the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with Section 4.10 hereof; (e) Investments in
endorsements of negotiable instruments and similar negotiable documents in the
ordinary course of business; (f) Investments existing on the date hereof; (g)
Investments in obligations of account debtors to the Company or any of its
Subsidiaries and stock or obligations issued to the Company or any such
Subsidiary by any Person, in each case, in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of such Person's Indebtedness; and (h) other Investments in any one
or more Persons that do not exceed $5.0 million in the aggregate at any time
outstanding.
"PERMITTED LIENS" means (i) Liens on accounts receivable and
inventory securing Indebtedness permitted to be incurred under Section
4.09(b)(i) hereof; (ii) Liens in favor of the Company; (iii) Liens to secure
Indebtedness permitted to be incurred under Section 4.09(a) hereof that is
incurred to finance the acquisition of property or assets acquired by the
Company or any Subsidiary after the date hereof, so long as (A) such
Indebtedness is incurred and the Lien securing such Indebtedness is created
within 90 days of such acquisition and (B) such Lien does not extend to any
property or assets of the Company or any Subsidiary other than the property and
assets so acquired; (iv) Liens on property of a Person existing at the time such
Person is merged into, consolidated with or acquired by the Company or any
Subsidiary of the Company; PROVIDED that such Liens were not incurred in
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Company or
any Subsidiary of the
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Company or those of an unrelated third party; (v) Liens on property existing at
the time of acquisition thereof by the Company or any Subsidiary of the Company,
PROVIDED that such Liens were not incurred in contemplation of such acquisition;
(vi) Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vii) Liens to secure Indebtedness permitted by
Section 4.09(b)(vi) hereof covering only (x) the assets acquired, constructed or
improved with such Indebtedness or (y) the Miami Lakes Facility, as the case may
be; (viii) Liens existing on the date hereof; (ix) Liens for taxes, assessments
or governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently pursued, PROVIDED that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made therefor; (x)
Liens securing Permitted Refinancing Indebtedness, PROVIDED that such Liens do
not extend to or cover any assets or property other than the collateral securing
the Indebtedness to be refinanced; (xi) Liens arising by operation of law in
connection with judgments, which do not give rise to an Event of Default with
respect thereto; (xii) easements, rights of way, zoning restrictions and other
similar encumbrances or title defects which do not materially detract from the
value of the property or the assets subject thereto or interfere with the
ordinary conduct of the business of the Company and its Subsidiaries, taken as a
whole; (xiii) Liens securing Attributable Debt with respect to any sale and
leaseback transaction in an aggregate amount not to exceed the aggregate
principal amount of Attributable Debt permitted to be incurred pursuant to
Section 4.09 hereof, PROVIDED that such Liens do not extend to or cover any
assets or property other than the collateral securing such Attributable Debt;
(xiv) Liens on sales of accounts receivable pursuant to the Heller Arrangement
(or any permitted replacement thereof); and (xv) Liens incurred in the ordinary
course of business of the Company or any Subsidiary of the Company with respect
to obligations that (A) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (B) do not in the aggregate materially detract
from the value of the property subject thereto or materially impair the use
thereof in the operation of business by the Company or such Subsidiary.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of
the Company or any of its Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Subsidiaries; PROVIDED
that (i) the principal amount of such Permitted Refinancing Indebtedness does
not exceed the principal amount of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (PLUS the amount of reasonable expenses
incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Senior Notes, such Permitted Refinancing
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Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Senior Notes on terms at least
as favorable to the holders of Senior Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Subsidiary that is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust or unincorporated organization (including any subdivision or ongoing
business of any such entity or substantially all of the assets of any such
entity, subdivision or business).
"PRINCIPALS" means Rafael Kravec, E. Scott Beattie, J.W. Nevil
Thomas, Fred Berens and Richard C.W. Mauran.
"PUBLIC EQUITY OFFERING" means any underwritten public
offering of Common Stock pursuant to a registration statement filed under the
Securities Act.
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" has the meaning
specified in Rule 144A under the Securities Act.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated the Issue Date between the Company and the Initial Purchasers.
"REGULATION S" means Regulation S under the Securities Act (or
any successor provision), as it may be amended from time to time.
"RELATED PARTY" with respect to any Principal means (a) any
spouse or immediate family member of such Principal or (b) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (a).
"RESPONSIBLE OFFICER," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"RESTRICTED INVESTMENT" means an Investment other than a
Permitted Investment.
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"RESTRICTED SECURITY" has the meaning set forth in Rule
144(a)(3) under the Securities Act; PROVIDED that the Trustee shall be entitled
to request and conclusively rely upon an Opinion of Counsel with respect to
whether any Senior Note is a Restricted Security.
"REVOLVING CREDIT FACILITY" means that revolving credit
facility, dated the date hereof, between the Company and Fleet National Bank.
"RULE 144" means Rule 144 under the Securities Act (or any
successor provision), as it may be amended from time to time.
"RULE 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"SENIOR INDEBTEDNESS" means any Indebtedness which ranks PARI
PASSU in right of payment with, and which is not expressly by its terms
subordinated in right of payment of principal, interest or premium, if any, to
the Senior Notes, whether or not such Indebtedness is secured.
"SENIOR NOTES" means the Initial Senior Notes and the Exchange
Senior Notes treated as a single class of securities, issued under this
Indenture, as amended or supplemented from time to time pursuant to the terms
hereof.
"SENIOR REVOLVING DEBT" means revolving credit borrowings
under any Credit Facility.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof; PROVIDED that each Subsidiary Guarantor shall be deemed a
Significant Subsidiary.
"6% BONUS POOL" means the annual bonus pool created by the
Company for members of senior management equal to 6% of the pre-tax profit of
the Company, as in effect on the date hereof.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness which is
expressly by its terms subordinated in right of payment of principal, interest
or premium, if any, to the Senior Notes.
"SUBSIDIARY" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of Capital Interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly
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or indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof).
"SUBSIDIARY GUARANTOR" means any Subsidiary of the Company
that executes a Subsidiary Guarantee in accordance with the provisions hereof,
and its successors and assigns.
"SUCCESSOR SENIOR NOTE" of any particular Senior Note means
every Senior Note issued after, and evidencing all or a portion of the same debt
as that evidenced by, such particular Senior Note; and, for the purposes of this
definition, any Senior Note authenticated and delivered under Section 2.02
hereof in exchange for or in lieu of a mutilated, destroyed, lost or stolen
Senior Note shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Senior Note.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"TRUSTEE" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that shall elapse
between such date and the making of such payment, by (b) the then outstanding
principal amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of
such Person, all of the outstanding Capital Interests or other ownership
interests of which (other than directors' qualifying shares or interests) shall
at the time be owned by such Person or by one or more Wholly Owned Subsidiaries
of such Person (or a combination thereof).
<TABLE>
<CAPTION>
SECTION 1.02. OTHER DEFINITIONS
Term Defined in
Section
<S> <C> <C>
"Affiliate Transaction"....................................... 4.11
"Agent Members"............................................... 2.15
"Applicable Procedures"....................................... 2.01
"Asset Sale Offer"............................................ 4.10
"Asset Sale Offer Price"...................................... 4.10
"Bankruptcy Law".............................................. 6.01
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"Change of Control Offer"..................................... 4.18
"Change of Control Payment"................................... 4.18
"Change of Control Payment Date".............................. 4.18
"Covenant Defeasance"......................................... 8.03
"Custodian"................................................... 6.01
"Depository Securities Certification"......................... 2.01
"Event of Default"............................................ 6.01
"Excess Proceeds"............................................. 4.10
"incur"....................................................... 4.09
"Legal Defeasance"............................................ 8.02
"Non-Global Permanent Regulation S Security".................. 2.16
"Offer Amount"................................................ 4.10
"Offer Period"................................................ 3.09
"Owner Securities Certification".............................. 2.01
"Paying Agent"................................................ 2.03
"Payment Default" ............................................ 6.01
"Permanent Regulation S Global Security"...................... 2.01
"Physical Securities"......................................... 2.01
"Private Placement Legend".................................... 2.16
"Purchase Date"............................................... 3.09
"Registrar"................................................... 2.03
"Restricted Global Security".................................. 2.01
"Restricted Payments"......................................... 4.07
"Restricted Period"........................................... 2.01
"Subsidiary Guarantee" ....................................... 4.09
"Temporary Regulation S Global Security"...................... 2.01
"Transferee Securities Certification"......................... 2.16
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST
INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the
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 Senior Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Senior Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee;
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"OBLIGOR" on the Senior Notes means the Company and any
successor obligor upon the Senior Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them.
SECTION 1.04. 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 in the
plural include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE SENIOR NOTES
SECTION 2.01. FORM AND DATING
The Senior Notes and the Trustee's certificate of
authentication shall be substantially in the form of EXHIBIT A or EXHIBIT B
hereto, as the case may be, the terms of which are incorporated in and made a
part of this Indenture. The Senior Notes may have notations, legends or
endorsements approved as to form by the Company and required by law, stock
exchange rule, agreements to which the Company is subject or usage. Each Senior
Note shall be dated the date of its authentication. The Senior Notes shall be
issuable only in denominations of $1,000 and integral multiples thereof.
Senior Notes offered and sold to QIBs in reliance on Rule 144A
or to Institutional Accredited Investors shall be issued initially in the form
of two Global Securities in registered form, substantially in the form set forth
in EXHIBIT A (collectively, and together with their Successor Senior Notes, the
"RESTRICTED GLOBAL SECURITY"), with such applicable legends as are provided for
in EXHIBIT A or EXHIBIT O, registered in the name of the Depository or its
nominee and deposited with the Trustee, as custodian for the
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Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided, for credit by the Depository to the respective accounts of
beneficial owners of the Senior Notes represented thereby (or such other
accounts as they may direct). One Global Security (which may be represented by
more than one certificate, if so required by the Depository's rules regarding
the maximum principal amount to be represented by a single certificate) will
represent Initial Senior Notes sold to QIBs and the other will represent Initial
Senior Notes sold to Institutional Accredited Investors. The aggregate principal
amount of the Restricted Global Security may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided. Transfers of Initial Senior Notes from
QIBs to Institutional Accredited Investors, and from Institutional Accredited
Investors to QIBs, will be represented by appropriate increases and decreases to
the respective amounts of the appropriate Global Security as provided in Section
2.16 hereof.
Senior Notes offered and sold in their initial distribution in
reliance on Regulation S may be initially issued in the form of temporary Global
Securities in fully registered form without interest coupons, substantially in
the form set forth in EXHIBIT A, with such applicable legends as are provided
for in EXHIBIT A or EXHIBIT O. Such temporary Global Securities shall be
registered in the name of the Depository or its nominee and deposited with the
Trustee, as custodian for the Depository, duly executed by the Company and
authenticated by the Trustee as hereinafter provided, for credit by the
Depository to the respective accounts of the beneficial owners of the Senior
Notes represented thereby (or such other accounts as they may direct), PROVIDED
that upon such deposit all such Securities shall be credited to or through
accounts maintained at the Depository by or on behalf of Euroclear or CEDEL.
Until such time as the Restricted Period (as defined below) shall have expired,
such temporary Global Securities, together with their Successor Senior Notes
which are Global Securities other than the Restricted Global Security, shall be
referred to herein as a "TEMPORARY REGULATION S GLOBAL SECURITY." After such
time as the Restricted Period shall have expired and the certifications referred
to below in the next succeeding paragraph shall have been provided, interests in
such Temporary Regulation S Global Securities shall be exchanged for interests
in like Global Securities, referred to herein collectively as the "PERMANENT
REGULATION S GLOBAL SECURITY," substantially in the form of Senior Note set
forth in EXHIBIT A, with such applicable legends as are provided for in EXHIBIT
A or EXHIBIT O. Such Permanent Regulation S Global Securities shall be
registered in the name of the Depository or its nominee and deposited with the
Trustee, as custodian for the Depository, duly executed by the Company and
authenticated by the Trustee as hereinafter provided, for credit to the
respective accounts of the beneficial owners of the Senior Notes represented
thereby (or such other accounts as they may direct). The aggregate principal
amount of the Temporary Regulation S Global Security or the Permanent Regulation
S Global Security may be increased or decreased from time to time by adjustments
made on the records of the Trustee, as custodian for the Depository, as
hereinafter provided. As used herein, the term "RESTRICTED PERIOD" means the
period of 40 days commencing on the day after the later of (a) the day on which
the Senior Notes are first
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offered to persons other than distributors (as defined in Regulation S) in
reliance on Regulation S and (b) the Issue Date.
Interests in a Temporary Regulation S Global Security may be
exchanged for interests in a Permanent Regulation S Global Security only after
(a) the expiration of the Restricted Period, (b) the delivery by a beneficial
owner of an interest therein to Euroclear or CEDEL of a written certification
(an "OWNER SECURITIES CERTIFICATION") substantially in the form of EXHIBIT E
hereto, and (c) upon delivery by Euroclear or CEDEL to the Trustee of a written
certification (a "DEPOSITORY SECURITIES CERTIFICATION") substantially in the
form attached hereto as EXHIBIT F. Upon satisfaction of such conditions, the
Trustee will exchange the portion of the Temporary Regulation S Global Security
covered by such certification for interests in a Permanent Regulation S Global
Security. The delivery by such Holder of a beneficial interest in such Temporary
Regulation S Global Security of such certification shall constitute an
irrevocable instruction by such holder to Euroclear or CEDEL, as the case may
be, to exchange such Holder's beneficial interest in the Temporary Regulation S
Global Security for a beneficial interest in the Permanent Regulation S Global
Security upon expiration of the Restricted Period in accordance with the next
succeeding paragraph.
Upon:
(i) the expiration of the Restricted Period;
(ii) receipt by Euroclear or CEDEL, as the case may
be, of Owner Securities Certifications described in the preceding
paragraph;
(iii) receipt by the Depository of:
(1) written instructions given in accordance with the
rules and procedures of the Depository, Euroclear and CEDEL, in each
case to the extent applicable and as in effect from time to time (the
"APPLICABLE PROCEDURES"), from an Agent Member directing the Depository
to credit or cause to be credited to a specified Agent Member's account
a beneficial interest in a Permanent Regulation S Global Security in a
principal amount equal to that of the beneficial interest in a
corresponding Temporary Regulation S Global Security for which the
necessary certifications have been delivered; and
(2) a written order given in accordance with the
Applicable Procedures containing information regarding the account of
the Agent Member, and the Euroclear or CEDEL account for which such
Agent Member's account is held, to be credited with, and the account of
the Agent Member to be debited for, such beneficial interest; and
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(iv) receipt by the Trustee of notification from the
Depository of the transactions described in (iii) above and from
Euroclear or CEDEL, as the case may be, of Depository Securities
Certifications,
the Trustee, as Registrar, shall instruct the Depository to reduce the principal
amount of such Temporary Regulation S Global Security and to increase the
principal amount of such Permanent Regulation S Global Security by the principal
amount of the beneficial interest in such Temporary Regulation S Global Security
to be so transferred, and to credit or cause to be credited to the account of
the Person specified in such instructions a beneficial interest in such
Permanent Regulation S Global Security having a principal amount equal to the
amount by which the principal amount of such Temporary Regulation S Global
Security was reduced upon such transfer.
Senior Notes offered and sold in reliance on Regulation S and
Senior Notes offered and sold in reliance on Rule 144A or to Institutional
Accredited Investors may be originally issued at the request of the Holders
thereof in the form of permanent certificated Senior Notes in registered form,
in substantially the form set forth in EXHIBIT A (the "PHYSICAL SECURITIES")
with appropriate legends. Beneficial owners of Physical Securities may request
registration of such Physical Securities in their names or the names of their
nominees.
If the Senior Notes are to be issued in the form of one or
more Global Securities, then the Company shall execute and the Trustee shall
authenticate and deliver one or more Global Securities that shall represent and
shall be in minimum denominations of $1,000.
Exchange Senior Notes may be issued only in exchange for a
like principal amount of Initial Senior Notes pursuant to an Exchange Offer.
The principal of and interest on Book-Entry Securities shall
be payable to the Depository or its nominee, as the case may be, as the sole
registered owner and the sole holder of the Book-Entry Securities represented
thereby. The principal of and interest on Senior Notes in certificated form
shall be payable at the office of the Paying Agent.
SECTION 2.02. EXECUTION AND AUTHENTICATION
An Officer of the Company shall sign the Senior Notes for the
Company by manual or facsimile signature. The Company's seal shall be reproduced
on the Senior Notes and may be in facsimile form.
If an Officer whose signature is on a Senior Note no longer
holds that office at the time the Senior Note is authenticated, the Senior Note
shall nevertheless be valid.
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A Senior Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Senior Note has been authenticated under this
Indenture. The form of Trustee's certificate of authentication to be borne by
the Senior Notes shall be substantially as set forth in EXHIBIT A hereto.
The Trustee shall, upon a written order of the Company signed
by an Officer of the Company, authenticate Senior Notes for original issue up to
an aggregate principal amount stated in paragraph 4 of the Senior Notes. The
aggregate principal amount of Senior Notes outstanding at any time shall not
exceed the amount set forth herein except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Senior Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Senior Notes 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 or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT
The Company shall maintain (i) an office or agency where
Senior Notes may be presented for registration of transfer or for exchange
(including any co-registrar, the "REGISTRAR") and (ii) an office or agency where
Senior Notes may be presented for payment ("PAYING AGENT"). The Registrar shall
keep a register of the Senior Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "PAYING AGENT" includes any additional paying agent. The
Company may change any Paying Agent, Registrar or co-registrar without prior
notice to any Holder of a Senior Note. The Company shall notify the Trustee, and
the Trustee shall notify the Holders of the Senior Notes, of the name and
address of any Agent not a party to this Indenture. The Company or any
Subsidiary of the Company may act as Paying Agent, Registrar or co-registrar.
The Company shall enter into an appropriate agency agreement with any Agent not
a party to this Indenture, which shall incorporate the provisions of the TIA.
The agreement shall implement the provisions of this Indenture that relate to
such Agent. The Company shall notify the Trustee of the name and address of any
such Agent. If the Company fails to maintain a Registrar or Paying Agent, or
fails to give the foregoing notice, the Company shall direct the Trustee to act
as such, and the Trustee shall be entitled to appropriate compensation in
accordance with Section 7.07 hereof.
The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of notices and demands in connection with the
Senior Notes.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent shall hold in trust for the
benefit of the Holders of the Senior Notes or the Trustee all money held by the
Paying Agent for the payment of principal of, premium, if any, and interest on
the Senior Notes, and shall notify the Trustee of any Default by the Company in
making any such payment. While any such Default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or any of its Subsidiaries) shall have no further liability for the
money delivered to the Trustee. If the Company or any of its Subsidiaries acts
as Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders of the Senior Notes all money held by it as Paying Agent.
SECTION 2.05. LISTS OF HOLDERS OF THE SENIOR NOTES
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 of the Senior Notes and shall otherwise comply with TIA ss.
312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of Holders of the Senior Notes, including the aggregate principal amount of the
Senior Notes held by each thereof, and the Company shall otherwise comply with
TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE
Subject to the provisions of Sections 2.15 and 2.16 hereof,
when Physical Securities are presented to the Registrar with a request to
register the transfer or to exchange them for an equal principal amount of
Physical Securities of other denominations, the Registrar shall register the
transfer or make the exchange if its requirements for such transactions are met;
PROVIDED that any Physical Security presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar and the Trustee
duly executed by the Holder thereof or by his attorney duly authorized in
writing. To permit registrations of transfer and exchanges, the Company shall
issue and the Trustee shall authenticate Senior Notes at the Registrar's
request, subject to such rules as the Trustee may reasonably require.
Neither the Company nor the Registrar shall be required to (i)
issue, register the transfer of or exchange Senior Notes during a period
beginning at the opening of business on a Business Day 15 days before the day of
any selection of Senior Notes for redemption
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under Section 3.02 or (ii) register the transfer of or exchange any Senior Note
so selected for redemption in whole or in part, except the unredeemed portion of
any Senior Note being redeemed in part.
No service charge shall be made to any Holder of a Senior Note
for any registration of transfer or exchange (except as otherwise expressly
permitted herein), 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 such transfer tax or similar governmental charge payable
upon exchanges pursuant to Sections 2.10, 3.06 or 9.05 hereof, which shall be
paid by the Company).
Prior to due presentment to the Trustee for registration of
the transfer of any Senior Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Senior Note is registered as the absolute
owner of such Senior Note for the purpose of receiving payment of principal of,
premium, if any, and interest on such Senior Note and for all other purposes
whatsoever, whether or not such Senior Note is overdue, and neither the Trustee,
any Agent nor the Company shall be affected by notice to the contrary. The
registered Holder of a Senior Note shall be treated as its owner for all
purposes.
SECTION 2.07. REPLACEMENT SENIOR NOTES
If any mutilated Senior Note is surrendered to the Trustee, or
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Senior Note, the Company shall issue and the
Trustee, upon the written order of the Company signed by an Officer of the
Company, shall authenticate a replacement Senior Note if the Trustee's
requirements for replacements of Senior Notes are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent or any authenticating agent from any loss that
any of them may suffer if a Senior Note is replaced. Each of the Company and the
Trustee may charge the Holder for its expenses in replacing a Senior Note.
Every replacement Senior Note is an additional obligation of
the Company, and shall be entitled to all of the benefits of this Indenture
equally and ratably with all other Senior Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING SENIOR NOTES
The Senior Notes outstanding at any time are all the Senior
Notes authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation and those described in this Section 2.08 as not
outstanding. If a Senior Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Senior Note is held by a bona fide
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purchaser. If the principal amount of any Senior Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue. Subject to Section 2.09 hereof, a Senior Note does not cease to be
outstanding because the Company, a Subsidiary of the Company or an Affiliate of
the Company holds the Senior Note.
SECTION 2.09. TREASURY SENIOR NOTES
In determining whether the Holders of the required principal
amount of Senior Notes have concurred in any direction, waiver or consent,
Senior Notes owned by the Company, any Subsidiary of the Company or any
Affiliate of the Company shall be considered as though not outstanding, except
that for purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Senior Notes which a
Responsible Officer knows to be so owned shall be so considered. Notwithstanding
the foregoing, Senior Notes that are to be acquired by the Company, any
Subsidiary of the Company or an Affiliate of the Company pursuant to an exchange
offer, tender offer or other agreement shall not be deemed to be owned by the
Company, such Subsidiary of the Company or an Affiliate of the Company, until
legal title to such Senior Notes passes to the Company, such Subsidiary or
Affiliate, as the case may be.
SECTION 2.10. TEMPORARY SENIOR NOTES
Until definitive Senior Notes are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Senior Notes.
Temporary Senior Notes shall be substantially in the form of definitive Senior
Notes but may have variations that the Company and the Trustee consider
appropriate for temporary Senior Notes. Without unreasonable delay, the Company
shall prepare and the Trustee, upon receipt of the written order of the Company
signed by an Officer of the Company, shall authenticate definitive Senior Notes
in exchange for temporary Senior Notes. Until such exchange, temporary Senior
Notes shall be entitled to the same rights, benefits and privileges as
definitive Senior Notes.
SECTION 2.11. CANCELLATION
The Company at any time may deliver Senior Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Senior Notes surrendered to them for registration of transfer,
exchange or payment. The Trustee shall cancel all Senior Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation. All
cancelled Senior Notes held by the Trustee shall be destroyed (subject to the
record retention requirement of the Exchange Act) and certification of their
destruction delivered to the Company, unless by a written order, signed by an
Officer of the Company, the Company shall direct that cancelled Senior Notes be
returned to it. The
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Company may not issue new Senior Notes to replace Senior Notes that it has
redeemed or paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST
If the Company defaults in a payment of interest on the Senior
Notes, it shall pay the defaulted interest in any lawful manner plus, to the
extent lawful, interest payable on the defaulted interest, to the Persons who
are Holders of the Senior Notes on a subsequent special record date, which date
shall be at the earliest practicable date but in all events at least five
Business Days prior to the payment date, in each case at the rate provided in
the Senior Notes and in Section 4.01 hereof. The Company shall, with the consent
of the Trustee, fix or cause to be fixed each such special record date and
payment date. At least 15 days before the special record date, the Company (or
the Trustee, in the name of and at the expense of the Company) shall mail to
Holders of the Senior Notes a notice that states the special record date, the
related payment date and the amount of such interest to be paid.
SECTION 2.13. RECORD DATE
The record date for purposes of determining the identity of
Holders of the Senior Notes entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture shall be determined as
provided for in TIA ss. 316(c).
SECTION 2.14. CUSIP NUMBER
The Company in issuing the Senior Notes may use a "CUSIP"
number and, if it does so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Holders; PROVIDED that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Senior Notes and
that reliance may be placed only on the other identification numbers printed on
the Senior Notes. The Company shall promptly notify the Trustee of any change in
the CUSIP number.
SECTION 2.15. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY
(a) Members of, or participants in, the Depository ("AGENT
MEMBERS") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or
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other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a holder of any Senior Note. With respect to any
Global Security deposited with the Trustee as custodian for the Depository for
credit to their respective accounts (or to such other accounts as they may
direct) at Euroclear or CEDEL, the provisions of the "Operating Procedures of
the Euroclear System" and the "Terms and Conditions Governing Use of Euroclear,"
and the "Management Regulations" and "Instructions to Participants" of CEDEL,
respectively, shall be applicable to such Global Security.
(b) Transfers of a Global Security shall be limited to
transfers, in whole or in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in a Global Security may be
transferred or exchanged for Physical Securities upon request of a Holder but
only upon at least 20 days' prior written notice given to the Trustee by or on
behalf of the Depository in accordance with the rules and procedures of the
Depository and the provisions of Section 2.16. In addition, Physical Securities
shall be transferred to all beneficial owners in exchange for their beneficial
interests in a Global Security if (i) the Depository (x) notifies the Company
that it is unwilling or unable to continue as Depository for such Global
Security and a successor depository is not appointed by the Company within 90
days of such notice or (y) has ceased to be a clearing agency registered under
the Exchange Act, (ii) the Company, at its option, notifies the Trustee in
writing that it elects to cause the issuance of Physical Securities or (iii) an
Event of Default has occurred and is continuing and the Registrar has received a
written request from the Depository to issue Physical Securities.
(c) If any Global Security is to be exchanged for other Senior
Notes or canceled in whole, it shall be surrendered by or on behalf of the
Depository or its nominee to the Trustee, as Registrar, for exchange or
cancellation as provided in this Article 2. If any Global Security is to be
exchanged for other Senior Notes or canceled in part, or if a Physical Security
is to be exchanged in whole or in part for a beneficial interest in any Global
Security, such Global Security shall be so surrendered for exchange or
cancellation as provided in this Article 2 or, if the Trustee is acting as
custodian for the Depository or its nominee (or is party to a similar
arrangement) with respect to such Global Security, the principal amount thereof
shall be reduced or increased by an amount equal to the portion thereof to be so
exchanged or canceled, or the principal amount of such other Senior Note to be
so exchanged for a beneficial interest therein, as the case may be, in each case
by means of an appropriate adjustment made on the records of the Trustee,
whereupon the Trustee, in accordance with the Applicable Procedures, shall
instruct the Depository or its authorized representatives to make a
corresponding adjustment to its records (including by crediting or debiting any
Agent Member's account as necessary to reflect any transfer or exchange of a
beneficial interest). Upon any such surrender or adjustment of a Global
Security, the Trustee shall, subject to this Article 2, authenticate and deliver
any Senior Notes issuable in exchange for such Global Security (or any portion
thereof) to or upon the order of, and registered in such names as may be
directed by, the Depository or its authorized
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representative. Upon the request of the Trustee in connection with the
occurrence of any of the events specified in the preceding paragraph or in
paragraph (b) above, the Company shall promptly make available to the Trustee a
reasonable supply of Senior Notes that are not in the form of Global Securities.
The Trustee shall be entitled to rely upon any order, direction or request of
the Depository or its authorized representative which is given or made pursuant
to this Article 2 if such order, direction or request is given or made in
accordance with the Applicable Procedures.
(d) In connection with the transfer of the entire Global
Security to beneficial owners pursuant to paragraph (b), the Global Security
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Security, an equal aggregate principal amount of Physical
Securities of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(d) shall, except as otherwise provided by paragraphs (a)(i)(x) and (e) of
Section 2.16, bear the legend regarding transfer restrictions applicable to the
Physical Securities set forth in EXHIBIT A.
(f) If an Initial Senior Note is a Restricted Security and a
Physical Security, then as provided in this Indenture and subject to the
limitations herein set forth, the Holder, provided it is a Qualified
Institutional Buyer or an Institutional Accredited Investor, may exchange such
Senior Note for a Book-Entry Security by instructing the Trustee (by completing
the Transferee Certificate in the form of EXHIBIT K or L hereto) to arrange for
such an Initial Senior Note to be represented by a beneficial interest in the
appropriate Global Security in accordance with the customary procedures of the
Depository.
(g) The Holder of a Global Security may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action such Holder is entitled
to take under this Indenture or the Senior Notes.
SECTION 2.16. SPECIAL TRANSFER PROVISIONS
(a) TRANSFERS OF PHYSICAL SECURITIES AND CERTAIN RESTRICTED
GLOBAL SECURITIES TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The following
provisions shall apply with respect to the registration of any proposed transfer
of a Physical Security constituting a Restricted Security and certain Restricted
Global Securities to any Institutional Accredited Investor which is not a QIB:
(i) the Registrar shall register the transfer of any
Senior Note constituting a Restricted Security, whether or not such Restricted
Security bears the private
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placement legend substantially in the form of EXHIBIT A hereto (the "PRIVATE
PLACEMENT LEGEND"), if (x) the requested transfer is after May 13, 1999 and the
transferor is not an affiliate of the Company or any Subsidiary Guarantor or (y)
the proposed transferee has delivered to the Registrar a certificate
substantially in the form of EXHIBIT N hereto; and
(ii) if the proposed transferor is an Agent Member
holding a beneficial interest in the Restricted Global Security representing
Initial Senior Notes held by QIBs, upon receipt by the Registrar of (x) the
certificate, if any, required by paragraph (i) above and (y) instructions given
in accordance with the Depository's and the Registrar's procedures, (a) the
Registrar shall reflect on its books and records the date and (if the transfer
does not involve a transfer of outstanding Physical Securities) a decrease in
the principal amount of such Restricted Global Security in an amount equal to
the principal amount of the beneficial interest in such Restricted Global
Security to be transferred, and (b) (x) the Company shall execute and the
Trustee shall authenticate and deliver one or more Physical Securities of like
tenor and amount or (y) the Registrar shall reflect on its books and records the
date and an increase in the principal amount of the Restricted Global Security
representing Initial Senior Notes held by Institutional Accredited Investors in
an amount equal to the principal amount of such Restricted Global Security to be
so transferred.
(b) TRANSFERS OF PHYSICAL SECURITIES AND CERTAIN RESTRICTED
GLOBAL SECURITIES TO QIBS. The following provisions shall apply with respect to
the registration of any proposed transfer of a Physical Security constituting a
Restricted Security and certain Restricted Global Securities to a QIB:
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has advised the Company and
the Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Senior Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Senior Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the meaning of Rule
144A, and is aware that the sale to it is being made in reliance on Rule 144A,
and acknowledges that it has received such information regarding the Company as
it has requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from registration
provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member
and the Senior Notes to be transferred consist of (a) Physical Securities which
after transfer are to be evidenced by a beneficial interest in the Restricted
Global Security representing Initial Senior Notes held by QIBs, or (b) an
interest in the Restricted Global Security representing Initial Senior Notes
held by Institutional Accredited Investors, upon receipt by the Registrar of
instructions given in accordance with the Depository's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date and an
increase in the principal
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amount of such Restricted Global Security in an amount equal to (x) the
principal amount of the Physical Securities to be transferred, and the Trustee
shall cancel the Physical Securities so transferred or (y) the amount of the
interest in the Restricted Global Security representing Initial Senior Notes
held by Institutional Accredited Investors to be so transferred (in which case
the Registrar shall reflect on its books and records the date and an appropriate
decrease in the principal amount of such Restricted Global Security).
(c) TRANSFER OF PHYSICAL SECURITIES TO NON-U.S. PERSONS. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Physical Security constituting a Restricted Security to
any Non-U.S. Person:
(i) the Registrar shall register the transfer of any
Senior Note constituting a Restricted Security, whether or not such Restricted
Security bears the Private Placement Legend, if (x) the requested transfer is
after May 13, 1999 and the transferor is not an affiliate of the Company or any
Subsidiary Guarantor or (y) the proposed transferee has delivered to the
Registrar a certificate including the information substantially to the effect of
EXHIBIT G hereto and the transferor has delivered to the Registrar a certificate
including the information substantially to the effect of EXHIBIT H or EXHIBIT I
hereto; and
(ii) if the proposed transferor is an Agent Member
holding a beneficial interest in a Restricted Global Security, upon receipt by
the Registrar of (x) the certificate, if any, required by (i) above and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures, (a) the Registrar shall reflect on its books and records the date
and (if the transfer does not involve a transfer of outstanding Physical
Securities) a decrease in the principal amount of such Restricted Global
Security in an amount equal to the principal amount of the beneficial interest
in such Restricted Global Security to be so transferred, and (b) the Company
shall execute and the Trustee shall authenticate and deliver one or more
Physical Securities of like tenor and amount.
(d) CERTAIN TRANSFERS AND EXCHANGES.
(i) TEMPORARY REGULATION S GLOBAL SECURITY. If the
holder of a beneficial interest in a Temporary Regulation S Global Security
wishes at any time to transfer such interest to a Person who wishes to take
delivery thereof in the form of a beneficial interest in such Temporary
Regulation S Global Security, such transfer may be effected, subject to the
Applicable Procedures, only in accordance with this clause (i). Upon delivery
(a) by a beneficial owner of an interest in a Temporary Regulation S Global
Security to Euroclear or CEDEL, as the case may be, of an Owner Securities
Certification, (b) by the transferee of such beneficial interest in the
Temporary Regulation S Global Security to Euroclear or CEDEL, as the case may
be, of a written certification (a "TRANSFEREE SECURITIES CERTIFICATION")
substantially in the form of EXHIBIT G hereto and (c) by Euroclear or CEDEL, as
the case may be, to the Trustee, as Registrar, of a Depository Securities
Certification, the Trustee may direct either Euroclear or CEDEL, as the case may
be, to reflect on its records the transfer of a beneficial interest in the
Temporary Regulation S Global Security from the
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beneficial owner providing the Owner Securities Certification to the Person
providing the Transferee Securities Certification.
(ii) RESTRICTED GLOBAL SECURITY TO TEMPORARY
REGULATION S GLOBAL SECURITY OR PERMANENT REGULATION S GLOBAL SECURITY. If the
holder of a beneficial interest in the Restricted Global Security wishes at any
time to transfer such interest to a Person who wishes to take delivery thereof
in the form of a beneficial interest in the Temporary Regulation S Global
Security or the Permanent Regulation S Global Security, such transfer may be
effected, subject to the Applicable Procedures, only in accordance with the
provisions of this clause (ii) and clause (vii) below. Upon receipt by the
Trustee, as Registrar, of (A) written instructions given by or on behalf of the
Depository in accordance with the Applicable Procedures directing the Trustee to
credit or cause to be credited to a specified Agent Member's account a
beneficial interest in the Temporary Regulation S Global Security or the
Permanent Regulation S Global Security, as the case may be, in a specified
principal amount and to cause to be debited from another specified Agent
Member's account a beneficial interest in the Restricted Global Security in an
equal principal amount and (B) a certificate in substantially the form set forth
(i) in EXHIBIT H for holders taking delivery in the form of a beneficial
interest in the Temporary Regulation S Global Security or (ii) in EXHIBIT I for
holders taking delivery in the form of a beneficial interest in the Permanent
Regulation S Global Security signed by or on behalf of the holder of such
beneficial interest in the Restricted Global Security, the Trustee, as
Registrar, shall, subject to clause (vii) below, reduce the principal amount of
the Restricted Global Security, and increase the principal amount of the
Temporary Regulation S Global Security or the Permanent Regulation S Global
Security, as the case may be, by such specified principal amount.
(iii) TEMPORARY REGULATION S GLOBAL SECURITY OR
PERMANENT REGULATION S GLOBAL SECURITY TO RESTRICTED GLOBAL SECURITY. If the
holder of a beneficial interest in the Temporary Regulation S Global Security or
Permanent Regulation S Global Security wishes at any time to transfer such
interest to a Person who wishes to take delivery thereof in the form of a
beneficial interest in the Restricted Global Security, such transfer may be
effected, subject to the Applicable Procedures, only in accordance with this
clause (iii) and clause (vii) below; PROVIDED that with respect to any transfer
of a beneficial interest in a Temporary Regulation S Global Security, the
transferor and Euroclear or CEDEL, as the case may be, must have previously
delivered an Owner Securities Certification and a Depository Securities
Certification, respectively, with respect to such beneficial interest. Upon
receipt by the Trustee, as Registrar, of (A) written instructions given by or on
behalf of the Depository in accordance with the Applicable Procedures directing
the Trustee to credit or cause to be credited to a specified Agent Member's
account a beneficial interest in the Restricted Global Security in a specified
principal amount and to cause to be debited from another specified Agent
Member's account a beneficial interest in the Temporary Regulation S Global
Security or the Permanent Regulation S Global Security, as the case may be, in
an equal principal amount and (B) a certificate in substantially the form set
forth in EXHIBIT J signed by or on behalf of the holder of such beneficial
interest in the Temporary Regulation S Global Security or the Permanent
Regulation S
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Global Security, as the case may be, the Trustee, as Registrar,
shall, subject to clause (vii) below, reduce the principal amount of such
Temporary Regulation S Global Security or Permanent Regulation S Global
Security, as the case may be, and increase the principal amount of the
Restricted Global Security by such specified principal amount.
(iv) NON-GLOBAL RESTRICTED SECURITY TO GLOBAL
SECURITY. If the holder of a Restricted Security (other than a Global Security)
wishes at any time to transfer all or any portion of such Security to a Person
who wishes to take delivery thereof in the form of a beneficial interest in the
Restricted Global Security, the Temporary Regulation S Global Security or the
Permanent Regulation S Global Security, such transfer may be effected, subject
to the Applicable Procedures, only in accordance with this clause (iv) and
clause (vii) below. Upon receipt by the Trustee, as Registrar, of (A) such
Security and written instructions given by or on behalf of such Holder as
provided in Section 2.15 directing the Trustee to credit or cause to be credited
to a specified Agent Member's account a beneficial interest in the Restricted
Global Security, the Temporary Regulation S Global Security or the Permanent
Regulation S Global Security, as the case may be, in a specified principal
amount equal to the principal amount of the Restricted Security (or portion
thereof) to be so transferred, and (B) an appropriately completed certificate
substantially in the form set forth in EXHIBIT K hereto, if the specified amount
is to be credited with a beneficial interest in the Restricted Global Security,
or EXHIBIT L hereto, if the specified account is to be credited with a
beneficial interest in the Temporary Regulation S Global Security or the
Permanent Regulation S Global Security, signed by or on behalf of such Holder,
then the Trustee, as Registrar, shall, subject to clause (vii) below, cancel
such Restricted Security (and issue a new Security in respect of any
untransferred portion thereof as provided in Section 2.15) and increase the
principal amount of the Restricted Global Security, Temporary Regulation S
Global Security or Permanent Regulation S Global Security, as the case may be,
by the specified principal amount.
(v) NON-GLOBAL PERMANENT REGULATION S SECURITY TO
RESTRICTED GLOBAL SECURITY OR PERMANENT REGULATION S GLOBAL SECURITY. If the
Holder of a Permanent Regulation S Security (other than a Global Security) (a
"Non-Global Permanent Regulation S Security") wishes at any time to transfer all
or any portion of such Security to a Person who wishes to take delivery thereof
in the form of a beneficial interest in the Restricted Global Security or the
Permanent Regulation S Global Security, as the case may be, such transfer may be
effected only in accordance with this clause (v) and subject to the Applicable
Procedures. Upon receipt by the Trustee, as Registrar, of (A) such Security and
instructions given by or on behalf of such Holder as provided in Section 2.15
directing the Trustee to credit or cause to be credited to a specified Agent
Member's account a beneficial interest in the Restricted Global Security or the
Permanent Regulation S Global Security, as the case may be, in a principal
amount equal to the principal amount of the Security (or portion thereof) to be
so transferred, (B) (i) with respect to a transfer which is to be delivered in
the form of a beneficial interest in the Restricted Global Security, a
certificate in substantially the
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form set forth in EXHIBIT M-1, signed by or on behalf of such Holder, and (ii)
with respect to a transfer which is to be delivered in the form of a beneficial
interest in the Permanent Regulation S Global Security, a certificate in
substantially the form set forth in EXHIBIT M-2, signed by or on behalf of such
Holder, then the Trustee, as Registrar, shall, subject to clause (vii) below,
cancel such Security (and issue a new Security in respect of any untransferred
portion thereof) as provided in Section 2.15 and increase the principal amount
of the Restricted Global Security, or the Permanent Regulation S Global
Security, as the case may be, by the specified principal amount.
(vi) OTHER EXCHANGE. Senior Notes that are not Global
Securities may be exchanged (on transfer or otherwise) for Senior Notes that are
not Global Securities or for beneficial interests in a Global Security (if any
is then outstanding) only in accordance with such procedures, which shall be
substantially consistent with the provisions of clauses (i) through (v) above
(including the certification requirements intended to insure that transfers of
beneficial interests in a Global Security comply with Rule 144A, Regulation S,
or another exemption from the Securities Act) and any Applicable Procedures, as
may be from time to time adopted by the Company and the Trustee.
(vii) INTERESTS IN TEMPORARY REGULATION S GLOBAL
SECURITY TO BE HELD THROUGH EUROCLEAR OR CEDEL. Until the later of the
expiration of the Restricted Period and the provision of the Owner Securities
Certification and the Depository Securities Certification, beneficial interests
in any Temporary Regulation S Global Security may be held only in or through
accounts maintained at the Depository by Euroclear or CEDEL (or by Agent Members
acting for the account thereof).
(e) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Senior Notes not bearing the Private Placement Legend, the
Registrar shall deliver Senior Notes that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Senior Notes bearing the
Private Placement Legend, the Registrar shall deliver only Senior Notes that
bear the Private Placement Legend unless (i) the circumstance contemplated by
paragraph (a)(i)(x) of this Section 2.16 exists or (ii) there is delivered to
the Registrar an Opinion of Counsel reasonably satisfactory to the Company and
the Trustee to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(f) GENERAL. By its acceptance of any Senior Note bearing the
Private Placement Legend, each Holder of such Senior Note acknowledges the
restrictions on transfer of such Senior Note set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Senior Note
only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.15 or this Section
2.16. The Company shall have the right to inspect and make copies of all such
letters, notices or other written
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communications at any reasonable time upon the giving of reasonable written
notice to the Registrar.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE
If the Company elects to redeem Senior Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 45 days (or such shorter time that is acceptable to the
Trustee) but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the Section of this Indenture pursuant to which
the redemption shall occur, (ii) the redemption date, (iii) the principal amount
of Senior Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF SENIOR NOTES TO BE REDEEMED
If less than all of the Senior Notes are to be redeemed at any
time, selection of Senior Notes for redemption shall be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Senior Notes are listed, or, if the Senior Notes are not so
listed, on a PRO RATA basis, by lot or by such method as the Trustee shall deem
fair and appropriate, PROVIDED that no Senior Notes of $1,000 or less shall be
redeemed in part. Notices of redemption shall be mailed by first class mail at
least 30 but not more than 60 days before the redemption date to each Holder of
Senior Notes to be redeemed at its registered address. If any Senior Note is to
be redeemed in part only, the notice of redemption that relates to such Senior
Note shall state the portion of the principal amount thereof to be redeemed. A
new Senior Note in principal amount equal to the unredeemed portion thereof
shall be issued in the name of the Holder thereof upon cancellation of the
original Senior Note. On and after the redemption date, interest ceases to
accrue on Senior Notes or portions of them called for redemption unless the
Company defaults in making such redemption payment.
The Trustee shall promptly notify the Company in writing of
the Senior Notes selected for redemption and, in the case of any Senior Note
selected for partial redemption, the principal amount thereof to be redeemed.
Senior Notes and portions of them selected shall be in amounts of $1,000 or
whole multiples of $1,000; except that if all of the Senior Notes of a Holder
are to be redeemed, the entire outstanding amount of Senior Notes held by such
Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided
in the preceding sentence, provisions of this Indenture that apply to Senior
Notes called for redemption also apply to portions of Senior Notes called for
redemption.
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SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Senior Notes are to be redeemed at its registered address.
The notice shall identify the Senior Notes to be redeemed and
shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Senior Note is being redeemed in part, the portion
of the principal amount of such Senior Note to be redeemed and that, after the
redemption date upon surrender of such Senior Note, a new Senior Note or Senior
Notes in principal amount equal to the unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
(e) that Senior Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Senior Notes called for redemption ceases to
accrue on and after the redemption date and the only remaining right of the
Holders is to receive payment of the redemption price upon surrender to the
Paying Agent of the Senior Notes to be redeemed;
(g) the paragraph of the Senior Notes and/or Section of this
Indenture pursuant to which the Senior Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Senior Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the name of the Company and at its expense; PROVIDED that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date (or such shorter time that is acceptable to the Trustee), an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
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SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Senior Notes called for redemption become due and payable on the
redemption date at the redemption price.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent immediately available
funds sufficient to pay the redemption price of and accrued interest on all
Senior Notes to be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the Company any money deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Senior Notes to be redeemed.
On and after the redemption date, interest shall cease to
accrue on the Senior Notes or the portions of Senior Notes called for
redemption. If a Senior Note is redeemed on or after an interest record date but
on or prior to the related interest payment date, then any accrued and unpaid
interest shall be paid to the Person in whose name such Senior Note was
registered at the close of business on such record date. If any Senior Note
called for redemption shall not be so paid upon surrender for redemption because
of the failure of the Company to comply with the preceding paragraph, interest
shall be paid on the unpaid principal, from the redemption date until such
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal, in each case at the rate provided in the Senior Notes and in
Section 4.01 hereof.
SECTION 3.06. SENIOR NOTES REDEEMED IN PART
Upon surrender of a Senior Note that is redeemed in part, the
Company shall issue and the Trustee shall authenticate for the Holder of the
Senior Notes at the expense of the Company a new Senior Note equal in principal
amount to the unredeemed portion of the Senior Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION
(a) The Senior Notes shall not be redeemable at the Company's
option prior to May 15, 2002. Thereafter, the Senior Notes shall be subject to
redemption at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice from the Trustee to the Holders, in cash at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on May 15
of the years indicated below:
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PERCENTAGE
----------
YEAR
----
2002.......................................... 105.188%
2003.......................................... 103.458%
2004.......................................... 101.729%
2005 and thereafter........................... 100.000%
(b) Notwithstanding the foregoing, at any time prior to May
15, 2000, the Company, at its option, may on any one or more occasions redeem up
to 35% of the initially outstanding aggregate principal amount of Senior Notes
at a redemption price equal to 109 3/8% of the principal amount thereof, plus
accrued and unpaid interest, if any, thereon to the redemption date, with the
net proceeds of one or more Public Equity Offerings of the Company generating in
each case net proceeds of at least $15.0 million; PROVIDED that at least 65% of
the initially outstanding aggregate principal amount of Senior Notes remains
outstanding immediately after the occurrence of any such redemption; and
PROVIDED, FURTHER, that such redemption shall occur within 60 days of the date
of the closing of any such Public Equity Offering of the Company.
SECTION 3.08. MANDATORY REDEMPTION
Except as set forth under Sections 4.10 and 4.18 of this
Indenture, the Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Senior Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF
EXCESS PROCEEDS
In the event that, pursuant to Section 4.10 hereof, the
Company shall commence an Asset Sale Offer, it shall follow the procedures
specified below:
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "OFFER PERIOD"). No
later than five Business Days after the termination of the Offer Period (the
"PURCHASE DATE"), the Company shall purchase the Offer Amount or, if less than
the Offer Amount has been tendered, all Senior Notes tendered in response to the
Asset Sale Offer.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued interest shall
be paid to the Person in whose name a Senior Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Senior Notes pursuant to the Asset Sale Offer.
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Upon the commencement of any Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the Holders
of the Senior Notes. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Senior Notes pursuant to the Asset
Sale Offer. The notice, which shall govern the terms of the Asset Sale Offer,
shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price pursuant to Section
4.10 and the Purchase Date;
(c) that any Senior Note not tendered or accepted for payment
shall continue to accrue interest;
(d) that any Senior Note accepted for payment pursuant to the
Asset Sale Offer shall cease to accrue interest after the Purchase Date unless
the Company defaults in making such payment;
(e) that Holders electing to have a Senior Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the Senior Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Senior Note completed, to the Company, a depository, if appointed by the
Company, or a Paying Agent at the address specified in the notice at least three
days before the Purchase Date;
(f) that Holders shall be entitled to withdraw their election
if the Company, depository or Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Senior Note the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have the Senior Note purchased;
(g) that, if the aggregate principal amount of Senior Notes
surrendered by Holders exceeds the Offer Amount, the Trustee shall select the
Senior Notes to be purchased on a pro rata basis (with such adjustments as may
be deemed appropriate by the Company so that only Senior Notes in denominations
of $1,000, or integral multiples thereof, shall be purchased); and
(h) that Holders whose Senior Notes were purchased only in
part shall be issued new Senior Notes equal in principal amount to the
unpurchased portion of the Senior Notes surrendered.
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a PRO RATA basis to the extent necessary,
the Offer Amount of Senior Notes or portions thereof tendered pursuant to the
Asset Sale Offer, or if less than the Offer Amount has been tendered, all Senior
Notes or portions thereof tendered, and deliver to the
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Trustee an Officers' Certificate stating that such Senior Notes or portions
thereof were accepted for payment by the Company in accordance with the terms of
this Section 3.09. The Company, depository or Paying Agent, as the case may be,
shall promptly (but in any case not later than five days after the Purchase
Date) mail or deliver to each tendering Holder an amount equal to the purchase
price of the Senior Note tendered by such Holder and accepted by the Company for
purchase, and the Company shall promptly issue a new Senior Note, and the
Trustee shall authenticate and mail or deliver such new Senior Note to such
Holder equal in principal amount to any unpurchased portion of the Senior Note
surrendered. Any Senior Note 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 Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SENIOR NOTES
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Senior Notes on the dates and in the manner
provided in the Senior Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to the then applicable interest rate on the Senior Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Senior Notes may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of
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the Senior Notes and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Senior Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; PROVIDED that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency in
the Borough of Manhattan, the City of New York for such purposes. The Company
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.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
SECTION 4.03. REPORTS
(a) So long as any of the Senior Notes remain outstanding, the
Company shall submit to the Trustee copies of all quarterly and annual financial
reports and of the information, documents, and other reports (or copies of such
portions of any of the foregoing as the Commission may by rules and regulations
prescribe) which the Company is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act, and the Company, or the Trustee at the
request and expense of the Company, shall mail the same to the Holders at their
addresses appearing in the register of Senior Notes maintained by the Registrar,
in each case, within 15 days of filing with the Commission. If the Company is
not subject to the requirements of such Section 13 or 15(d) of the Exchange Act,
the Company shall nevertheless continue to submit to the Trustee (i) the annual
and quarterly financial statements, including any notes thereto (and, with
respect to annual reports, an auditors' report by an accounting firm of
established national reputation), including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations," comparable to that
which would have been required to appear in annual or quarterly reports filed
under Section 13 or 15(d) of the Exchange Act and (ii) all current reports that
would be required to be filed with the Commission on Form 8-K if the Company
were required to file such reports, and the Company shall file a copy of such
information and reports with the Commission for public availability (unless the
Commission will not accept such a filing), and the Company or the Trustee, at
the request and expense of the Company, shall mail the same to the Holders
within 120 days after the end of the Company's Fiscal Years and within 60 days
after the end of each of the first three quarters of each such Fiscal Year. The
Company shall make such information available to securities analysts and
prospective investors upon request. The Company shall also comply with the
provisions of TIA ss. 314(a).
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(b) The Company shall in advance of the deadlines specified in
Section 4.03(a) hereof provide the Trustee with a sufficient number of copies of
all reports and other documents and information that the Trustee may be required
to deliver to the Holders of the Senior Notes under this Section 4.03.
SECTION 4.04. COMPLIANCE CERTIFICATE
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each Fiscal Year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding Fiscal Year has been made under the supervision of the signing
Officers with a view to determining whether each has kept, observed, performed
and fulfilled its obligations under this Indenture, and further stating, as to
each such Officer signing such certificate, that to the best of his or her
knowledge each entity has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action each is taking or proposes to take with respect thereto) and that to the
best of his or her knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal of or interest, if any, on
the Senior Notes is prohibited or if such event has occurred, a description of
the event and what action each is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of Sections 4.01, 4.05, 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19 or 4.21 hereof or
Article 5 of this Indenture or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Senior Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of (i) any Default or Event of Default or (ii) any event of default under any
Indebtedness referred to in Section 6.01(e) hereof, an Officers' Certificate
specifying such Default, Event of Default or default and what action the Company
is taking or proposes to take with respect thereto.
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SECTION 4.05. TAXES
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except as contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Senior Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on account of the Company's or any of its Subsidiaries' Equity
Interests (including, without limitation, any such distribution by such Persons
in connection with any merger or consolidation involving the Company) (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or dividends or distributions payable to the
Company or any Wholly Owned Subsidiary of the Company); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company or any
direct or indirect parent of the Company; (iii) make any principal payment on,
or purchase, redeem, defease or otherwise acquire or retire for value any
Subordinated Indebtedness, except at scheduled maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "RESTRICTED PAYMENTS"),
unless, at the time of and after giving effect to such Restricted Payment:
(A) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(B) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the most recently ended four fiscal quarters for which
financial statements are available, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 4.09(a) hereof; and
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(C) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Subsidiaries after the
date hereof (excluding Restricted Payments permitted by clauses (ii) and (iii)
of Section 4.07(b) hereof), is less than the sum of (1) 50% of the Consolidated
Net Income of the Company for the period (taken as one accounting period) from
the beginning of the first fiscal quarter commencing after the date hereof to
the end of the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment (or,
if such Consolidated Net Income for such period is a deficit, LESS 100% of such
deficit), PLUS (2) 100% of the aggregate net cash proceeds received by the
Company from the issuance or sale since the date hereof of Equity Interests of
the Company or of debt securities of the Company that have been converted into
such Equity Interests (other than Equity Interests (or convertible debt
securities) sold to a Subsidiary of the Company and other than Disqualified
Stock or debt securities that have been converted into Disqualified Stock or
Equity Interests issued upon conversion of the Company's Series B and Series C
Convertible Preferred Stock outstanding on the date hereof), PLUS (3) to the
extent that any Restricted Investment that was made after the date hereof is
sold for cash or otherwise liquidated or repaid for cash, the lesser of (x) the
cash return of capital with respect to such Restricted Investment (LESS the cost
of disposition, if any) and (y) the initial amount of such Restricted
Investment.
(b) The foregoing provisions shall not prohibit (i) the
payment of any dividend or distribution within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions hereof; (ii) the redemption, repurchase, retirement
or other acquisition of any Equity Interests of the Company in exchange for, or
out of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of other Equity Interests of the Company (other than
any Disqualified Stock); PROVIDED that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (C)(2) of Section 4.07(a) hereof;
(iii) the defeasance, redemption or repurchase of Subordinated Indebtedness with
the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness
or the substantially concurrent sale (other than to a Subsidiary of the Company)
of Equity Interests of the Company (other than Disqualified Stock); PROVIDED
that the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded from
clause (C)(2) of Section 4.07(a) hereof; (iv) the payment on the Issue Date of
all principal and interest related to (a) all of the Company's 8.0% Secured
Subordinated Debentures; and (b) $4.0 million principal amount of the Company's
8.5% Subordinated Debentures; and (v) an Investment to repurchase stock and to
repay Indebtedness in connection with a transaction that results in Fine
Fragrances becoming a Wholly Owned Subsidiary of the Company on the Issue Date,
in the case of (iv) and (v), from the net proceeds of the sale of the Senior
Notes.
(c) The amount of all Restricted Payments (other than cash)
shall be the fair market value (evidenced by a resolution of the Board of
Directors set forth in an Officers'
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Certificate delivered to the Trustee) on the date of the Restricted Payment of
the asset(s) proposed to be transferred by the Company or such Subsidiary, as
the case may be, pursuant to the Restricted Payment. Not later than the date of
making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by Section 4.07(a)
hereof were computed, which calculations may be based upon the Company's latest
available financial statements.
SECTION 4.08. DIVIDEND 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 encumbrance or restriction on the ability of any
Subsidiary to (a)(i) pay dividends or make any other distributions to the
Company or any of its Subsidiaries (A) on their Capital Interests or (B) with
respect to any other interest or participation in, or measured by, its profits,
or (ii) pay any Indebtedness owed to the Company or any of its Subsidiaries, (b)
make loans or advances to the Company or any of its Subsidiaries or (c) transfer
any of its properties or assets to the Company or any of its Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (i)
Existing Indebtedness as in effect on the date hereof, (ii) any Credit Facility,
PROVIDED that any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereto are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the Revolving Credit Facility as in effect on the date
hereof, (iii) the Indenture and the Senior Notes, (iv) applicable law, (v) by
reason of customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices, (vi) Capital
Lease Obligations, mortgage financings or purchase money obligations for
property acquired in the ordinary course of business or mortgage financings
secured by the Miami Lakes Facility that impose restrictions of the nature
described in clause (c) above on the property so acquired or the Miami Lakes
Facility, as the case may be, (vii) existing with respect to any Person or the
property or assets of such Person acquired by the Company or any of its
Subsidiaries, at the time of such acquisition and not incurred in contemplation
thereof, which encumbrances or restrictions are not applicable to any Person or
the property or assets of any Person other than such Person or the property or
assets of such Person so acquired, or (viii) Permitted Refinancing Indebtedness,
PROVIDED that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced.
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SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED STOCK
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "INCUR") any Indebtedness (including Acquired
Debt) and the Company shall not issue any Disqualified Stock; PROVIDED that the
Company may incur Indebtedness (including Acquired Debt) or issue Disqualified
Stock and any Subsidiary may incur Indebtedness (including Acquired Debt), if
(i) in each case, the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least (a) 2.00 to 1, on or prior to May 15, 1999, and (b) 2.25 to 1, thereafter,
in each case, determined on a pro forma basis (including a pro forma application
of the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period and (ii) in the case of incurrence of
Indebtedness by a Subsidiary (other than Acquired Debt), such Subsidiary
guarantees, subject to Section 4.15 hereof, if applicable, on a senior unsecured
basis (a "SUBSIDIARY GUARANTEE") the Company's payment obligations under the
Senior Notes. Notwithstanding the foregoing, any such Subsidiary Guarantee by a
Subsidiary Guarantor of the Senior Notes shall be subject to release as provided
in Section 10.03 hereof.
(b) The foregoing provisions shall not apply to:
(i) the incurrence by the Company and any Subsidiary
Guarantor of Senior Revolving Debt and letters of credit pursuant to any Credit
Facility for working capital purposes (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of the Company
thereunder) in an aggregate principal amount not to exceed the amount of the
Borrowing Base;
(ii) the incurrence by the Company of the Existing
Indebtedness;
(iii) the incurrence by the Company of the
Indebtedness represented by the Senior Notes and the incurrence by any
Subsidiary Guarantor of the Indebtedness represented by its Subsidiary
Guarantee;
(iv) the incurrence by the Company and any Subsidiary
Guarantor of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, Indebtedness that was permitted hereby to be incurred;
(v) the incurrence by the Company or any Subsidiary
Guarantor of intercompany Indebtedness between or among the Company and any of
its Wholly Owned
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Subsidiaries; PROVIDED that (A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person other
than a Wholly Owned Subsidiary and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Wholly Owned
Subsidiary shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Subsidiary Guarantor, as the case may be;
(vi) the incurrence by the Company and any Subsidiary
Guarantor of Indebtedness (A) represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the purpose
of financing up to all or any part of the purchase price or cost of construction
or improvement of property used in the business of the Company or such
Subsidiary Guarantor, or (B) represented by mortgage financing secured solely by
the Miami Lakes Facility (in addition to Indebtedness permitted to be incurred
pursuant to clauses (ii) or (iv) of this Section 4.09(b)) in a principal amount
for (A) and (B) of this clause (vi) in the aggregate not to exceed $7.5 million
at any time outstanding;
(vii) the incurrence by the Company and any
Subsidiary Guarantor of Hedging Obligations in the ordinary course of business
of the Company or such Subsidiary Guarantor, as the case may be;
(viii) the incurrence by the Company and any
Subsidiary Guarantor of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the ordinary
course of business; and
(ix) the incurrence by the Company and any Subsidiary
Guarantor of Indebtedness not otherwise permitted hereunder in an aggregate
amount for all such Indebtedness not to exceed $7.5 million at any time
outstanding.
(c) The Company shall not incur any secured
Indebtedness which is not Senior Indebtedness.
(d) No Subsidiary Guarantor shall incur any secured
Indebtedness which is not Guarantor Senior Indebtedness.
SECTION 4.10. ASSET SALES
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, engage in an Asset Sale, unless (a) the Company (or the
Subsidiary, as the case may be) receives consideration at the time of such Asset
Sale at least equal to the fair market value (evidenced by a resolution of the
Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) of the assets or Equity Interests issued or sold or otherwise disposed
of and (b) at least 75% of the consideration therefor received by the Company or
such Subsidiary is in the form of cash or Cash Equivalents; PROVIDED that the
amount of (i) any liabilities (as shown on the Company's or such Subsidiary's
most recent balance sheet or in
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the notes thereto) of the Company or any Subsidiary (other than liabilities that
are by their terms subordinated to the Senior Notes or any guarantee thereof)
that are assumed by the transferee of any such assets and (ii) any securities,
notes or other obligations received by the Company or any such Subsidiary from
such transferee that are promptly converted by the Company or such Subsidiary
into cash (to the extent of the cash received), shall be deemed to be cash for
purposes of this provision.
(b) Within 180 days after the receipt of any Net Proceeds from
an Asset Sale, the Company may apply such Net Proceeds (a) to permanently reduce
Senior Indebtedness, (b) to permanently reduce Indebtedness permitted to be
incurred pursuant to Section 4.09(b)(i) hereof or (c) to an Investment in
another business, the making of a capital expenditure or the acquisition of
other tangible assets, in each case, in the same or a similar or related line of
business as the Company and its Subsidiaries were engaged in on the date hereof.
Any Net Proceeds from Asset Sales that are not applied or invested as provided
in the first sentence of this paragraph shall be deemed to constitute "EXCESS
PROCEEDS." Within 30 days after the aggregate amount of Excess Proceeds exceeds
$10.0 million, the Company shall be required to make an offer to all holders of
Senior Notes (an "ASSET SALE OFFER") to purchase the maximum principal amount of
Senior Notes that may be purchased out of the Excess Proceeds (the "OFFER
AMOUNT"), at an offer price in cash in an amount equal to 100% of the principal
amount thereof, plus accrued and unpaid interest, if any, thereon to the date of
purchase (the "ASSET SALE OFFER PRICE"), in accordance with the procedures set
forth herein. To the extent that the aggregate amount of Senior Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
and its Subsidiaries may use any remaining Excess Proceeds for general corporate
purposes. If the aggregate principal amount of Senior Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Senior Notes to be purchased on a PRO RATA basis. Upon completion of such
offer to purchase, the amount of Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES
The Company shall not, and shall not permit any of its
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make any contract, agreement, understanding, loan, advance or guarantee with,
or for the benefit of, any Affiliate (each of the foregoing, an "AFFILIATE
TRANSACTION"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such Subsidiary
with an unrelated Person and (b) the Company delivers to the Trustee (i) with
respect to any Affiliate Transaction involving aggregate consideration in excess
of $1.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
clause (a) above and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors and (ii) with
respect to any Affiliate Transaction involving aggregate consideration in excess
of $5.0
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million, an opinion as to the fairness to the Company or such Subsidiary
of such Affiliate Transaction from a financial point of view issued by a
nationally-recognized investment banking firm; PROVIDED that (A) any reasonable
employment, compensation, bonus or benefit arrangement entered into by the
Company or any of its Subsidiaries in the ordinary course of business of the
Company or such Subsidiary, including without limitation, (x) the grant of stock
options, stock appreciation rights or other stock-based incentive awards (other
than Disqualified Stock) in the ordinary course of business, PROVIDED that any
non-stock payments by the Company or any Subsidiary in connection with the grant
or exercise or other settlement of such stock options, stock appreciation rights
or other stock-based incentive awards are permitted under the provisions of
Section 4.07 hereof and (y) the payment of bonuses to officers of the Company
from the 6% Bonus Pool and any renewals, extensions or amendments thereof,
PROVIDED that amounts paid thereunder with respect to any Fiscal Year shall not
exceed in the aggregate 6% of the Company's pre-tax profits for such Fiscal Year
as determined pursuant to the terms of the 6% Bonus Pool as in effect on the
date hereof, (B) transactions between or among the Company and/or its
Subsidiaries, (C) the payment of reasonable fees, expense reimbursement and
customary indemnification, advances and other similar arrangements to directors
and officers of the Company, (D) reasonable loans or advances to employees of
the Company and its Subsidiaries in the ordinary course of business, (E)
transactions permitted by Section 4.07 hereof, (F) scheduled payments of
principal and interest with respect to Existing Indebtedness, (G) scheduled
payments pursuant to the lease of the National Trading Facility, and (H) so long
as Mr. Beattie is acting as President and Chief Operating Officer of the
Company, payment of a fee to ESB pursuant to the terms of the Chief Operating
Officer Compensation Agreement as in effect on the date hereof (or any agreement
replacing such agreement on terms approved as reasonable by a majority of the
disinterested members of the Board of Directors and set forth in an Officers'
Certificate delivered to the Trustee), in each case, shall not be deemed to be
Affiliate Transactions.
SECTION 4.12. LIENS
The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired, unless all payments
due under this Indenture and the Senior Notes and the Subsidiary Guarantees, if
any, are secured on an equal and ratable basis with the obligations so secured
until such time as such obligations are no longer secured by a Lien.
SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS
The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any sale and leaseback transaction; PROVIDED that
the Company and any Subsidiary Guarantor may enter into a sale and leaseback
transaction if (a) the Company or such
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Subsidiary Guarantor could have (i) incurred Indebtedness in an amount equal to
the Attributable Debt relating to such sale and leaseback transaction pursuant
to Section 4.09 hereof and (ii) incurred a Lien to secure such Indebtedness
pursuant to Section 4.12 hereof, (b) the gross cash proceeds of such sale and
leaseback transaction are at least equal to the fair market value (as determined
in good faith by the Board of Directors and set forth in an Officers'
Certificate delivered to the Trustee) of the property that is the subject of
such sale and leaseback transaction and (c) the transfer of assets in such sale
and leaseback transaction is permitted by, and the Company or such Subsidiary
Guarantor applies the proceeds of such transaction in compliance with, Section
4.10 hereof.
SECTION 4.14. LIMITATION ON ISSUANCES AND SALES OF
CAPITAL INTERESTS OF WHOLLY OWNED
SUBSIDIARIES
The Company (a) shall not, and shall not permit any Wholly
Owned Subsidiary of the Company to, transfer, convey, sell, lease or otherwise
dispose of (including by way of merger, consolidation or similar transaction)
any Capital Interests of any Wholly Owned Subsidiary of the Company to any
Person (other than the Company or a Wholly Owned Subsidiary of the Company),
unless (i) such transfer, conveyance, sale, lease or other disposition is of all
the Capital Interests of such Wholly Owned Subsidiary and (ii) the cash Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with Section 4.10 hereof, and (b) shall not permit any
Wholly Owned Subsidiary of the Company to issue any of its Equity Interests
(other than, if necessary, Capital Interests constituting directors' qualifying
shares or interests) to any Person other than to the Company or a Wholly Owned
Subsidiary of the Company.
SECTION 4.15. LIMITATIONS ON ISSUANCES OF GUARANTEES
OF INDEBTEDNESS
The Company shall not permit any Subsidiary, directly or
indirectly, to guarantee or secure the payment of any Indebtedness other than
the Senior Notes, unless such Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for the Guarantee of the
payment of the Senior Notes by such Subsidiary, which Guarantee shall be senior
to or PARI PASSU with such Subsidiary's Guarantee of, or pledge to secure, such
other Indebtedness. Notwithstanding the foregoing, any such Guarantee by a
Subsidiary of the Senior Notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon either (a) the
release or discharge of such Guarantee of such Indebtedness, except a discharge
by or as a result of payment under such Guarantee, or (b) any sale, exchange or
transfer, to any Person not an Affiliate of the Company, of all of the Company's
Capital Interests in, or all or substantially all the assets of, such
Subsidiary, which sale, exchange or transfer is made in compliance with the
applicable provisions hereof. The form of such Guarantee is attached as EXHIBIT
C hereto.
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SECTION 4.16. SUBSIDIARY GUARANTEES
If any Subsidiary of the Company shall, after the date hereof,
incur Indebtedness in circumstances under which, pursuant to Section 4.09
hereof, the incurrence of such Indebtedness requires that such Subsidiary
execute a Subsidiary Guarantee or that it be a Subsidiary Guarantor, then such
Subsidiary shall execute and deliver to the Trustee a Subsidiary Guarantee in
the form attached hereto as EXHIBIT C and a supplemental indenture in the form
attached hereto as EXHIBIT D and deliver an Opinion of Counsel, in accordance
with the terms hereof.
SECTION 4.17. BUSINESS ACTIVITIES
The Company shall not, and shall not permit any Significant
Subsidiary to, engage in any business, other than such business activities as
the Company and its Subsidiaries are engaged in on the date hereof and such
business activities similar or reasonably related thereto.
SECTION 4.18. OFFER TO REPURCHASE UPON CHANGE OF
CONTROL
(a) Upon the occurrence of a Change of Control, each Holder of
Senior Notes shall have the right to require the Company to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Senior Notes pursuant to the offer described below (the "CHANGE OF CONTROL
OFFER") at an offer price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest, if any, thereon to the date of
purchase (the "CHANGE OF CONTROL PAYMENT"). Within 60 days following any Change
of Control, the Company shall mail a notice to each Holder, with a copy to the
Trustee, describing the transaction or transactions that constitute the Change
of Control and offering to repurchase Senior Notes pursuant to the procedures
required hereby and described in such notice. The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Senior Notes as a result of
a Change of Control.
(b) On the payment date set forth in the Change of Control
Offer (the "CHANGE OF CONTROL PAYMENT DATE"), the Company shall, to the extent
lawful, (i) accept for payment all Senior Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Senior
Notes or portions thereof so tendered and (iii) deliver or cause to be delivered
to the Trustee the Senior Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Senior Notes or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
each Holder of Senior Notes so tendered the Change of Control Payment for such
Senior Notes, and the Trustee
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shall promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Senior Note equal in principal amount to any unpurchased
portion of the Senior Notes surrendered, if any; PROVIDED that each such new
Senior Note shall be in a principal amount of $1,000 or an integral multiple
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 Payment
Date.
SECTION 4.19. CORPORATE EXISTENCE
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate or other existence of any of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) their rights (charter and statutory), licenses and franchises; PROVIDED
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate or other existence of any Subsidiary, if the Board
of Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Senior Notes.
SECTION 4.20. PAYMENTS FOR CONSENT
Neither the Company nor any of its Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Senior Notes for or as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Senior Notes, unless such consideration is
offered to be paid or agreed to be paid to all Holders of the Senior Notes that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
SECTION 4.21. LIMITATION ON PREFERRED STOCK OR
PREFERRED EQUITY INTERESTS OF
SUBSIDIARIES.
The Company will not permit any of its Subsidiaries to issue
or sell any preferred stock or preferred Equity Interests (other than to the
Company or to a Wholly Owned Subsidiary of the Company) or permit any Person
(other than the Company or a Wholly-Owned Subsidiary of the Company) to own any
preferred stock or preferred Equity Interests of any Subsidiary.
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ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS
(a) The Company may not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets in one or more related transactions to, another corporation, Person or
entity, unless (i) the Company is the surviving Person or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is organized and existing under the laws
of the United States, any state thereof or the District of Columbia; (ii) the
entity or Person formed by or surviving any such consolidation or merger (if
other than the Company) or the entity or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made assumes
all the obligations of the Company under the Senior Notes and this Indenture
pursuant to a supplemental indenture reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of Default exists;
and (iv) the Company or the entity or Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) shall have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) except in the case of a transaction the principal purpose and effect of
which is to change the Company's state of incorporation, shall, at the time of
such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof.
(b) The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed transaction
and such supplemental indenture comply with this Indenture. The Trustee shall be
entitled to conclusively rely upon such Officers' Certificate and Opinion of
Counsel.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, lease, conveyance or other disposition is made
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shall succeed to, and be substituted for and may exercise every right and power
of the Company under this Indenture and the Senior Notes with the same effect as
if such successor Person has been named as the Company herein.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT
Each of the following constitutes an "EVENT OF DEFAULT":
(a) default by the Company for 30 days in the payment when due
of interest on the Senior Notes;
(b) default by the Company in the payment of all or any part
of the principal, or premium, if any, on the Senior Notes when and as the same
becomes due and payable at maturity, upon redemption, by acceleration, or
otherwise, including, without limitation, the payment of the Change of Control
Payment or the Asset Sale Offer Price, or otherwise;
(c) failure by the Company or any of its Subsidiaries to
observe or perform in all material respects the covenants contained in Sections
4.07, 4.09, 4.12 and 5.01 hereof;
(d) failure by the Company or any of its Subsidiaries to
observe or perform in all material respects any other covenant or agreement on
the part of the Company or such Subsidiary contained in the Senior Notes or this
Indenture and the continuance of such failure for a period of 30 days after
written notice is given to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in aggregate principal amount of the
Senior Notes then outstanding, specifying such default, requiring that it be
remedied and stating that such notice is a "Notice of Default";
(e) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness by 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 hereof, which
default (A) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "PAYMENT DEFAULT")
or (B) results in the acceleration of such Indebtedness prior to its express
maturity and, in each of (A) or (B), 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 $3.0 million or more;
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(f) failure by the Company or any of its Subsidiaries to pay
one or more final non-appealable judgments aggregating in excess of $3.0 million
entered by courts of competent jurisdiction which judgments are not paid,
discharged or stayed within 60 consecutive days after their entry;
(g) except as permitted hereby, any Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Subsidiary Guarantor, or
any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm
its obligations under its Subsidiary Guarantee;
(h) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken together, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief
against it in an involuntary case;
(iii) consents to the appointment of a Custodian of
it or for all or substantially all of its property; or
(iv) makes a general assignment for the benefit of
its creditors; and
(i) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(i) is for relief against the Company or any
Significant Subsidiary of the Company in an involuntary case;
(ii) appoints a Custodian of the Company or any
Significant Subsidiary of the Company or for all or substantially all of the
property of the Company or any Significant Subsidiary of the Company; or
(iii) orders the liquidation of the Company or any
Significant Subsidiary of the Company,
and the order or decree remains unstayed and in effect for 60 consecutive days.
The term "BANKRUPTCY LAW" means title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "CUSTODIAN"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
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SECTION 6.02. ACCELERATION
(a) If an Event of Default (other than an Event of Default
specified in clause (h) or (i) of Section 6.01 relating to the Company, any
Significant Subsidiary or any group of Subsidiaries of the Company that, taken
together, would constitute a Significant Subsidiary) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount of the then outstanding Senior Notes by written
notice to the Company and the Trustee, may declare the unpaid principal of,
premium, if any, and any accrued and unpaid interest on all the Senior Notes to
be due and payable. Upon such declaration the principal, premium, if any, and
interest shall be due and payable immediately. If an Event of Default specified
in clause (h) or (i) of Section 6.01 occurs relating to the Company, any
Significant Subsidiary or any group of Subsidiaries of the Company that, taken
together, would constitute a Significant Subsidiary, such an amount shall IPSO
FACTO become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder. The Holders of a majority in
aggregate principal amount of the then outstanding Senior Notes, by written
notice to the Trustee, may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.
(b) In the case of any Event of Default occurring by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Senior Notes
pursuant to Section 3.07 hereof, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon acceleration of
the Senior Notes. If an Event of Default occurs prior to May 15, 2002 by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding the prohibition on redemption of the
Senior Notes prior to May 15, 2002 pursuant to Section 3.07, then the amount
payable for purposes of this paragraph for each of the years beginning on May 15
of the years set forth below (and in 1997 also for May 13 and May 14) shall be
as set forth in the following table, expressed as a percentage of the amount
that would otherwise be due but for the provisions of this paragraph, plus
accrued interest, if any, to the date of payment:
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YEAR PERCENTAGE
1997 (including May 13 and May 14)................... 110.375%
1998................................................. 109.338%
1999................................................. 108.300%
2000................................................. 107.263%
2001................................................. 106.225%
SECTION 6.03. OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Senior Notes or to enforce the performance of any
provision of the Senior Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Senior Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of a Senior Note in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS
Holders of not less than a majority in aggregate principal
amount of the then outstanding Senior Notes by notice to the Trustee may on
behalf of the Holders of all of the Senior Notes waive an existing Default or
Event of Default and its consequences, except a continuing Default or Event of
Default in the payment of the principal of, premium, if any, or interest on, the
Senior Notes and except as to payments required under Sections 4.10 and 4.18
hereof. 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.
SECTION 6.05. CONTROL BY MAJORITY
Subject to Section 7.01(e) hereof, Holders of a majority in
principal amount of the then outstanding Senior Notes may direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee or exercising any trust or power conferred on it.
However, the Trustee may refuse to follow any direction that conflicts with the
law or this Indenture, that the Trustee determines may be unduly prejudicial to
the rights of other Holders of Senior Notes or that may involve the Trustee in
personal liability.
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SECTION 6.06. LIMITATION ON SUITS
A Holder of a Senior Note may pursue a remedy with respect to
this Indenture or the Senior Notes only if:
(a) the Holder of a Senior Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Senior Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Senior Note or Holders of Senior Notes
offer and, if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Senior Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Senior Note may not use this Indenture to
prejudice the rights of another Holder of a Senior Note or to obtain a
preference or priority over another Holder of a Senior Note.
SECTION 6.07. RIGHTS OF HOLDERS OF SENIOR NOTES TO
RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Senior Note to receive payment of principal, premium,
if any, and interest on the Senior Note, on or after the respective due dates
expressed in the Senior Note, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of the Holder of the Senior Note.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium, if any, and interest remaining unpaid on the
Senior Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
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SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Senior Notes allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Senior Notes), its creditors or its
property and shall be entitled and empowered to participate as a member, voting
or otherwise, of any official committee of creditors appointed in such matter
and to collect, receive and distribute any money or other property payable or
deliverable on any such claims, and any custodian in any such judicial
proceeding is hereby authorized by each Holder of a Senior Note 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 of the Senior Notes, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties which the Holders of the Senior Notes may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to restrict
the right of any Holder of a Senior Note to vote on any plan of reorganization,
arrangement, adjustment or composition affecting the Senior Notes or the rights
of any Holder of a Senior Note thereunder, or to authorize the Trustee to vote
in respect of the claim of any Holder of a Senior Note in any such proceeding.
SECTION 6.10. PRIORITIES
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
FIRST: to the Trustee, its agents and attorneys for amounts
due under Section 7.07, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
SECOND: to Holders of Senior Notes for amounts due and unpaid
on the Senior Notes for principal, premium, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Senior Notes for principal, premium, if any and interest,
respectively; and
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THIRD: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Senior Notes.
SECTION 6.11. UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Senior Note pursuant to Section 6.07, or a suit by Holders of more
than 10% in principal amount of the then outstanding Senior Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture or the TIA and the Trustee
need perform only those duties that are specifically set forth in this Indenture
or the TIA and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee, and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture, but shall not
be obligated to verify the contents thereof.
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(c) none of the provisions of this Indenture shall be
construed to relieve the Trustee from liabilities for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request or direction of any Holder of Senior Notes, unless such
Holder shall have offered to the Trustee reasonable compensation and indemnity
satisfactory to it (including, in the Trustee's discretion, payment in cash)
against any loss, liability or expense, including reasonable attorneys' fees
that might be incurred by it in compliance with such request or direction.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE
(a) The Trustee may conclusively rely upon 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. The Trustee shall receive and retain financial reports and statements
of the Company as provided herein, but it shall have no duty to review or
analyze such statements to determine compliance with covenants or other
obligations of the Company.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such
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counsel or any Opinion of Counsel shall be full and complete authorization and
protection from liability in respect of any action taken, suffered or omitted by
it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent or
attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any
of its rights and powers under this Indenture at the request or direction of any
Holder of Senior Notes unless such Holder shall have offered to the Trustee
reasonable compensation and indemnity satisfactory to it (including, in the
Trustee's discretion, payment in cash) against any loss, liability or expense,
including reasonable attorneys' fees that might be incurred by it in compliance
with such request or direction.
(g) The Trustee shall not be bound to ascertain or inquire as
to the performance or observance of any covenants, conditions or agreements on
the part of the Company, except as set forth herein; but the Trustee may require
of the Company full information and advice as to the performance of the
aforesaid covenants, conditions and agreements.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become
the owner or pledgee of Senior Notes and may otherwise deal with the Company or
any Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must (i) eliminate such conflict within 90 days, (ii) apply to the
Commission for permission to continue as trustee or (iii) resign. Any Agent may
do the same with like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Senior
Notes, it shall not be accountable for the
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Company's use of the proceeds from the Senior Notes or any money paid to the
Company or upon the Company's direction under any provision of this Indenture,
it shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Senior Notes or any other
document in connection with the sale of the Senior Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Senior Notes
a notice of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Senior Note, the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of the
Senior Notes. The Trustee shall not be required to take notice or be deemed to
have notice of any Default hereunder except failure by the Company to cause to
be made any of the payments to the Trustee required to be made, or an Event of
Default of which the Trustee has actual knowledge, unless the Trustee shall have
been specifically notified in writing of such Default by the Company or the
Holders of at least 25% in aggregate principal amount of the then outstanding
Senior Notes. All notices or other instruments required by this Indenture to be
delivered to the Trustee must, in order to be effective, be delivered to the
Corporate Trust Office of the Trustee, and, in the absence of such notice so
delivered, the Trustee may conclusively assume that no Default exists.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE
SENIOR NOTES
Within 60 days after each April 15 beginning with the April 15
following the date of this Indenture and for so long as Senior Notes remain
outstanding, the Trustee shall mail to the Holders of the Senior Notes a brief
report dated as of such reporting date that complies with TIA ss. 313(a) (but if
no event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the
Holders of Senior Notes shall be mailed to the Company and filed with the
Commission and each stock exchange on which the Senior Notes are listed. The
Company shall promptly notify the Trustee when the Senior Notes are listed on
any stock exchange.
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SECTION 7.07. COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee from time to time upon
written request reasonable compensation for its acceptance of this Indenture and
services hereunder. The Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Company shall reimburse
the Trustee promptly upon request for all reasonable disbursements, advances and
actual out-of-pocket expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel,
but shall not include expenses incurred as a result of the Trustee's negligence
or willful misconduct.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses, including reasonable attorneys' fees, incurred
by it arising out of or in connection with the acceptance or administration of
its duties under this Indenture without negligence or bad faith on its part. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder, except to the extent of actual prejudice
to the Company resulting from such failure. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations under this Section
7.07, the Trustee shall have a Lien prior to the Senior Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Senior Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(h) or (i) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Senior Notes of a majority in
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principal amount of the then outstanding Senior Notes may remove the Trustee by
so notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Senior Notes
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the then
outstanding Senior Notes may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee after written request by any Holder of a Senior
Note who has been a Holder of a Senior Note for at least six months fails to
comply with Section 7.10, such Holder of a Senior Note may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, 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. The successor Trustee shall mail a notice of its
succession to Holders of the Senior Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject to
the Lien provided for in Section 7.07 hereof, PROVIDED all sums owing to the
retiring Trustee hereunder have been paid. Notwithstanding replacement of the
retiring Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or association, the successor corporation or association without any
further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder which shall be
a corporation organized and doing business under the laws of the United States
of America or of any state thereof authorized under such laws to exercise
corporate trustee power, shall be subject to supervision or examination by
federal or state authority and shall have a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS
AGAINST COMPANY
The Trustee is subject to TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR
COVENANT DEFEASANCE
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
with respect to the Senior Notes, elect to have either Section 8.02 or 8.03 be
applied to all outstanding Senior Notes upon compliance with the conditions set
forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE
Upon the Company's exercise under Section 8.01 of the option
applicable to this Section 8.02, the Company shall be deemed to have been
discharged from its obligations with respect to all outstanding Senior Notes on
the date the conditions set forth below are
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satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Senior Notes, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.05
and the other Sections of this Indenture referred to in (a) and (b) below, and
to have satisfied all their other obligations under such Senior Notes and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of outstanding Senior Notes to receive
solely from the trust fund described in Section 8.04, and as more fully set
forth in such Section, payments in respect of the principal of, premium, if any,
and interest on such Senior Notes when such payments are due, (b) the Company's
obligations with respect to such Senior Notes under Sections 2.03, 2.04, 2.05,
2.06, 2.07, 2.10 and 4.02, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article 8. Subject to compliance with this Article 8, the Company
may exercise its option under this Section 8.02, notwithstanding the prior
exercise of its option under Section 8.03 with respect to the Senior Notes.
SECTION 8.03. COVENANT DEFEASANCE
Upon the Company's exercise under Section 8.01 of the option
applicable to this Section 8.03, the Company shall be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21 and Article 5
with respect to the outstanding Senior Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "COVENANT DEFEASANCE"),
and the Senior Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Senior Notes shall not be deemed outstanding for accounting
purposes). For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Senior Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document, and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01, but, except as specified above, the remainder of this Indenture
and such Senior Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 of the option applicable to this Section
8.03, Sections 6.01(e) and (f) shall not constitute Events of Default.
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SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT
DEFEASANCE
The following shall be the conditions to application of either
Section 8.02 or Section 8.03 to the outstanding Senior Notes:
(a) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article 8
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Senior Notes, (i) cash in U.S. Dollars in
an amount, (ii) non-callable Government Securities which through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms shall provide, not later than one day before the due date of any payment,
cash in U.S. Dollars in an amount, or (iii) a combination thereof, in such
amounts, as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge (A) the principal of,
premium, if any, and interest on the outstanding Senior Notes on the stated
maturity or on the applicable redemption date, as the case may be, of such
principal or installment of principal, premium, if any, or interest and (B) any
mandatory sinking fund payments or analogous payments applicable to the
outstanding Senior Notes on the day on which such payments are due and payable
in accordance with the terms of this Indenture and of such Senior Notes;
PROVIDED that the Trustee shall have been irrevocably instructed to apply such
money or the proceeds of such non-callable Government Securities to said
payments with respect to the Senior Notes;
(b) In the case of an election under Section 8.02, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably satisfactory to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date hereof, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such Opinion of Counsel shall confirm that, the Holders of the outstanding
Senior Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.03, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee to the effect that the Holders of the
outstanding Senior Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax in the same amount, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
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(d) No Default or Event of Default with respect to the Senior
Notes shall have occurred and be continuing on the date of such deposit (other
than a Default or Event of Default resulting from the borrowing of funds to be
applied to such deposit) or, insofar as Section 6.01(h) or (i) is concerned, at
any time in the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until the
expiration of such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any other
material agreement or instrument (other than this Indenture) to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;
(f) In the case of an election under either Section 8.02 or
8.03, the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that after the 91st day following the deposit, assuming that no
Holder of a Senior Note is an "insider" as defined in Section 101(31) of the
U.S. Bankruptcy Code and assuming that prior to such 91st day no voluntary or
involuntary bankruptcy case has been commenced with respect to the Company, such
deposit will not constitute a preference as defined in Section 547 of the U.S.
Bankruptcy Code, and, assuming such a bankruptcy case is commenced on or after
such 91st day, the trust funds will not constitute property included within the
estate of the debtor;
(g) In the case of an election under either Section 8.02 or
8.03, the Company shall have delivered to the Trustee an Officers' Certificate
stating that the deposit made by the Company pursuant to its election under
Section 8.02 or 8.03 was not made by the Company with the intent of preferring
the Holders over other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others; and
(h) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel in the United States, each
stating that all conditions precedent provided for relating to either the Legal
Defeasance under Section 8.02 or the Covenant Defeasance under Section 8.03 (as
the case may be) have been complied with as contemplated by this Section 8.04.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT
SECURITIES TO BE HELD IN TRUST; OTHER
MISCELLANEOUS PROVISIONS
Subject to Section 8.06, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"TRUSTEE") pursuant to Section 8.04 in respect of the outstanding Senior Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Senior Notes and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company or a Subsidiary
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Guarantor, if any, acting as Paying Agent) as the Trustee may determine, to the
Holders of such Senior Notes of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Senior
Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
Company's request any money or non-callable Government Securities held by it as
provided in Section 8.04 which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a)), are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company in trust for the payment of the principal of, premium,
if any, or interest on any Senior Note and remaining unclaimed for two years
after such principal, and premium, if any, or interest has become due and
payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Senior Note
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining shall be repaid to the Company.
SECTION 8.07. REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any U.S.
Dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under
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this Indenture and the Senior Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 8.02 or 8.03, as the case may be; PROVIDED that, if the Company makes
any payment of principal of, premium, if any, or interest on any Senior Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Senior Notes to receive such payment from
the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR
NOTES
Notwithstanding Section 9.02 of this Indenture, the Company
and the Trustee may amend or supplement this Indenture, the Senior Notes or any
Subsidiary Guarantee without the consent of any Holder of a Senior Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Notes in addition to
or in place of certificated Senior Notes;
(c) to provide for the assumption of the Company's or any
Subsidiary Guarantor's obligations to the Holders of the Senior Notes in the
case of a merger, consolidation or other similar business combination pursuant
to Article 5 or Section 10.04 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Senior Notes or that does not
materially adversely affect the legal rights hereunder of any Holder of the
Senior Note;
(e) to provide for Subsidiary Guarantees of the Senior Notes;
or
(f) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by resolutions of
the Board of Directors of the Company authorizing the execution of any such
amended or supplemental indenture and upon receipt by the Trustee of the
documents described in Section 9.06 hereof, the Trustee shall join with the
Company in the execution of any amended or supplemental indenture authorized or
permitted by the terms of this Indenture and make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
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shall not be obligated to enter into such amended or supplemental indenture
which affects its own rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR NOTES
Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture or the Senior Notes or any
amended or supplemental indenture with the written consent of the Holders of at
least a majority in aggregate principal amount of the Senior Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Senior Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default and its consequences (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Senior Notes, except a payment default resulting from
an acceleration that has been rescinded) or compliance with any provision of
this Indenture or the Senior Notes may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Senior Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Senior Notes).
Upon the request of the Company accompanied by resolutions of
the Board of Directors of the Company authorizing the execution of any such
amended or supplemental indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders of Senior
Notes as aforesaid, and upon receipt by the Trustee of the documents described
in Section 9.06 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental indenture unless such amended or supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of
Senior Notes under this Section 9.02 to approve the particular form of any
proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders of Senior Notes
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 amended
or supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in aggregate principal amount of the Senior Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Senior Notes. However, without the
consent of each Holder affected, an amendment or waiver may not (with respect to
any Senior Notes held by a non-consenting Holder of Senior Notes):
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(a) reduce the principal amount of Senior Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Senior Note or alter the provisions with respect to the redemption of the
Senior Notes;
(c) reduce the rate of or change the time for payment of
interest, including default interest, on any Senior Note;
(d) waive a Default or Event of Default in the payment of
principal of, premium, if any, or interest on the Senior Notes, including,
without limitation, payment of the Change of Control Payment or the Asset Sale
Offer Price (except a rescission of acceleration of the Senior Notes by the
Holders of at least a majority in aggregate principal amount of the then
outstanding Senior Notes and a waiver of the payment default that resulted from
such acceleration);
(e) make any Senior Note payable in money other than that
stated in the Senior Notes;
(f) make any change in Section 6.04 or 6.07 hereof or in the
provisions of this Indenture relating to the rights of Holders of Senior Notes
to receive payments of principal of, premium, if any, or interest on the Senior
Notes;
(g) waive a redemption payment with respect to any Senior
Note; or
(h) make any change in this sentence of this Section 9.02.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment or supplement to this Indenture or the Senior
Notes shall be set forth in an amended or supplemental indenture that complies
with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Senior Note is a continuing consent by the Holder
of a Senior Note and every subsequent Holder of a Senior Note or portion of a
Senior Note that evidences the same debt as the consenting Holder's Senior Note,
even if notation of the consent is not made on any Senior Note. However, any
such Holder of a Senior Note or subsequent Holder of a Senior Note may revoke
the consent as to its Senior Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective.
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An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder of a Senior Note.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SENIOR NOTES
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Senior Note thereafter authenticated. The
Company in exchange for all Senior Notes may issue and the Trustee shall
authenticate new Senior Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Senior
Note shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
Subject to the receipt of an Officers' Certificate and an
Opinion of Counsel as set forth in this Section 9.06, and upon the filing with
the Trustee of evidence of consent of the Holders as provided in Section 9.02
hereof, the Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental indenture until the Board of Directors
of the Company approves it, and no Subsidiary Guarantor may sign such an
amendment or supplemental indenture until its board of directors approves it.
The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Officer's Certificate and an Opinion of Counsel stating that
such amendment or supplement is authorized or permitted by this Indenture, that
all conditions precedent to the execution of the amendment or supplement by the
parties thereto have been complied with and that the amendment or supplement is
valid and binding upon the Company and any Subsidiary Guarantor in accordance
with its terms.
ARTICLE 10
GUARANTEE OF SENIOR NOTES
SECTION 10.01. SUBSIDIARY GUARANTEE
Subject to the provisions of this Article 10, each Subsidiary
Guarantor, if any, jointly and severally, shall unconditionally guarantee, on a
senior unsecured basis, to each Holder of a Senior Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Senior
Notes or the obligations of the Company to the Holders or the Trustee hereunder
or
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under the Senior Notes, that (a) the principal of, premium, if any, and any
accrued and unpaid interest on the Senior Notes shall be duly and punctually
paid in full when due, whether at maturity, by acceleration or otherwise, and
interest on overdue principal of, premium, if any, and (to the extent permitted
by law) interest on the Senior Notes and that all other obligations of the
Company to the Holders or the Trustee hereunder or under the Senior Notes
(including fees, expenses or other) shall be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; (b) in case of any
extension of time of payment or renewal of any Senior Notes or any of such other
obligations, the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise; and (c) any and all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by the Trustee or its agents or any Holder of Senior Notes in enforcing
any rights under any Subsidiary Guarantee shall be promptly paid in full when
due. Failing payment when due of any amount so guaranteed or failing performance
of any other Guaranteed Obligation of the Company to the Holders, for whatever
reason, each Subsidiary Guarantor shall be obligated to pay, or to perform or to
cause the performance of, the same immediately. Each Subsidiary Guarantee shall
be a guarantee of payment and not a guarantee of collection. An Event of Default
under this Indenture or the Senior Notes shall constitute an event of default
under each Subsidiary Guarantee, and shall entitle the Holders of Senior Notes
to accelerate the Guaranteed Obligations of the Subsidiary Guarantors in the
same manner and to the same extent as the Guaranteed Obligations of the Company.
Each Subsidiary Guarantor's Subsidiary Guarantee shall be unconditional,
irrespective of the validity, regularity or enforceability of the Senior Notes
or this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of Senior Notes with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. By executing a Subsidiary
Guarantee, each Subsidiary Guarantor shall be deemed to waive diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company and such Subsidiary Guarantor, protest,
notice and all demands whatsoever and covenant that its Subsidiary Guarantee
shall not be discharged except by complete performance of all Guaranteed
Obligations, except as specified in Section 10.03. If any Holder or the Trustee
is required by any court or otherwise to return to the Company or such
Subsidiary Guarantor, or any custodian, trustee, liquidator or other similar
official acting in relation to either the Company or such Subsidiary Guarantor,
any amount paid by any such entity to the Trustee or such Holder, such
Subsidiary Guarantor's Subsidiary Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. By executing a
Subsidiary Guarantee, each Subsidiary Guarantor shall be deemed to agree that it
shall not be entitled to any right of subrogation in relation to the Holders in
respect of any Guaranteed Obligations until payment in full of all Guaranteed
Obligations and further that, as between the Subsidiary Guarantors, on the one
hand, and the Holders of Senior Notes and the Trustee, on the other hand, (x)
the maturity of the Guaranteed Obligations may be accelerated as provided in
Article 6 hereof for the purposes of its Subsidiary Guarantee, notwithstanding
any stay, injunction or other
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prohibition preventing such acceleration in respect of the Guaranteed
Obligations, and (y) in the event of any acceleration of such Guaranteed
Obligations as provided in Article 6 hereof, such Guaranteed Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Subsidiary Guarantor for the purpose of its Subsidiary Guarantee. The Guaranteed
Obligations of each Subsidiary Guarantor shall rank PARI PASSU in right of
payment with all Guarantor Senior Indebtedness of such Subsidiary Guarantor.
SECTION 10.02. LIMITATION OF THE SUBSIDIARY GUARANTORS'
LIABILITY
Each Subsidiary Guarantor, by executing a Subsidiary
Guarantee, and, by its acceptance hereof, each beneficiary hereof, shall be
deemed to confirm that it is the intention and agreement of all such parties
that such Subsidiary Guarantor's Subsidiary Guarantee not constitute a
fraudulent transfer, conveyance or obligation for purposes of any Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or state law (including, without limitation, the Debtor
and Creditor Law of the State of New York). To effectuate the foregoing
intention, each such Person hereby irrevocably agrees that the Guaranteed
Obligations of the Subsidiary Guarantors under this Article 10 shall be limited
to the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Subsidiary Guarantor, result in the Guaranteed
Obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not
constituting a fraudulent transfer, conveyance or obligation.
SECTION 10.03. RELEASE OF THE SUBSIDIARY GUARANTORS
In the event of (i) a sale or other disposition of all, or
substantially all, of the assets of any Subsidiary Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the capital
stock of any Subsidiary Guarantor, such Subsidiary Guarantor (in the event of a
sale or other disposition, by way of such a merger, consolidation or otherwise,
of all of the capital stock of such Subsidiary Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all, or
substantially all, of the assets of such Subsidiary Guarantor) will be released
and relieved of any obligations under its Subsidiary Guarantee; PROVIDED that
the Net Proceeds of such sale or other disposition are applied in accordance
with Section 4.10 hereof, (ii) in the event the Subsidiary Guarantee was issued
under Section 4.09 or 4.16 hereof by reason of the incurrence of Indebtedness by
a Subsidiary Guarantor permitted pursuant to Section 4.09 hereof, the payment in
full, whether at maturity or otherwise, of all Indebtedness incurred by the
Subsidiary Guarantor by reason of which it executed or was required to execute a
Subsidiary Guarantee, such Subsidiary Guarantor will be released and relieved of
any obligations under such Subsidiary Guarantee and (iii) in the event the
Subsidiary Guarantee was issued by reason of the Guarantee or securing of
payment of Indebtedness other than the Senior Notes pursuant to Section 4.15
hereof, the release or discharge of the Guarantee by the Subsidiary Guarantor of
all such Indebtedness, except a discharge by or as a result of
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payment under such Guarantee, such Subsidiary Guarantor will be released and
relieved of any obligation under such Subsidiary Guarantee. The Trustee shall
deliver an appropriate instrument evidencing such release upon receipt of a
request of the Company accompanied by an Officers' Certificate and Opinion of
Counsel certifying as to the compliance with this Section 10.03. Any Subsidiary
Guarantor not released from its obligations under its Subsidiary Guarantee shall
remain liable for the full amount of principal of, premium, if any, and accrued
and unpaid interest on the Senior Notes and for the other obligations of such
Subsidiary Guarantor under this Indenture as provided in this Article 10.
SECTION 10.04. MERGER, CONSOLIDATION OR SALE OF ASSETS
No Subsidiary Guarantor may consolidate with or merge with or
into (whether or not such Subsidiary Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Subsidiary
Guarantor (other than a Subsidiary of the Company that is a Subsidiary
Guarantor), unless (i) subject to Section 10.03 hereof, the Person formed by or
surviving any such consolidation or merger (if other than such Subsidiary
Guarantor) assumes all the Guaranteed Obligations of such Subsidiary Guarantor
pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists and (iii) such Subsidiary
Guarantor, or any Person formed by or surviving any such consolidation or
merger, would be permitted by virtue of the Company's pro forma Fixed Charge
Coverage Ratio to incur, immediately after giving effect to such transaction, at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 4.09(a) hereof; PROVIDED that the foregoing
provisions shall not apply to any Asset Sale subject to Section 4.10 hereof.
SECTION 10.05. EXECUTION AND DELIVERY OF SUBSIDIARY
GUARANTEES
To evidence its Subsidiary Guarantee set forth in this Article
10, each Subsidiary Guarantor shall execute and deliver to the Trustee a
Subsidiary Guarantee in the form of Exhibit C hereto and a supplemental
indenture in the form of EXHIBIT D hereto, pursuant to which such Subsidiary
shall become a Subsidiary Guarantor under this Article 10 and shall guarantee
the obligations of the Company as provided in this Article 10. Concurrently with
the execution and delivery of such Subsidiary Guarantee and supplemental
indenture, the Company shall deliver to the Trustee an Opinion of Counsel
reasonably satisfactory to the Trustee substantially to the effect that such
Subsidiary Guarantee and supplemental indenture have been duly authorized,
executed and delivered by such Subsidiary Guarantor and that, subject to the
application of bankruptcy, insolvency, moratorium, fraudulent conveyance or
fraudulent transfer and other laws relating to creditors' rights generally and
to general principles of equity, whether considered in a proceeding at law or in
equity, the Subsidiary Guarantee of such Subsidiary Guarantor contained herein
and in its Subsidiary Guarantee (subject to the limitations set forth in Section
10.02) is a legal,
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valid and binding obligation of such Subsidiary Guarantor, enforceable against
such Subsidiary Guarantor in accordance with its terms.
Each Subsidiary Guarantee shall remain in full force and
effect and apply to all of the Senior Notes notwithstanding any failure to
endorse on each Senior Note a notation of such Subsidiary Guarantee. The
delivery of any Senior Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of each Subsidiary Guarantor.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA ss.318(c), the imposed duties shall
control.
SECTION 11.02. NOTICES
Any notice or communication by the Company, any Subsidiary
Guarantor or the Trustee to the others is duly given if in writing and delivered
in person or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address:
If to the Company or any Subsidiary Guarantor:
French Fragrances, Inc.
14100 N.W. 60th Avenue
Miami Lakes, Florida 33014
Telecopier No.: (305) 818-8020
Attention: Chief Financial Officer
With a copy to:
Steel Hector & Davis LLP
200 South Biscayne Boulevard
Suite 4000
Miami, Florida 33131
Telecopier No.: (305) 577-7001
Attention: Beatriz Llorens Koltis, Esq.
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If to the Trustee:
Marine Midland Bank
140 Broadway
12th Floor
New York, New York 10005
Telecopier No.: (212) 658-6425
Attention: Corporate Trust Administration--French
Fragrances
The Company, any Subsidiary Guarantor or the Trustee, by
notice to the others, may designate additional or different addresses for
subsequent notices or communications.
All notices and communications (other than those sent to the
Trustee or to Holders of Senior Notes) shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
Any notice or communication to the Trustee shall be deemed to
have been duly given to the Trustee when received at its Corporate Trust Office,
Attention: Corporate Trust Administration--French Fragrances.
Any notice or communication to a Holder of a Senior Note shall
be either mailed by first class mail or sent by overnight air courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed or sent to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail or send a notice or communication to a Holder of a Senior Note or any
defect in it shall not affect its sufficiency with respect to other Holders of
Senior Notes.
If a notice or communication is mailed or sent in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails or sends a notice or communication to
Holders of Senior Notes, it shall mail or send a copy to the Trustee and each
Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF SENIOR NOTES
WITH OTHER HOLDERS OF SENIOR NOTES
Holders of the Senior Notes may communicate pursuant to TIA
ss. 312(b) with other Holders of Senior Notes with respect to their rights under
this Indenture or the Senior Notes. The Company, any Subsidiary Guarantor, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
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SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR
OPINION
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been satisfied.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS
The Trustee may make reasonable rules for action by or at a
meeting of Holders of Senior Notes. The Registrar or Paying Agent may make
reasonable rules and set reasonable requirements for its functions.
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SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS,
OFFICERS, EMPLOYEES, PARTNERS AND
STOCKHOLDERS
No director, officer, employee, incorporator, partner or
stockholder of the Company or any Subsidiary of the Company, as such, shall have
any liability for any obligations of the Company or any Subsidiary Guarantor
under the Senior Notes, this Indenture or any Subsidiary Guarantee or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of the Senior Notes by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Senior Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws, and it is the view of
the Commission that such a waiver is against public policy.
SECTION 11.08. GOVERNING LAW
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE SENIOR NOTES AND ANY SUBSIDIARY GUARANTEE.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER
AGREEMENTS
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. SUCCESSORS
All agreements of the Company in this Indenture and the Senior
Notes shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successor.
SECTION 11.11. SEVERABILITY
In case any provision in this Indenture or in the Senior Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 11.12. COUNTERPART ORIGINALS
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
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SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
SECTION 11.14. AGENT FOR SERVICE OF PROCESS; CONSENT TO
JURISDICTION
By the execution and delivery of this Indenture, the Company
(i) acknowledges that it has, by separate written instrument, irrevocably
designated and appointed Abelman, Frayne & Schwab, 150 East 42nd Street, 26th
Floor, New York, NY 10017-5612 (Attn: Peter Lynfield) as its authorized agent
upon whom process may be served in any suit or proceeding arising out of or
relating to the Senior Notes or this Indenture that may be instituted in any
federal or New York state court located in The City of New York, or brought by
the Trustee (whether in its individual capacity or in its capacity as Trustee
hereunder) or by any Holder, and acknowledges that Abelman, Frayne & Schwab has
accepted such designation, (ii) submits to the non-exclusive jurisdiction of any
such court in any such suit or proceeding, and (iii) agrees that service of
process upon Abelman, Frayne & Schwab and written notice of said service to the
Company (mailed or delivered to the Company's Corporate Secretary at its
principal office 14100 N.W. 60th Avenue, Miami Lakes, Florida 33014 as specified
in Section 11.02 hereof), shall be deemed in every respect effective service of
process upon the Company in any such suit or proceeding. The Company further
agrees to take any and all action, including the execution and filing of any and
all such documents and instruments, as may be necessary to continue such
designation and appointment of Abelman, Frayne & Schwab in full force and effect
so long as this Indenture shall be in full force and effect.
The Company irrevocably and unconditionally waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of venue of any such action, suit or proceeding in any such court
or any appellate court with respect thereto. The Company irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action, suit or proceeding in any such court.
Any Subsidiary that executes a Subsidiary Guarantee and a
supplemental indenture in the form of EXHIBIT D hereto, pursuant to which such
Subsidiary shall become a Subsidiary Guarantor under Article 10 hereof, shall be
deemed to have irrevocably designated and appointed Abelman, Frayne & Schwab as
its authorized agent for service of process and shall be bound by the provisions
set forth in this Section 11.14 as if it were the Company.
[Signatures on following page]
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SIGNATURES
Dated as of May 13, 1997 FRENCH FRAGRANCES, INC.
By: /s/ Oscar E. Marina
----------------------------------
Name: Oscar E. Marina
Title: Vice President
MARINE MIDLAND BANK,
as Trustee
By: /s/ Eileen M. Hughes
----------------------------------
Name: Eileen M. Hughes
Title: Assistant Vice President
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EXHIBIT A
(Form of Face of Series A Senior Note)
[If a restricted security, then insert -- THE NOTE (OR ITS PREDECESSOR)
EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER
OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) INSIDE THE
UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A FOREIGN PURCHASER IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND,
IN THE CASE OF CLAUSE (b), (c) OR (d), BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE EVIDENCED HEREBY
OR ANY NOTE ISSUED IN EXCHANGE FOR OR IN SUBSTITUTION HEREOF OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.]
Each Temporary Regulation S Global Security shall bear the
following legend on the face thereof:
THIS SECURITY IS A TEMPORARY REGULATION S GLOBAL SECURITY WITHIN THE MEANING OF
THE INDENTURE REFERRED TO HEREINAFTER. EXCEPT IN THE CIRCUMSTANCES DESCRIBED IN
SECTION 2.16 OF THE INDENTURE, INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL
SECURITY MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON OR FOR THE ACCOUNT OR
BENEFIT
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OF A U.S. PERSON PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD (AS
DEFINED IN THE INDENTURE), AND NO TRANSFER OR EXCHANGE OF AN INTEREST IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY MAY BE MADE FOR AN INTEREST IN A
RESTRICTED GLOBAL SECURITY OR IN A PERMANENT REGULATION S GLOBAL SECURITY UNTIL
AFTER THE LATER OF THE DATE OF EXPIRATION OF THE RESTRICTED PERIOD AND THE DATE
ON WHICH THE OWNER SECURITIES CERTIFICATION AND THE DEPOSITORY SECURITIES
CERTIFICATION RELATING TO SUCH INTEREST HAVE BEEN PROVIDED IN ACCORDANCE WITH
THE TERMS OF THE INDENTURE, TO THE EFFECT THAT THE BENEFICIAL OWNER OR OWNERS OF
SUCH INTEREST ARE NOT U.S. PERSONS.
Each Permanent Regulation S Security shall bear the following
legend on the face thereof:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, OR
DELIVERED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S.
PERSON, UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS AVAILABLE.
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10 3/8% Senior Note due 2007, Series A
No. $__________
FRENCH FRAGRANCES, INC.
promises to pay to
- -------------------------
or its registered assigns
the principal sum of
Dollars on May 15, 2007.
Interest Payment Dates: May 15 and November 15, commencing November 15, 1997.
Record Dates: May 1 and November 1 (whether or not a Business Day).
Dated: ____________,1997
FRENCH FRAGRANCES, INC.
By:________________________
Name:_________________
Title:________________
(SEAL)
This is one of the Series A Senior Notes
referred to in the within-mentioned
Indenture:
Marine Midland Bank, as Trustee
By:________________________________________
(Authorized Signature)
Dated:_____________________________________
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<PAGE>
(Form of Reverse Side of Series A Senior Note)
10 3/8% Senior Note due 2007, Series A
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined) unless otherwise indicated.
1. INTEREST. French Fragrances, Inc., a Florida corporation
(the "COMPANY"), promises to pay interest on the principal amount of this Senior
Note at the rate and in the manner specified below. The Company shall pay
interest on the principal amount of this Senior Note in cash at the rate per
annum of 10 3/8%. The Company will pay interest semi-annually on May 15 and
November 15 of each year, commencing November 15, 1997, or, if any such day is
not a Business Day, on the next succeeding Business Day (each, an "INTEREST
PAYMENT DATE") to Holders of record on the immediately preceding May 1 and
November 1. Interest will be computed on the basis of a 360-day year consisting
of twelve 30-day months. Interest shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Senior Notes. To the extent lawful, the Company
shall pay interest on overdue principal at the rate of the then applicable
interest rate on the Senior Notes; it shall pay interest on overdue installments
of interest (without regard to any applicable grace periods) at the same rate to
the extent lawful.
2. METHOD OF PAYMENT. The Company will pay interest on the
Senior Notes (except defaulted interest) to the Persons who are registered
Holders of Senior Notes at the close of business on the record date next
preceding the Interest Payment Date, even if such Senior Notes are cancelled
after such record date and on or before such Interest Payment Date. The Holder
hereof must surrender this Senior Note to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. The Company, however, may pay principal, premium, if any, and
interest by check payable in such money. The Senior Notes will be payable as to
principal, premium and interest at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of interest may be made by check mailed to the
Holders of Senior Notes at their respective addresses set forth in the register
of Holders of Senior Notes. Unless otherwise designated by the Company, the
Company's office or agency in New York, New York will be the office of the
Trustee maintained for such a purpose.
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Holder of a Senior Note.
The Company or any Subsidiary may act in any such capacity.
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<PAGE>
4. INDENTURE. The Company issued the Senior Notes under an
Indenture, dated as of May 13, 1997 (the "INDENTURE"), between the Company and
the Trustee. The terms of the Senior Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date of
the Indenture. The Senior Notes are subject to all such terms, and Holders of
Senior Notes are referred to the Indenture and such act for a statement of such
terms. The terms of the Indenture shall govern any inconsistencies between the
Indenture and the Senior Notes. This Senior Note is one of a duly authorized
issue of Initial Senior Notes of the Company designated as its 10 3/8% Senior
Notes due 2007, Series A (the "INITIAL SENIOR NOTES"). The Senior Notes are
senior unsecured obligations of the Company limited to $115,000,000 in aggregate
principal amount. The Senior Notes include the Initial Senior Notes and the
Exchange Senior Notes, as defined below, to be issued in exchange for the
Initial Senior Notes pursuant to the Indenture. The Initial Senior Notes and the
Exchange Senior Notes are treated as a single class of securities under the
Indenture.
5. OPTIONAL REDEMPTION. The Senior Notes will not be
redeemable at the Company's option prior to May 15, 2002. Thereafter, the Senior
Notes will be subject to redemption at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, in cash at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on May 15
of the years indicated below:
YEAR PERCENTAGE
---- ----------
2002................................................. 105.188%
2003................................................. 103.458%
2004................................................. 101.729%
2005 and thereafter.................................. 100.000%
Notwithstanding the foregoing, at any time prior to May 15,
2000, the Company, at its option, may on any one or more occasions redeem up to
35% of the initially outstanding aggregate principal amount of Senior Notes at a
redemption price equal to 109 3/8% of the principal amount thereof, plus accrued
and unpaid interest, if any, thereon to the redemption date, with the net
proceeds of one or more Public Equity Offerings of the Company generating in
each case net proceeds of at least $15.0 million; PROVIDED that at least 65% of
the initially outstanding aggregate principal amount of Senior Notes remains
outstanding immediately after the occurrence of any such redemption; and
PROVIDED, FURTHER, that such redemption shall occur within 60 days of the date
of the closing of any such Public Equity Offering of the Company.
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<PAGE>
6. MANDATORY REDEMPTION. Except as set forth in Sections 4.10
and 4.18 of the Indenture, the Company is not required to make mandatory
redemption or sinking fund payments with respect to the Senior Notes.
7. REPURCHASE AT OPTION OF HOLDER. (a) Upon the occurrence of
a Change of Control, each Holder of Senior Notes will have the right to require
the Company to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Senior Notes at an offer price in cash equal
to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of purchase. Holders of Senior Notes that
are subject to an offer to purchase will receive a Change of Control Offer from
the Company prior to any related Change of Control Payment Date and may elect to
have such Senior Notes purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below.
(b) If the Company or a Subsidiary consummates any Asset
Sales, and when the aggregate amount of Excess Proceeds from such Asset Sales
exceeds $10.0 million, the Company will be required to make an offer to all
Holders of Senior Notes to purchase the maximum principal amount of Senior Notes
that may be purchased out of the Excess Proceeds, at an offer price in cash in
an amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. If the aggregate principal amount of
Senior Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Senior Notes to be purchased on a PRO
RATA basis. Holders of Senior Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Senior Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed
at least 30 days but not more than 60 days before the redemption date to each
Holder whose Senior Notes are to be redeemed at its registered address. Senior
Notes may be redeemed in part but only in whole multiples of $1,000, unless all
of the Senior Notes held by a Holder of Senior Notes are to be redeemed. On and
after the redemption date, interest ceases to accrue on Senior Notes or portions
of them called for redemption unless the Company defaults in making such
redemption payment.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Notes may be registered and Senior
Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder of a Senior Note, 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 exchange
or register the transfer of any Senior Note or portion of a Senior Note selected
for
A-6
<PAGE>
redemption. Also, it need not exchange or register the transfer of any
Senior Notes for a period of 15 days before a selection of Senior Notes to be
redeemed.
10. PERSONS DEEMED OWNERS. Prior to due presentment to the
Trustee for registration of the transfer of this Senior Note, the Trustee, any
Agent and the Company may deem and treat the Person in whose name this Senior
Note is registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this Senior Note and for all
other purposes whatsoever, whether or not this Senior Note is overdue, and
neither the Trustee, any Agent nor the Company shall be affected by notice to
the contrary. The registered Holder of a Senior Note shall be treated as its
owner for all purposes.
11. AMENDMENTS, SUPPLEMENT AND WAIVERS. Subject to certain
exceptions, the Indenture or the Senior Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Senior Notes then outstanding (including consents obtained in connection
with a tender offer or exchange offer for Senior Notes), and any existing
Default or compliance with any provision of the Indenture or the Senior Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Senior Notes (including consents obtained in connection
with a tender offer or exchange offer for Senior Notes). However, without the
consent of each Holder affected, an amendment or waiver may not (with respect to
any Senior Notes held by a non-consenting holder) (i) reduce the principal
amount of Senior Notes whose holders must consent to an amendment, supplement or
waiver, (ii) reduce the principal of or change the fixed maturity of any Senior
Note or alter the provisions with respect to the redemption of the Senior Notes,
(iii) reduce the rate of or change the time for payment of interest on any
Senior Note, (iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on, the Senior Notes, including,
without limitation, payment of the Change of Control Payment or the Asset Sale
Offer Price (except a rescission of acceleration of the Senior Notes by the
Holders of at least a majority in aggregate principal amount of the Senior Notes
and a waiver of the payment default that resulted from such acceleration), (v)
make any Senior Note payable in money other than that stated in the Senior
Notes, (vi) make any change in the provisions of the Indenture relating to
waivers of Defaults or the rights of Holders of Senior Notes to receive payments
of principal of or premium, if any, or interest on the Senior Notes, (vii) waive
a redemption payment with respect to any Senior Note or (viii) make any change
in the foregoing amendment and waiver provisions. Notwithstanding the foregoing,
without the consent of any Holder of Senior Notes, the Company and the Trustee
may amend or supplement the Indenture or the Senior Notes to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Senior Notes in addition
to or in place of certificated Senior Notes, to provide for the assumption of
the Company's obligations to holders of Senior Notes in the case of a merger or
consolidation or other business combination, to make any change that would
provide any additional rights or benefits to the Holders of Senior Notes or that
does not materially adversely affect the legal rights under the Indenture of any
such Holder, to provide for Subsidiary Guarantees of the
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Senior Notes or to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Each of the following constitutes
an Event of Default: (i) default for 30 days in the payment when due of interest
on the Senior Notes; (ii) default in the payment of all or any part of the
principal, or premium, if any, on the Senior Notes when and as the same becomes
due and payable at maturity, upon redemption, by acceleration, or otherwise,
including, without limitation, the payment of the Change of Control Payment or
the Asset Sale Offer Price, or otherwise; (iii) failure by the Company or any of
its Subsidiaries to observe or perform in all material respects the covenants
contained in Sections 4.07, 4.09, 4.12 and 5.01 of the Indenture; (iv) failure
by the Company or any of its Subsidiaries to observe or perform in all material
respects any other covenant or agreement on the part of the Company or such
Subsidiary contained in the Senior Notes or the Indenture and the continuance of
such failure for a period of 30 days after written notice is given to the
Company by the Trustee or to the Company and the Trustee by the holders of at
least 25% in aggregate principal amount of the Senior Notes then outstanding,
specifying such default, requiring that it be remedied and stating that such
notice is a "Notice of Default;" (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness by 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 the Indenture, which default (A) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"PAYMENT DEFAULT") or (B) results in the acceleration of such Indebtedness prior
to its express maturity and, in each of (A) and (B), 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 $3.0 million or more; (vi) failure by
the Company or any of its Subsidiaries to pay final non-appealable judgments
aggregating in excess of $3.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; (vii) except as permitted by the Indenture,
any Subsidiary Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Subsidiary Guarantor, or any Person acting on behalf of any
Subsidiary Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; and (viii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Significant Subsidiaries, or any group of
Subsidiaries that, taken together, would constitute a Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Senior Notes may declare all the Senior Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Senior Notes will become
due and
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payable without further action or notice. Holders of the Senior Notes
may not enforce the Indenture or the Senior Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Senior Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Senior Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Senior Notes then outstanding, by
notice to the Trustee, may on behalf of the Holders of all of the Senior Notes
waive any existing Default or Event of Default and its consequences under the
Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, Senior Notes and except as to payments
required under Sections 4.10 and 4.18 of the Indenture. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. SUBSIDIARY GUARANTEES. This Senior Note is entitled to the
benefits of any Subsidiary Guarantee of any Subsidiary Guarantor made for the
benefit of the Holders in accordance with the provisions of the Indenture. Upon
the terms and subject to the conditions set forth in the Indenture, such
Subsidiary Guarantors, if any, will unconditionally guarantee that the principal
of and premium, if any, and interest on the Senior Notes will be duly and
punctually paid in full when due, whether at maturity, by acceleration or
otherwise, and interest on overdue principal and premium, if any, and (to the
extent permitted by law) interest on any interest, if any, on the Senior Notes
and that all other Guaranteed Obligations of the Company to the Holders or the
Trustee under the Senior Notes or the Indenture (including fees, expenses or
other Guaranteed Obligations) will be promptly paid in full.
14. 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 Trustee;
however, if the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue as
Trustee or resign.
15. NO PERSONAL LIABILITIES OF DIRECTORS, OFFICERS, EMPLOYEES,
PARTNERS AND STOCKHOLDERS. No director, officer, employee, manager,
incorporator, partner or stockholder of the Company or any Subsidiary of the
Company, as such, shall have any liability for any obligations of the Company or
any Subsidiary Guarantor under the Senior Notes, the Indenture or any Subsidiary
Guarantee or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder of a Senior Note by accepting a
Senior Note waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Senior Notes.
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16. AUTHENTICATION. This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder of a Senior Note or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Senior Notes and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience to
Holders of Senior Notes. No representation is made as to the accuracy of such
numbers either as printed on the Senior Notes or as contained in any notice of
redemption, and reliance may be placed only on the other identification numbers
placed thereon.
19. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE SENIOR NOTES AND ANY
SUBSIDIARY GUARANTEE.
20. REGISTRATION RIGHTS. Pursuant to the Registration Rights
Agreement among the Company and the Initial Purchasers, the Company will be
obligated to consummate an exchange offer pursuant to which the Holder of this
Senior Note shall have the right to exchange this Senior Note for the Company's
10 3/8% Senior Notes due 2007, Series B (the "EXCHANGE SENIOR NOTES"), which
have been registered under the Securities Act, in like principal amount and
having terms identical in all material respects to the Initial Senior Notes. The
Holders of the Initial Senior Notes shall be entitled to receive Liquidated
Damages in the event such exchange offer is not consummated and upon certain
other conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
The Company will furnish to any Holder of a Senior Note upon
written request and without charge a copy of the Indenture. Request may be made
to:
French Fragrances, Inc.
14100 N.W. 60th Avenue
Miami Lakes, Florida 33014
Telecopier No.: (305) 818-8020
Attention: Chief Financial Officer
The form of reverse of a Temporary Regulation S Global
Security shall include the language:
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<PAGE>
This Temporary Regulation S Global Security is one of a duly
authorized issue of Senior Notes of the Company designated as its Senior Notes
due 2007 (the "SENIOR NOTES"), issued under an Indenture, dated as of May 13,
1997 (herein called the "INDENTURE"), between the Company and Marine Midland
Bank, as trustee (herein called the "TRUSTEE," which term includes any successor
trustee under the Indenture). The Senior Notes are limited in aggregate
principal amount to $115,000,000. Reference is hereby made to the Indenture and
all indentures supplemental thereto for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Senior Notes and of the terms upon which the
Senior Notes are, and are to be, authenticated and delivered.
Until this Temporary Regulation S Global Security is exchanged
for a Permanent Regulation S Global Security, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Temporary Regulation S Global Security shall in all other respects be
entitled to the same benefits as other Senior Notes under the Indenture.
This Temporary Regulation S Global Security is exchangeable in
whole or in part for one or more Permanent Regulation S Global Securities or
Restricted Global Securities only (i) on or after the expiration of the
Restricted Period and (ii) upon presentation of certificates (accompanied by an
opinion of counsel, if applicable) required by Article 2 of the Indenture. Upon
exchange for this Temporary Regulation S Global Security for one or more
Permanent Regulation S Global Securities or Restricted Global Securities, the
Trustee shall cancel this Temporary Regulation S Global Security.
This Temporary Regulation S Global Security shall not become
valid or obligatory until the certificate of authentication hereon shall have
been duly manually signed by the Trustee in accordance with the Indenture. This
Temporary Regulation S Global Security shall be governed by and construed in
accordance with the laws of the State of New York.
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<PAGE>
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below: (I) or
(we) assign and transfer this Senior Note to
- --------------------------------------------------------------------------------
(Insert assignee's social security or federal tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
agent to transfer this Senior Note on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date: ______________
Your Signature:______________________________
(Sign exactly as your name appears on the
face of this Senior Note)
Signature Guarantee.
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<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Senior
Note purchased by the Company pursuant to Section 4.10 or Section 4.18 of the
Indenture check the appropriate box:
|_| Section 4.10 |_| Section 4.18
If you want to have only part of the Senior Note purchased by
the Company pursuant to Section 4.10 or Section 4.18 of the Indenture, state the
amount (in integral multiples of $1,000) you elect to have purchased:
$ ---------------
Date:____________
Your Signature:______________________________
(Sign exactly as your name appears on the
face of this Senior Note)
Signature Guarantee.
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<PAGE>
EXHIBIT B
(Form of Face of Series B Senior Note)
10 3/8% Senior Note due 2007, Series B
No. $__________
FRENCH FRAGRANCES, INC.
promises to pay to
- --------------------
or its registered assigns
the principal sum of
Dollars on May 15, 2007.
Interest Payment Dates: May 15 and November 15, commencing November 15, 1997.
Record Dates: May 1 and November 1 (whether or not a Business Day).
Dated: ____________,1997
FRENCH FRAGRANCES, INC.
By:________________________
Name:_________________
Title:________________
(SEAL)
This is one of the Series B Senior Notes
referred to in the within-mentioned
Indenture:
Marine Midland Bank, as Trustee
By:_____________________________________
(Authorized Signature)
Dated:__________________________________
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(Form of Reverse Side of Series B Senior Note)
10 3/8% Senior Note due 2007, Series B
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined) unless otherwise indicated.
1. INTEREST. French Fragrances, Inc., a Florida corporation
(the "COMPANY"), promises to pay interest on the principal amount of this Senior
Note at the rate and in the manner specified below. The Company shall pay
interest on the principal amount of this Senior Note in cash at the rate per
annum of 10 3/8%. The Company will pay interest semi-annually on May 15 and
November 15 of each year, commencing November 15, 1997, or, if any such day is
not a Business Day, on the next succeeding Business Day (each, an "INTEREST
PAYMENT DATE") to Holders of record on the immediately preceding May 1 and
November 1. Interest will be computed on the basis of a 360-day year consisting
of twelve 30-day months. Interest shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Senior Notes. To the extent lawful, the Company
shall pay interest on overdue principal at the rate of the then applicable
interest rate on the Senior Notes; it shall pay interest on overdue installments
of interest (without regard to any applicable grace periods) at the same rate to
the extent lawful.
2. METHOD OF PAYMENT. The Company will pay interest on the
Senior Notes (except defaulted interest) to the Persons who are registered
Holders of Senior Notes at the close of business on the record date next
preceding the Interest Payment Date, even if such Senior Notes are cancelled
after such record date and on or before such Interest Payment Date. The Holder
hereof must surrender this Senior Note to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. The Company, however, may pay principal, premium, if any, and
interest by check payable in such money. The Senior Notes will be payable as to
principal, premium and interest at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of interest may be made by check mailed to the
Holders of Senior Notes at their respective addresses set forth in the register
of Holders of Senior Notes. Unless otherwise designated by the Company, the
Company's office or agency in New York, New York will be the office of the
Trustee maintained for such a purpose.
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice to any Holder of a Senior Note.
The Company or any Subsidiary may act in any such capacity.
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<PAGE>
4. INDENTURE. The Company issued the Senior Notes under an
Indenture, dated as of May 13, 1997 (the "INDENTURE"), between the Company and
the Trustee. The terms of the Senior Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date of
the Indenture. The Senior Notes are subject to all such terms, and Holders of
Senior Notes are referred to the Indenture and such act for a statement of such
terms. The terms of the Indenture shall govern any inconsistencies between the
Indenture and the Senior Notes. This Senior Note is one of a duly authorized
issue of Exchange Senior Notes of the Company designated as its 10 3/8% Senior
Notes due 2007, Series B. The Senior Notes are senior unsecured obligations of
the Company limited to $115,000,000 in aggregate principal amount.
5. OPTIONAL REDEMPTION. The Senior Notes will not be
redeemable at the Company's option prior to May 15, 2002. Thereafter, the Senior
Notes will be subject to redemption at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, in cash at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on May 15
of the years indicated below:
YEAR PERCENTAGE
2002................................................. 105.188%
2003................................................. 103.458%
2004................................................. 101.729%
2005 and thereafter.................................. 100.000%
Notwithstanding the foregoing, at any time prior to May 15,
2000, the Company, at its option, may on any one or more occasions redeem up to
35% of the initially outstanding aggregate principal amount of Senior Notes at a
redemption price equal to 109 3/8% of the principal amount thereof, plus accrued
and unpaid interest, if any, thereon to the redemption date, with the net
proceeds of one or more Public Equity Offerings of the Company generating in
each case net proceeds of at least $15.0 million; PROVIDED that at least 65% of
the initially outstanding aggregate principal amount of Senior Notes remains
outstanding immediately after the occurrence of any such redemption; and
PROVIDED, FURTHER, that such redemption shall occur within 60 days of the date
of the closing of any such Public Equity Offering of the Company.
6. MANDATORY REDEMPTION. Except as set forth in Sections 4.10
and 4.18 of the Indenture, the Company is not required to make mandatory
redemption or sinking fund payments with respect to the Senior Notes.
7. REPURCHASE AT OPTION OF HOLDER. (a) Upon the occurrence of
a Change of Control, each Holder of Senior Notes will have the right to require
the Company to
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repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Senior Notes at an offer price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of purchase. Holders of Senior Notes that are subject to an
offer to purchase will receive a Change of Control Offer from the Company prior
to any related Change of Control Payment Date and may elect to have such Senior
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" appearing below.
(b) If the Company or a Subsidiary consummates any Asset
Sales, and when the aggregate amount of Excess Proceeds from such Asset Sales
exceeds $10.0 million, the Company will be required to make an offer to all
Holders of Senior Notes to purchase the maximum principal amount of Senior Notes
that may be purchased out of the Excess Proceeds, at an offer price in cash in
an amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. If the aggregate principal amount of
Senior Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Senior Notes to be purchased on a PRO
RATA basis. Holders of Senior Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Senior Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed
at least 30 days but not more than 60 days before the redemption date to each
Holder whose Senior Notes are to be redeemed at its registered address. Senior
Notes may be redeemed in part but only in whole multiples of $1,000, unless all
of the Senior Notes held by a Holder of Senior Notes are to be redeemed. On and
after the redemption date, interest ceases to accrue on Senior Notes or portions
of them called for redemption unless the Company defaults in making such
redemption payment.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Notes may be registered and Senior
Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder of a Senior Note, 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 exchange
or register the transfer of any Senior Note or portion of a Senior Note selected
for redemption. Also, it need not exchange or register the transfer of any
Senior Notes for a period of 15 days before a selection of Senior Notes to be
redeemed.
10. PERSONS DEEMED OWNERS. Prior to due presentment to the
Trustee for registration of the transfer of this Senior Note, the Trustee, any
Agent and the Company may deem and treat the Person in whose name this Senior
Note is registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this
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Senior Note and for all other purposes whatsoever, whether or not this Senior
Note is overdue, and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary. The registered Holder of a Senior Note shall
be treated as its owner for all purposes.
11. AMENDMENTS, SUPPLEMENT AND WAIVERS. Subject to certain
exceptions, the Indenture or the Senior Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Senior Notes then outstanding (including consents obtained in connection
with a tender offer or exchange offer for Senior Notes), and any existing
Default or compliance with any provision of the Indenture or the Senior Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Senior Notes (including consents obtained in connection
with a tender offer or exchange offer for Senior Notes). However, without the
consent of each Holder affected, an amendment or waiver may not (with respect to
any Senior Notes held by a non-consenting holder) (i) reduce the principal
amount of Senior Notes whose Holders must consent to an amendment, supplement or
waiver, (ii) reduce the principal of or change the fixed maturity of any Senior
Note or alter the provisions with respect to the redemption of the Senior Notes,
(iii) reduce the rate of or change the time for payment of interest on any
Senior Note, (iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, interest on, the Senior Notes, including,
without limitation, payment of the Change of Control Payment or the Asset Sale
Offer Price (except a rescission of acceleration of the Senior Notes by the
Holders of at least a majority in aggregate principal amount of the Senior Notes
and a waiver of the payment default that resulted from such acceleration), (v)
make any Senior Note payable in money other than that stated in the Senior
Notes, (vi) make any change in the provisions of the Indenture relating to
waivers of Defaults or the rights of Holders of Senior Notes to receive payments
of principal of or premium, if any, interest on the Senior Notes, (vii) waive a
redemption payment with respect to any Senior Note or (viii) make any change in
the foregoing amendment and waiver provisions. Notwithstanding the foregoing,
without the consent of any Holder of Senior Notes, the Company and the Trustee
may amend or supplement the Indenture or the Senior Notes to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Senior Notes in addition
to or in place of certificated Senior Notes, to provide for the assumption of
the Company's obligations to Holders of Senior Notes in the case of a merger or
consolidation or other business combination, to make any change that would
provide any additional rights or benefits to the Holders of Senior Notes or that
does not materially adversely affect the legal rights under the Indenture of any
such holder, to provide for Subsidiary Guarantees of the Senior Notes or to
comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Each of the following constitutes
an Event of Default: (i) default for 30 days in the payment when due of interest
on the Senior Notes; (ii) default in the payment of all or any part of the
principal, or premium, if any, on the Senior Notes when and as the same becomes
due and payable at maturity, upon redemption, by
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acceleration, or otherwise, including, without limitation, the payment of the
Change of Control Payment or the Asset Sale Offer Price, or otherwise; (iii)
failure by the Company or any of its Subsidiaries to observe or perform in all
material respects the covenants contained in Sections 4.07, 4.09, 4.12 and 5.01
of the Indenture; (iv) failure by the Company or any of its Subsidiaries to
observe or perform in all material respects any other covenant or agreement on
the part of the Company or such Subsidiary contained in the Senior Notes or the
Indenture and the continuance of such failure for a period of 30 days after
written notice is given to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in aggregate principal amount of the
Senior Notes then outstanding, specifying such default, requiring that it be
remedied and stating that such notice is a "Notice of Default;" (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness by 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 the Indenture, which default (A) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on the
date of such default (a "PAYMENT DEFAULT") or (B) results in the acceleration of
such Indebtedness prior to its express maturity and, in each of (A) and (B), 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 $3.0 million or more; (vi)
failure by the Company or any of its Subsidiaries to pay final non-appealable
judgments aggregating in excess of $3.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) except as permitted by the
Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to
be unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Subsidiary Guarantor, or any Person acting on behalf of any
Subsidiary Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; and (viii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken together, would constitute a Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Senior Notes may declare all the Senior Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Senior Notes will become
due and payable without further action or notice. Holders of the Senior Notes
may not enforce the Indenture or the Senior Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Senior Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Senior Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines
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that withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Senior Notes then outstanding, by notice to
the Trustee, may on behalf of the Holders of all of the Senior Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Senior Notes and except as to payments required under
Sections 4.10 and 4.18 of the Indenture. The Company is required to deliver to
the Trustee annually a statement regarding compliance with the Indenture, and
the Company is required upon becoming aware of any Default or Event of Default,
to deliver to the Trustee a statement specifying such Default or Event of
Default.
13. SUBSIDIARY GUARANTEES. This Senior Note is entitled to the
benefits of any Subsidiary Guarantee of any Subsidiary Guarantor made for the
benefit of the Holders in accordance with the provisions of the Indenture. Upon
the terms and subject to the conditions set forth in the Indenture, such
Subsidiary Guarantors, if any, will unconditionally guarantee that the principal
of and premium, if any, and interest on the Senior Notes will be duly and
punctually paid in full when due, whether at maturity, by acceleration or
otherwise, and interest on overdue principal and premium, if any, and (to the
extent permitted by law) interest on any interest, if any, on the Senior Notes
and that all other Guaranteed Obligations of the Company to the Holders or the
Trustee under the Senior Notes or the Indenture (including fees, expenses or
other Guaranteed Obligations) will be promptly paid in full.
14. 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 Trustee;
however, if the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue as
Trustee or resign.
15. NO PERSONAL LIABILITIES OF DIRECTORS, OFFICERS, EMPLOYEES,
PARTNERS AND STOCKHOLDERS. No director, officer, employee, manager,
incorporator, partner or stockholder of the Company or any Subsidiary of the
Company, as such, shall have any liability for any obligations of the Company or
any Subsidiary Guarantor under the Senior Notes, the Indenture or any Subsidiary
Guarantee or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder of a Senior Note by accepting a
Senior Note waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Senior Notes.
16. AUTHENTICATION. This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder of a Senior Note 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).
B-7
<PAGE>
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Senior Notes and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience to
Holders of Senior Notes. No representation is made as to the accuracy of such
numbers either as printed on the Senior Notes or as contained in any notice of
redemption, and reliance may be placed only on the other identification numbers
placed thereon.
19. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE SENIOR NOTES AND ANY
SUBSIDIARY GUARANTEE.
The Company will furnish to any Holder of a Senior Note upon
written request and without charge a copy of the Indenture. Request may be made
to:
French Fragrances, Inc.
14100 N.W. 60th Avenue
Miami Lakes, Florida 33014
Telecopier No.: (305) 818-8020
Attention: Chief Financial Officer
B-8
<PAGE>
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below: (I) or
(we) assign and transfer this Senior
Note to
- --------------------------------------------------------------------------------
(Insert assignee's social security or federal tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
agent to transfer this Senior Note on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date: ______________
Your Signature:_________________________
(Sign exactly as your name appears on
the face of this Senior Note)
Signature Guarantee.
B-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Senior
Note purchased by the Company pursuant to Section 4.10 or Section 4.18 of the
Indenture check the appropriate box:
|_| Section 4.10 |_| Section 4.18
If you want to have only part of the Senior Note purchased by
the Company pursuant to Section 4.10 or Section 4.18 of the Indenture, state the
amount (in integral multiples of $1,000) you elect to have purchased:
$ ---------------
Date:____________
Your Signature:_________________________
(Sign exactly as your name appears on
the face of this Senior Note)
Signature Guarantee.
B-10
<PAGE>
EXHIBIT C
SUBSIDIARY GUARANTEE
The undersigned Subsidiary Guarantor (which term includes any
successor or assign), pursuant to the terms of that certain Indenture (the
"Indenture"), dated as of May 13, 1997, between French Fragrances, Inc., a
Florida corporation (the "Company"), and Marine Midland Bank, as trustee (the
"Trustee") hereby, jointly and severally, unconditionally guarantees, on a
senior unsecured basis, to each Holder of a Senior Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Senior
Notes or the obligations of the Company to the Holders or the Trustee under the
Indenture or under the Senior Notes, that (a) the principal of, premium, if any,
and any accrued and unpaid interest on the Senior Notes shall be duly and
punctually paid in full when due, whether at maturity, by acceleration or
otherwise, and interest on overdue principal of, premium, if any, and (to the
extent permitted by law) interest on the Senior Notes and that all other
obligations of the Company to the Holders or the Trustee under the Indenture or
under the Senior Notes (including fees, expenses or other) shall be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
(b) in case of any extension of time of payment or renewal of any Senior Notes
or any of such other obligations, the same shall be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise; and (c) any and all
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses) incurred by the Trustee or its agents or any Holder of Senior
Notes in enforcing any rights under any Subsidiary Guarantee shall be promptly
paid in full when due.
The obligations of the Subsidiary Guarantor to the Holders of
Senior Notes and to the Trustee pursuant to this Subsidiary Guarantee and the
Indenture are expressly set forth in Article 10 of the Indenture and reference
is hereby made to such Indenture for the precise terms of this Subsidiary
Guarantee. THE TERMS OF ARTICLE 10 OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE. In the case of any discrepancy between this writing and Article 10 of
the Indenture, Article 10 of the Indenture shall control.
This is a continuing guarantee and shall remain in full force
and effect and shall be binding upon the Subsidiary Guarantor and its successors
and assigns until full, final and indefeasible payment of all of the Guaranteed
Obligations (subject to Section 10.05 of the Indenture) and shall inure to the
benefit of the successors and assigns of the Trustee and the Holders of Senior
Notes and, in the event of any transfer or assignment of rights by any Holder of
Senior Notes or the Trustee, the rights and privileges herein conferred upon the
party shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This is a guarantee of
payment and not a guarantee of collection.
C-1
<PAGE>
Notwithstanding the foregoing, this Subsidiary Guarantee shall
be automatically released and discharged upon (a) in the event this Subsidiary
Guarantee is issued by reason of the Guarantee or securing of payment of
Indebtedness other than the Senior Notes pursuant to Section 4.15 of the
Indenture, the release or discharge of the Guarantee by the Subsidiary Guarantor
of all such Indebtedness, except a discharge by or as a result of payment under
such Guarantee, (b) in the event this Subsidiary Guarantee is issued under
Section 4.09 or 4.16 of the Indenture by reason of the incurrence of
Indebtedness by a Subsidiary Guarantor permitted pursuant to Section 4.09 of the
Indenture, the payment in full, whether at maturity or otherwise, of all
Indebtedness incurred by such Subsidiary Guarantor by reason of which it
executed or was required to execute this Subsidiary Guarantee or (c) a sale or
other disposition of all, or substantially all, of the assets of any Subsidiary
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Subsidiary Guarantor, which sale,
exchange or transfer is made in compliance with applicable provisions of the
Indenture.
The Subsidiary Guarantor and, by its acceptance hereof, each
beneficiary hereof, hereby confirms that it is the intention and agreement of
all such parties that this Subsidiary Guarantee not constitute a fraudulent
transfer, conveyance or obligation for purposes of any Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar Federal or state law (including, without limitation, the Debtor and
Creditor Law of the State of New York). To effectuate the foregoing intention,
each such Person hereby irrevocably agrees that the Guaranteed Obligations of
the Subsidiary Guarantor under Article 10 of the Indenture shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Subsidiary Guarantor, result in the Guaranteed
Obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not
constituting a fraudulent transfer, conveyance, or obligation.
Capitalized terms used herein but not defined herein shall
have the meanings given to them in the Indenture.
C-2
<PAGE>
[Subsidiary Guarantor]
By: _____________________________
Name:
Title:
Attest:
- --------------------------------
Name:
Title:
C-3
<PAGE>
EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE"), dated
as of ____________________, ____, among French Fragrances, Inc., a Florida
corporation (the "COMPANY"), _______________ (the "GUARANTOR"), a subsidiary of
the Company, and Marine Midland Bank, as trustee under the indenture referred to
below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an indenture (the "INDENTURE"), dated as of May 13, 1997, providing
for the issuance of an aggregate principal amount of $115,000,000 of 10 3/8%
Senior Notes due 2007, Series A, and 10 3/8% Senior Notes due 2007, Series B
(the "SENIOR NOTES");
WHEREAS, Section 4.16 of the Indenture provides that under
certain circumstances the Company is required to cause the Guarantor to execute
and deliver to the Trustee a supplemental indenture pursuant to which the
Guarantor shall unconditionally guarantee all of the Company's obligations under
the Senior Notes pursuant to a Guarantee on the terms and conditions set forth
in Article 10 of the Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company, the Guarantor and the Trustee mutually covenant and
agree for the equal and ratable benefit of the holders of the Senior Notes as
follows:
(a) CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
(b) AGREEMENT TO GUARANTEE. The Guarantor hereby agrees,
jointly and severally with all other Subsidiary Guarantors, if any, to
guarantee, on a senior unsecured basis, the Company's obligations under the
Senior Notes on the terms and subject to the conditions set forth in Article 10
of the Indenture and to be bound by all other applicable provisions of the
Indenture.
(c) NO RECOURSE AGAINST OTHERS. No officer, employee, director
or stockholder of the Guarantor shall have any liability for any obligations of
the Company or any Subsidiary Guarantor under the Senior Notes, any Subsidiary
Guarantee, the Indenture or
D-1
<PAGE>
this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation of any such obligation. Each
Holder by accepting a Senior Note waives and releases all such liability, and
such waiver and release is part of the consideration for the issuance of the
Senior Notes.
(d) GOVERNING LAW. The internal laws of the State of New York
shall govern and be used to construe this Supplemental Indenture.
(e) COUNTERPARTS. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
(f) EFFECT OF HEADINGS. The section headings herein are for
convenience only and shall not affect the construction hereof.
D-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated: _______________ ___, ______
French Fragrances, Inc.
By: ______________________________
Name:
Title:
[Guarantor]
By: _____________________________
Name:
Title:
Attest:
- --------------------------------
Name:
Title:
Marine Midland Bank,
as Trustee
By: _____________________________
Name:
Title:
Attest:
- --------------------------------
Name:
Title:
D-3
<PAGE>
EXHIBIT E
FORM OF CERTIFICATION TO BE GIVEN BY HOLDERS OF
BENEFICIAL INTEREST IN A TEMPORARY
REGULATION S GLOBAL SECURITY
TO EUROCLEAR OR CEDEL
OWNER SECURITIES CERTIFICATION
FRENCH FRAGRANCES, INC.
10 3/8% Senior Notes due 2007
Reference is hereby made to the Indenture, dated as of May 13,
1997 (the "Indenture"), between French Fragrances, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This is to certify that, as of the date hereof, $___ of the
above-captioned Senior Notes (the "Senior Notes") are beneficially owned by
non-U.S. person(s). As used in this paragraph, the term "U.S. Person" has the
meaning given to it by Regulation S under the Securities Act of 1933, as
amended.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the Senior Notes held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceedings.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer and the Initial Purchasers.
Dated: _________________, ____
By: ___________________________________
As, or as agent for, the
beneficial owner(s) of the
Senior Notes to which this
certificate relates.
E-1
<PAGE>
EXHIBIT F
FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR
CEDEL
DEPOSITORY SECURITIES CERTIFICATION
FRENCH FRAGRANCES, INC.
10 3/8% Senior Notes due 2007
CUSIP No. U31403 AA 3
Reference is hereby made to the Indenture, dated as of May 13,
1997 (the "Indenture"), between French Fragrances, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein, shall
have the meanings given to them in the Indenture.
This is to certify that, with respect to U.S. $_______
principal amount of the above-captioned Senior Notes (the "Senior Notes"),
except as set forth below, we have received in writing by tested telex or by
electronic transmission, from member organizations appearing in our records as
persons being entitled to a portion of the principal amount of the Senior Notes
(our "Member Organizations"), certifications with respect to such portion,
substantially to the effect set forth in the Indenture.1
We further certify (i) that we are not making available
herewith for exchange (or, if relevant, exercise of any rights or collection of
any interest) any portion of the Temporary Regulation S Global Security (as
defined in the Indenture) excepted in such certifications and (ii) that as of
the date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange or, if relevant, exercise of any rights or collection of any interest
are no longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in
connection with certain securities laws of the United States. In connection
therewith, if administrative or legal proceedings are commenced or threatened in
connection with which this certification is or would be relevant, we irrevocably
authorize you to produce this certification to any interested
- --------------------------
1 Unless Morgan Guaranty Trust Company of New York, London Branch is
otherwise informed by the Agent, the long form certificate set out in
the Operating Procedures will be deemed to meet the requirements of
this sentence.
F-1
<PAGE>
party in such proceedings. This certificate and the statements contained herein
are made for your benefit and the benefit of the Issuer and the Initial
Purchasers.
Dated: __________________, _____
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as operator of the Euroclear System]
or
[CEDEL BANK, SOCIETE ANONYME]
By: ___________________________________
F-2
<PAGE>
EXHIBIT G
FORM OF CERTIFICATION TO BE GIVEN BY
TRANSFEREE OF BENEFICIAL INTEREST IN A
TEMPORARY REGULATION S GLOBAL SECURITY
TRANSFEREE SECURITIES CERTIFICATION
FRENCH FRAGRANCES, INC.
10 3/8% Senior Notes due 2007
CUSIP No. U31403 AA 3
Reference is hereby made to the Indenture, dated as of May 13, 1997 (the
"Indenture"), between French Fragrances, Inc., as Issuer, and Marine Midland
Bank, as Trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
For purposes of acquiring a beneficial interest in the Temporary Regulation S
Global Security, the undersigned certifies that it is not a U.S. Person as
defined by Regulation S under the Securities Act of 1933, as amended.
We undertake to advise you promptly by tested telex on or prior to the date on
which you intend to submit your certification relating to the Senior Notes held
by you in which we intend to acquire a beneficial interest in accordance with
your operating procedures if any applicable statement herein is not correct on
such date, and in the absence of any such notification it may be assumed that
this certification applies as of such date.
We understand that this certificate is required in connection with certain
securities laws of the United States. In connection therewith, if administrative
or legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceeding. This certificate
and the statements contained herein are made for you benefit and the benefit of
the Issuer and the Initial Purchasers.
Dated: ___________________, __
By: _______________________________
As, or as agent for, the beneficial
owner(s) of the Senior Notes to
which this certificates relates.
G-1
<PAGE>
EXHIBIT H
FORM OF CERTIFICATION FOR TRANSFER OR
EXCHANGE OF RESTRICTED GLOBAL SECURITY
TO TEMPORARY REGULATION S GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.16(d)(ii) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration--French Fragrances
Re: FRENCH FRAGRANCES, INC.
10 3/8% Senior Notes due 2007
(THE "SENIOR NOTES")
Reference is hereby made to the Indenture, dated as of May 13,
1997 (the "Indenture"), between French Fragrances, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to U.S. $_________ aggregate principal
amount of Senior Notes which are held in the form of the Restricted Global
Security representing Initial Senior Notes held by QIBs (CUSIP No. 357658 AA 1)
or in the form of the Restricted Global Security representing Initial Senior
Notes held by Institutional Accredited Investors (CUSIP No. 357658 AB 9) with
the Depository in the name of [insert name of transferor] (the "Transferor").
The Transferor has requested a transfer of such beneficial interest in the
Senior Notes to a Person who will take delivery thereof in the form of an equal
aggregate principal amount of Senior Notes evidenced by the Temporary Regulation
S Global Security (CUSIP No. U31403 AA 3) to be held with the Depository in the
name of [Euroclear] [Cedel Bank, societe anonyme].
In connection with such request and in respect of such Senior
Notes, the Transferor does hereby certify that such transfer has been effected
in accordance with the transfer restrictions set forth in the Senior Notes and
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and accordingly the Transferor does
hereby certify that:
(1) the offer of the Senior Notes was not made to a
person in the United States;
H-1
<PAGE>
[(2) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any person acting
on its behalf reasonably believed that the transferee was outside the
United States;] *
[(2) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither the
Transferor nor any person acting on our behalf knows that the
transaction was pre-arranged with a buyer in the United States;]*
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial
interest being transferred as described above is to be held with the
Depository in the name of [Euroclear] [Cedel Bank, societe anonyme].
We understand that this certification is required in
connection with certain securities laws of the United States. In connection
therewith, if administrative or legal proceedings are commenced or threatened in
connection with which this certification is or would be relevant, we irrevocably
authorize you to produce this certificate to any interested party in such
proceeding. This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuer and the Initial Purchasers.
(Insert Name of Transferor)
By: __________________________________
Name:
Title:
Dated ________________
cc: French Fragrances, Inc.
- ----------------------
* Insert one of these two provisions, which come form the definition of
"offshsore transactions" in Regulation S.
H-2
<PAGE>
EXHIBIT I
FORM OF CERTIFICATION FOR TRANSFER OR
EXCHANGE OF RESTRICTED GLOBAL SECURITY
TO PERMANENT REGULATION S GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.16(d)(ii) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration--French Fragrances
Re: French Fragrances, Inc.
10 3/8% Senior Notes due 2007
(THE "SENIOR NOTES")
Reference is hereby made to the Indenture, dated as of May 13,
1997 (the "INDENTURE"), between French Fragrances, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to U.S. $_________ aggregate principal
amount of Senior Notes which are held in the form of the Restricted Global
Security representing Initial Senior Notes held by QIBs (CUSIP No. 357658 AA 1)
or in the form of the Restricted Global Security representing Initial Senior
Notes held by Institutional Accredited Investors (CUSIP No. 357658 AB 9) with
the Depository in the name of [insert name of transferor] (the "TRANSFEROR").
The Transferor has requested a transfer of such beneficial interest in the
Senior Notes to a Person who will take delivery thereof in the form of an equal
aggregate principal amount of Senior Notes evidenced by the Permanent Regulation
S Global Security (CUSIP No. U31403 AA 3).
In connection with such request, and in respect of such Senior
Notes, the Transferor does hereby certify that such transfer has been effected
in accordance with the transfer restrictions set forth in the Senior Notes, and
(1) with respect to transfers made in reliance on Regulation S
under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
the Transferor does hereby certify that:
(A) the offer of the Senior Notes was not made to a
person in the United States;
I-1
<PAGE>
[(B) at the time the buy order was originated, the
transferee was outside the United States or the Transferor and
any person acting on its behalf reasonably believed that the
transferee was outside the United States;]*
[(B) the transaction was executed in, on or through
the facilities of a designated offshore securities market and
neither the Transferor nor any person acting on our behalf
knows that the transaction was pre-arranged with a buyer in the
United States;]*
(C) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable; and
(D) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act;
and
(2) with respect to transfers made in reliance on Rule 144
under the Securities Act, the Transferor does hereby certify that the
Senior Notes are being transferred in a transaction permitted by Rule
144 under the Securities Act.
We understand that this certification is required in
connection with certain securities laws of the United States. In connection
therewith, if administrative or legal proceedings are commenced or threatened in
connection with which this certification is or would be relevant, we irrevocably
authorize you to produce this certification to any interested party in such
proceedings. This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuer and the Initial Purchasers.
[Insert Name of Transferor]
By: __________________________________
Name:
Title:
Dated: _______________________
cc: French Fragrances, Inc.
- ----------------------
* Insert one of these two provisions, which come form the definition of
"offshsore transactions" in Regulation S.
I-2
<PAGE>
EXHIBIT J
FORM OF CERTIFICATION FOR TRANSFER OR
EXCHANGE OF TEMPORARY REGULATION S GLOBAL SECURITY
OR PERMANENT REGULATION S GLOBAL SECURITY TO
RESTRICTED GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.16 (d)(iii) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration--French Fragrances
Re: French Fragrances, Inc.
10 3/8% Senior Notes due 2007
(THE "SENIOR NOTES")
Reference is hereby made to the Indenture, dated as of May 13,
1997 (the "INDENTURE"), between French Fragrances, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to U.S. $_______ principal amount of
Senior Notes which are evidenced by an aggregate [Temporary Regulation S Global
Security (CUSIP No. U31403 AA 3)] [Permanent Regulation S Global Security (CUSIP
No. U31403 AA 3)] and held with the Depository through [Euroclear] [Cedel]
(Common Code _______) in the name of [insert name of transferor] (the
"TRANSFEROR"). The Transferor has requested a transfer of such beneficial
interest in Senior Notes to a person that will take delivery thereof in the form
of an equal aggregate principal amount of Senior Notes evidenced by a Restricted
Global Security representing Initial Senior Notes held by QIBs of the same
series and of like tenor as the Senior Notes (CUSIP No. 357658 AA 1) or in the
form of the Restricted Global Security representing Initial Senior Notes held by
Institutional Accredited Investors (CUSIP No. 357658 AB 9).
In connection with such request and in respect of such Senior
Notes, the Transferor does hereby certify that such transfer is being effected
(i) pursuant to and in accordance with Rule 144A under the Securities Act and,
accordingly, the Transferor does hereby further certify that the Senior Notes
are being transferred to a Person that the Transferor reasonably believes is
purchasing the Senior Notes for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and
J-1
<PAGE>
such Person and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A, in each case in a transaction meeting the requirements
of Rule 144A and (ii) in accordance with any applicable securities laws of any
state of the United States or any other jurisdiction.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Issuer and the Initial Purchasers.
[Insert Name of Transferor]
By: _______________________________
Name:
Title:
Dated: _________________
cc: French Fragrances, Inc.
J-2
<PAGE>
EXHIBIT K
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL RESTRICTED SECURITY TO
RESTRICTED GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.16 (d)(iv) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration--French Fragrances
Re: French Fragrances, Inc.
10 3/8% Senior Notes due 2007
(THE "SECURITIES")
Reference is hereby made to the Indenture, dated as of May 13,
1997 (the "INDENTURE"), between French Fragrances, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Restricted
Securities held in definitive form (CUSIP No. _______) by [insert name of
transferor] (the "TRANSFEROR"). The Transferor has requested an exchange or
transfer of such Securities.
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that (i) such Securities are
owned by the Transferor and are being exchanged without transfer or (ii) such
transfer has been effected pursuant to and in accordance with Rule 144A or
another exemption under the United States Securities Act of 1933, as amended
(the "SECURITIES ACT") and accordingly the Transferor does hereby further
certify that:
(1) if the transfer has been effected pursuant to Rule 144A:
(A) the Securities are being transferred to a person
that the Transferor reasonably believes is purchasing the
Securities for its own account, or for one or more accounts
with respect to which such Person exercises sole investment
discretion;
(B) such Person and each such account is a "qualified
institutional buyer" within the meaning of Rule 144A; and
K-1
<PAGE>
(C) the Securities have been transferred in a
transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of
the United States; or
(2) if the transfer has been effected pursuant to another
exemption under the Act:
(A) the Securities were transferred to a person that
the Transferor reasonably believes is an Institutional
Accredited Investor; and
(B) the Securities have been transferred pursuant to
an exemption from the Securities Act and made in accordance
with any applicable securities laws of any state of the United
States.
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certification to any interested party in such proceeding.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer and the Initial Purchasers.
Dated: __________________, ____
[Insert Name of Transferor]
By: __________________________________
Name:
Title:
cc: French Fragrances, Inc.
K-2
<PAGE>
EXHIBIT L
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL RESTRICTED SECURITY TO
PERMANENT REGULATION S GLOBAL SECURITY
OR TEMPORARY REGULATION S GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.16 (d)(iv) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration--French Fragrances
Re: French Fragrances, Inc.
10 3/8% Senior Notes due 2007
(THE "SECURITIES")
Reference is hereby made to the Indenture, dated as of May 13,
1997 (the "INDENTURE"), between French Fragrances, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $____ principal amount of Restricted
Securities held in definitive form (CUSIP No. _______ ) by [insert name of
transferor] (the "TRANSFEROR"). The Transferor has requested an exchange or
transfer of such Securities.
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that (i) such Securities are
owned by the Transferor and are being exchanged without transfer or (ii) such
transfer has been effected pursuant to and in accordance with Rule 904 under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and accordingly the
Transferor does hereby further certify that:
(A) the offer of the Securities was not made to a person in
the United States;
(B) either:
(i) at the time the buy order was originated, the
transferee was outside the United States or the Transferor and
any person acting on its behalf reasonably believed that the
transferee was outside the United States, or
L-1
<PAGE>
(ii) the transaction was executed in, on or through
the facilities of a designated offshore securities market and
neither the Transferor nor any person acting on its behalf
knows that the transaction was pre-arranged with a buyer in the
United States;
(C) no directed selling efforts have been made in
contravention of the requirements of Rule 904(b) of Regulation S, as
applicable;
(D) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(E) if such transfer is to occur during the Restricted Period,
upon completion of the transaction, the beneficial interest being
transferred as described above will be held with the Depository through
[Euroclear] [CEDEL].
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection
therewith, if administrative or legal proceedings are commenced or
threatened in connection with which this certificate is or would be
relevant, we irrevocably authorize you to produce this certificate to
any interested party in such proceeding. This certificate and the
statements contained herein are made for your benefit and the benefit
of the Issuer and the Initial Purchasers.
Dated: __________________, ____
[Insert Name of Transferor]
By: __________________________________
Name:
Title:
cc: French Fragrances, Inc.
L-2
<PAGE>
EXHIBIT M-1
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL PERMANENT REGULATION S
SECURITY TO RESTRICTED GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.16 (d)(v) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration--French Fragrances
Re: French Fragrances, Inc.
10 3/8% Senior Notes due 2007
(THE "SECURITIES")
Reference is hereby made to the Indenture, dated as of May 13,
1997 (the "INDENTURE"), between French Fragrances, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $____ principal amount of Restricted
Securities held in definitive form (CUSIP No. _______ ) by [insert name of
transferor] (the "TRANSFEROR"). The Transferor has requested an exchange or
transfer of such Securities.
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that (i) such Securities are
owned by the Transferor and are being exchanged without transfer or (ii) such
transfer has been effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended, and accordingly the
Transferor does hereby further certify that the Securities are being transferred
to a Person that the Transferor reasonably believes is purchasing the Securities
for its own account, or for one or more accounts with respect to which such
Person exercises sole investment discretion, and such Person and each such
account is a "qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of the United
States.
M-1-1
<PAGE>
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which its certificate is or would be relevant, we irrevocably authorize you
to produce this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuer and the Initial Purchasers.
Dated: __________________, ____
[Insert Name of Transferor]
By: __________________________________
Name:
Title:
cc: French Fragrances, Inc.
M-1-2
<PAGE>
EXHIBIT M-2
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL
PERMANENT REGULATION S SECURITY
TO PERMANENT REGULATION S GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.16 (d)(v) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration--French Fragrances
Re: French Fragrances, Inc.
10 3/8% Senior Notes due 2007
(THE "SECURITIES")
Reference is hereby made to the Indenture, dated as of May 13,
1997 (the "INDENTURE"), between French Fragrances, Inc., as Issuer, and Marine
Midland Bank, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $____ principal amount of Restricted
Securities held in definitive form (CUSIP No. _______ ) by [insert name of
transferor] (the "TRANSFEROR"). The Transferor has requested an exchange or
transfer of such Securities.
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that (i) such Securities are
owned by the Transferor and are being exchanged without transfer or (ii) such
transfer has been effected pursuant to and in accordance with (a) Rule 904 under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), or (b) Rule 144
under the Securities Act, and accordingly the Transferor does hereby further
certify that:
(1) if the transferor has been effected pursuant to Rule
903 or Rule 904:
(A) the offer of the Securities was not made to
a person in the United States;
(B) either:
(i) at the time the buy order was
originated, the transferee was outside the United
States or the Transferor and any person acting
M-2-1
<PAGE>
on its behalf reasonably believed that the transferee
was outside the United States, or
(ii) the transaction was executed in, on or
through the facilities of a designated offshore
securities market and neither the Transferor nor any
person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the
United States;
(C) no directed selling efforts have been made in
contravention of the requirements of Rule 904(b) of Regulation
S, as applicable;
(D) the transaction is not part of a plan or scheme
to evade the registration requirements of the Act; and
(E) if such transfer is to occur during the
Restricted Period, upon completion of the transaction, the
beneficial interest being transferred as described above will
be held with the Depository through [Euroclear] [CEDEL]; or
(2) If the transfer has been effected pursuant to Rule 144:
(A) more than two years has elapsed since the date of
the closing of the initial placement of the Securities
pursuant to the Purchase Agreement; and
(B) the Securities have been transferred in a
transaction permitted by Rule 144 and made in accordance with
any applicable securities laws of any state of the United
States.
M-2-2
<PAGE>
We understand that this certification is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate is or
would be relevant, we irrevocably authorize you to produce this
certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchasers.
Dated: __________________, ___
[Insert Name of Transferor]
By: __________________________
Name:
Title:
cc: French Fragrances, Inc.
M-2-3
<PAGE>
EXHIBIT N
Transferee Letter of Representation
------------, ---
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005
Attention: Corporate Trust Administration--French Fragrances
Re: French Fragrances, Inc.
10 3/8% Senior Notes due 2007
Ladies and Gentlemen:
In connection with our proposed purchase of 10 3/8% Senior
Notes due 2007 (the "Senior Notes") of French Fragrances, Inc. (the "Company"),
we hereby confirm that:
(i) we are an "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
1933, as amended (the "Securities Act"), (an "Institutional
Accredited Investor"), or an entity in which all of the equity
owners are Institutional Accredited Investors;
(ii) any purchase of Senior Notes by us will be for our
own account or for the account of one or more other
Institutional Accredited Investors as to which we exercise
sole investment discretion;
(iii) in the event that we purchase any Senior Notes,
we will acquire such Senior Notes having a minimum purchase
price of at least $100,000 for our own account and for each
separate account for which we are acting;
(iv) we have such knowledge and experience in financial
and business matters that we are capable of evaluating the
merits and risks of purchasing Senior Notes and we and any
accounts for which we are acting are able to bear the economic
risks of our or their investment; and
(v) we are not acquiring the Senior Notes with a view
to any distribution thereof in a transaction that would
violate the Securities Act or the securities laws of any State
of the United States or any other applicable jurisdiction;
provided that the disposition of our property and the property
of any accounts for which we are acting as fiduciary shall
remain at all times within our control.
N-1
<PAGE>
We understand that the Senior Notes have not been registered
under the Securities Act, and we agree, on our own behalf and on behalf of each
account for which we acquire any Senior Notes, that such Senior Notes may be
offered, resold, pledged or otherwise transferred only (i) to a person who we
reasonably believe to be a qualified institutional buyer (as defined in Rule
144A under the Securities Act) in a transaction meeting the requirements of Rule
144A, in a transaction meeting the requirements of Rule 144 under the Securities
Act, outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act, or in accordance with another
exemption from the registration requirements of the Securities Act (and, unless
such transfer occurs in a transaction meeting the requirements of Rule 144A,
based upon an opinion of counsel if the Company so requests), (ii) to the
Company or (iii) pursuant to an effective registration statement under the
Securities Act, and, in each case, in accordance with any applicable securities
laws of any State of the United States or any other applicable jurisdiction. We
understand that the registrar will not be required to accept for registration of
transfer any Senior Notes, except upon presentation of evidence satisfactory to
the Company that the foregoing restrictions on transfer have been complied with.
We further understand that the Senior Notes purchased by us will bear a legend
reflecting the substance of this paragraph. We further agree to provide to any
person acquiring any of the Senior Notes from us a notice advising such person
that resales of the Senior Notes are restricted as stated herein.
N-2
<PAGE>
We acknowledge that you, the Company and others will rely upon
our confirmation, acknowledgments and agreements set forth herein, and we agree
to notify you promptly in writing if any of our representations or warranties
herein cease to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
----------------------------------
(Name of Purchaser)
By:________________________________
Date:______________________________
Upon transfer the Senior Notes would be registered in the name
of the new beneficial owner as follows:
Name: _______________________________
Address: ______________________________
Taxpayer ID Number: ___________________
N-3
<PAGE>
EXHIBIT O
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder
shall bear a legend (which would be in addition to any other legends required in
the case of a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
O-1
- --------------------------------------------------------------------------------
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
Dated as of May 13, 1997
by and among
French Fragrances, Inc.
and
Donaldson, Lufkin & Jenrette Securities Corporation
and
TD Securities (USA) Inc.
- --------------------------------------------------------------------------------
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of May 13, 1997 by and among French Fragrances, Inc., a
Florida corporation (the "COMPANY") and Donaldson, Lufkin & Jenrette Securities
Corporation and TD Securities (USA) Inc. (each an "INITIAL PURCHASER" and,
collectively, the "INITIAL PURCHASERS"), each of whom has agreed to purchase the
Company's 10 3/8% Series A Senior Notes due 2007 (the "SERIES A NOTES") pursuant
to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement,
dated May 6, 1997 (the "PURCHASE AGREEMENT"), by and among the Company and the
Initial Purchasers. In order to induce the Initial Purchasers to purchase the
Series A Notes, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 7 of
the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
ACT: The Securities Act of 1933, as amended.
BUSINESS DAY: Any day except a Saturday, Sunday or other day
in the City of New York, or in the city of the corporate trust office of the
Trustee, on which banks are authorized to close.
BROKER-DEALER: Any broker or dealer registered under the
Exchange Act.
BROKER-DEALER TRANSFER RESTRICTED SECURITIES: Series B Notes
that are acquired by a Broker Dealer in the Exchange Offer in exchange for
Series A Notes that such Broker-Dealer acquired for its own account as a result
of market making activities or other trading activities (other than Series A
Notes acquired directly from the Company or any of its affiliates).
CERTIFICATED SECURITIES: As defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
<PAGE>
CONSUMMATE: An Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Transfer Restricted
Securities tendered by Holders thereof pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Series A Notes, each
Interest Payment Date.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The registration by the Company under the Act
of the Series B Notes pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities for Series B Notes in an aggregate principal
amount equal to the aggregate principal amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration
Statement relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial
Purchasers propose to sell the Series A Notes to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the Act, to
certain "accredited investors," as such term is defined in Rule 501(a)(1), (2),
(3), (5) and (7) of Regulation D under the Act, and to non-U.S. persons whom you
reasonably believe are outside the United States and to whom offers and sales of
the Series A Notes may be made in reliance upon Regulation S under the Act, in
transactions meeting the requirements of Regulation S under the Act.
GLOBAL NOTE: As defined in the Indenture.
HOLDERS: As defined in Section 2 hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated the Closing Date, between the
Company and Marine Midland Bank, as trustee (the "TRUSTEE"), pursuant to which
the Notes are to be issued, as such Indenture is amended or supplemented from
time to time in accordance with the terms thereof.
2
<PAGE>
INTEREST PAYMENT DATE: As defined in the Indenture and the
Notes.
NASD: National Association of Securities Dealers, Inc.
NOTES: The Series A Notes and the Series B Notes.
PERSON: An individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
PROSPECTUS: The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
RECORD HOLDER: With respect to any Damages Payment Date, each
Person who is a Holder of Notes on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the
Company relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) which is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
RESTRICTED BROKER-DEALER: Any Broker-Dealer which holds
Broker-Dealer Transfer Restricted Securities.
SERIES B NOTES: The Company's 10 3/8% Series B Senior Notes
due 2007 to be issued pursuant to the Indenture (i) in the Exchange Offer or
(ii) upon the request of any Holder of Series A Notes covered by a Shelf
Registration Statement, in exchange for such Series A Notes.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Note, until the earliest
to occur of (a) the date on which such Note is exchanged in the Exchange Offer
and entitled to be resold to the public by the Holder thereof without complying
with the prospectus delivery
3
<PAGE>
requirements of the Act, (b) the date on which such Note has been disposed of in
accordance with a Shelf Registration Statement, (c) the date on which such Note
is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including delivery of
the Prospectus contained therein) and (d) the date on which such Note is
distributed to the public pursuant to Rule 144 under the Act.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by
applicable law or Commission policy (after the procedures set forth in Section
6(a)(i) below have been complied with), the Company shall (i) cause to be filed
with the Commission as soon as practicable after the Closing Date, but in no
event later than 30 days after the Closing Date, the Exchange Offer Registration
Statement, (ii) use its reasonable best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but in
no event later than 150 days after the Closing Date, (iii) in connection with
the foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such Exchange Offer
Registration Statement to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the Series B Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of such
Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the Series B Notes to be offered in exchange for the Series A
Notes that are Transfer Restricted Securities and to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers as
contemplated by Section 3(c) below.
(b) The Company shall use its reasonable best efforts to cause
the Exchange Offer Registration Statement to be effective continuously, and
shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws to Consummate
the Exchange Offer; PROVIDED,
4
<PAGE>
HOWEVER, that in no event shall such period be less than 20 Business Days. The
Company shall cause the Exchange Offer to comply with all applicable federal and
state securities laws. No securities other than the Notes shall be included in
the Exchange Offer Registration Statement. The Company shall use its reasonable
best efforts to commence the Exchange Offer on or prior to 30 Business Days
after the Exchange Offer Registration Statement has become effective.
(c) The Company shall include a "Plan of Distribution" section
in the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Restricted Broker-Dealer who holds Series A Notes that
are Transfer Restricted Securities and that were acquired for the account of
such Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Series A Notes (other than Transfer Restricted
Securities acquired directly from the Company or any Affiliate of the Company)
pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be
an "underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of each Series B Note received by such Broker-Dealer in the Exchange Offer,
which prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers that the Commission may require in order
to permit such sales pursuant thereto, but such "Plan of Distribution" shall not
be required to name any such Broker-Dealer or disclose the amount of Notes held
by any such Broker-Dealer, except to the extent required by the Commission as a
result of a change in policy after the date of this Agreement.
The Company shall use its reasonable best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers, and to ensure that such
Registration Statement conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period equal to the shorter of (A) one year from the date on
which the Exchange Offer is Consummated and (B) the date on which all Transfer
Restricted Securities acquired in the Exchange Offer by Restricted
Broker-Dealers have been sold to the public by such Restricted Broker-Dealers.
The Company shall provide sufficient copies of the latest
version of such Prospectus to such Restricted Broker-Dealers promptly upon
request, and in no event later than one day after such request, at any time
during such one-year period in order to facilitate such sales.
5
<PAGE>
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Company is not required to
file an Exchange Offer Registration Statement with respect to the Series B Notes
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a)(i) below have been
complied with) or if (ii) any Holder of Transfer Restricted Securities shall
notify the Company within 20 Business Days following the Consummation of the
Exchange Offer that (A) such Holder was prohibited by law or Commission policy
from participating in the Exchange Offer or (B) such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder or (C) such Holder is a Broker-Dealer and holds Series A Notes acquired
directly from the Company or one of its affiliates, then the Company shall (x)
cause to be filed, on or prior to 30 days after the date on which the Company
determines that it is not required to file the Exchange Offer Registration
Statement pursuant to clause (i) above or 30 days after the date on which the
Company receives the notice specified in clause (ii) above, a shelf registration
statement pursuant to Rule 415 under the Act (which may be an amendment to the
Exchange Offer Registration Statement (in either event, the "SHELF REGISTRATION
STATEMENT")), relating to all Transfer Restricted Securities the Holders of
which shall have provided the information required pursuant to Section 4(b)
hereof, and shall (y) use its reasonable best efforts to cause such Shelf
Registration Statement to become effective on or prior to 150 days after the
date on which the Company becomes obligated to file such Shelf Registration
Statement; provided that if the Company has not consummated the Exchange Offer
within 180 days of the Closing Date, then the Company will file the Shelf
Registration Statement with the Commission on or prior to the 181st date after
the Closing Date. If, after the Company has filed an Exchange Offer Registration
Statement which satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer shall not be permitted under applicable law or
Commission policy, then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above. Such an event
shall have no effect on the requirements of clause (y) above. The Company shall
use its reasonable best efforts to keep the Shelf Registration Statement
discussed in this Section 4(a) continuously effective, supplemented and amended
as required by and subject to the provisions of Sections 6(b) and (c) hereof to
the extent necessary to ensure that it is available for sales of Transfer
Restricted Securities by the Holders thereof entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(d)) following the Closing Date or such shorter period that
will terminate when all the Transfer
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Restricted Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement or are eligible for sale under Rule
144(k) under the Act.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION
WITH THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 days after receipt of a request
therefor, such information specified in Item 507 of Regulation S-K under the Act
for use in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein. No Holder of Transfer Restricted
Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof
unless and until such Holder shall have used its reasonable best efforts to
provide all such information. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) the Company fails to file any Registration Statement
required by this Agreement with the Commission on or prior to the date specified
for such filing in this Agreement, (ii) any such Registration Statement has not
been declared effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement, (iii) the Company fails to Consummate the
Exchange Offer within 30 Business Days after the Exchange Offer Registration
Statement is first declared effective by the Commission, (iv) subject to the
provisions of Section 6(c)(i) below, any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective for a period of one business day without being succeeded immediately
by a post-effective amendment to such Registration Statement that cures such
failure and that is itself declared effective immediately or (v) subject to the
provisions of Section 6(c)(i) below, at any time when a prospectus is required
by the Act to be delivered in connection with sales of the Transfer Restricted
Securities, the Company shall conclude, or the Holders of a majority in
principal amount of the affected Transfer Restricted Securities shall reasonably
conclude, based on the advice of their counsel, and shall give notice to the
Company, that either (A) any event shall have occurred or fact exist as a result
of which it is necessary to amend or supplement the prospectus in order that it
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, or (B) it shall be
necessary to amend or supplement such Registration Statement or a Prospectus in
order to comply with the requirements of the
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Act or the rules of the Commission thereunder, and in the case of clause (A) or
(B), such Registration Statement is not appropriately amended by an effective
post-effective amendment, or the Prospectus is not amended or supplemented, in a
manner reasonably satisfactory to the Holders of Transfer Restricted Securities
so as to be declared effective or made usable within one business day after the
Company shall so conclude or shall receive the above-mentioned notice from
Holders of Transfer Restricted Securities (each such event referred to in
clauses (i) through (v), a "REGISTRATION DEFAULT"), then the Company agrees to
pay liquidated damages to each Holder of Transfer Restricted Securities with
respect to the first 90-day period immediately following the occurrence of such
Registration Default in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 principal
amount of Transfer Restricted Securities. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, (4) upon the filing of a post-effective amendment to the Registration
Statement, or an amendment or supplement to the Prospectus, or an additional
Registration Statement, in each case that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) and (v) above, or (5) once
the Transfer Restricted Securities are eligible for resale under Rule 144(k)
under the Act, the liquidated damages payable with respect to the Transfer
Restricted Securities as a result of such clause (i), (ii), (iii), (iv) or (v),
as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holder of
the Global Note by wire transfer of immediately available funds or by federal
funds check and to Holders of Certificated Securities by mailing checks to their
registered addresses on each Damages Payment Date. All obligations of the
Company set forth in the preceding paragraph that are outstanding with respect
to any Transfer Restricted Security at the time such security ceases to be a
Transfer Restricted Security shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with
the Exchange Offer, the Company shall comply with all applicable provisions of
Section
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6(c) below, shall use its reasonable best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If, following the date hereof there has been
published a change in Commission policy with respect to exchange offers
such as the Exchange Offer, such that in the reasonable opinion of
counsel to the Company there is a substantial question as to whether
the Exchange Offer is permitted by applicable federal law, the Company
hereby agrees to seek a no-action letter or other favorable decision
from the Commission allowing the Company to Consummate an Exchange
Offer for such Series A Notes. The Company hereby agrees to pursue the
issuance of such a decision to the Commission staff level, but shall
not be required to take commercially unreasonable action to effect a
change of Commission policy. In connection with the foregoing, the
Company hereby agrees to take all such other actions as are requested
by the Commission or otherwise required in connection with the issuance
of such decision, including without limitation (A) participating in
telephonic conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded
that such an Exchange Offer should be permitted and (C) diligently
pursuing a resolution (which need not be favorable) by the Commission
staff of such submission.
(ii) As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement, each Holder of
Transfer Restricted Securities shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an affiliate of the Company, (B) it is
not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Series B Notes to be issued in the Exchange Offer
and (C) it is acquiring the Series B Notes in its ordinary course of
business. The Exchange Offer Registration Statement shall disclose that
any Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) may not under Commission policy as in effect on the
date of this Agreement rely on the position of the Commission
enunciated in MORGAN STANLEY AND CO., INC. (available June 5, 1991) and
EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no-action letters (including, if applicable,
any no-action letter obtained pursuant to clause (i) above), and (2)
must
9
<PAGE>
comply with the registration and prospectus delivery requirements
of the Act in connection with a secondary resale transaction and that
such a secondary resale transaction must be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of Series B Notes obtained by such Holder in
exchange for Series A Notes acquired by such Holder directly from the
Company or an affiliate thereof.
(iii) If the Commission requests, prior to
effectiveness of the Exchange Offer Registration Statement, the Company
shall provide a supplemental letter to the Commission (A) stating that
the Company is registering the Exchange Offer in reliance on the
position of the Commission enunciated in EXXON CAPITAL HOLDINGS
CORPORATION (available May 13, 1988), MORGAN STANLEY AND CO., INC.
(available June 5, 1991) and, if applicable, any no-action letter
obtained pursuant to clause (i) above, (B) including a representation
that the Company has not entered into any arrangement or understanding
with any Person to distribute the Series B Notes to be received in the
Exchange Offer and that, to the best of the Company's information and
belief, each Holder participating in the Exchange Offer is acquiring
the Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer and
(C) any other undertaking or representation required by the Commission
as set forth in any no-action letter obtained pursuant to clause (i)
above.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its reasonable best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to Section 4(b)
hereof), and pursuant thereto the Company will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without limitation,
any Exchange Offer Registration Statement and the related Prospectus, to the
extent that the same are required to be available to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the
Company shall:
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<PAGE>
(i) use its reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B) not
to be effective and usable for resale of Transfer Restricted Securities
during the period required by this Agreement, the Company shall give
notice promptly to the underwriter(s), if any, and selling Holders of
the occurrence of such event and file promptly an appropriate amendment
to such Registration Statement, (1) in the case of clause (A),
correcting any such misstatement or omission, and (2) in the case of
clauses (A) and (B), use its reasonable best efforts to cause such
amendment to be declared effective and such Registration Statement and
the related Prospectus to become usable for their intended purpose(s)
as soon as practicable thereafter. Notwithstanding the foregoing, the
Company may suspend the offering and sales under the Exchange Offer
Registration Statement subsequent to the Consummation of the Exchange
Offer or the Shelf Registration Statement for up to 30 days in each
year during which such Exchange Offer Registration Statement is
required to be effective and usable hereunder subsequent to the
Consummation of the Exchange Offer or such Shelf Registration Statement
is required to be effective and usable hereunder (measured from the
date of effectiveness of such Shelf Registration Statement to
successive anniversaries thereof) if (A) either (y)(I) the Company
shall be engaged in a material acquisition or disposition and (II)(aa)
such acquisition or disposition is required to be disclosed in the
Exchange Offer Registration Statement or the Shelf Registration
Statement, the related Prospectus or any amendment or supplement
thereto, or the failure by the Company to disclose such transaction in
the Exchange Offer Registration Statement or the Shelf Registration
Statement or related Prospectus, or any amendment or supplement
thereto, as then amended or supplemented, would cause such Exchange
Offer Registration Statement or Shelf Registration Statement,
Prospectus or amendment or supplement thereto, to contain an untrue
statement of material fact or omit to state a material fact necessary
in order to make the statement therein not misleading, in light of the
circumstances under which they were made, (bb) information regarding
the existence of such acquisition or disposition has not then been
publicly disclosed by or on behalf of the Company and (cc) a majority
of the Board of Directors of the Company determines in the exercise of
its good faith judgment that disclosure of such acquisition or
disposition would not be in the best interest of the Company or would
have a material adverse effect on the consummation of such acquisition
or disposition or (z) a majority of the Board of Directors of the
Company determines in the exercise of its good faith judgment that
compliance with the disclosure obligations set forth in this Section
6(c)(i) would otherwise have a material adverse
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<PAGE>
effect on the Company and its subsidiaries, taken as a whole, and (B)
the Company notifies the Holders within two business days after such
Board of Directors makes the relevant determination set forth in clause
(A); provided, however, that in each such case the applicable period
specified in Section 3 (subsequent to the Consummation of the Exchange
Offer) and Section 4 hereof during which the applicable Exchange Offer
Registration Statement or Shelf Registration Statement is required to
be kept effective and usable shall be extended by the number of days
during which such effectiveness was suspended pursuant to the foregoing
and Liquidated Damages shall not apply during any period the Company is
permitted to suspend offerings and sales under this sentence;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the Registration Statement
as may be necessary to keep the Registration Statement effective for
the applicable period set forth in Section 3 or 4 hereof, or such
shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been sold; cause
the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act, and to comply fully with Rules 424, 430A and 462, as
applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement
to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, confirm such advice
in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or
that requires the making of any additions to
12
<PAGE>
or changes in the Registration Statement in order to make the
statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue
any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(iv) furnish to the Initial Purchasers, each selling
Holder named in any Registration Statement or Prospectus and each of
the underwriter(s) in connection with such sale, if any, before filing
with the Commission, copies of any Registration Statement or any
Prospectus included therein or any amendments or supplements to any
such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review and comment
of such Holders and underwriter(s) in connection with such sale, if
any, for a period of at least five Business Days, and the Company will
not file any such Registration Statement or Prospectus or any amendment
or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which the
selling Holders of the Transfer Restricted Securities covered by such
Registration Statement or the underwriter(s) in connection with such
sale, if any, shall reasonably object within five Business Days after
the receipt thereof;
(v) promptly prior to the filing of any document that
is to be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to the selling Holders and
to the underwriter(s) in connection with such sale, if any, make the
Company's representatives available for discussion of such document and
other customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for
inspection by the selling Holders, any managing underwriter
participating in any disposition pursuant to such Registration
Statement and any attorney or accountant retained by such selling
Holders or any of such underwriter(s), all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries cause the Company's and its subsidiaries' officers,
directors and employees to supply all information reasonably requested
by any such Holder, underwriter, attorney or accountant in connection
with such Registration Statement or any post-effective amendment
thereto subsequent to the filing thereof and prior to its
effectiveness;
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<PAGE>
(vii) if requested by any selling Holders or the
underwriter(s) in connection with such sale, if any, promptly include
in any Registration Statement or Prospectus, pursuant to a supplement
or post-effective amendment if necessary, such information as such
selling Holders and underwriter(s), if any, may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted
Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering
of the Transfer Restricted Securities to be sold in such offering; and
make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Company is
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(viii) furnish to each selling Holder and each of the
underwriter(s) in connection with such sale, if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including, at the
request of such selling Holder and such underwriter(s), exhibits
incorporated therein by reference);
(ix) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company
hereby consents to the use (in accordance with law) of the Prospectus
and any amendment or supplement thereto by each of the selling Holders
and each of the underwriter(s), if any, in connection with the offering
and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(x) enter into such agreements (including an
underwriting agreement) and make such representations and warranties
and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any Registration Statement contemplated by this
Agreement as may be reasonably requested by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or
resale pursuant to any Registration Statement contemplated by this
Agreement, and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
Underwritten Registration, the Company shall:
(A) furnish (or in the case of paragraphs (2) and (3), use its
reasonable best efforts to furnish) to each selling Holder, the
Trustee under the Indenture
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<PAGE>
and each underwriter, if any, upon the effectiveness of the Shelf
Registration Statement and to each Restricted Broker-Dealer upon
Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf of
the Company by (x) the President or any Vice President and (y) a
principal financial or accounting officer of the Company,
confirming, as of the date thereof, the matters set forth in
paragraphs (a) through (d) of Section 7 of the Purchase Agreement
and such other similar matters as the Holders, underwriter(s)
and/or Restricted Broker Dealers may reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company covering
matters similar to those set forth in paragraph (f) of Section 7
of the Purchase Agreement and such other matter as the Holders,
underwriters and/or Restricted Broker Dealers may reasonably
request, and in any event including a statement to the effect that
such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the
independent public accountants for the Company and has considered
the matters required to be stated therein and the statements
contained therein, although such counsel has not independently
verified the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on the basis of
the foregoing (relying as to materiality to a large extent upon
facts provided to such counsel by officers and other
representatives of the Company and without independent check or
verification), no facts came to such counsel's attention that
caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective and, in the case
of the Exchange Offer Registration Statement, as of the date of
Consummation of the Exchange Offer, contained an untrue statement
of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such Registration
Statement as of its date and, in the case of the opinion dated the
date of Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and expresses no
15
<PAGE>
opinion as to, the accuracy, completeness or fairness of the
financial statements, notes and schedules and other financial data
included in any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may be, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 7 of the Purchase Agreement,
without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or
resale pursuant to any Shelf Registration Statement the
indemnification provisions and procedures of Section 8 hereof with
respect to all parties to be indemnified pursuant to said Section;
and
(C) deliver such other documents and certificates as may be
reasonably requested by the selling Holders, the underwriter(s),
if any, and Restricted Broker Dealers, if any, to evidence
compliance with clause (A) above and with any customary conditions
contained in the underwriting agreement or other agreement entered
into by the Company pursuant to this clause (x).
The above shall be done at each closing under such
underwriting or similar agreement, as and to the extent required
thereunder, and if at any time the representations and warranties of the
Company contemplated in (A)(1) above cease to be true and correct, the
Company shall so advise the underwriter(s), if any, the selling Holders and
each Restricted Broker-Dealer promptly and if requested by such Persons,
shall confirm such advice in writing;
(xi) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in connection with
the registration and qualification of the Transfer Restricted
Securities under the securities or Blue Sky laws of such jurisdictions
as the selling Holders or underwriter(s), if any, may request and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the applicable Registration Statement; provided, however,
that the Company shall not be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any
action that would subject it to the service of process in suits or to
taxation, other
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<PAGE>
than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(xii) issue, upon the request of any Holder of Series
A Notes covered by any Shelf Registration Statement contemplated by
this Agreement, Series B Notes having an aggregate principal amount
equal to the aggregate principal amount of Series A Notes surrendered
to the Company by such Holder in exchange therefor or being sold by
such Holder; such Series B Notes to be registered in the name of such
Holder or in the name of the purchaser(s) of such Notes, as the case
may be; in return, the Series A Notes held by such Holder shall be
surrendered to the Company for cancellation;
(xiii) in connection with any sale of Transfer
Restricted Securities that will result in such securities no longer
being Transfer Restricted Securities, cooperate with the selling
Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive
legends; and to register such Transfer Restricted Securities in such
denominations and such names as the Holders or the underwriter(s), if
any, may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
(xiv) use its reasonable best efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriter(s), if any, to consummate
the disposition of such Transfer Restricted Securities, subject to the
proviso contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer
Restricted Securities not later than the effective date of a
Registration Statement covering such Transfer Restricted Securities and
provide the Trustee under the Indenture with printed
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<PAGE>
certificates for the Transfer Restricted Securities which are in a form
eligible for deposit with The Depository Trust Company;
(xvii) cooperate and assist in any filings required
to be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use its reasonable best efforts
to cause such Registration Statement to become effective and approved
by such governmental agencies or authorities as may be necessary to
enable the Holders selling Transfer Restricted Securities to consummate
the disposition of such Transfer Restricted Securities;
(xviii) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and
make generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is
defined in paragraph (c) of Rule 158 under the Act);
(xix) use its reasonable best efforts to cause the
Indenture to be qualified under the TIA not later than the effective
date of the first Registration Statement required by this Agreement
and, in connection therewith, cooperate with the Trustee and the
Holders of Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its reasonable best efforts to
cause the Trustee to execute, all documents that may be required to
effect such changes and all other forms and documents required to be
filed with the Commission to enable such Indenture to be so qualified
in a timely manner; and
(xx) provide promptly to each Holder upon request
each document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition
of a Transfer Restricted Security that, upon receipt of the notice referred to
in Section 6(c)(i) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing by the Company that the use of
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the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (the
"ADVICE"). If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of either such
notice. In the event the Company shall give any such notice, the time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date when
each selling Holder covered by such Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xv) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by any Purchaser or Holder with the NASD (and, if applicable, the
reasonable fees and expenses of any "qualified independent underwriter" and its
counsel that may be required by the rules and regulations of the NASD)); (ii)
all fees and expenses of compliance with federal securities and state Blue Sky
or securities laws; (iii) all expenses of printing (including printing
certificates for the Series B Notes to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company; (v) all application and
filing fees in connection with listing the Notes on a national securities
exchange or automated quotation system pursuant to the requirements hereof; (vi)
all fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance); and (vii) all fees and reasonable
out-of-pocket disbursements of the Trustee and the Exchange Agent, including all
fees and disbursements of counsel for the Trustee and the Exchange Agent.
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company. The Company shall not be responsible for fees and
disbursements of counsel, accountants or any other advisors to any Purchaser or
Holder, underwriting commissions and discounts, brokerage
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commissions, agent fees (other than fees of the Exchange Agent as specified
above) and transfer taxes relating to any Registration Statement filed pursuant
to this Agreement.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each
Holder and (ii) each person, if any, who controls (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) any Holder (any of the persons
referred to in this clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"INDEMNIFIED HOLDER"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by an untrue statement or omission or alleged untrue statement or
omission that is made in reliance upon and in conformity with information
relating to any of the Holders furnished in writing to the Company by any of the
Holders expressly for use therein.
In case any action or proceeding (including any governmental
or regulatory investigation or proceeding) shall be brought or asserted against
any of the Indemnified Holders with respect to which indemnity may be sought
against the Company, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company in
writing (provided that the failure to give such notice shall not relieve the
Company of its obligations pursuant to this Agreement, except to the extent the
Company or any Subsidiary is materially prejudiced by such failure). In case any
such action or proceeding shall be brought or asserted against any of the
Indemnified Holders and such Indemnified Holder shall notify the Company of the
commencement thereof, the Company shall be entitled to participate therein and,
to the extent it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Holder. Such Indemnified Holder
shall have the right to employ its own counsel in any such action and the fees
and expenses of such counsel shall be paid, as incurred, by such Indemnified
Holder, unless (i) the Company has failed promptly to assume the defense and
employ counsel reasonably satisfactory to such Indemnified
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Holder, (ii) the Company has authorized the employment of counsel for the
Indemnified Holder at the expense of the Company, or (iii) the named parties to
any such action or proceeding (including any impleaded parties) include such
Indemnified Holder and the Company and such Indemnified Holder shall have been
advised by counsel that it has reasonably concluded that a conflict of interest
may exist between the Company and such Indemnified Holder in the conduct of the
defense of such action or proceeding. In the case of each of clause (i), (ii),
or (iii) above, the Company shall pay, as incurred, the fees and expenses of
such counsel, regardless of whether it is ultimately determined that an
Indemnified Holder is not entitled to indemnification hereunder. The Company
shall not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for such Indemnified Holders, which
firm shall be designated by the Holders of a majority in principal amount of
Transfer Restricted Securities involved in such action or proceeding. The
Company shall be liable for any settlement of any such action or proceeding
effected with the Company's prior written consent, which consent shall not be
withheld unreasonably, and the Company agrees to indemnify and hold harmless
each Indemnified Holder from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the written
consent of the Company. The Company shall not, without the prior written consent
of each Indemnified Holder, settle or compromise or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action,
claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified Holder is a
party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Holder from all liability
arising out of such action, claim, litigation or proceeding.
(b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Company, and its
respective directors, officers, and any person controlling (within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act) the Company, and the
respective officers, directors, partners, employees, representatives and agents
of each such person, to the same extent as the foregoing indemnity from the
Company to each of the Indemnified Holders, but only with respect to claims and
actions based on information relating to such Holder furnished in writing by
such Holder expressly for use in any Registration Statement. In case any action
or proceeding shall be brought against the Company or its directors or officers
or any such controlling person in respect of which indemnity may be sought
against a Holder of Transfer Restricted Securities, such Holder shall have the
rights and duties given the Company, and the Company, such directors or officers
or such controlling person shall have the rights and duties given to each Holder
by the preceding paragraph.
21
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In no event shall any Holder be liable or responsible for any amount in excess
of the amount by which the total amount received by such Holder with respect to
its sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds the sum of (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Holders, on the other hand, from their sale of
Transfer Restricted Securities or if such allocation is not permitted by
applicable law, the relative fault of the Company, on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and of the Indemnified Holder, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Indemnified Holder and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and each Holder of Transfer Restricted Securities
agree that it would not be just and equitable if contribution pursuant to this
Section 8(c) were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Holder or its related Indemnified Holders shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of its Transfer
Restricted Securities pursuant to a Registration Statement exceeds the sum of
(A) the amount paid by such Holder for such Transfer Restricted Securities and
(B) the amount of any damages which such Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or
22
<PAGE>
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount of
Series A Notes held by each of the Holders hereunder and not joint.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in which
the Company is not subject to Section 13 or 15(d) of the Securities Exchange
Act, to make available, upon request of any Holder of Transfer Restricted
Securities, to any Holder or beneficial owner of Transfer Restricted Securities
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities designated by such Holder or beneficial owner,
the information required by Rule 144A(d)(4) under the Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in customary underwriting
arrangements entered into in connection therewith and (b) completes and executes
all reasonable questionnaires, powers of attorney, and other documents required
under the terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or
investment bankers and manager or managers for any Underwritten Offering that
will administer such offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering. Such investment bankers and managers are referred to herein as
the "underwriters."
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SECTION 12. MISCELLANEOUS
(a) REMEDIES. Each Holder, in addition to being entitled to
exercise all rights provided herein, in the Indenture, the Purchase Agreement or
granted by law, including recovery of liquidated or other damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by them of the provisions of this Agreement and
hereby agree to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not, on or
after the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Company has not
previously entered into any agreement granting any registration rights pursuant
to which the holders of such rights have the right to demand or request that the
Company register the securities held by them as a result of the filing of any
Registration Statement required to be filed hereunder. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) ADJUSTMENTS AFFECTING THE NOTES. The Company will not take
any action, or voluntarily permit any change to occur, with respect to the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case of
Section 5 hereof and this Section 12(d)(i), the Company has obtained the written
consent of Holders of all outstanding Transfer Restricted Securities and (ii) in
the case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
that does not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be given
by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities subject to such Exchange Offer. The Company will promptly
furnish to the Trustee under the Indenture a copy of any amendment, modification
or supplement to this Agreement.
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(e) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the Registrar
under the Indenture; and
(ii) if to the Company:
French Fragrances, Inc.
14100 N.W. 60th Avenue
Miami Lakes, Florida 33014
Telecopier No.: (305) 818-8020
Attention: Oscar E. Marina, Esq.
With a copy to:
Steel Hector & Davis LLP
200 South Biscayne Boulevard
Suite 4000
Miami, Florida 33131-2398
Telecopier No.: (305) 577-7001
Attention: Beatriz Llorens Koltis, Esq.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged, if telecopied; and on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; PROVIDED,
HOWEVER, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the
25
<PAGE>
extent such successor or assign acquired Transfer Restricted Securities directly
from such Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAWS RULES THEREOF.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
FRENCH FRAGRANCES, INC.
By: /s/ Oscar E. Marina
------------------------------------------
Name: Oscar E. Marina
Title: Vice President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ William J.R. Wilson
-------------------------------------------
Name: William J.R. Wilson
Title: Vice President
TD SECURITIES (USA) INC.
By: /s/ Thomas W. Regan, Jr.
--------------------------------------------
Name: Thomas W. Regan, Jr.
Title: Managing Director
27
EXHIBIT 4.3
CREDIT AGREEMENT
AGREEMENT made as of this 13th day of May, 1997, by and among FLEET
NATIONAL BANK, a national banking association organized under the laws of the
United States having a place of business at 111 Westminster Street, Providence,
Rhode Island 02903 ("Fleet"), in its capacity as agent (in the event there is
more than one lender) and as a lender and FRENCH FRAGRANCES, INC., a Florida
corporation, with its principal place of business at 14100 N.W. 60th Avenue,
Miami Lakes, Florida 33014 (together with the predecessor Florida corporation,
the "Borrower").
W I T N E S S E T H:
WHEREAS, Borrower and Lenders have agreed to enter into this Credit
Agreement pursuant to which Lenders will make revolving credit advances and
other extensions of credit to Borrower from time to time subject to the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, Lenders and Borrower
hereby agree as follows:
I. DEFINITIONS
SECTION 1.01. DEFINED TERMS. The following terms used in this Agreement
shall have the following meanings:
"Accounts" shall mean all accounts (as that term is defined in the
Uniform Commercial Code), whether now owned or hereinafter acquired by Borrower
or, for purposes of Section 8.08 hereof, any of its Subsidiaries.
"Advance or Advances" shall mean the individual or aggregate principal
amount advanced by Lenders to Borrower pursuant to Section 2.01 hereof.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person.
"Agent" shall mean Fleet, in its capacity as agent for itself and the
other Lenders as appointed pursuant to the provisions of Article XI of this
Agreement, and its successors in such capacity.
"Agreement" shall mean this Credit Agreement, as the same may be
amended, supplemented, extended and modified from time to time by the execution
and delivery of an Amendment Letter or otherwise in accordance with the terms
hereof.
<PAGE>
"Amendment Letter" shall mean a letter signed by Lenders and agreed to
by Borrower in substantially the form attached hereto as EXHIBIT A, which letter
shall constitute an amendment to this Agreement, the Notes and the Security
Documents, as appropriate.
"Applicable Eurodollar Rate Margin" shall mean,
if the Funded Debt to then the Applicable
Shareholders Equity Base is Eurodollar Rate Margin is:
--------------------------- --------------------------
greater than
2.00 : 1.00 2.25%
less than or equal to
2.00 : 1.00 but greater than
1.50 : 1.00 2.00%
less than or equal
to 1.50 : 1.00 1.75%.
"Applicable Revolving Funded Debt Rate" shall mean the rate of interest
which corresponds to the Funded Debt to Shareholders Equity Base ratio as
follows:
Funded Debt to
Shareholders Equity Base Interest Rate
------------------------ -------------
greater than 2.00:1.00 Prime Rate + .50%
less than or equal to 2.00:1.00 Prime Rate + .25%
but greater than 1.50:1.00
less than or equal to 1.50:1.00 Prime Rate
"Approved Eligible Accounts Receivable" shall mean Eligible Accounts
Receivable which are not Insured Eligible Accounts Receivable and which are owed
by an account debtor listed on SCHEDULE 1.01(A) to this Agreement. The list of
account debtors may be updated from time to time by Agent without Borrower's
consent in its sole discretion upon Agent's delivery to Borrower of a writing
signed by Agent or a new SCHEDULE 1.01(A), signed at the bottom by Agent.
"Basic Eurodollar Rate" shall mean, for any Interest Period, the rate
of interest per annum determined by Agent (fixed through such Interest Period
(subject to adjustments for the Eurodollar Rate Reserve Percentage), and rounded
upwards, if necessary, to the next 1/16 of 1%) which is equal to the quotient of
(i) either (a) the rate of interest at which Dollar deposits are offered in the
London interbank market in an amount approximately equal to the principal of
such Eurodollar Loan for a period of time equal to such Interest Period as such
rate appears on
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the Telerate Page 3750 as of 11:00 a.m. London time two (2) Business Days prior
to the Business Day on which such Interest Period begins, or (b) if no such rate
appears on the Telerate Page 3750, the rate of interest determined by Agent to
be the average of up to four interest rates per annum at which Dollar deposits
are offered in the London interbank market in an amount approximately equal to
the principal amount of such Eurodollar Loan, for a period of time equal to such
Interest Period as such rates appear on the Reuter's Screen LIBO Page as of
11:00 a.m. London time two (2) Business Days prior to the Business Day on which
such Interest Period begins so long as at least two such offered rates so appear
on the Reuter's Screen LIBO Page, or (c) if two such offered rates do not appear
on the Reuter's Screen LIBO Page, the rate of interest determined by Agent to be
the interest rate per annum at which Dollar deposits are offered to the Agent by
first-class banks in the London interbank market at approximately 11:00 a.m.,
London time, two (2) Business Days prior to the Business Day on which such
Interest Period begins in an amount approximately equal to the principal amount
of such Eurodollar Loan for a period of time equal to such Interest Period and
(ii) a number equal to the number one minus the Eurodollar Rate Reserve
Percentage. The Basic Eurodollar Rate shall be adjusted automatically on and as
of the effective date of any change in the Eurodollar Rate Reserve Percentage.
"Bonus Pool" shall mean bonuses paid to employees, officers and/or
directors as approved by the Board of Directors of the Borrower from time to
time in an amount not to exceed six percent (6%) of the Borrower's pre-tax
profits in any fiscal year.
"Borrowed Money" shall mean, with respect to any Person, all
Indebtedness of such Person representing borrowed money, including, without
limitation, (i) any Indebtedness evidenced by notes, bonds, debentures or
similar obligations, (ii) any Indebtedness representing any obligation for the
deferred purchase price of property or services or an obligation under a
conditional sale or other title retention agreement, (iii) any Indebtedness
representing Capitalized Lease Obligations and (iv) any Indebtedness
representing a reimbursement obligation for any letter of credit or with respect
to any performance bond.
"Borrower" shall mean French Fragrances, Inc., a Florida corporation,
and its successors and assigns to the extent permitted hereunder.
"Borrower Security Agreement" shall mean the Security Agreement, in
such form as Agent shall reasonably require, pursuant to which Borrower grants
to Agent for the ratable benefit of Lenders and to Lenders security interests in
Borrower's Accounts and Inventory.
"Borrowing Base" shall mean, as of any date, the sum of, without
duplication, (i) eighty-five percent (85%) of Insured Eligible Accounts
Receivable determined as of such date, PLUS (ii) eighty-five percent (85%) of
Approved Eligible Accounts Receivable determined as of such date, PLUS, (iii)
eighty percent (80%) of Eligible Accounts Receivable (other than Insured
Eligible Accounts Receivable or Approved Eligible Accounts Receivable)
determined as of such date, PLUS (iv) fifty percent (50%) of Eligible In-House
Inventory; provided that the portion of the Borrowing Base derived from clause
(iv) shall be capped at Twenty Million Dollars ($20,000,000), and provided
further there shall be a reserve against total Eligible In-House Inventory of
One Million Two Hundred Thousand Dollars ($1,200,000). The
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<PAGE>
foregoing definition of "Borrowing Base", including the respective percentages
set forth therein, may be amended from time to time by the execution and
delivery of an Amendment Letter or other written instrument executed by Borrower
and Lenders.
"Borrowing Base Certificate" shall mean a certificate of the chief
financial officer of Borrower, in the form attached hereto as EXHIBIT B having
the blanks therein appropriately completed, setting forth in reasonable detail
Eligible Accounts Receivable, Eligible In House Inventory and Eligible Inventory
as of the last day of the preceding month.
"Borrowing Date" shall mean the date an Advance is made to Borrower
pursuant to a Request for Advance.
"Business Day" shall mean any day except a Saturday, Sunday or other
day on which commercial banks in Providence, Rhode Island or London, England are
authorized or required to close.
"Capital Base" shall mean, with respect to any Person, as at any date,
the stockholders' equity of such Person as of such date as determined in
accordance with GAAP, PLUS with respect to the Borrower the principal amount
outstanding under the Subordinated Debentures.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures of such Person for assets which are or should be capitalized, and
the fair value of any assets leased by such Person under any leases which would
be capitalized, under GAAP.
"Capitalized Lease" shall mean any lease which is or should be
capitalized on the balance sheet of the lessee thereunder in accordance with
GAAP.
"Capital Stock" shall mean any and all shares, interests, rights to
purchase, participations or other equivalents of or interests in (however
designated) corporate stock.
"Capitalized Lease Obligations" shall mean, with respect to any Person,
the amount of the liability under all Capitalized Leases of such Person as at
any date, determined in accordance with GAAP.
"Chief Operating Officer Compensation Agreement" shall mean that
certain Chief Operating Officer Compensation Agreement dated as of April 1, 1997
between E.S.B. Consultants, Inc. and Borrower.
"Closing Date" shall mean the effective date on which all of the
conditions precedent to the transactions contemplated pursuant to this Agreement
set forth in Article 6 hereof have been satisfied to Lenders' satisfaction.
"CMLTD" shall mean, with respect to any Person for any fiscal period,
all regularly scheduled principal payments for Borrowed Money in accordance with
GAAP.
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"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder, as the same may from time to
time be amended and remain in effect.
"Collateral" shall mean (a) all Inventory, whether now owned or
hereafter acquired, (b) all Accounts, whether now owned or hereafter acquired,
or in which the Borrower (or for purposes of Section 8.08, its Subsidiaries),
may now have or hereafter acquire an interest; (c) all accessions, additions or
improvements to, all replacements, substitutions and parts for, and all proceeds
and products of, all of the foregoing; and (d) all books, records and documents
relating to all of the foregoing.
"Commitment Share" shall mean with respect to the Revolving Credit
Commitment, each Lender's percentage share of the Revolving Credit Commitment,
as set forth opposite such Lender's name on SCHEDULE 1.01(B) attached hereto, as
amended from time to time.
"Commonly Controlled Entity" shall mean any Person (including any
Subsidiary), whether or not incorporated, which is under common control with
Borrower within the meaning of section 414(b) or (c) of the Code.
"Current Assets" shall mean, with respect to any Person, as of any
date, the current assets of such Person as determined in accordance with GAAP.
"Current Liabilities" shall mean, with respect to any Person, as of any
date, the current liabilities of such Person as determined in accordance with
GAAP.
"Delinquent Lender" shall mean any Lender which fails to make available
to Agent such Lender's Commitment Share of any Advance requested or deemed to be
requested by Borrower in accordance with such Lender's obligations under this
Agreement or any Lender which gives Agent written notice that it will not fund
any requested Advance in accordance with such Lender's obligations under this
Agreement after the date of such notice.
"Dollars" and the sign "$" shall mean lawful money of the United States
of America.
"EBITDA" shall mean, with respect to any Person for any period, pre-tax
income (or loss) of such Person for such period, PLUS (i) the sum of (a)
Interest Expense, (b) depreciation, amortization and other non-cash charges, (c)
losses on asset sales, exchanges, transfers or other dispositions, and (d)
extraordinary or other unusual losses or charges, LESS (ii) the sum of (a) gains
on asset sales, exchanges, transfers or other dispositions, (b) extraordinary or
other unusual gains or credits, and (c) income attributable to non-cash items or
other non-cash credits, in each case to the extent included in arriving at such
pre-tax income (or loss) for such period and determined in accordance with GAAP.
"Eligible Accounts Receivable" shall mean the face amount of such of
any of Borrower's trade accounts receivable for goods sold and/or services
rendered by Borrower in the ordinary
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course of its business which satisfy each of the following requirements (unless
waived by Lenders):
(i) the subject goods have been shipped or delivered to an
account debtor (a) on an absolute sale basis and not on consignment,
approval or a sale-or-return basis or subject to any other repurchase
or return agreement, or (b) on an open account basis, in either case
with no part of the subject goods having been returned, rejected, lost
or damaged; PROVIDED, HOWEVER, that if a part of the subject goods have
been returned, rejected, lost or damaged, and Majority Lenders
determine in their sole discretion that such return, rejection, loss or
damage will not affect the likelihood of payment by the account debtor
for the remaining subject goods, the face amount of the account for
such subject goods, less an amount which in the opinion of Majority
Lenders reflect the value of such returned, rejected, lost or damaged
goods, may be included in the computation of Eligible Accounts
Receivable (subject to the other requirements set forth below);
(ii) the account is not evidenced by chattel paper or an
instrument of any kind;
(iii) the account debtor is not insolvent or the subject of
any bankruptcy or insolvency proceeding of any kind;
(iv) the account debtor is located in the United States;
(v) it is a valid, legally enforceable obligation of the
account debtor thereunder and is not subject to any offset (other than
discount for prompt payment consistent with past practices of Borrower)
or other defense on the part of such account debtor or to any claim on
the part of such account debtor denying liability thereunder;
(vi) it is subject to no lien or security interest whatsoever,
except for the security interest of the Agent and the Lenders under the
Security Documents and liens permitted by Section 8.02 hereof;
(vii) it has not remained unpaid for a period exceeding ninety
(90) days after the date of invoice;
(viii) to the extent the obligation is with an account debtor
that is the federal government or a political subdivision thereof and
Borrower has complied with the Federal Assignment of Claim Acts of
1940, and any amendment thereto, with respect to such obligation.
(ix) it does not arise out of a transaction with any Affiliate
of Borrower or any Related Person;
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(x) no more than fifty percent (50%) of the accounts
receivable for the same account debtor shall have remained unpaid for a
period exceeding ninety (90) days after the date of invoice; and
(xi) it is not otherwise determined by Majority Lenders to be
difficult to collect, uncollectible or otherwise unacceptable for any
reason, irrespective of how many days past due, as reasonably
determined by Majority Lenders, which determination shall be final and
binding.
"Eligible In-House Inventory" shall mean Eligible Inventory which as of
the date of determination (a) is located on premises described in SCHEDULE 5.15,
(b) is stored with Majority Lenders' prior written consent with a bailee,
warehouseman or similar party so long as Agent has received from such bailee,
warehouseman or similar party warehouse receipts therefor in Agent's name for
the ratable benefit of Lenders and Lenders and in form and substance
satisfactory to Majority Lenders, or (c) is located at such other in-house
location as shall be approved by Majority Lenders in writing from time to time.
"Eligible Inventory" shall mean the lower of fair market value or cost
of Borrower's inventory of raw materials, work-in-process and finished goods
determined on a consolidated FIFO basis in accordance with GAAP which, as of the
day preceding any calculation of the Revolving Credit Commitment, is in good
condition, meets all standards imposed by any governmental agency or department
or division thereof having regulatory authority over such goods, their use,
manufacture and/or sale, is currently usable or currently saleable in the normal
course of the Borrower's business, is not on consignment to or from any Person
and is not otherwise deemed by the Majority Lenders in their reasonable
discretion to be ineligible.
"Employment Agreement" shall mean that certain Employment Agreement
dated April 1, 1997 between Borrower and Rafael Kravec.
"Environmental Laws" shall mean any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
and the rules and regulations promulgated thereunder, as the same may from time
to time be amended and remain in effect.
"Event of Default" shall have the meaning given to such term in Article
IX hereof.
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"Eurodollar" shall mean deposits of Dollars in an international
banking facility.
"Eurodollar Loan" shall mean all or any portion of the Advances bearing
interest at the applicable Eurodollar Rate designated for the Advances.
"Eurodollar Rate" shall mean the rate of interest per annum equal to
the Basic Eurodollar Rate as in effect from time to time PLUS the Applicable
Eurodollar Rate Margin, in each case fixed for the Interest Period in question
(subject to adjustment, however, as a result of any change in the Basic
Eurodollar Rate based upon a change in the Eurodollar Rate Reserve Percentage).
"Eurodollar Rate Reserve Percentage" shall mean, with respect to any
Interest Period, the maximum effective rate (expressed as a decimal) of the
statutory reserve requirements (without duplication, but including, without
limitation, basic, supplemental, marginal and emergency reserves then in effect)
determined by the Agent from time to time to be applicable to the Agent when
making a Basic Eurodollar Rate determination for such Interest Period, or which
in any other respect relate directly to the funding of Eurodollar Loans, under
regulations of the Board of Governors of the Federal Reserve System (or any
successor), including without limitation Regulation D or any other regulation
dealing with maximum reserve requirements which are applicable to the Agent with
respect to its "Eurocurrency Liabilities," as that term may be defined from time
to time by the Board of Governors of the Federal Reserve System (or any
successor).
"Fine Fragrances" shall mean Fine Fragrances, Inc., a Delaware
corporation and a wholly owned subsidiary of Borrower .
"First Mortgage" shall mean a mortgage granting a first priority
interest in the Headquarter's Location, as security for the Mortgage
Indebtedness.
"Floating Rate Loan" shall mean all or any portion of the Advances
bearing interest at the Applicable Revolving Funded Debt Rate.
"FMG" shall mean Fragrance Marketing Group, Inc., a Florida
corporation.
"FMG Consulting Agreement" shall mean that certain Consulting Agreement
dated as of May 10, 1996 between the Borrower and Rene A. Garcia.
"FMG Subordinated Debentures" shall mean those certain 8.5% Junior
Subordinated Debentures due 2004 and in the original principal amount of
$7,100,034.
"FRM Services" shall mean FRM Services, Inc., a Delaware corporation
and wholly-owned subsidiary of Borrower.
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<PAGE>
"Funded Debt" shall mean, as of the date of any determination thereof,
the total of all Indebtedness of Borrower including, without limitation, the
Public Debt, the Subordinated Debentures, the Loans and the Mortgage
Indebtedness, but excluding the Halston Royalty Note.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"G.B. Parfums" shall mean G.B. Parfums, Inc., a Delaware corporation
and wholly owned subsidiary of Borrower.
"G.B. Sublicense Agreement" shall mean that certain Sublicense
Agreement dated April 1, 1995 between Borrower and G.B. Parfums.
"Halston" shall mean Halston Parfums, Inc., a Delaware corporation and
wholly-owned subsidiary of the Borrower.
"Halston License Agreement" shall mean that certain License Agreement
dated as of March 21, 1996 between Borrower and Halston.
"Halston Royalty Note" shall mean that certain $2,000,000 promissory
note of Borrower in favor of Halston Borghese, Inc.
"Headquarter's Location" shall mean the real property owned by Borrower
located at 14100 N.W. 60th Avenue, Miami Lakes, Florida 33014.
"Heller" shall mean Heller Financial, Inc.
"Heller Factoring Agreement" shall mean that certain Accounts Credit
and Servicing Agreement dated July 13, 1993, among Borrower and Heller.
"Heller Intercreditor Agreement" shall mean that certain letter
agreement dated July 8, 1993 among Fleet, Borrower and Heller.
"Indebtedness" shall mean, with respect to any Person, all items which
in accordance with GAAP should be included as liabilities on the balance sheet
of such Person as at the date as of which Indebtedness is to be determined, and,
in any event, shall include the following, without limitation or duplication:
(a) all Borrowed Money of such Person (b) all obligations secured by any
mortgage, pledge, lien or conditional sale or other title retention agreement to
which any property or asset owned or held by such Person is subject, whether or
not the obligations secured thereby shall have been assumed, (c) all obligations
of others which such Person has directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business),
discounted or sold with recourse or agreed (contingently or otherwise) to
purchase or repurchase or otherwise acquire, or in respect of which such Person
has agreed to supply or advance funds (whether by way of loan, stock purchase,
capital contribution or otherwise) or otherwise to become directly or indirectly
liable, and (d) all obligations with respect to any letters
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of credit issued on behalf of such Person to any beneficiary or with respect
to which such Person has any reimbursement obligations.
"Insured Eligible Accounts Receivable" shall mean Eligible Accounts
Receivable, the collection of which is fully insured by Heller pursuant to the
Heller Factoring Agreement or other factor reasonably satisfactory to Agent such
other agreement which, as of the date of determination of Insured Eligible
Accounts Receivable, is in full force and effect, such agreement to be
reasonably satisfactory to Agent. For the purposes of this definition, "Eligible
Accounts Receivable" shall include accounts with an account debtor that is the
federal government or a political subdivision thereof, although Borrower may not
have complied with the Federal Assignment of Claims Acts of 1940, or any
amendment thereto, with respect to such obligation. Any such Insured Eligible
Account Receivable shall be an "Approved Account" under the Heller Factoring
Agreement or shall be otherwise approved by such other factor under its
operative agreement, and shall be included in the Borrowing Base only (i) to the
extent of the amount thereof approved by Heller or other factor and (ii) so long
as all or any portion thereof is not subject to return or reassignment under the
Heller Factoring Agreement or any such other operative agreement, in each case
as of the date of determining the Borrowing Base.
"Interest Adjustment Date" shall mean (i) as to any Floating Rate Loan,
the Business Day elected by the Borrower in its applicable Interest Rate
Election as the Business Day on which such Floating Rate Loan is to convert to a
Eurodollar Loan; PROVIDED, HOWEVER, that such Business Day shall be at least two
(2) Business Days after receipt by the Agent of an Interest Rate Election
changing the interest rate on such Floating Rate Loan to the Eurodollar Rate in
accordance with Section 3.01 hereof, and (ii) as to any Eurodollar Loan, 12:00
Noon (Providence, Rhode Island time) on the last Business Day of the Interest
Period pertaining to such Eurodollar Loan.
"Interest Expense" shall mean, with respect to any Person, for any
fiscal period, the interest expense of such Person and its Subsidiaries for such
fiscal period, determined on a consolidated basis in accordance with GAAP.
"Interest Period" shall mean, with respect to any Eurodollar Loan, each
one (1), two (2), three (3) or six (6) month period of a Eurodollar Loan
selected by the Borrower in its Interest Rate Election and commencing on (i) the
Borrowing Date for such Eurodollar Loan, (ii) the Interest Adjustment Date for
the immediately preceding Interest Period applicable to any Eurodollar Loan
continuing as a Eurodollar Loan or (iii) the Interest Adjustment Date applicable
to any Floating Rate Loan changing to a Eurodollar Loan, as the case may be;
PROVIDED, HOWEVER, that (x) any Interest Period (other than an Interest Period
determined pursuant to clause (z) below) which would otherwise end on a day
which is not a Business Day shall be extended to the next Business Day unless
such Business Day falls in another calendar month, in which case such Interest
Period shall end on the immediately preceding Business Day; (y) any Interest
Period which begins on the last Business Day of the calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall, subject to clause (z) below, end on the last
Business Day of a calendar month; and (z) no Interest Period for Advances shall
end after the Revolving Credit Maturity Date.
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"Interest Rate Election" shall mean an irrevocable notice to the Agent
by an authorized officer of the Borrower given in accordance with Section 3.01
hereof that the Eurodollar Rate or the Applicable Revolving Funded Debt Rate
shall apply or continue to apply to all or any portion of the Advances with any
such written notice or confirmation of telephonic notice to be in the form of
EXHIBIT C attached hereto, with all blanks therein appropriately completed.
- - "Inventory" shall mean all inventory (as that term is defined in the Uniform
Commercial Code), whether now owned or hereinafter acquired by Borrower or, for
purposes of Section 8.08 hereof, any of its Subsidiaries
"Lease" shall mean that certain Lease dated July 2, 1992 between NTM
and Borrower covering the premises at 15595 N.W. 15th Avenue, Miami, Florida.
"Lender" or "Lenders" shall mean Fleet together with any other bank or
financial institution which becomes a party to this Agreement.
"Letters of Credit" shall mean any commercial letter of credit
(commercial or standby) issued by Agent pursuant to the terms hereof and
pursuant to the Letter of Credit Application.
"Letter of Credit Application" shall mean that certain Application and
Agreement for Commercial Letter of Credit dated as of March 14, 1996, as the
same may be amended, supplemented, altered or modified from time to time
hereafter and any other letter of credit applications required by Agent in
connection with the issuance of any Letters of Credit.
"Letter of Credit Documents" shall mean the Letter of Credit
Application, any issued Letter of Credit and any other application or agreement
in the form customarily used by Agent for or in connection with the issuance of
commercial letters of credit.
"Letter of Credit Reimbursement Obligations" shall mean any and all
obligations of the Borrower under the Letter of Credit Documents to reimburse
the issuer upon the occurrence of any draw under any Letter of Credit.
"Loans" shall mean the Advances and the issuance of Letters of Credit
and any other loans or advances made by Lenders from time to time.
"Loans Outstanding" shall mean, with respect to any Lender, the sum of
(x) the aggregate outstanding principal amount of Loans made by such Lender to
Borrower, PLUS (y) the stated undrawn amount of any outstanding Letter of Credit
issued by such Lender (or its risk participation thereon, as the case may be),
PLUS (z) the aggregate amount of unpaid Letter of Credit Reimbursement
Obligations due to such Lender (or its risk participation therein, as the case
may be).
"Majority Lenders" shall mean those Lenders whose hold sixty-six and
two-thirds percent (66-2/3%) or more of the Revolving Credit Commitment.
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"Mortgage Indebtedness" shall mean a mortgage loan in the original
principal amount of $6,000,000 to Borrower from Westmark Commercial Mortgage
Fund II.
"Multiemployer Plan" means a multiemployer plan as defined in Title IV
of ERISA.
"Notes" shall mean collectively, the Revolving Credit Notes issued
hereunder, each as may be amended, supplemented, extended and modified from time
to time in accordance with the terms hereof.
"NTM" shall mean National Trading Manufacturing, Inc., a Florida
corporation.
"Operating Cash Flow" shall mean, with respect to any Person for any
fiscal period, the net income of such Person and its Subsidiaries (after
provision for income taxes) for such fiscal period, PLUS Interest Expense paid
or accrued on all interest-bearing obligations of Borrower and its Subsidiaries
and MINUS interest income and dividends earned during such fiscal period, PLUS
any income taxes paid, accrued or deferred and MINUS any income tax credits
received or accrued for such fiscal period, PLUS any losses and MINUS any gains
of such Person and its Subsidiaries attributable to dispositions of assets
during such fiscal period, PLUS any other extraordinary losses or charges and
MINUS any other extraordinary gains or credits of such Person and its
Subsidiaries for such fiscal period, all determined on a consolidated basis in
accordance with GAAP.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, partnership, joint
venture, trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Plan" shall mean an employee benefit plan as defined in Section 3 of
ERISA maintained for employees of Borrower or any Commonly Controlled Entity.
"Prime Rate" shall mean the floating rate of interest designated by
Agent from time to time as being its "prime rate" of interest.
"Public Debt" shall mean those $115,000,000 10-3/8% Senior Notes Due
2007 of the Borrower issued on May 13, 1997, including any and all Subsidiary
guarantees issued from time to time in respect thereof.
"Public Offering" shall mean the sale by Borrower of equity securities
of Borrower to the public pursuant to an offering registered under the
Securities Act of 1933, as amended.
"Purchase-Money Indebtedness" shall mean, with respect to any Person,
Indebtedness of such Person incurred to acquire assets in the ordinary course of
such Person's business, which Indebtedness is secured by purchase-money liens or
other liens of a conditional vendor; provided, however, that the Indebtedness
secured thereby shall not exceed the cost thereof and
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PROVIDED FURTHER that such Indebtedness shall not otherwise be prohibited by
the terms of this Agreement.
"Related Person" shall mean, with respect to any Person, any director,
executive officer, partner or stockholder of such Person, and any spouse,
brother, sister, child or parent of such director, executive officer, partner or
stockholder.
"Reportable Event" shall have the meaning assigned to that term in
Title IV of ERISA, but shall exclude events the reporting of which is waived
under regulations promulgated under Title IV of ERISA.
"Request for Advance" shall mean Borrower's telephonic or written
request for an Advance, any such written request to be substantially in the form
of EXHIBIT C attached hereto and made a part hereof, appropriately completed and
signed by a duly authorized officer of Borrower. Each such request shall
indicate the Borrowing Date and the amount of the Advance requested.
"Reuter's Screen LIBO Page" means the display designated as Page "LIBO"
on the Reuters Monitor Money Rate Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Revolving Credit Commitment" shall mean the aggregate maximum
principal amount of the commitment of Lenders to make Advances under the
Revolving Credit Facility from time to time as set forth in Section 2.03 hereof,
as such maximum amount is adjusted from time to time in accordance with Section
2.03 hereof.
"Revolving Credit Facility" shall mean the Forty Million Dollars
($40,000,000) revolving credit facility available to the Borrower pursuant to
the provisions of Article II hereof and subject to the other terms and
conditions of this Agreement.
"Revolving Credit Maturity Date" shall mean May 31, 1999, as extended
from time to time by the execution and delivery of an Amendment Letter or other
written instrument executed and delivered by Lenders Agent hereunder.
"Revolving Credit Note" or "Revolving Credit Notes" shall mean the
secured revolving credit notes of Borrower issued to Lenders in the aggregate
principal amount not to exceed Forty Million Dollars ($40,000,000) and
substantially in the form attached hereto as EXHIBIT D, which promissory notes
evidence the obligations of Borrower to repay Lenders the Advances made by
Lenders under the Revolving Credit Facility, which notes are hereby incorporated
herein by reference and made a part hereof, as such Revolving Credit Notes may
be amended, extended or renewed from time to time by the execution and delivery
of an Amendment Letter or other written instrument executed and delivered by
Lenders hereunder.
"Security Documents" shall mean all of the documents and instruments
described in Section 4.02 hereof providing security for Agent for the ratable
benefit of Lenders and Lenders
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for the Notes, the Letters of Credit and for all fees and other sums due under
this Agreement and the Security Documents, as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof.
"7.5% Convertible Debentures" shall mean 7.5% Subordinated Convertible
Debentures Due 2006 issued by the Borrower.
"Shareholders Equity Base" shall mean, with respect to any Person, as
at any date, the stockholders' equity of such Person as of such date as
determined in accordance with GAAP.
"Single Employer Plan" shall mean any Plan which is not a Multiemployer
Plan.
"Subordinated Creditors" shall mean the holders of the Subordinated
Debentures.
"Subordinated Debentures" shall mean FMG Subordinated Debentures and
the 7.5% Convertible Debentures.
"Subsidiary" shall mean collectively, G.B. Parfums, Halston, Fine
Fragrances, FRM Services and any other corporation or other entity of which the
Capital Stock or other ownership interests having voting power to elect a
majority of the board of directors or other persons performing similar functions
is owned by (i) the Borrower, (ii) the Borrower and one or more of its
Subsidiaries or (iii) one or more Subsidiaries of the Borrower.
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank offered
rates for U.S. dollar deposits).
"Transaction Documents" shall mean this Agreement, the Notes, the
Security Documents, and any and all other agreements, documents and instruments
executed or delivered in connection herewith or therewith to which Lenders are a
party or which is issued in its favor pursuant to the terms hereof or thereof.
SECTION 1.02. CONSTRUCTION OF CERTAIN TERMS.
(a) The term "Consolidated", when used with reference to any term
defined herein, shall mean that term as applied to the accounts of a Person and
all of its Subsidiaries, or such of its Subsidiaries as may be specified, which
should be consolidated in accordance with GAAP, with appropriate deductions for
minority interests in Subsidiaries.
(b) Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made,
and, except as provided in the proviso of the succeeding sentence, all financial
statements required to be delivered hereunder shall be prepared, in accordance
with GAAP as in effect at the time of such preparation. In the event that
changes in GAAP accounting principles occur and such changes
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result in a change in the method of calculation of financial covenants,
standards or terms in this Agreement, the parties agree to negotiate in good
faith to amend such provisions of this Agreement as shall be necessary to
equitably take into account such change with the desired result that the
criteria for evaluating Borrower.
II. GENERAL TERMS OF REVOLVING CREDIT FACILITY
SECTION 2.01. ADVANCES UNDER THE REVOLVING CREDIT FACILITY.
(a) Subject to the terms and conditions contained in this Agreement,
from time to time from the Closing Date to and including the Business Day
preceding the Revolving Credit Maturity Date, each Lender severally and not
jointly agrees to loan to Borrower such Lender's Commitment Share of Advances as
may be requested by Borrower under the Revolving Credit Facility in accordance
with the terms hereof; PROVIDED, HOWEVER, in no event shall the aggregate amount
of Advances outstanding exceed at any time the Revolving Credit Commitment as in
effect at such time. Borrower and each Lender acknowledges that each such
Lender's Revolving Credit Commitment shall be the percentage set forth on
SCHEDULE 1.01(B) hereto. Each Advance shall be in an amount of at least Fifty
Thousand Dollars ($50,000), or, if a greater amount, in integral multiples of
Fifty Thousand Dollars ($50,000). From the Closing Date to and including the
Business Day preceding the Revolving Credit Maturity Date and within the
Revolving Credit Commitment limits, Borrower may borrow, prepay (subject to
Section 2.06 and Section 3.02 hereof) and reborrow under this Section 2.01 by
submitting to Agent a Request for Advance or by telephonic notice to Agent
confirmed by a Request for Advance telecopied to Agent on the same day as such
telephonic notice is given. Each Request for Advance or telephonic notice
thereof shall be delivered or given by Borrower to Agent at least one (1)
Business Day prior to the Borrowing Date. Lenders shall not be obligated to make
any Advance if after giving effect to the making of such Advance, the aggregate
amount of Advances outstanding would exceed the Revolving Credit Commitment as
then in effect; PROVIDED, HOWEVER, a Lender may make an Advance which causes the
aggregate amount of Advances outstanding under such Lender's Revolving Credit
Note to exceed its Commitment Share to the extent a Delinquent Lender has failed
to make available to Agent its Commitment Share of any Advance requested or
deemed to be requested by Borrower in accordance with such Delinquent Lender's
obligations under this Agreement, but only if such Lender shall have determined
in its sole discretion that such Advance satisfies the credit standards of such
Lender and the aggregate amount of Advances outstanding would not exceed the
Revolving Credit Commitment as then in effect.
(b) Agent shall telephone each Lender promptly upon receipt of a Request
for Advance under the Revolving Credit Facility, and shall telex or telecopy
copies thereof to each Lender, within one (1) Business Day of such telephonic
communication. Subject to the other provisions of this Section 2.01, not later
than 11:00 A.M. (Providence, Rhode Island time) on the Borrowing Date specified
in such notice, each Lender shall make available to Agent, in immediately
available funds, at Agent's office at 111 Westminster Street, Providence, Rhode
Island 02903, such Lender's Commitment Share of the requested Advance. Upon
receipt by Agent of the funds contemplated by this paragraph (b), and upon
satisfaction of the conditions set forth in Article VI hereof as determined in
good faith by Agent, Agent shall promptly disburse such funds to
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Borrower. Should any Lender fail to make its Commitment Share of the requested
Advance available at the office of Agent prior to 11:00 A.M. (Providence, Rhode
Island time) on the Borrowing Date specified in the notice to such Lender, such
default shall not affect the obligation of the other Lenders to make available
their respective Commitment Shares of the requested Advance, Agent shall notify
Borrower of such default and Agent may, but shall not be obligated to, advance
to Borrower on such Lender's behalf, out of funds otherwise available to Agent,
such Lender's Commitment Share of such Advance, or a portion thereof; PROVIDED,
HOWEVER, Agent shall not be authorized to make any such advance on behalf of any
such Lender if prior to 11:00 A.M. (Providence, Rhode Island time) on such
Borrowing Date, Agent shall have received a written instrument signed by a duly
authorized officer of such Lender revoking Agent's authority hereunder or
stating that such Lender's Commitment Share is not required to be advanced
pursuant to this Section 2.01. If Agent advances such Lender's Commitment Share
of such Advance or a portion thereof as permitted hereby, Agent shall notify the
Delinquent Lender of such funding by Agent on the date of funding and such
Lender shall reimburse Agent in full therefor within one (1) Business Day after
the date of such Advance, together with interest on the principal amount so
advanced by Agent at a rate per annum equal to the interest rate payable by
Borrower from time to time on such Advance or portion thereof while it is
outstanding.
SECTION 2.02. REVOLVING CREDIT NOTES.
The Advances made by Lenders pursuant to Section 2.01 hereof shall be
evidenced by the Revolving Credit Notes issued by Borrower to the order of
Lenders in the original principal amount of Forty Million Dollars ($40,000,000).
SECTION 2.03. THE REVOLVING CREDIT COMMITMENT.
(a) The Revolving Credit Commitment shall be equal to the
lesser of:
(i) the Borrowing Base as in effect from time to time, or
(ii) Forty Million Dollars ($40,000,000).
(b) The Borrowing Base shall be adjusted upon Agent's review and
acceptance of (i) each monthly Borrowing Base Certificate submitted by Borrower
or (ii) any additional information obtained by Agent (including any Request for
Advance or updated Borrowing Base Certificates) relating to the determination of
Eligible Accounts Receivable and Eligible Inventory.
(c) Borrower may, at its option, upon prepayment of all outstanding
principal of and interest on the Revolving Credit Notes in accordance with the
terms of Section 2.06 hereof, and upon thirty (30) days' prior written notice to
Agent, cancel the Revolving Credit Commitment. Borrower may, at its option, upon
thirty (30) days' prior written notice to Agent, but not more frequently than
two (2) times in any fiscal year of Borrower, reduce the Revolving Credit
Commitment by an amount not less than One Hundred Thousand Dollars ($100,000),
or, if a greater amount, in integral multiples of Fifty Thousand Dollars
($50,000); PROVIDED, HOWEVER, that the Revolving Credit Commitment shall not at
any time be reduced by operation of this
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Section 2.03(c) to an amount less than the aggregate unpaid principal amount
then outstanding under the Revolving Credit Notes and to an amount equal to the
face amount of any Letters of Credit still outstanding. Any such reduction or
cancellation shall be irrevocable and shall not affect any of the obligations or
liabilities of Borrower to Lenders under the Revolving Credit Notes (except to
the extent prepaid).
SECTION 2.04. INTEREST ON THE REVOLVING CREDIT NOTE.
The aggregate principal amount of Advances outstanding under the
Revolving Credit Notes shall bear interest, commencing on the Borrowing Date for
such Advances and continuing until payment in full thereof, at either (i) the
Applicable Revolving Funded Debt Rate with calculation of the appropriate Funded
Debt to Shareholders Equity Base ratio on a quarterly basis or (ii) the
applicable Eurodollar Rate for the applicable Interest Period. The Applicable
Revolving Funded Debt Rate shall also change upon changes in the Prime Rate and
such changes shall become effective on the effective date of such change in the
Prime Rate. The Borrower's rights to election of a Eurodollar Rate are more
specifically set forth in Section 3.01 hereof, but are subject to the provisions
of Section 3.02 hereof. Interest shall be payable monthly in arrears on the
first day of each month, commencing June 1, 1997 and continuing on the first day
of each month thereafter until payment in full, and on the Revolving Credit
Maturity Date; provided, however that in addition to any such monthly payment of
interest, all accrued and unpaid interest outstanding under any Eurodollar Loan
shall be paid in full on the Interest Adjustment Date for such Eurodollar Loan.
Interest shall be calculated on the basis of a year of 360 days, counting the
actual number of days elapsed.
SECTION 2.05. MANDATORY REPAYMENT OF ADVANCES.
(a) In the event the outstanding aggregate principal amount of Advances
as of any date exceeds the Revolving Credit Commitment as in effect for such
date, Borrower shall immediately pay to Agent, on behalf of Lenders, without
further notice or demand, the amount by which the outstanding aggregate
principal amount of Advances exceeds the Revolving Credit Commitment for such
date. Any such payment shall be applied to outstanding Floating Rate Loans or to
Eurodollar Loans, if any, which have an Interest Adjustment Date on the date
such payment is due, as designated by Borrower; PROVIDED, HOWEVER, that in the
absence of a designation by the Borrower that such payment is a payment of
Floating Rate Loans or Eurodollar Loans, the Agent shall apply such payment
first to outstanding Floating Rate Loans with any balance applied to Eurodollar
Loans, which balance shall be applied first to those Eurodollar Loans with an
Interest Adjustment Date on the payment date. If any such payment is applied to
Eurodollar Loans, such payment shall be accompanied by amounts, if any, due
under Section 3.02(e) with respect to the Eurodollar Loans being paid.
(b) The aggregate principal amount of Advances outstanding under the
Revolving Credit Notes, together with all unpaid interest thereon, shall be
payable in full on the Revolving Credit Maturity Date.
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(c) The outstanding aggregate principal amount of Advances shall
otherwise be payable in accordance with this Article II and the provisions of
the Revolving Credit Notes.
SECTION 2.06. VOLUNTARY PREPAYMENT OF ADVANCES.
Subject to the provisions of this Agreement, Borrower may prepay the
Advances outstanding under the Revolving Credit Notes, in whole at any time or
in part from time to time, upon not less than one (1) Business Day's prior
written or telephonic notice to Agent; PROVIDED, HOWEVER, that any such
prepayment shall be made only on a Business Day and each partial prepayment
shall be in an amount equal to at least Fifty Thousand Dollars ($50,000), or, if
a greater amount, in integral multiples of Fifty Thousand Dollars ($50,000) AND
PROVIDED further, that any such repayment of principal of a Eurodollar Loan
shall be made only on the Interest Adjustment Date for such Eurodollar Loan
(unless accompanied by amounts, if any, due under Section 3.02(e) hereof) and
any partial repayment of principal of a Eurodollar Loan shall be in an amount so
that such outstanding Eurodollar Loan remains in a principal amount of Five
Hundred Thousand Dollars ($500,000) or, if a greater amount, in integral
multiples of One Hundred Thousand Dollars ($100,000). Any such telephonic notice
shall be confirmed in writing by letter mailed or telecopied to Agent on the
same day as the telephonic notice. Each such notice or confirmation shall
specify the prepayment date and the principal amount of the Advances to be
prepaid. All repayments shall be applied by the Agent to outstanding Floating
Rate Loans, or to Eurodollar Loans, if any, which have an Interest Adjustment
Date on the date such payment is to be made as designated by the Borrower;
PROVIDED, HOWEVER, that in the absence of a designation by Borrower that such
repayment is a payment of Floating Rate Loans or Eurodollar Loans, the Agent
shall apply such payment first to outstanding Floating Rate Loans with any
balance applied to Eurodollar Loans, which balance shall be applied first to
those Eurodollar Loans with an Interest Adjustment Date on the repayment date.
If any such repayment is applied to Eurodollar Loans, such repayment shall be
accompanied by amounts, if any, due under Section 3.02(e) hereof with respect to
any Eurodollar Loan so repaid. Any Advances so repaid pursuant to this Section
2.06 (and not constituting a permanent reduction or cancellation of the
Commitment pursuant to Section 2.03(c)) may be reborrowed from time to time by
the Borrower within the Revolving Credit Commitment limits, and in accordance
with the terms and provisions of this Agreement.
SECTION 2.07. REVOLVING CREDIT UNUSED COMMITMENT FEE.
Borrower hereby agrees to pay to Agent for the account of each Lender
computed from the Closing Date to and including the Revolving Credit Maturity
Date, a revolving credit commitment fee in an amount equal to .375% of the
average daily unused portion of the Revolving Credit Commitment (as in effect as
of the date of any determination thereof, giving effect to any adjustment
pursuant to Section 2.03), payable quarterly in arrears, commencing July 31,
1997 and continuing on the last day of each October, January, April and July
thereafter and payable upon payment in full of the Revolving Credit Notes and
cancellation of the Revolving Credit Commitment, and on the Revolving Credit
Maturity Date. Such fee shall be computed on the basis of a 360-day year,
counting the actual number of days elapsed.
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SECTION 2.08. AGENT'S ADMINISTRATIVE FEE.
Borrower hereby agrees to pay to Agent for the account of the Agent
computed from the Closing Date to and including the Revolving Credit Maturity
Date, an administrative fee equal to Twenty Thousand Dollars ($20,000) per annum
(the "Administrative Fee"), payable to the Agent quarterly in arrears,
commencing July 31, 1997 and continuing on the last day of each October,
January, April and July thereafter. Such fee shall be computed on the basis of a
360 day year, counting the actual number of days elapsed. In the event there
have been no Advances made by Lender under the Revolving Credit Facility at any
time during any quarter, Agent agrees to waive the Administrative Fee for the
corresponding quarter period.
SECTION 2.09. USE OF PROCEEDS.
The proceeds of the Advances shall be used by Borrower solely to
finance general corporate and working capital requirements of Borrower.
SECTION 2.10. ENDORSEMENTS.
Borrower hereby authorizes each Lender to endorse on the last page of
its Revolving Credit Note or to enter into such Lender's internal records an
appropriate notation evidencing the making of each Advance, the interest rate(s)
in effect under such Revolving Credit Note, each change in such rate(s), and
each repayment or prepayment of Advances. In the absence of manifest error, such
notations and such Lender's records containing such notations shall constitute
presumptive evidence of the facts stated therein, including, without limitation,
the outstanding amount of Advances and all amounts due and owing to such Lender
at any time. Any such notations and such Lender's records containing such
notations may be introduced in evidence in any judicial or administrative
proceeding relating to this Agreement, the Loans or the Revolving Credit Notes.
No Lender shall have liability for its failure to make such notations and any
such failure shall not affect the obligations of Borrower hereunder or under the
Revolving Credit Notes.
SECTION 2.11. FACILITY FEES.
In consideration of the issuance of Lenders' commitment to enter into
this Agreement, and its processing and review of matters relating to the Loans
and the purposes thereof, including its due diligence in respect thereof,
Borrower hereby agrees to pay to Agent on behalf of Lenders a facility fee equal
to one quarter of one percent (.25%) of the Revolving Credit Facility
($100,000).
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III. SPECIAL PROVISIONS REGARDING INTEREST RATES UNDER THE LOANS.
SECTION 3.01. SPECIAL PROVISIONS RELATING TO INTEREST RATE ELECTIONS
ON THE LOANS.
(a) Subject to the terms of Section 3.02 hereof, at the time of the
making of any Advance, the Borrower may select the Applicable Revolving Funded
Debt Rate, or the Eurodollar Rate for the applicable Interest Period, to apply
to all or a portion of such Advance, to be effective on the Borrowing Date, by
making an Interest Rate Election in accordance with Section 3.01(b) hereof.
Subject to the terms of Section 3.02 hereof, by making an Interest Rate
Election, the Borrower may, with respect to all or any portion of the
outstanding Advances, (i) change the applicable interest rate for any Floating
Rate Loan to the Eurodollar Rate for the applicable Interest Period, or change
the applicable interest rate for any Eurodollar Loan to the Applicable Revolving
Funded Debt Rate, in either case only to be effective on the Interest Adjustment
Date applicable to such Loan, or (ii) with respect to any Eurodollar Loan for
which the Interest Period is expiring on an Interest Adjustment Date, elect the
Eurodollar Rate to continue for such Loan on such Interest Adjustment Date for
the applicable Interest Period.
(b) An Interest Rate Election shall be made by written or telephonic
(confirmed in writing) notice to the Agent selecting the Applicable Revolving
Funded Debt Rate, or the Eurodollar Rate for the applicable Interest Period, and
confirming the applicable Borrowing Date or Interest Adjustment Date, as the
case may be; PROVIDED, HOWEVER, that any Interest Rate Election selecting the
Eurodollar Rate must be in writing and must be received by the Agent prior to
10:00 A.M. (Providence, Rhode Island time) on at least two (2) Business Days
prior to the applicable Borrowing Date or Interest Adjustment Date, as the case
may be. Each Interest Rate Election shall be effective as of the applicable
Borrowing Date or Interest Adjustment Date, for any applicable Interest Period,
as the case may be, with respect to the interest rate on the Advances or any
portion thereof to which such Interest Rate Election was made. Any Interest Rate
Election received after 10:00 A.M. (Providence, Rhode Island time) on a Business
Day shall be deemed, for all purposes of this Agreement, to have been received
prior to 10:00 A.M. (Providence, Rhode Island time) on the next succeeding
Business Day. Any selection of the Eurodollar Rate permitted hereunder shall be
made so that after giving effect to any such selection, the outstanding
Eurodollar Loan shall be in a principal amount of Five Hundred Thousand Dollars
($500,000), or if a greater amount, in integral multiples of One Hundred
Thousand Dollars ($100,000).
(c) Notwithstanding any other provision of this Agreement, no more than
six (6) Eurodollar Loans shall be outstanding at any time.
(d) Notwithstanding any other provision of this Agreement, in the case
of any Eurodollar Loan requested by the Borrower, if, on or before 10:00 A.M.
(Providence, Rhode Island time) on the date at least two (2) Business Days prior
to any Borrowing Date or any Interest Adjustment Date, the Borrower fails to
make an effective Interest Rate Election selecting the Eurodollar Rate to apply
to the Advances or any portion thereof in accordance with this Section 3.01 or
specifying an Interest Period for such Loan or portion thereof or is incomplete
in any other
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respects, then such Loan or portion thereof shall bear interest at the
Applicable Revolving Funded Debt Rate from such Borrowing Date or such Interest
Adjustment Date until payment in full or receipt by the Agent of an effective
Interest Rate Election, properly accepted, for such Loan or portion thereof.
(e) Notwithstanding any other provision of this Agreement, unless the
Agent shall otherwise agree, after the occurrence and during the continuance of
an Event of Default declared by the Agent pursuant to written notice to the
Borrower, the Borrower may not elect to have a Loan be made or converted into a
Eurodollar Loan, or continued as a Eurodollar Loan after the expiration of any
Interest Period then in effect for that Eurodollar Loan.
SECTION 3.02. SPECIAL PROVISIONS RELATING TO EURODOLLAR LOANS.
The Eurodollar Loans shall be subject to and governed by the following
additional terms and conditions:
(a) Notwithstanding any other provision of this Agreement, if, prior to
or on the date on which all or any portion of any Advance is to be made
as or converted into a Eurodollar Loan, the Agent shall determine (which
determination shall be conclusive and binding on the Borrower) that
(i) dollar deposits in the relevant amounts and for
the relevant Interest Period are not offered to Agent in the
inter-bank eurodollar market in which such Lenders regularly
participate,
(ii) by reason of circumstances affecting the
inter-bank eurodollar market in which Agent regularly
participates, adequate and reasonable means do not exist for
ascertaining the interest rate applicable to such Eurodollar
Loan, or
(iii) the Basic Eurodollar Rate no longer represents
the effective cost to Agent for dollar deposits in the
inter-bank eurodollar market in which such Lenders regularly
participate;
the Agent shall promptly give telephonic or telecopied notice of such
event to the Lenders and the Borrower, and all or such portion of such
Advance which is subject to any of Section 3.02(a)(i) through (iii) as a
result of the Agent's determination, shall be made as, or converted into
at the end of the applicable Interest Period, as the case may be,
Floating Rate Loans, and no Lender shall have any further obligation to
make Eurodollar Loans until further written notice to the contrary is
given by the Agent to the Lenders and the Borrower. The Agent shall
promptly confirm any such telephonic notice in writing to the Lenders and
the Borrower.
(b) In the event any change in applicable laws or regulations
(including the enactment of any new applicable law or regulation) or in
the interpretation thereof
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(whether or not having the force of law) by any governmental or other
regulatory authority charged with the administration thereof, makes it
unlawful for any Lender to make or continue to maintain Eurodollar Loans,
the obligation of such Lender to make or maintain Eurodollar Loans shall,
upon the happening of such event, terminate, and such Lender shall, by
telephonic, telexed or telecopied notice to the Agent and the Borrower
declares that such obligation has so terminated, and such Eurodollar
Loans shall, on the last day on which such Lender can lawfully continue
to maintain such Eurodollar Loans, automatically convert into Floating
Rate Loans. Such Lender shall promptly confirm any such telephonic notice
in writing to the Agent and the Borrower and shall provide a written
explanation as to the reasons for such termination.
(c) If the circumstances set forth in subsections (a) or (b) above
subsequently change so that Agent or a Lender shall no longer be so
affected, as the case may be, the Lenders' or such Lender's (as
applicable) obligation to make or maintain Eurodollar Loans shall be
reinstated when the Agent or such Lender (as applicable) obtains actual
knowledge of such change of circumstances, and promptly after obtaining
such actual knowledge, written notice thereof shall be forwarded to the
Borrower. The Borrower shall then have the right to submit an Interest
Rate Election to the Agent electing the Eurodollar Rate to apply in
accordance with but subject to the terms of this Agreement. During any
period throughout which the Lenders or such Lender (as applicable) has no
obligation to make or maintain Eurodollar Loans, no Interest Rate
Elections electing the Eurodollar Rate shall be effective with regard to
any Advance.
(d) The Borrower agrees to pay to the Agent, on a joint and several
basis, for the account of each applicable Lender from time to time such
amounts as will compensate such Lender for any increase in the costs to
such Lender, reasonably incurred, of making or maintaining (or of its
obligation to make or maintain) all or any portion of any Eurodollar
Loans and for any reduction in the amount of any sum receivable by such
Lender under this Agreement in respect of making or maintaining (or of
its obligation to make or maintain) all or any portion of such Eurodollar
Loans, in either case, by reason of:
(i) any reserve, special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, such Lender, under or pursuant to any
law, treaty, rule, regulation (including, without limitation,
any Regulations of the Board of Governors of the Federal Reserve
System but expressly excluding Regulation D) or requirement in
effect on or after the date hereof, any interpretation thereof
by any governmental authority charged with administration
thereof or by any central bank or other fiscal or monetary
authority or other authority having jurisdiction over such
Lender, or any requirement imposed by any central bank or such
other authority whether or not having the force of law; or
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(ii) any change in (including the enactment of any
new) applicable law, treaty, rule, regulation or requirement or
in the interpretation thereof by any official authority, or the
imposition of any requirement of any central bank, whether or
not having the force of law, which shall subject such Lender to
any tax (other than taxes on overall net income, profits or
gains imposed on such Lender by the United States of America or
the state in which the head office of such Lender is located or
by the jurisdiction in which the applicable lending office is
located), levy, impost, charge, fee, duty, deduction or
withholding of any kind whatsoever or change the taxation of
such Lender with respect to making or maintaining (or of its
obligation to make or maintain) all or any portion of any
Eurodollar Loans and the interest thereon (other than any change
which affects, and to the extent that it affects, the taxation
of overall net income, profits or gains of such Lender by the
United States of America or the state in which the head office
of such Lender is located or by the jurisdiction in which the
applicable lending office is located).
In any such event, the applicable Lender shall promptly notify the Agent
and the Borrower thereof in writing stating the reasons therefor and the
additional amounts required to fully compensate such Lender for such
increased or new cost or reduced amount as determined by such Lender.
Such additional amounts shall be payable on each date on which interest
is to be paid hereunder or, if there is no outstanding principal amount
under the Notes, on the last Business Day of the month in which the
Borrower receives the notice in question. The applicable Lender's
certificate as to any such increased or new cost or reduced amount
(including calculations, in reasonable detail, showing how such Lender
computed such cost or reduction) shall be submitted by such Lender to the
Agent and the Borrower before the Borrower are required to pay any such
additional amount and shall, in the absence of manifest error, be
conclusive and binding. In determining any such amount such Lender may
use any reasonable averaging and attribution methods.
(e) In the event any Lender shall incur any loss or expense (including,
without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain all or any portion of the Advances as
Eurodollar Loans) as a result of
(i) any payment or any mandatory or voluntary
repayment by the Borrower of all or any portion of any
Eurodollar Loan on a date other than the Interest Adjustment
Date applicable thereto, for any reason;
(ii) conversion of all or any portion of any
Eurodollar Loan on a day other than the Interest Adjustment Date
applicable to such Loan to a Floating Rate Loan for any reason
including, without limitation, delivery of an Interest Rate
Election or any other cause whether voluntary or
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involuntary and whether or not referred to or described in this
Agreement, except for any Lender's inability to continue to
maintain Eurodollar Loans as set forth in Section 3.02(b)
hereof; or
(iii) any failure by the Borrower to borrow an
Advance as a Eurodollar Loan on the Borrowing Date specified in
any Interest Rate Election selecting the Eurodollar Rate;
then upon the request of such Lender, the Borrower shall pay to the
Agent, on a joint and several basis, for the account of such Lender such
amount as will (in the reasonable determination of such Lender) reimburse
such Lender for such loss or expense; PROVIDED, HOWEVER, that clauses
(i), (ii) and (iii) hereof shall not be deemed to grant to the Borrower
any right to convert a Eurodollar Loan to a Floating Rate Loan prior to
the Interest Adjustment Date applicable thereto without reimbursement to
the Lender for any loss or expenses as contemplated above, or any right
to fail to borrow on any Borrowing Date specified in any Interest Rate
Election selecting the Eurodollar Rate. The applicable Lender shall
furnish to the Agent and the Borrower, before the Borrower shall be
required to make any such payment, a written statement setting forth the
computation of any such amounts payable to such Lender under this Section
3.02(e).
(f) Each Lender agrees that upon the occurrence of any of the events
described in Section 3.02(a), (d) or (e), such Lender will exercise its
best efforts to take such reasonable actions at no expense to such Lender
(other than expenses (i) which are covered by the Borrower's advance
deposit of funds with such Lender for such purpose, or (ii) if such
Lender agrees, which the Borrower hereby agrees to pay or reimburse to
such Lender in full upon demand), in accordance with such Lender's usual
banking practices in such situations and subject to any statutory or
regulatory requirements applicable to such Lender, as such Lender may
take without the consent or participation of any other person to, in the
case of an event described in Section 3.02(d) or (e), mitigate the cost
of such events to the Borrower and, in the case of an event described in
Section 3.02(a), to seek dollar deposits in any other inter-bank
eurodollar market in which such Lender regularly participates and in
which the applicable determination(s) described in Section 3.02(a), does
(do) not apply.
IV. TERMS APPLICABLE TO REVOLVING CREDIT FACILITIES.
SECTION 4.01. INCREASED COSTS - CAPITAL.
In the event that after the date hereof the adoption or implementation
of or any change in (including the enactment of any new) applicable law, rule or
regulation, or in the interpretation or administration thereof by any
governmental authority, central bank or other comparable agency charged with the
interpretation or administration thereof, or compliance by any of the Lenders
with any request or directive (whether or not having the force of law) of any
such governmental
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authority, central bank or comparable agency, shall impose, modify or deem
applicable any capital adequacy or similar requirement (including, without
limitation, a request or requirement which affects the manner in which any of
the Lenders allocates capital resources to its commitments, including its
obligations hereunder) and as a result thereof, in the good faith judgment of
the applicable Lender, the rate of return on such Lender's capital as a
consequence of its obligations hereunder is reduced to a level below that which
such Lender could have achieved but for such circumstances, then and in each
such case, upon notice to Agent and Borrower by such Lender and such Lender's
request for payment thereof, from time to time Borrower shall pay to Agent, for
the account of such Lender such additional amount or amounts as shall compensate
such Lender for such reduction in rate of return (but only to the extent such
capital adequacy or similar requirement shall have reduced such rate of return
and with appropriate adjustment for the extent, if any, such capital adequacy or
similar requirement shall have previously been reflected in the determination of
the applicable base interest rates payable on the Notes). In any such event, the
applicable Lender shall promptly notify Borrower thereof in writing, stating the
reasons therefor and the additional amounts required to fully compensate such
Lender for such reduction in rate of return. Such additional amounts shall be
payable on each date on which interest is to be paid hereunder or, if there is
no outstanding principal amounts under the Notes, on the last business day of
the month in which Borrower received the notice in question. The applicable
Lender's certificate as to any such reduction in return (including calculations,
in reasonable detail, showing how such Lender computed such reduction) shall be
submitted to Borrower before any additional amount shall become payable and
shall, in the absence of manifest error, be conclusive and binding. In
determining any such amount, such Lender may use any reasonable averaging and
attribution methods.
SECTION 4.02. SECURITY FOR THE NOTES.
The Notes and the Letter of Credit Documents shall be secured by:
(a) Borrower Security Agreement;
(b) the Heller Intercreditor Agreement; and
(c) such financing statements, assignments, agreements to assign,
landlord waivers and consents and other instruments, in each case in form and
substance reasonably satisfactory to Lenders and their counsel, as Lenders may
reasonably request in connection with any or all of the foregoing.
SECTION 4.03. MANNER OF PAYMENTS.
All payments and prepayments to be made by Borrower of principal of, and
interest on, the Notes and in respect of Letter of Credit Reimbursement
Obligations, and all fees and other sums and charges payable by Borrower
hereunder, shall be made to Agent in U.S. dollars in immediately available funds
prior to 11:00 A.M. (Providence, Rhode Island time) on the day that such payment
is due; PROVIDED that it shall not be deemed to be an Event of Default hereunder
if a payment is due on a day which is not a Business Day and Agent receives such
payment in
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Dollars in immediately available funds prior to 11:00 A.M. (Providence, Rhode
Island time) on the next succeeding Business Day, and PROVIDED FURTHER that upon
not less than two (2) Business Days prior notice to Borrower any such payment
may be made by Agent debiting the demand deposit accounts, if any, maintained
with Agent on each date on which any such payment is due or remains unpaid
hereunder or under the Notes, in an amount up to the principal, interest, Letter
of Credit Reimbursement Obligations, fees or other sums or charges due and
payable hereunder or under the Notes, and any such debit shall be deemed payment
hereunder and/or under the Notes in question to the extent immediately available
funds are then in such accounts. Any such payment which is not received in such
form or prior to such time shall be deemed received for all purposes of this
Agreement on the next succeeding Business Day on which such funds become
immediately available prior to such time. Promptly upon receipt thereof, Agent
shall cause such payments to be distributed by wire transfer to Lenders entitled
thereto, in like funds with respect to the payment received by Agent from
Borrower. Distributions to Lenders by Agent shall be made to such office as such
Lender shall from time to time designate in writing to Agent. The amount of each
payment wired by Agent to each such Lender shall be such amount as shall be
necessary to provide such Lender with its Commitment Share of such payment
(without consideration or use of any contra accounts of any Lender), or with
such other amount as may be owing to such Lender in accordance with this
Agreement (in each case, without deduction for any claim, defense or offset of
any type). Each such wire transfer shall be sent by Agent only after Agent has
received immediately available dollars from or on behalf of Borrower and each
such wire transfer by Agent shall provide each Lender receiving same with
immediately available funds.
SECTION 4.04. LATE CHARGES.
Borrower hereby agrees to pay to Agent on behalf of Lenders, upon
demand, to the extent permitted by law, a late charge in an amount equal to five
percent (5%) of each payment of principal and/or interest, and/or in respect of
any other sum or amount, which is not paid in full within ten (10) days of the
date on which such payment is due (without giving effect to any applicable grace
period).
SECTION 4.05. SET-OFF.
Upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized at any time and from time to time, without
notice to Borrower (any such notice being expressly waived by Borrower), to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by it and any and all other Indebtedness
at any time owing by such Lender to or for the credit or the account of Borrower
against any and all of the obligations of Borrower now or hereafter existing
under this Agreement, the Notes, the Letter of Credit Reimbursement Obligations
or in respect of the other Transaction Documents, irrespective of whether or not
Agent or such Lender shall have made any demand under this Agreement, the Notes,
the Letter of Credit Reimbursement Obligations or the Transaction Documents, and
although such obligations may be unmatured. Each Lender agrees to promptly
notify Agent and Borrower after any such setoff and application; PROVIDED THAT
the failure to give such notice shall not affect the validity of such setoff and
application.
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Promptly following any notice of setoff received by Agent from a Lender pursuant
to the foregoing, Agent shall notify each other Lender thereof. The rights of
each Lender under this Section 4.05 are in addition to all other rights and
remedies (including, without limitation, other rights of setoff) which such
Lender may have.
SECTION 4.06. REPLACEMENT OF LENDER.
In the event that any Lender becomes a Delinquent Lender and remains so
for ten (10) Business Days after written notice thereof to such Delinquent
Lender from Agent or Borrower, as the case may be, or in the event a Delinquent
Lender notifies Agent or Borrower that it does not intend to make additional
Advances after the date of such notice, in each case with copies of such notice
to each other party to this Agreement, Agent, Borrower and the other Lender
shall exercise good faith efforts to reach mutual agreement on and to implement
(i) a means of replacing the Delinquent Lender with another bank or banks or
(ii) the purchase of the Delinquent Lender's Loans Outstanding and its
Commitment Share by any other Lender, PROVIDED, HOWEVER, no such default shall
obligate any other Lender to make any Advance in excess of its Commitment Share
or to purchase the Loans Outstanding of the Delinquent Lender. Each Lender
agrees that in the event that it becomes a Delinquent Lender, it shall take all
such actions as may be reasonably requested by Borrower, Agent and any other
Lenders, at the Delinquent Lender's sole cost and expense, to permit its
replacement and/or purchase of its Loans Outstanding and its Commitment Share at
no more than the outstanding principal amount of such Loans Outstanding plus
accrued interest thereon, and that it shall indemnify and hold harmless
Borrower, Agent and any other Lender from and against all out-of-pocket loss,
cost or expense resulting from its acts or omissions in becoming and being a
Delinquent Lender or resulting from replacement of the Delinquent Lender and/or
purchase of the Delinquent Lender's Loans Outstanding and its Commitment Share,
and all out-of-pocket costs and expenses incurred by Borrower, Agent or any
other Lender in connection with any necessary amendments of this Agreement, any
of the Notes and/or any other document, instrument or agreement entered into in
connection therewith which result from replacement of such Delinquent Lender
and/or purchase of such Delinquent Lender's Loans Outstanding and its Commitment
Share, but excluding any credit risk of any Lender which purchases all or any
part of the Delinquent Lender's Loans Outstanding and its Commitment Share. The
indemnifications set forth in this Section 4.06 shall not be deemed to limit any
rights or remedies of Borrower or any Lender against the Delinquent Lender.
SECTION 4.07. PRO RATA TREATMENT. Each payment and prepayment of interest
and/or principal on the Loans to Agent for the account of Lenders or to Lenders
hereunder (whether directly made by Borrower or received by Agent or a Lender
through the exercise of a right of set-off or otherwise), shall be made pro
rata, according to each Lender's Commitment Share, and according, in the case of
payments or prepayments, to the then outstanding principal amounts of the Notes
which are being paid or prepaid, and each payment of fees under Section 2.07 and
4.11(f) (whether directly made by Borrower or received by Agent or a Lender
through the exercise of a right of set-off or otherwise) shall be made pro rata,
according to each Lender's Commitment Share; PROVIDED, HOWEVER, that any amounts
payable by Borrower pursuant to either of Sections 12.02 or 12.03 shall be paid
to Agent for the account of Lenders or Lenders entitled to such amounts. Each
Lender's share of Advances shall be equal to such Lender's
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Commitment Share. Notwithstanding the foregoing provisions of this Section 4.07,
upon the occurrence and during the continuance of an Event of Default, each
payment and prepayment of principal and interest on the Loans to Agent for the
account of Lenders or to Lenders hereunder (whether directly made by Borrower or
received by Agent or a Lender through the exercise of a right of set-off or
otherwise), shall be made pro rata, according to each Lender's share of Loans
Outstanding.
SECTION 4.08. DECLARATION OF INVALIDATION. Each Lender agrees that, to
the extent that any amount received by any Lender from Borrower or otherwise on
account of any of the Loans, is subsequently invalidated, declared to be
fraudulent or preferential, set aside or judicially required to be repaid to a
debtor-in-possession, trustee, receiver, custodian or any other Person in
connection with any proceeding referred to in Article IX(g) or (h) hereof or any
similar cause of action (a "Preference"), then, to the extent of such
Preference, each Lender shall upon demand reimburse Lenders(s) subjected to such
Preference the amount necessary to cause each Lender to be affected by such
Preference in proportion to its pro rata share of the Loans Outstanding.
SECTION 4.09. PRO RATA SHARES PARI PASSU AND EQUAL. The Commitment Share
of each Lender, and each Lender's pro rata share of Loans Outstanding, shall be
PARI PASSU and equal with the Commitment Shares and pro rata shares of Loans
Outstanding, of all other Lenders, and no Lender shall have priority over any
other.
SECTION 4.10. APPLICATION OF FUNDS RECEIVED BY LENDERS. As long as any
amounts due under any of the Notes or this Agreement are outstanding, if any
Lender shall receive from Borrower or any other Person, whether by exercise of a
right of setoff pursuant to Section 4.05 or otherwise, or resulting from a
banker's lien or by voluntary payment, counterclaim, cross action, suit at law
or in equity or by proof of claim in bankruptcy, liquidation or similar
proceedings, or by sale or disposition of any Collateral or by payment made
under any policy of insurance or otherwise (but excluding any amounts received
by such Lender from Agent in accordance with this Agreement), any amount in
respect of its Note or Notes (other than an amount owing by Borrower to such
Lender under any of Sections 4.01, 4.04, 12.02 or 12.03 of this Agreement), such
Lender shall promptly send by wire transfer the portion of such amount remaining
(after deduction by such Lender of any expenses or costs incurred by such Lender
in connection with obtaining such amount) to Agent which are immediately
available to Agent upon receipt, together with such Lender's accounting of the
gross amount so received and the expenses or costs deducted therefrom. Agent
shall, promptly after Agent's receipt of such amount in immediately available
funds, send to each Lender by wire transfer funds (which are immediately
available to such Lenders upon receipt) in such amount as may be necessary to
cause each Lender (including Lenders which wired the above-referenced amount to
Agent) to receive payment of a portion of said amount so received by Agent which
is proportionate to such Lender's Commitment Share, or pro rata share of Loans
Outstanding, as the case may be. If any such payment in respect of any such
amount is made by any Lender pursuant to this Section 4.10 and if such amount or
any part thereof is thereafter recovered from such Lender, the related payment
to Agent and by Agent to Lenders shall be rescinded, to the extent of said
recovery, and any distribution or payment restored as to the portion of such
payment so recovered, but without interest. This Section 4.10
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shall be applied so as to maintain for each Lender its Commitment Share, or pro
rata share of Loans Outstanding, as the case may be.
SECTION 4.11. LETTER OF CREDIT FACILITY.
(a) From time to time, so long as no Event of Default exists and so
long as after giving effect to the issuance of the Letter of Credit the
aggregate outstanding Revolving Credit Loans do not exceed the Revolving Credit
Commitment, the Agent, as issuer agrees to issue for the account of Borrower
Letters of Credit, in form and substance satisfactory to Agent in accordance
with its usual and customary practice.
(b) The aggregate outstanding amount of all Letters of Credit issued
pursuant hereto shall at no time exceed a face amount equal to Three Million
Dollars ($3,000,000).
(c) The Letters of Credit issued pursuant hereto shall be governed by
the terms of this Agreement and by the Letter of Credit Documents, signed or
guaranteed or otherwise verified by Borrower in a manner satisfactory to Lenders
at the time of the issuance, extension or renewal thereof.
(d) Borrower hereby agrees to pay to Agent, as issuer a letter of
credit fee equal to the customary fees charged by such issuer in connection with
the issuance of Letters of Credit, payable upon issuance of each Letter of
Credit.
(e) Borrower hereby agrees to pay to Agent, as issuer, on demand, all
drawing fees, transfer fees, other administrative fees and all other usual and
customary fees and transaction charges of Agent, as issuer in connection with
letters of credit as described in the Letter of Credit Documents as in effect
from time to time.
(f) Borrower hereby agrees to pay to Agent on behalf of Lenders, on
demand, letter of credit fees as follows: (i) for trade letters of credit, an
annual fee equal to one percent (1%) of the face amount of the issued trade
letters of credit, and (ii) for standby letters of credit, an annual fee equal
to two percent (2%) of the face amount of the issued standby letters of credit,
such fees shall be payable quarterly in arrears.
(g) No Letter of Credit shall have a maturity date after the Revolving
Credit Maturity Date.
V. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lenders (which
representations and warranties shall survive the delivery of the Notes, the
making of each Advance and the issuance of any Letters of Credit), that:
SECTION 5.01. FINANCIAL STATEMENTS. Borrower has heretofore furnished
to Lenders (a) balance sheets of Borrower as at January 31, 1997 (on a
consolidated basis), January 31, 1996
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(on a consolidated basis), January 31, 1995 (on a consolidated basis) and, June
30, 1994 and statements of income and of cash flows of Seller for the fiscal
years then ended, together with the notes thereto, audited by Deloitte & Touche,
certified public accountants and (b) a PRO FORMA balance sheet of Borrower and
its Subsidiaries giving effect to the incurrence of the Public Debt, and
projected statements of income of Borrower and its Subsidiaries for each of the
fiscal years of Borrower ending January 31, 1998 through January 31, 2000,
prepared by Borrower. The balance sheets and statements described in clause (a)
have been prepared in accordance with GAAP applied on a basis consistent with
that of preceding periods (except as described therein), and fairly present the
financial condition of Borrower and its Subsidiaries on a consolidated basis, as
applicable as at said dates and the results of its operations for the years
ended on said dates. The PRO FORMA balance sheet and projected statements of
income and cash flows described in clause (b) have been prepared on a sound
financial planning basis in accordance with GAAP applied on a basis consistent
with that utilized in preparing the balance sheets and statements described in
clause (a) (except as described therein) and the assumptions upon which such
projections are based are reasonable. Borrower and its Subsidiaries have no
indebtedness, contingent obligations or liabilities that should properly be
reflected in a financial statement prepared in accordance with GAAP, except as
specifically reflected in such financial statements.
Since January 31, 1997, no event has occurred which has had a material
adverse impact on the condition of Borrower and its Subsidiaries' (on a
consolidated basis) operations, financial or otherwise, and there has been no
material adverse change in the financial condition, business, prospects, assets,
operations or properties of Borrower and its Subsidiaries' (on a consolidated
basis) operations, and since such date no distributions have been declared or
paid or made to the stockholders of Borrower. Since the dates of preparation of
the financial statements described in clause (b) above, no event has occurred
which has had a material adverse impact on the condition of Borrower and its
Subsidiaries on a consolidated basis, financial or otherwise, and there has been
no material adverse change in the financial condition, business, prospects,
assets, operations or properties of Borrower and its Subsidiaries on a
consolidated basis as represented in the financial statements described in
clause (b) or which would render any of the assumptions contained therein
unreasonable.
SECTION 5.02. INCORPORATION. Borrower is duly organized and validly
existing as a corporation under the laws of the State of Florida, has all
requisite power and authority to own its properties and to carry on its business
as now being conducted or presently contemplated, and is qualified to do
business in every jurisdiction where it is required to be so qualified, except
such jurisdictions, if any, in which the failure to be so qualified will not
have a material adverse effect on the financial condition, business, prospects,
assets, operations or properties of Borrower. Borrower has all requisite power
and authority to execute and deliver, and perform its obligations under, this
Agreement, the Notes and the Security Documents executed by it.
SECTION 5.03. AUTHORIZATION; COMPLIANCE. The execution and delivery of,
and performance by Borrower of its obligations under, this Agreement, the Notes
and the Security Documents executed by it, have been duly authorized by all
requisite action, will not violate any provision of law, any order of any court
or other agency of government, the charter or by-laws of Borrower, or any
indenture, agreement or other instrument to which Borrower is a party, or by
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which it is bound, or be in conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under, or except as may be
provided by the Security Documents executed by it, result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the property or assets of Borrower pursuant to, any such indenture, agreement
or instrument. This Agreement, the Notes and the Security Documents to which
Borrower is a party have been duly executed and delivered by Borrower and
constitute the valid and binding obligations of Borrower enforceable in
accordance with their respective terms. Except as set forth on SCHEDULE 5.03
hereto, Borrower is not required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any court,
governmental instrumentality or other agency, or any other Person, in connection
with or as a condition to the execution, delivery or performance of this
Agreement, the Notes, or any Security Documents, as the case may be, other than
such filings as are required to perfect any lien granted by the Security
Documents.
SECTION 5.04. LITIGATION. There is no action, suit or proceeding at law
or in equity or by or before any court, governmental instrumentality or other
agency now pending or, to the knowledge of Borrower, threatened against or
affecting Borrower which, if adversely determined, would have a material adverse
effect on the business, operations, prospects, properties, assets or condition,
financial or otherwise, of Borrower.
SECTION 5.05. MATERIAL AGREEMENTS. Borrower is not a party to any
agreement or instrument or subject to any other restriction adversely affecting
its business, properties, assets, operations, prospects or condition, financial
or otherwise.
SECTION 5.06. TITLE TO PROPERTY. Borrower has good title to all of its
properties and assets, free and clear of all mortgages, security interests,
restrictions, liens and encumbrances of any kind, except mortgages, security
interests, restrictions, liens and encumbrances described on SCHEDULE 5.06
attached hereto and made a part hereof or permitted under Section 8.02 hereof or
under any of the Security Documents, and except for restrictions, easements and
minor irregularities in title which do not and will not interfere with the
occupation, use and enjoyment by Borrower of such properties and assets in the
normal course of its business as presently conducted, or materially impair the
value of such properties and assets for the purpose of such business.
SECTION 5.07. SUBSIDIARIES. Borrower has the Subsidiaries listed on
SCHEDULE 5.07(A) and owns the issued and outstanding shares of Capital Stock or
other equity interest of any Person, or any warrant, option or other right to
purchase any such shares of Capital Stock or other equity interest, and any
security convertible into or exchangeable for any such shares of Capital Stock
to the extent disclosed on SCHEDULE 5.07(A).
SECTION 5.08. INSOLVENCY. Entering into this Agreement, making and
delivering the Notes and any borrowings made by Borrower under this Agreement,
do not and will not render Borrower insolvent; Borrower is not contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidating of all or a major portion of its property,
and Borrower has no knowledge of any person contemplating the filing of any such
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petition against it or any of its assets; and after giving effect to the
transactions contemplated by this Agreement (including all borrowings to be made
hereunder), Borrower is and will be able to pay its debts as such debts become
due, will have and continue to have funds and capital sufficient to carry on its
business as presently conducted or contemplated, and will own property having a
value both at fair market valuation and at fair saleable value in the ordinary
course of Borrower's business greater than the amount required to pay its
Indebtedness, including for this purpose unliquidated and disputed claims.
SECTION 5.09. DISCLOSURE. No statement of fact made by or on behalf of
Borrower in this Agreement or in any certificate or schedule furnished to
Lenders pursuant hereto, contains any untrue statement of a material fact as to
which Borrower is aware or omits to state any material fact as to which Borrower
is aware necessary to make statements contained therein or herein not
misleading. There is no fact presently known to Borrower which has not been
disclosed to Lenders which materially adversely affects, nor as far as Borrower
can reasonably foresee, will materially adversely affect the property, business,
operations, prospects or condition (financial or otherwise) of Borrower.
SECTION 5.10. INVESTMENT COMPANY. Borrower is not an "investment
company", or a company "controlled" by an "investment company", as such terms
are defined in the Investment Company Act of 1940, as amended.
SECTION 5.11. MARGIN STOCK PURPOSE CREDIT. Borrower does not own nor
does it have any present intention of acquiring, any "margin security" or
"margin stock" within the meaning of Regulation G (12 CFR Part 207), or any
"margin stock" within the meaning of Regulation U (12 CFR Part 221), of the
Board of Governors of the Federal Reserve System (herein called "margin
security" and "margin stock"). None of the proceeds of the Advances or Loans
will be used, directly or indirectly, by Borrower for the purpose of purchasing
or carrying, or for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry, any margin security or margin
stock or for any other purpose which might constitute the transactions
contemplated hereby a "purpose credit" within the meaning of said Regulation G
or Regulation U, or cause this Agreement to violate any other regulation of the
Board of Governors of the Federal Reserve System or the Securities Exchange Act
of 1934, as amended, or any rules or regulations promulgated under such
statutes.
SECTION 5.12. TAXES. Except as set forth on SCHEDULE 5.12, Borrower has
filed or caused to be filed or has properly secured extensions to file all
federal, state and local tax returns required to be filed, and has paid or made
adequate provision for the payment of all federal, state and local taxes,
charges and assessments imposed upon Borrower or upon its income and profits or
upon any of its property or upon any part thereof.
SECTION 5.13. EMPLOYEE BENEFIT PLANS. (a) Neither Borrower nor any
Commonly Controlled Entity maintains or contributes to any Plan which is not in
material compliance with ERISA, the Code and Title X of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (P.L. 99-272), as amended, or which has
incurred any material accumulated funding deficiency within the meaning of
section 412 or 418B of the Code, or which has applied for or obtained a
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waiver from the Internal Revenue Service of any minimum funding requirement
under section 412 of the Code. SCHEDULE 5.13 attached hereto and made a part
hereof correctly identifies each Plan. Neither Borrower nor any Commonly
Controlled Entity has incurred any liability to the PBGC in connection with any
Plan covering any employees of Borrower or any Commonly Controlled Entity or
ceased operations at any facility or withdrawn from any Plan in a manner which
could subject any of them to liability under Section 4062(e), 4063 or 4064 of
ERISA or liability to any Plan participant or beneficiary, and know of no facts
or circumstance which might give rise to any liability of Borrower or any
Commonly Controlled Entity to the PBGC under Title IV of ERISA or liability to
any Plan participant or beneficiary. Neither Borrower nor any Commonly
Controlled Entity has incurred any withdrawal liability (including but not
limited to any contingent or secondary withdrawal liability) within the meaning
of Sections 4201 and 4202 of ERISA, to any Multiemployer Plan, and no event has
occurred, and there exists no condition or set of circumstances, which presents
a risk of the occurrence of any withdrawal from or the partition, termination,
reorganization or insolvency of any Multiemployer Plan which could result in any
liability to a Multiemployer Plan.
(b) Full payment has been made of all amounts which Borrower and any
Commonly Controlled Entity were required to have paid prior to the Closing Date
as premiums to the PBGC under Sections 4006 and 4007 of ERISA, or as
contributions to any Plan under applicable law or under any Plan or any
agreement relating to any Plan to which Borrower or any Commonly Controlled
Entity is a party.
(c) Neither Borrower nor any Commonly Controlled Entity has any
knowledge of, nor do any of them have any reason to believe that, any Reportable
Event has occurred with respect to any Plan subject to Title IV of ERISA.
(d) All Plans which are employee pension benefit plans (as defined in
Section 3(2) of ERISA) are qualified plans under section 401(a) of the Code, and
Borrower or a Commonly Controlled Entity (as appropriate) has received favorable
determination letters from the Internal Revenue Service to such effect, which
letters remain in effect.
(e) No civil or criminal action brought pursuant to Part 5 of Title I
of ERISA or under any state law and no claim (other than routine course) is
pending with respect to any Plan, and neither Borrower nor any Commonly
Controlled Entity has any knowledge of, or reason to believe that, any such
action or claim is threatened against Borrower, any Commonly Controlled Entity,
or any fiduciary of any Plan.
(f) Neither Borrower nor any Commonly Controlled Entity has had any tax
assessed against it by the Internal Revenue Service for any alleged violation
under section 4975 of the Code, nor has Borrower or any Commonly Controlled
Entity incurred any material liability under Section 406 of ERISA.
SECTION 5.14. EMPLOYEE MATTERS. Borrower is not a party to any contract
with any labor organization, nor has Borrower agreed to recognize any union or
other collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of its
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employees. There is no strike or work stoppage pending or, to the best knowledge
of Borrower, threatened, or any organizational effort currently being made or,
to the best knowledge of Borrower, threatened, by or on behalf of any labor
union with respect to employees of Borrower. Borrower has not experienced any
strike, work stoppages, grievance proceedings, claims of unfair labor practices
filed or threatened to be filed, or other significant labor difficulties of any
nature, nor are there any material controversies pending or threatened between
Borrower and any of its employees.
SECTION 5.15. LOCATIONS. SCHEDULE 5.15 attached hereto and made a part
hereof sets forth (i) every location where any tangible asset, either real or
personal, of Borrower or any Subsidiary is located, (ii) every location where
Borrower or any Subsidiary has an office or place of business, (iii) the address
of all real estate owned by Borrower or any Subsidiary, (iv) the address of all
real estate leased by Borrower or any Subsidiary (including the record owner and
any mortgagee of such real estate), and (v) each jurisdiction in which Borrower
or any Subsidiary is qualified or required to be qualified to do business.
SECTION 5.16. LICENSES; TRADEMARKS. (a) SCHEDULE 5.16 attached hereto
and made a part hereof sets forth a list of (i) all material non-governmental
licenses held by Borrower relating to the operation of its business as now
conducted or presently contemplated (including, as to each such license, the
name of the licensee and licensor, a description of the subject matter of the
license, the termination date or notice requirement with respect to termination
and renewal options) and (ii) all material trademarks, trade names, service
marks, copyrights, know-how, patents and applications for any of the foregoing
owned by or registered in the name of Borrower or any Subsidiary, relating to or
used in connection with the operation of its business as now conducted or
presently contemplated.
(b) Except as set forth in SCHEDULE 5.16, all of such licenses are in
full force and effect and constitute legal, valid and binding obligations of
Borrower; there have not been and there currently are not any defaults
thereunder by Borrower or, to the best of its knowledge, by any other party
which could cause such license to be canceled, revoked or terminated; and no
event has occurred which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute such a default by
Borrower or, to the best of its knowledge, by any other party thereunder.
Borrower owns all the trademarks, trade names, service marks, copyrights,
know-how, patents and applications for any of the foregoing listed on SCHEDULE
5.16 and, except as set forth thereon or as permitted herein, pays no royalty
under any of them and has the exclusive right to bring actions for the
infringement thereof. Except as set forth on SCHEDULE 5.16, no product made or
sold by Borrower violates any license or, to the best of its knowledge,
infringes any trademark, trade name, service mark, copyright, know-how, patent
or application for any of the foregoing of any other Person. Except as listed on
SCHEDULE 5.16, there is no pending or, to the best of its knowledge, threatened
claim or litigation against Borrower contesting the right of Borrower to use any
of the trademarks, trade names, service marks and know-how or the validity of
any of the licenses, copyrights and patents listed on such Schedule or asserting
the misuse thereof.
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SECTION 5.17. MATERIAL AGREEMENTS. (a) SCHEDULE 5.17 attached hereto
and made a part hereof sets forth a list of all material contracts, agreements
and other instruments binding upon Borrower or to which it is a party, or
otherwise relating to the operation by Borrower of its business as now conducted
or presently contemplated (but only to the extent not listed on another Schedule
hereto), including any (i) material distribution, sales, agency, manufacturer's
representative or similar contract relating to the payment of a commission, (ii)
contract involving payment of more than $250,000 in any instance for the future
purchase of material, supplies, equipment or services (iii) contract for the
future sale of products involving payment of more than $500,000, (iv) contract
or commitment for the employment of any employee or other type of contract or
understanding with any employee or consultant, involving payment of more than
$200,000 on an annual basis, (v) indenture, mortgage, promissory note, loan
agreement, guarantee or other agreement or commitment for the borrowing of money
or for a line of credit, or for a leasing transaction required to be capitalized
in accordance with GAAP (vi) guaranty of the obligations of a third party, (vii)
lease, sublease, tenancy or other agreement with respect to use of real or
personal property by Borrower not required to be listed under clause (v) above
involving payment of more than $50,000 annually, (viii) agreement or arrangement
for the sale of any of the assets, property or rights of Borrower outside the
ordinary course of business or requiring the consent of any party to the
transfer and assignment of such assets, property and rights, or (ix) any other
contract deemed by Borrower to be material to the operation of its business as
now conducted or presently contemplated.
(b) Except as described in SCHEDULE 5.17, Borrower has in all material
respects observed or performed all the obligations required to be observed or
performed by it to date pursuant to, and is not in default or alleged to be in
default under, any agreement, lease, contract, commitment, instrument or
obligation required to be listed on any Schedule to this Agreement or any other
material contract, agreement or other instrument relating to the operation by
Borrower of its business, and there exists no event, condition or occurrence
which, after notice or lapse of time, or both, would constitute such a default
by it under any of the foregoing.
SECTION 5.18. COMPLIANCE. Except as set forth on SCHEDULE 5.18 attached
hereto and made a part hereof, Borrower is in compliance with all federal, state
and local laws, ordinances, rules, regulations and orders applicable to the
business or properties of Borrower, including Environmental Laws and those
relating to, anti-competitive practices, discrimination, employment, health and
safety, except such laws, ordinances, rules, regulations and orders, if any,
with which the failure to comply will not have a material adverse effect on the
financial condition, business, prospects, assets, operations or properties of
Borrower. Borrower has all federal, state and local governmental licenses and
permits necessary in the conduct of the business of Borrower, except such
licenses and permits, if any, the failure of which to have will not have a
material adverse effect on the financial condition, business, prospects, assets,
operations or properties of Borrower, and all such licenses and permits are in
full force and effect, and no violations are or have been recorded in respect of
any thereof, and no proceeding is pending or, to the best of its knowledge,
threatened to revoke or limit any thereof. SCHEDULE 5.18 contains a list of: (i)
all such governmental licenses and permits (all of which are transferable
without consent of any third party unless otherwise indicated by an asterisk)
and (ii) all judicial or governmental consents, orders, decrees and other
compliance agreements under which
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Borrower is operating or by which it is bound, copies of all of which have been
furnished to Lenders. To the best knowledge of Borrower, no federal, state or
local statute, rule, regulation, ordinance or order has been adopted or
promulgated which materially adversely affects the business or assets of
Borrower or its ability to carry on its business as now being conducted or as
presently contemplated to be conducted.
SECTION 5.19. ENVIRONMENTAL COMPLIANCE. Except as set forth on SCHEDULE
5.19 attached hereto and made a part hereof, there has never been any event
("Environmental Event") at, on or in connection with any real estate owned,
leased or operated by Borrower or any of the Subsidiaries ("Facilities"), or in
connection with the business of Borrower or any of the Subsidiaries or, to the
best of Borrower's knowledge of any predecessor-in-interest, which would be
deemed a release or a disposal of any hazardous, toxic or dangerous substance,
waste or material ("Hazardous Material"), defined as such in, or for the purpose
of, the Comprehensive Environmental Response, Liability and Compensation Act, or
any other Environmental Law. In addition, except as set forth on SCHEDULE 5.19,
(i) neither Borrower, nor, to its knowledge, any predecessor-in-interest, has
generated, stored, transported or disposed of any Hazardous Material in
connection with their respective business operations, and Borrower is not
currently generating, storing, transporting or disposing of Hazardous Material,
(ii) neither Borrower nor, to its knowledge, any predecessor-in-interest, has
contaminated lands, wetlands, or waters of others with Hazardous Material in the
course of their respective business operations, (iii) Borrower has never
received any notification from any federal, state, local or other governmental
authority of any potential or known violation of any Environmental Law or
release or threat of release of any Hazardous Material at, on or in connection
with any Facilities or its business operations or any vessel owned, occupied, or
operated by Borrower or any Person for whose conduct Borrower is responsible,
and/or of the incurrence of any expense or loss by such governmental entity, and
(iv) Borrower does not know or have reason to know of any claims, actions,
lawsuits, litigation, proceedings, or investigations pending or threatened
before any governmental entity relating to any environmental matter generally,
nor any basis for any such claim, action, lawsuit, litigation, proceeding or
investigation. As used herein, "predecessor-in-interest" means all Persons who
previously conducted all or any portion of the business conducted by Borrower,
and all persons who previously conducted any business at any Facilities (but
only to the extent of their conduct of such business), and all previous owners
of any Facilities.
SECTION 5.20. INVENTORY. In determining which items of inventory listed
on any schedule of inventory heretofore or hereafter provided by Borrower to
Lenders are Eligible Inventory, Lenders may rely on all statements or
representations made by Borrower or any of them on or with respect to any such
schedule; further, Borrower represents and warrants that:
(a) all inventory is located on premises described in SCHEDULE
5.15 as being premises owned or leased by Borrower, or on such premises
as shall be approved by Agent in writing from time to time (including
the additional locations set forth in SCHEDULE 5.15);
(b) no inventory is subject to any lien or security interest
whatsoever, except as permitted by the terms of this Agreement; and
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(c) except as specified on such schedules of inventory
submitted to Lenders, no inventory is now, or shall at any time or
times hereafter be, stored with a bailee, warehouseman or similar party
without Agent's prior written consent and, if Agent gives such consent,
Borrower will upon the request of Agent cause any such bailee,
warehouseman or similar party to issue and deliver to Lenders in form
and substance acceptable to Lenders, warehouse receipts therefor in
Agent's name for the ratable benefit of Lenders.
VI. CONDITIONS OF MAKING THE ADVANCES AND
ISSUING LETTERS OF CREDIT
SECTION 6.01. The obligation of Lenders to make any Advances on the
Closing Date and to issue the Letters of Credit is subject to the following
conditions precedent:
(a) The representations and warranties set forth in Article V
hereof shall be true and correct on and as of the date hereof;
(b) Borrower shall have executed and/or delivered or caused to
be executed and delivered to Agent on behalf of Lenders the following:
(i) This Agreement and the Note;
(ii) The Security Documents, together with all
instruments required to be delivered pursuant to the terms
thereof;
(iii) A Certificate of the Secretary or Assistant
Secretary of Borrower certifying as to the due authorization,
execution and delivery by Borrower of this Agreement, the
Notes and the Security Documents to be executed by Borrower;
(iv) A Certificate of the Secretary or Assistant
Secretary of Borrower certifying as to its articles and
by-laws and listing the names of officers of Borrower
authorized to sign this Agreement, the Notes, and the Security
Documents to be executed by Borrower and any other documents
or certificates to be delivered pursuant to this Agreement,
together with the true signatures of such officers. Lenders
may conclusively rely on such certificate until Agent shall
receive a further certificate of the Secretary or Assistant
Secretary of Borrower canceling or amending the prior
certificate and submitting the signatures of the officers
named in such further certificate;
(v) Certificates of the Secretary of State and of the
Division of Taxation (if applicable) of the state of
incorporation of Borrower, dated reasonably near the Closing
Date, stating that Borrower is duly organized and in
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good standing in such State and has paid all taxes, fees and
other charges due such State as of the date of such
certificate;
(vi) Certificates of insurance evidencing the
insurance coverage required by Section 7.01 hereof and by the
Security Documents, together with copies of insurance policies
and endorsements naming Agent for the ratable benefit of
Lenders as loss payee in accordance with the requirements of
the Security Documents;
(vii) A Request for Advance, a Borrowing Base
Certificate and an Interest Rate Election, if applicable;
(viii) Copies of all documents, instruments and
agreements described on any Schedule hereto, certified as true
and correct copies by the Secretary of Borrower;
(ix) Copies of all Public Debt documentation;
(x) A copy of the Chief Operating Officer
Compensation Agreement;
(xi) A copy of the Employment Agreement;
(xii) A certificate of the President of Borrower
stating that:
(A) The representations and warranties set forth
in Article V hereof are true and correct on and as of the
Closing Date as though made on and as of such date;
(B) No Event of Default, nor any event which,
upon notice or lapse of time or both, would constitute such an
Event of Default, has occurred or will have occurred after
giving effect to the making of the Advances, the Revolving
Credit Commitment or the Loans;
(C) There has occurred no material adverse
change in the financial condition, business, assets,
prospects, operations or properties of Borrower since January
31, 1997;
(xiii) The pro forma balance sheet and projections
described in Section 5.01 hereof; and
(xiv) Such other supporting documents and
certificates as Lenders may reasonably request on or prior to
the Closing Date.
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(c) Lenders shall have received the favorable written opinion
of Steel Hector & Davis LLP, counsel for Borrower dated the Closing
Date, reasonably satisfactory to Lenders and their counsel in scope and
substance;
(d) Lenders shall have completed their due diligence review of
Borrower and its assets and operations with results satisfactory to
Lenders;
(e) All necessary consents, if any, to the transactions
contemplated hereby shall have been obtained;
(f) Borrower shall be indebted to Halston Borghese, Inc. in
the aggregate principal amount of not more than $2,000,000 evidenced by
the Halston Royalty Note;
(g) All legal matters incident to the transactions
contemplated hereby shall be reasonably satisfactory to counsel for
Lenders;
(h) No Event of Default, nor any event which, upon notice or
lapse of time or both, would constitute such an Event of Default, shall
have occurred; and
(i) Lenders shall have received payment of the fees described
in Section 2.11 hereof in immediately available funds.
SECTION 6.02. SUBSEQUENT ADVANCES.
(a) The obligation of Lenders to make any Advance subsequent to the
Closing Date is subject to the following conditions precedent:
(i) All representations and warranties set forth in Sections
5.02 through 5.20 hereof shall be true and accurate as of the Borrowing
Date for such Advance, except to the extent altered by actions
permitted pursuant to the terms hereof or to the extent Lenders shall
have been advised in writing of any inaccuracy with respect to such
representations and warranties and shall have waived the same in
writing;
(ii) There shall have occurred no material adverse change in
the financial condition, business, prospects, assets, operations, or
properties of Borrower, or in the value of the collateral securing
Borrower's obligations hereunder, in each case since the date of the
most recent financial statements required to be delivered to Agent
under Section 7.04(a) of this Agreement;
(iii) No Event of Default, nor any event which, upon notice or
lapse of time or both, would constitute such an Event of Default, shall
have occurred and be continuing or would have occurred after giving
effect to the borrowing contemplated by such Advance;
(iv) Each such Advance shall continue to be secured by a
perfected first priority lien (except as otherwise permitted by this
Agreement and the Security Documents)
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arising under the Security Documents in favor of Agent for the
ratable benefit of Lenders and Lenders covering the Collateral; and
(vi) No change shall have occurred under any applicable law
which would make any Advance pursuant to the terms hereof illegal, or
make the obligation of Borrower to repay the same voidable.
(b) The obligation of Lenders to make any Advance subsequent to the
Closing Date is also subject to the additional condition precedent that Agent
shall have received with respect to such Advance a Request for Advance and an
Interest Rate Election, if applicable.
SECTION 6.03. LETTERS OF CREDIT.
The obligation of the Agent to issue, extend or renew, or to cause any
Affiliate to extend, issue or renew any Letter of Credit after the Closing Date,
and the obligation of the Lenders to purchase a participation interest in any
such Letter of Credit, is subject to all of the conditions precedent set forth
in Section 6.02 and to the following additional conditions precedent:
(i) The Borrower shall have executed all Letter of Credit
Documents as may be reasonably required by the Agent; and
(ii) The Agent shall have received in immediately available
funds payment of any fees due and payable under Section 4.11(d) and (f)
hereof.
VII. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, from the date hereof and until
payment in full of the principal of and interest on, the Notes and any other
indebtedness, liabilities and obligations of Borrower to Lenders, whether now
existing or arising hereafter, unless the prior written consent of Majority
Lenders shall have been obtained, Borrower will:
SECTION 7.01. PRESERVATION OF EXISTENCE. (a) Do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
corporate existence and its rights, licenses, permits and franchises applicable
to it; at all times maintain, preserve and protect all such franchises,
trademarks, trade names, service marks, copyrights, know-how and patents, and
preserve all the remainder of its property used or useful in the conduct of its
business and keep the same in good repair, working order and condition, and from
time to time, make, or cause to be made, all needful and proper repairs,
renewals, replacements, betterments and improvements thereto, as are necessary
in the reasonable business judgment of Borrower so that the business carried on
in connection therewith may be properly and advantageously conducted at all
times; and keep its insurable properties adequately insured at all times in the
reasonable business judgment of Borrower, by financially sound and reputable
insurers, to such extent and against such risks, including fire and other risks
insured against by extended coverage, and maintain liability and such other
insurance, as is required by the Security Documents or, if greater, as is
customarily maintained by similarly situated companies engaged in similar
businesses, and upon
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request of Lenders, furnish to Agent satisfactory evidence of the same; and
notify Agent of any material change in the insurance maintained on Borrower's
properties after the date hereof and furnish Agent satisfactory evidence of any
such change. In the event that Borrower shall default in the performance of any
of its obligations under this Section, Lenders may, at their option, effect such
insurance coverage with an insurer acceptable to Lenders and add the premium(s)
paid therefor to the principal amount of the indebtedness incurred pursuant
hereto, and the amount of such premium shall be payable by Borrower on demand
with interest thereon at the highest rate payable hereunder.
(b) Comply with all applicable laws and regulations applicable to it
whether now in effect or hereafter enacted; provided that it shall not be
required to so comply with any such law or regulation so long as it shall
contest the same in good faith by appropriate proceedings diligently pursued and
the effects of any such non-compliance would not be materially adverse to
Borrower or its condition, financial or otherwise.
(c) To the extent not prohibited hereunder, pay, perform and fulfill
all of its obligations and covenants under each material document, instrument or
agreement to which it is a party or by which it is bound, all in accordance with
their respective terms; PROVIDED, HOWEVER, that with respect to any such
documents, instruments and agreements (other than the Transaction Documents and
any other documents, instruments or agreements with or in favor of Lenders or
Agent), so long as Borrower is contesting in good faith any alleged failure by
it to pay, perform and fulfill such obligations and covenants by proper
proceedings and has made any proper reserve or other provision in accordance
with GAAP on account thereof, Borrower shall not be deemed in violation of this
Section 7.01(c); PROVIDED FURTHER that payment, performance or fulfillment of
such obligations and covenants shall be made or completed before any of its
property shall be seized or foreclosure proceedings commenced in satisfaction
thereof.
SECTION 7.02. TAXES. Pay and discharge or cause to be paid and
discharged all taxes, assessments and governmental charges or levies imposed
upon it or upon its respective income and profits or upon any of its property,
real, personal or mixed, or upon any part thereof, before the same shall become
in default, as well as all lawful claims for labor, materials and supplies or
otherwise, which, if unpaid, might become a lien or charge upon such properties
or any part thereof; provided that it shall not be required to pay and discharge
or cause to be paid and discharged any such tax, assessment, charge, levy or
claim so long as the validity thereof shall be contested in good faith by
appropriate proceedings and it shall have set aside on its books adequate
reserves with respect to any such tax, assessment, charge, levy or claim, so
contested.
SECTION 7.03. NOTICES. Give prompt written notice to Agent of any
proceedings instituted against Borrower by or in any federal or state court or
before any commission or other regulatory body, whether federal, state or local,
which, if adversely determined, would have a material adverse effect upon its
business, operations, prospects, properties, assets, or condition, financial or
otherwise, including any notice of non-compliance by Borrower with any
Environmental Law.
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SECTION 7.04. FINANCIAL STATEMENTS. Furnish to Agent:
(a) Within ninety (90) days of the end of each fiscal year of
Borrower, a consolidated and consolidating balance sheet and
consolidated and consolidating statements of income, of changes in
stockholders' equity and of cash flows of Borrower and its
Subsidiaries, together with notes to financial statements, audited by
Deloitte & Touche or other independent certified public accountants
selected by Borrower and reasonably acceptable to Lenders, the form of
certification to be also reasonably satisfactory to Lenders, showing
the financial condition of Borrower and its Subsidiaries at the close
of such fiscal year and the results of operations during such year, and
to be on a comparative basis with the corresponding statements for the
preceding fiscal year on a consolidated basis; such statements shall be
accompanied by (i) a statement by such accountants to the effect that
such financial statements have been prepared in accordance with GAAP
applied on a basis consistent with prior years (except as to changes
with which such accountants concur) and fairly present the financial
condition of Borrower and its Subsidiaries at the dates thereof and the
results of its operations for the periods covered thereby and (ii) a
management letter from such accountants to Borrower;
(b) Within forty-five (45) days after the end of each quarter
in each such fiscal year, commencing with the quarter ending July 31,
1997, a consolidated and consolidating balance sheet and statements of
income, of changes in stockholders' equity and of cash flows of
Borrower and its Subsidiaries on a consolidated and consolidating
basis, prepared by Borrower and certified by its chief financial
officer, such balance sheet to be as of the close of such quarter and
such statements of income, of changes in stockholders' equity and of
cash flows to be for the period from the beginning of the then current
fiscal year to the end of such quarter, and to set forth in comparative
form the corresponding figures for the corresponding quarter(s) of the
preceding fiscal year, in each case subject to normal audit and
year-end adjustments;
(c) Within thirty (30) days after the end of each month in
each such fiscal year, commencing with the month ending April 30, 1997,
a consolidated and consolidating balance sheet and statement of income,
prepared by Borrower and certified by its chief financial officer, such
balance sheet to be as of the close of such month and such statement of
income to be for the period from the beginning of the then current
fiscal year to the end of such month, in each case subject to normal
audit and year-end adjustments, together with a written statement by
the President or chief financial officer describing, in reasonable
detail, any material changes in the financial condition and prospects
of Borrower and the reasons therefor;
(d) Concurrently with the delivery of any and all financial
statements required by Section 7.04(a) or (b), a certificate of the
chief financial officer of Borrower in substantially the form of
EXHIBIT E attached hereto and made a part hereof (i) calculating,
setting forth and certifying, to the best knowledge of such officer
after diligent inquiry, as to the accuracy of the amounts required to
be calculated under Sections 7.08 through 7.11, 8.01(d), 8.01(h), 8.06,
and 8.09 through 8.11 hereof, and (ii) certifying as to the fact
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that such officer has examined such financial statements and the
provisions of this Agreement and that, to the best knowledge of such
officer after diligent inquiry, no Event of Default, nor any event
which upon notice or lapse of time or both, would constitute such an
Event of Default, has occurred;
(e) Ninety (90) days after the end of each fiscal year of
Borrower, commencing with the fiscal year ending January 31, 1997,
projections in reasonable detail of the operating budget and cash flow
of Borrower and its Subsidiaries for each of its two next succeeding
fiscal years, prepared by Borrower, and also containing a certification
by its chief financial officer to the effect that such projections have
been prepared on a sound financial planning basis in accordance with
GAAP and that the assumptions upon which such projections are based are
reasonable;
(f) Within fifteen (15) days after the end of each month in
each fiscal year of Borrower, a Borrowing Base Certificate, together
with a schedule setting forth in reasonable detail Borrower's inventory
and the agings of all accounts receivable of Borrower, certified by
Borrower's chief financial officer as of the end of such month;
(g) Written notice of any of the following events, as soon as
possible and in any event within 15 days after Borrower knows or has
reason to know thereof: (i) the occurrence or expected occurrence of
any Reportable Event with respect to any Plan, or (ii) the institution
of proceedings or the taking or expected taking of any other action by
PBGC or Borrower or any Commonly Controlled Entity to terminate,
withdraw or partially withdraw from any Plan and, with respect to any
Multiemployer Plan, the Reorganization (as defined in Section 4241 of
ERISA) or Insolvency (as defined in Section 4245 of ERISA) of such Plan
and, in addition to such notice, deliver to Lenders whichever of the
following may be applicable (x) a certificate of the chief financial
officer of Borrower setting forth details as to such Reportable Event
and the action that Borrower or such Commonly Controlled Entity
proposes to take with respect thereto, together with a copy of any
notice of such Reportable Event that may be required to be filed with
PBGC, or (y) any notice delivered by PBGC evidencing its intent to
institute such proceedings or any notice to PBGC that such Plan is to
be terminated, as the case may be;
(h) Promptly upon circulation or filing thereof, copies of any
material written reports issued by any Borrower to any of its
stockholders or any material creditors relating to the Borrower's
financial condition, and copies of all regular, periodic and special
reports and all registration statements which the Borrower files or is
required to file with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any
national securities exchange; and
(i) Promptly, from time to time, such other information
regarding the operations, assets, business, affairs and financial
condition of Borrower (including, without limitation, any updated
Borrowing Base Certificate), as Lenders may reasonably request.
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SECTION 7.05. INSPECTION. Permit Lenders and their agents or
representatives, at reasonable hours and upon reasonable notice, at any time and
from time to time, at Borrower's sole reasonable expense, to inspect the
properties and books and records of the Borrower and to make abstracts or
reproductions thereof and to discuss the business affairs of Borrower with any
of its officers or any attorney or accountant engaged to perform services for
it; provided that, so long as no Event of Default shall have occurred and be
continuing audits at Borrower's reasonable expense shall be conducted no more
frequently than once a quarter.
SECTION 7.06. MATERIAL ADVERSE CHANGE. Promptly advise Agent of any
material adverse change in the business, operations, prospects, properties,
assets or condition, financial or otherwise, of Borrower or of the occurrence of
any Event of Default, or of the occurrence of any event which upon notice or
lapse of time or both, would constitute such an Event of Default.
SECTION 7.07. ACCOUNTING. Maintain a standard system of accounting in
accordance with GAAP with only such exceptions as are reasonably acceptable to
Lenders.
SECTION 7.08. RATIO OF INDEBTEDNESS TO CAPITAL BASE. Maintain as at the
last day of each fiscal quarter of Borrower a maximum ratio of (A) Indebtedness
of Borrower as at such date LESS the aggregate principal amounts outstanding
under the Subordinated Debentures as at such date to (B) the Capital Base of
Borrower as at such date, of 3.0 to 1.0.
SECTION 7.09. SHAREHOLDERS' EQUITY BASE. Maintain at the end of each
fiscal quarter Shareholders' Equity Base at least equal to $37,000,000 ("Minimum
Amount") from the Closing Date through and including the fiscal quarter ending
January 31, 1997; provided, however, such Minimum Amount shall be increased
ninety (90) days following each fiscal year end after January 31, 1997 in an
amount equal to 50% of the net income of Borrower for the preceding fiscal year,
and; provided further, the Minimum Amount shall be immediately increased by an
amount equal to the net proceeds received by Borrower as a result of any Public
Offering, upon Borrower's receipt of the net proceeds therefrom.
SECTION 7.10. MINIMUM DEBT SERVICE COVERAGE. Maintain at the end of
each fiscal quarter for the twelve preceding months then ended, a minimum ratio
of EBITDA less Capital Expenditures to Interest Expense plus CMLTD of 1.25 to
1.00 for the fiscal quarters including the quarter ending on January 31, 1998
and 1.40 to 1.00 thereafter.
SECTION 7.11. MINIMUM INTEREST COVERAGE. Maintain at the end of each
fiscal quarter for the twelve preceding months then ended, a minimum ratio of
Operating Cash Flow to Interest Expense of 1.35 to 1.0 for the fiscal quarters
including the quarter ending on January 31, 1998 and 1.50 to 1.0 thereafter.
For purposes of the calculations required in connection with Sections 7.08,
7.09, 7.10 and 7.11 hereof, all tests shall be determined on a consolidated
basis.
SECTION 7.12. PRINCIPAL DEPOSITORY. Use Agent as the principal
depository of its corporate funds.
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VIII. NEGATIVE COVENANTS.
Borrower covenants and agrees that, until payment in full of the
principal of and interest on, the Notes and any other indebtedness, liabilities
or obligations of Borrower to Lenders, whether now existing or arising
hereafter, unless the prior written consent of Majority Lenders shall have been
obtained, Borrower will not, directly or indirectly:
SECTION 8.01. INDEBTEDNESS. Incur, create, assume, become or be liable
in any manner with respect to, or permit to exist, any Indebtedness, except:
(a) Indebtedness to Lenders;
(b) Indebtedness with respect to trade obligations and other
normal accruals in the ordinary course of business not yet due and
payable, or with respect to which it is contesting in good faith the
amount or validity thereof by appropriate proceedings, and then only to
the extent it has set aside as to such contested amounts on its books
adequate reserves therefor;
(c) Endorsements of negotiable instruments for collection in
the ordinary course of business;
(d) Indebtedness representing (i) existing Capitalized Lease
Obligations or Purchase-Money Indebtedness described on SCHEDULE
8.01(D) hereto (but not any renewals or refinancings thereof), (ii)
additional Capitalized Lease Obligations or Purchase-Money Indebtedness
in an aggregate amount not to exceed $100,000 (but only to the extent
such additional Indebtedness is incurred within the limits set forth in
Section 8.10 hereof), and (iii) Capitalized Lease Obligations or
Purchase-Money Indebtedness exceeding the amount described in (ii)
above, but only under terms and conditions and in amount acceptable to
Lenders.
(e) Deferred taxes, but only to the extent it has set aside on
its books adequate reserves in accordance with GAAP;
(f) Indebtedness to the Subordinated Creditors evidenced by
the Subordinated Debentures in an aggregate principal amount not to
exceed at any time outstanding $12,560,034 only so long as such
Indebtedness is subordinated to Indebtedness of Borrower to Lenders;
(g) Indebtedness to Seller evidenced by the Halston Royalty
Note in a principal amount not to exceed at any time outstanding
$2,000,000;
(h) Obligations under existing Plans maintained in accordance
with the terms of this Agreement, but only to the extent it has set
aside on its books adequate reserves in accordance with GAAP;
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(i) Indebtedness to Heller evidenced by the Heller Factoring
Agreement;
(j) Indebtedness pursuant to foreign currency exchange
contracts in aggregate face amounts not to exceed $200,000 at any time
outstanding;
(k) Indebtedness issued pursuant to the Public Debt;
(l) the Mortgage Indebtedness; and
(m) Indebtedness incurred in connection with an acquisition
permitted under Section 8.08 hereof.
SECTION 8.02. LIENS AND ENCUMBRANCES. Create, incur, assume or suffer
to exist any mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets, now or hereafter owned, other than:
(a) liens securing the payment of taxes, either not yet
delinquent or the validity of which is being contested in good faith by
appropriate proceedings, and as to which it shall have set aside on its
books adequate reserves in accordance with GAAP;
(b) deposits under workers' compensation, unemployment
insurance and social security laws, or to secure the performance of
bids, tenders, contracts (other than for the repayment of borrowed
money) or leases, or to secure statutory obligations or surety or
appeal bonds, or to secure indemnity, performance or other similar
bonds in the ordinary course of business;
(c) carriers', warehousemen's and mechanics' liens, incurred
by it in good faith in the ordinary course of business, and liens
arising out of a judgment or award against it with respect to which it
shall currently be prosecuting an appeal, a stay of execution pending
such appeal having been secured;
(d) liens in favor of Agent for the ratable benefit of Lenders
or Lenders;
(e) liens securing Indebtedness permitted by Section 8.01(d)
hereof, PROVIDED that the liens securing such Indebtedness shall be
confined solely to the assets purchased from the proceeds of such
Indebtedness or assets required to be capitalized in connection with
such Indebtedness;
(f) liens and other encumbrances permitted pursuant to the
Security Documents;
(g) liens in favor of the Subordinated Creditors;
(h) liens in favor of Heller so long as the Heller
Intercreditor Agreement is in full force and effect;
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(i) the First Mortgage;
(j) liens and encumbrances disclosed on SCHEDULE 5.06 hereof;
and
(k) liens and encumbrances incurred in connection with an
acquisition permitted under Section 8.08 hereof.
SECTION 8.03. GUARANTEES. Guarantee, endorse or otherwise in any way
become or be responsible for, obligations of any other Person, whether by
agreement to purchase Indebtedness of any other Person, or agreement for the
furnishing of funds to any other Person, through purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan,
for the purpose of paying or discharging any Indebtedness or obligation of such
other Person, or otherwise (except endorsements on negotiable instruments for
collection in the ordinary course of business and except for that certain
Guarantee Agreement, dated March 16, 1995, from Borrower to Geoffrey Beene,
Inc.).
SECTION 8.04. SALE - LEASEBACKS. Enter into any arrangements, directly
or indirectly, with any Person whereby it shall sell or transfer any property or
asset, real, personal or mixed, used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such property or
asset.
SECTION 8.05. SALE OF ASSETS. Sell, lease, transfer or otherwise
dispose of all or any portion of its properties or assets to any Person, except
in the ordinary course of its business (which ordinary course shall include the
sale or other disposition of obsolete or excess inventory, fixtures or equipment
to the extent ordinary and consistent with past practice including machinery and
equipment related to the manufacture of footwear), or turn over the management
of, or enter into a management contract with respect to, such properties or
assets; provided, however, Borrower may, prior to the end of each calendar year,
assign its Accounts and other intangible assets, to FRM Services so long as the
Borrower shall take such action as Agent may require to perfect or continue to
perfect the Agent's security interest in the Accounts.
SECTION 8.06. INVESTMENTS. Purchase, invest in or otherwise acquire or
hold securities, including, without limitation, capital stock or other
securities or evidences of Indebtedness of, or make loans or advances to, or
enter into any arrangement for the purpose of providing funds or credit to, any
Person, except:
(a) advances to employees for business expenses or for
personal needs not to exceed Twenty Thousand Dollars ($20,000) in the
case of any one (1) employee and not to exceed Fifty Thousand Dollars
($50,000) in the aggregate to all such employees of Borrower
outstanding at any one time;
(b) investments in short-term obligations of the United States
of America;
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(c) demand deposits, certificates of deposit, bankers'
acceptances and time deposits of United States banks having total
assets in excess of $250,000,000;
(d) securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof which at the time of purchase
have been rated and the ratings for which are not less than "P-1" if
rated by Moody's Investors Services, Inc., and not less than "A-1" if
rated by Standard & Poor's;
(e) investments in money market funds, liquid assets funds and
other similar funds purchasing, investing in or otherwise acquiring or
holding only investments otherwise permitted by paragraphs (b) through
(d) of this Section 8.06;
(f) investments in Fine Fragrances, evidenced by Capital Stock
of Fine Fragrances issued to Borrower;
(g) investments in G.B. Parfums, evidenced by Capital Stock of
G.B. Parfums issued to Borrower;
(h) investments in Halston, evidenced by Capital Stock of
Halston issued to Borrower;
(i) investments in FRM Services, evidenced by Capital Stock of
FRM Services issued to Borrower; and
(j) investments permitted pursuant to Section 8.08 hereof
SECTION 8.07. CHANGES. Dissolve, liquidate or commence the winding up
of its affairs, or merge or consolidate with or into any Person, except for the
merger of any Subsidiary with or into any other wholly-owned Subsidiary or the
Borrower.
SECTION 8.08. ASSET PURCHASES. Except in the case of the Borrower and
its Subsidiary, acquire all or substantially all of the assets of any Person,
except that Borrower or any of its Subsidiaries may, without the prior written
consent of Lenders, acquire all or substantially all of the assets of any Person
so long as (a) Borrower gives Lenders prior written notice of such acquisition,
(b) such acquisition is in the same, similar or complementary business of
Borrower, (c) neither Borrower nor any Subsidiary shall assume or create any
liabilities or contingent obligations in connection with such acquisition in an
amount in excess of $50,000,000 in the aggregate, (d) Agent for the ratable
benefit of Lenders has a first priority security interest in the Accounts and
Inventory acquired immediately following such acquisition, (e) the purchase
price for such assets, when added to the purchase price paid for all other
acquisitions of assets permitted pursuant to this Section 8.08 do not exceed
$50,000,000 in the aggregate for the then current fiscal year and (f) there
exists no Event of Default, or any event which, with the giving of notice or
passage of time or both, or after giving effect to such acquisition, would
constitute an Event of Default. In connection with any such acquisition, the
Borrower or any such Subsidiary
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shall be permitted to secure the indebtedness permitted pursuant to clause (c)
of this Section 8.08 with the assets acquired (other than Accounts and
Inventory).
SECTION 8.09. DIVIDENDS AND DISTRIBUTIONS. Declare or pay any dividends
(other than stock dividends) or make any other distribution of cash or property
to any of its stockholders (other than in connection with the terms of any
outstanding warrants), or directly or indirectly redeem, purchase or otherwise
acquire for consideration, any shares of its Capital Stock (a "Restricted
Distribution"), except that Borrower may make payments (a) to the holders of the
Subordinated Debentures and the Halston Royalty Note to the extent such payments
are not prohibited under Section 8.12 hereof, (b) pursuant to the terms of the
FMG Consulting Agreement, (c) pursuant to the terms of the Employment Agreement,
(d) pursuant to the terms of the Chief Operating Officer Compensation Agreement,
(e) pursuant to the Bonus Plan and (f) additional Restricted Distributions
(exclusive of those set forth in subsections (a) through (e) hereof) in an
amount not to exceed $50,000 in the aggregate per annum.
SECTION 8.10. CAPITAL EXPENDITURES. Make Capital Expenditures during
any fiscal year in excess of $2,500,000.
SECTION 8.11. CAPITAL LEASES. Incur obligations under any lease not
deemed to be a Capitalized Lease if the aggregate rental payable by Borrower
during any fiscal year under all such leases in effect at any one time during
such year exceeds $100,000 plus the obligations outstanding under the Lease.
SECTION 8.12. SUBORDINATED PAYMENTS.
(a) Make any payments to the holder(s) of the Subordinated Debentures,
whether on account of principal, premium, if any, or interest due thereunder if
an Event of Default has occurred and is continuing.
(b) Make any payment of regularly scheduled principal to the holders of
the FMG Subordinated Debentures unless the Borrower is maintaining a Debt
Service Coverage (as required by Section 7.10 hereof) of at least 1:50:1.0, and
(c) Make any payment of regularly scheduled interest to the holders of
the FMG Subordinated Debentures unless Borrower is maintaining an interest
coverage ratio (as required by Section 7.11 hereof) of 1.75:1.0.
SECTION 8.13. TRANSACTIONS WITH AFFILIATES. Conduct or enter into any
business or transaction or series of related transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate except on terms and conditions determined in good
faith by the Board of Directors of Borrower to be no less favorable to Borrower
than could be obtained in arms-length transactions with unaffiliated Persons,
except (i) for the FMG Consulting Agreement, the G.B. Parfums Sublicense
Agreement, the Halston License Agreement, the Employment Agreement, the Chief
Operating Officer Compensation Agreement and the Bonus Pool, (ii) transfers to
FRM Services as permitted pursuant to Section
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8.05 and (iii) the granting of a license by Fine Fragrances to the Borrower for
the use of the trademarks and trademark application owned by Fine Fragrances and
the payment of royalties thereunder.
SECTION 8.14. ACCOUNTS RECEIVABLE. Except for (i) the sale of Accounts
pursuant to the Heller Factoring Agreement and (ii) transfers permitted to FRM
Services pursuant to Section 8.05, sell, assign, discount or dispose in any way
of any accounts receivable, promissory notes or trade acceptances, with or
without recourse, except for collection (including endorsements) in the ordinary
course of business.
SECTION 8.15. ERISA. (a) Terminate any Plan so as to result in any
material liability to PBGC, including, without limitation, any contingent or
secondary withdrawal liability within the meaning of Sections 4201 and 4202 of
ERISA to any Multiemployer Plan, (b) engage in any "prohibited transaction" (as
defined in section 4975 of the Code) involving any Plan which would result in a
material liability for an excise tax or civil penalty in connection therewith,
(c) incur or suffer to exist any material "accumulated funding deficiency" (as
defined in Section 302 of ERISA or section 412 and/or 418B of the Code), whether
or not waived, involving any Plan, (d) allow or suffer to exist any event or
condition, which presents a material risk of incurring a material liability to
PBGC by reason of termination of any such Plan or (e) cause or permit any Plan
maintained by Borrower and/or any Commonly Controlled Entity to be administered
in a manner which is not in material compliance with ERISA, the Code and/or
Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L.
99-272), as amended.
SECTION 8.16. AMENDMENTS; MODIFICATIONS. Amend, waive or modify in any
material respect any of the terms of (a) the documentation evidencing the Public
Debt, (b) the Subordinated Debentures (c) the Halston Royalty Note, (d) the FMG
Consulting Agreement or (e) the Chief Operating Officer Compensation Agreement.
SECTION 8.17. CHANGE IN BUSINESS. Engage, directly or indirectly, in a
business substantially different from the business conducted by Borrower during
the preceding calendar year .
SECTION 8.18. FISCAL YEAR. Change the fiscal year of Borrower.
SECTION 8.19. SUBSIDIARIES. Sell, assign or otherwise dispose of, or
directly or indirectly create, incur, assume or suffer to exist any mortgage,
pledge, lien, charge or other encumbrance or any nature whatsoever on,
Borrower's Capital Stock in Fine Fragrances, G. B. Parfums, Halston or FRM
Services, except as provided in Section 8.02 hereof.
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IX. DEFAULTS
In case of the occurrence of any one or more of the following events
(each of which event is herein and in the Notes and the Security Documents
sometimes called an "Event of Default"):
(a) any representation or warranty made herein or in any
Security Document, or in any report, certificate, financial statement
or other instrument furnished to Agent or Lenders in connection with
this Agreement, or any borrowing hereunder, shall prove to be false or
misleading in any material respect when made or deemed to have been
made;
(b) default (i) in the payment of any installment of the
principal of or interest on the Notes or any other Indebtedness of
Borrower to Lenders, whether at the due date thereof or at a date fixed
for prepayment, by acceleration, demand or otherwise, or (ii) in the
payment of any other amount or fee due to Lenders hereunder or under
any of the Security Documents and the continuation of any such default
described in this clause (ii) for five (5) days after written notice
thereof by such Agent to Borrower;
(c) default in the due observance or performance of any
covenant, condition or agreement contained in any Section of Article
VII (except for Sections 7.01, 7.02 or 7.07) or any Section of Article
VIII hereof;
(d) default in the due observance or performance of any other
covenant, condition or agreement on the part of Borrower to be observed
or performed pursuant to the terms hereof or pursuant to the terms of
any of the Security Documents (other than as set forth in subparagraphs
(b) and (c) above), and such default shall continue unremedied for
thirty (30) days after written notice thereof by the Agent to Borrower;
(e) (i) default under any other Indebtedness of Borrower
(other than to any of Lenders) in an amount outstanding which exceeds
One Hundred Thousand Dollars ($100,000) at the time of such default if,
as a result of such default, the holder thereof would be entitled to
accelerate the maturity of such Indebtedness (after any applicable
notice and the passage of any applicable grace period), or (ii) if any
Indebtedness described in clause (i) above is not paid when due and
payable, whether at the due date thereof or a date fixed for
prepayment, by demand or otherwise;
(f) dissolution, liquidation, winding-up, or termination of
existence of Borrower;
(g) if Borrower shall (i) apply for or consent to the
appointment of a receiver, trustee, custodian or liquidator of it or
any of its property, (ii) admit in writing its inability to pay its
debts as they mature, (iii) make a general assignment for the benefit
of creditors, (iv) be adjudicated a bankrupt or insolvent or be the
subject of an order for relief under Title 11 of the United States
Code, or (v) file a voluntary petition in bankruptcy, or a petition or
an answer seeking reorganization or an arrangement with creditors or to
take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or an
answer admitting the
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material allegations of a petition filed against it in any proceeding
under any such law or if action shall be taken for the purpose of
effecting any of the foregoing;
(h) an order, judgment or decree shall be entered, without the
application, approval or consent of Borrower by any court of competent
jurisdiction, approving a petition seeking reorganization of Borrower
or appointing a receiver, trustee, custodian or liquidator of Borrower
or of all or a substantial part of its assets, and such order, judgment
or decree shall continue unstayed and in effect for any period of
thirty (30) consecutive days;
(i) final judgment for the payment of money in excess of an
aggregate of One Hundred Thousand Dollars ($100,000) shall be rendered
against Borrower and the same shall remain undischarged for a period of
thirty (30) consecutive days, during which period execution shall not
be effectively stayed or bonded, unless such judgment shall be covered
by an insurance policy maintained by Borrower in full force and effect
without notice of the denial of or any challenge to a claim brought in
respect thereof;
(j) the occurrence of any attachment of any deposits or other
property of Borrower in the hands or possession of Agent for the
ratable benefit of Lenders or Lenders, which shall not be discharged,
stayed or bonded within thirty (30) days of the date of such
attachment;
(k) the occurrence of any attachment of any other property of
Borrower in an amount exceeding Fifty Thousand Dollars ($50,000), which
shall not be discharged, bonded or stayed pending appeal within thirty
(30) days of the date of such attachment;
(l) an Event of Default under any of the Security Documents
shall have occurred and be continuing beyond any applicable grace
period;
(m) an Event of Default under any of the Subordinated
Debentures or the Halston Royalty Note shall have occurred and be
continuing beyond any applicable grace period;
then and in every such Event of Default which shall be continuing, Majority
Lenders may declare the obligation to make the Advances to be terminated,
whereupon the same shall forthwith terminate, and Majority Lenders may, by
notice to Borrower, declare the entire unpaid principal amount of the Notes and
all fees and interest accrued and unpaid thereon and/or under this Agreement and
any and all other Indebtedness of Borrower to Lenders and/or to any holder of
all or any portion of the Notes to be forthwith due and payable, whereupon the
Notes and all such accrued fees and interest and other Indebtedness shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
Borrower; provided, however that upon the occurrence of an Event of Default
under Article IX (g) or (h) hereof, all of the unpaid principal amount of the
Notes, all fees and interest accrued and unpaid thereon and/or under this
Agreement and any and all other Indebtedness of Borrower to Lenders and/or to
any such holder shall thereupon become and be forthwith due and payable in full
without any need for Lenders to make any such declaration or
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take any action, and Lenders' obligations to make the Advances shall
simultaneously terminate. Upon the occurrence of any Event of Default, Lenders,
without regard to the value or adequacy of the security for the Indebtedness of
Borrower under the Transaction Documents, shall be entitled as a matter of
right, if they so elect, to the appointment of or taking possession by a
trustee, receiver or liquidator (or other similar official) of all or any
substantial part of the properties of Borrower, for the purpose of collecting
all rents, income and other benefits thereof, or of liquidating all or any part
of the collateral, and applying such rents, income or other benefits or the
proceeds of such liquidation to the Indebtedness of Borrower to Lenders (or to
such other indebtedness as the court appointing such trustee, receiver,
liquidator or other official may direct). The remedies specified herein are
cumulative and not exclusive of any other remedy after any particular Event of
Default and shall not operate as a waiver of any remedy in that or in any
subsequent instance.
X. MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS
SECTION 10.01. (a) Upon the occurrence of an Event of Default, or the
occurrence of any event which, with the giving of notice or passage of time or
both, would constitute an Event of Default, or a material change in the value of
the collateral securing Borrower's obligations under this Agreement, the Notes
and the other Transaction Documents, upon request of Majority Lenders, Borrower
shall arrange for all payments due to Borrower from any Person, including, but
not limited to, customers or account debtors of Borrower, to be made directly to
lock-boxes owned or designated by Agent to which Agent or its designee shall
have exclusive access for the purpose of collecting and processing payments on
Accounts, or in such other manner as Majority Lenders may reasonably direct.
Agent shall credit all payments made with respect to Accounts of Borrower to
Borrower's account, conditioned upon final collection. All items of payment
received (subject to dishonor) upon the collection of any Account shall be
applied (conditioned upon final collection) by Agent to outstanding Advances the
Business Day payment is received by Agent in immediately available funds at its
office in Providence, Rhode Island. Any such payment which is not received in
such form or prior to 12:00 Noon (Providence, Rhode Island time) shall be deemed
received for all purposes of this Agreement on the next succeeding Business Day
on which such funds become immediately available prior to such time.
(b) In the event Borrower (or any Affiliate of Borrower or any Person
acting for or in concert with Borrower) shall, notwithstanding the existence of
any lock-box arrangement referred to in subsection (a) of this Section 10.01,
receive any monies, checks, drafts or other similar negotiable items of payments
made with respect to Accounts of Borrower, Borrower or such Persons shall
receive the same in trust and shall deliver to Agent (or to a depository
designated by Agent) in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness.
(c) Upon the occurrence of an Event of Default, or the occurrence of
any event which, with the giving of notice or passage of time or both, would
constitute an Event of Default, or the occurrence of a material change in the
value of the collateral securing Borrower's obligations under this Agreement,
the Notes and the other Transaction Documents, Borrower will, at Majority
Lenders' request, at Borrower's cost and expense, collect and otherwise enforce
as
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Lenders' property and in trust for Agent for the ratable benefit of Lenders all
amounts payable on or otherwise receivable with respect to the Accounts and
Inventory of Borrower. In such event, as to all moneys so collected and all
other proceeds of Accounts and Inventory received by Borrower, Borrower shall
receive in trust and shall deliver to Agent (or to a lock-box designated by
Agent pursuant to Section 10.01(a) hereof) in original form and on the date of
receipt thereof, all checks, drafts, notes, money orders, acceptances, cash and
other evidences of Indebtedness. Upon any termination of Borrower's authority to
collect and enforce the Accounts and amounts payable with respect to Inventory
of Borrower (which Agent may do at any time after the occurrence of an Event of
Default, or the occurrence of any event which, with the passage of time or
giving of notice or both, would constitute an Event of Default, or the
occurrence of a material change in the value of the collateral securing
Borrower's obligations under this Agreement, the Notes and the other Transaction
Documents), Agent may send a notice of assignment and/or notice of Lenders'
security interest to any and all customers or any third party otherwise
concerned with any of the Accounts or such Inventory, and thereafter Agent shall
have the sole right to collect and receive and/or take possession of the
Accounts and such other amounts and the books and records relating thereto.
(d) (i) Borrower hereby constitutes Agent or its designee on
behalf of Lenders as Borrower's attorney-in-fact with power: to receive,
endorse, assign and/or deliver in its name or the name of Borrower on any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
account that may come into its possession and Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed; to sign
Borrower's name on any invoice or bill of lading relating to any of the
Accounts, drafts against customers, assignments and verifications of Accounts
and notices to customers; to send verifications of Accounts; to do all other
acts and things necessary to carry out this Agreement and, upon the occurrence
of an Event of Default, or the occurrence of any event which, with the giving of
notice or passage of time or both, would constitute an Event of Default, to
notify postal service authorities to change the address for delivery of mail
addressed to Borrower to such address as Agent may designate. All acts of said
attorney or designee are hereby ratified and approved, and said attorney or
designee shall not be liable for any acts of omission or commission, for any
error of judgment or for any mistake of fact or law, provided that Agent or its
designee shall not be relieved of liability to the extent it is determined by a
final judicial decision that its act, error or mistake constituted gross
negligence or willful misconduct. This power of attorney, being coupled with an
interest, is irrevocable until all of the obligations of Borrower to Agent under
this Agreement and the Notes are paid in full and this Agreement is terminated.
(ii) Agent, on behalf of the Lenders, without notice to or
consent of Borrower, upon the occurrence of an Event of Default under
subsections (g) or (h) of Article IX hereof or upon the occurrence and during
the continuance of any other Event of Default, (A) may make demand on, sue upon
or otherwise collect, extend the time of payment of, or compromise or settle for
cash, credit or otherwise upon such terms as shall be determined by Agent in its
sole discretion, any of the Accounts or any securities, instruments or insurance
applicable thereto and/or release the obligor thereon; and (B) is authorized and
empowered to accept the return of the goods represented by any of the Accounts.
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(e) Nothing herein contained shall be construed to constitute
Borrower as agent of Agent for any purpose whatsoever, and Agent shall not be
responsible or liable for any shortage, discrepancy, damage, loss or destruction
of any part of the Collateral wherever the same may be located and regardless of
the cause thereof (except for Agent's obligations, if any, under the Uniform
Commercial Code with respect thereto or to the extent it is determined by a
final judicial decision that Agent's act or omission constituted gross
negligence or willful misconduct). Agent shall not, under any circumstances or
in any event whatsoever, have any liability for any error or omission or delay
of any kind occurring in the settlement, collection or payment of any of the
Accounts or any instrument received in payment thereof or for any damage
resulting therefrom (except to the extent it is determined by a final judicial
decision that Agent's error, omission or delay constituted gross negligence or
willful misconduct). Agent, by anything herein or in any assignment or
otherwise, does not assume any of Borrower's obligations under any contract or
agreement assigned to Agent, and Agent shall not be responsible in any way for
the performance by Borrower of any of the terms and conditions thereof.
(f) If any of the Accounts include a charge for any tax
payable to any governmental tax authority, Agent is hereby authorized (but in no
event obligated) in its discretion to pay the amount thereof to the proper
taxing authority for Borrower's account and to charge Borrower's account
therefor. Borrower shall notify Agent if any Accounts include any tax due to any
such taxing authority and, in the absence of such notice, Agent shall have the
right to retain the full proceeds of such Accounts and shall not be liable for
any taxes that may be due from Borrower by reason of the sale and delivery
creating such Accounts.
SECTION 10.02. ACCOUNTS DOCUMENTATION. Borrower will, in addition to
the monthly Accounts agings certificates and Borrowing Base Certificates
delivered pursuant to Section 7.04 of this Agreement, at such intervals as
Majority Lenders require (including on a daily basis), furnish a Borrowing Base
Certificate and such further schedules and/or information to Agent as Majority
Lenders may reasonably require relating to the Accounts, including, without
limitation, sales invoices. In addition, Borrower shall notify Agent of any
non-compliance with respect to the representations, warranties and covenants
contained in Section 10.03 below. The items to be provided under this Section
10.02 are to be in form satisfactory to Agent and are to be executed and
delivered to Agent from time to time solely for its convenience in maintaining
records of the Accounts; Borrower's failure to give any of such items to Agent
shall not affect, terminate, modify or otherwise limit Lenders' lien or security
interest in the Accounts or any other Collateral securing the obligations of
Borrower to Lenders under this Agreement and the Notes.
SECTION 10.03. STATUS OF ACCOUNTS.
(a) With respect to Eligible Accounts of Borrower in existence on the
date hereof and at the time any future Eligible Accounts are included in any
Borrowing Base Certificate, Borrower represents and warrants that:
(i) Borrower is the sole owner of the Account and is fully
authorized to sell, transfer, pledge and/or grant a security interest
in each and every Account, free and clear
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of all liens except in favor of Agent for the ratable benefit of
Lenders and Lenders or otherwise permitted hereunder;
(ii) each Account is a good and valid account representing a
bona fide transaction completed in accordance with the terms and
provisions contained in any documents related thereto;
(iii) the amount of the face value shown on any schedule of
Accounts provided to Agent and/or all invoices and statements delivered
to Agent with respect to any Account, are actually and absolutely owing
to Borrower for delivery of goods or services and are not contingent
for any reason;
(iv) to the best of Borrower's knowledge, there are no
setoffs, counterclaims or disputes existing or asserted with respect
thereto, the Account is not a contra account, and Borrower not has made
any agreement with any account debtor thereunder for any deduction
therefrom, except a discount or allowance allowed by Borrower in the
ordinary course of its business for prompt payment consistent with past
practices of Borrower uniformly applied, all of which discounts or
allowances are reflected in the calculation of the face value of each
respective invoice related thereto;
(v) none of the transactions underlying or giving rise to any
Account shall violate in any material respect any applicable state or
federal laws or regulations, and all documents relating to any Account
shall be legally sufficient under such laws or regulations and shall be
legally enforceable in accordance with their terms;
(vi) to the best of Borrower's knowledge, all signatures and
endorsements that appear on all documents and agreements relating to
Accounts are genuine and each account debtor, guarantor or endorser
thereunder (i) had the capacity, power and authority to contract at the
time any such document or agreement giving rise to the Account was
executed and (ii) is solvent and will continue to be fully able to pay
all Accounts on which it is obligated in full when due;
(vii) all documents and agreements relating to Accounts are
true and correct and in all respects what they purport to be, are not
evidenced by a judgment and are only evidenced by one executed
original;
(viii) to the best of Borrower's knowledge, there are no
facts, events or occurrences which in any way impair the validity or
enforcement thereof or tend to reduce the amount payable or collectible
thereunder from the amount of the invoice face value shown on any
schedule of Accounts, and on all contracts, invoices and statements
delivered to Agent with respect thereto;
(ix) the goods giving rise thereto are not, and were not at
the time of the sale thereof, subject to any lien, claim, encumbrance
or security interest, except the lien of Borrower as vendor thereof
pursuant to the Uniform Commercial Code, the security
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interest of Lenders pursuant to the Security Documents, the security
interests permitted by, and subject to, Section 8.02(g) of this
Agreement and the security interest of Heller under the Heller
Factoring Agreement;
(x) to the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any
account debtor thereunder which might result in any material adverse
change in the financial condition of such account debtor; and
(xi) they have not been pledged to any other Person except as
permitted by, and subject to, Section 8.02 of this Agreement.
(b) Borrower covenants that, from and after the date hereof:
(i) Borrower shall maintain books and records pertaining to
said collateral in such detail, form and scope as Lenders shall
reasonably require;
(ii) Borrower will, promptly upon learning thereof, report to
Agent any matters adversely affecting the value, enforceability or
collectibility of any of the Accounts;
(iii) if any amount payable under or in connection with any
Account is evidenced by a promissory note or other instrument, as such
terms are defined in the Uniform Commercial Code, such promissory note
or instrument shall be immediately pledged, endorsed, assigned and
delivered to Agent for the ratable benefit of Lenders as additional
collateral;
(iv) Borrower shall not re-date any invoice or sale, or make
sales on extended terms dating beyond that customary in the industry;
(v) Borrower shall conduct a physical count of its inventory
at such intervals as Lenders may reasonably request, and promptly
supply Agent with a copy of such counts accompanied by a report of the
value (based on the lower of cost (on a FIFO basis) and market value)
of such inventory;
(vi) Borrower is not and shall not be entitled to pledge
Lenders' credit on any purchases or for any purpose whatsoever; and
(vii) Borrower shall not, without Lenders' prior written
consent, grant any extension of the time of payment of any Eligible
Account Receivable, compromise or settle any Eligible Account
Receivable for less than the full amount thereof, release in whole or
in part, any Person or property liable for the payment thereof, or
allow any credit or discount whatsoever thereon (other than discounts
in the ordinary course of business for prompt payment consistent with
past practices); provided, that, Borrower may without Lenders' prior
written consent grant extensions of time of payment for Accounts which
are not Eligible Accounts Receivable, or compromise or settle any such
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Accounts for less than the full amount thereof or allow a credit or
discount on any such Account, so long as such extension, compromise,
settlement, credit or discount is in the ordinary course of Borrower's
business consistent with past practices and on such terms as may be
customary in the industry.
SECTION 10.04. COLLATERAL CUSTODIAN. Upon the occurrence of an Event of
Default set forth in subsections (g) or (h) of Article IX hereof or upon the
occurrence and during the continuance of any other Event of Default (or any
event which, with the giving of notice or passage of time or both, would
constitute an Event of Default), Agent may at any time and from time to time
employ and maintain in the premises of Borrower a custodian selected by Agent
who shall have full authority to do all acts necessary to protect Lenders'
interests and to report to Agent thereon. Borrower hereby agrees to cooperate
with any such custodian and to do whatever Agent may reasonably request to
preserve the collateral. All costs and expenses incurred by Agent by reason of
the employment of the custodian shall be charged to Borrower's account and added
to the amounts due and owing under this Agreement and the Notes.
XI. AGENT.
SECTION 11.01. APPOINTMENT.
Fleet is hereby appointed as agent hereunder and each Lender hereby
authorizes Fleet to act hereunder and under the Transaction Documents (as
applicable) as its agent hereunder and thereunder. Fleet agrees to act as such
upon the express conditions contained in this Article XI. The provisions of this
Article XI are solely for the benefit of Fleet, as agent for Lenders, and
neither Borrower nor any third party shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement, Fleet shall act solely as agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for Borrower.
SECTION 11.02. POWERS; GENERAL IMMUNITY.
(a) DUTIES SPECIFIED. Each Lender irrevocably authorizes Agent to take
such action on such Lender's behalf, and to exercise such powers hereunder and
under the other instruments and agreements referred to herein as are
specifically delegated to Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. Agent shall be responsible for
delivering to each Lender, promptly upon Agent's receipt of the same, copies of
all financial statements, reports and other written materials required to be
delivered to Agent pursuant to Section 7.04 hereto. Agent shall have only those
other duties and responsibilities which are expressly specified in this
Agreement and it may perform such duties by or through its agents or employees.
The duties of Agent shall be mechanical and administrative in nature; and Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender; and nothing in this Agreement, expressed or implied, is intended
to or shall be so construed as to impose upon Agent any obligations in respect
of this Agreement or the other instruments and agreements referred to herein
except as expressly set forth herein or therein.
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(b) NO RESPONSIBILITY FOR CERTAIN MATTERS. Agent shall not be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement, the Notes or
other Transaction Documents or any other document, instrument or agreement now
or hereafter executed in connection herewith or therewith, or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents executed in connection
herewith or therewith by or on behalf of Borrower or any Subsidiary to Agent or
any Lender, or be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of the Loans or of
the existence or possible existence of any default or Event of Default.
(c) EXCULPATORY PROVISIONS. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted hereunder or in connection herewith unless caused by its or
their gross negligence or willful misconduct. If Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement, Agent shall be
entitled to refrain from such act or taking such action unless and until it
shall have received instructions from Lenders. Without prejudice to the
generality of the foregoing, (i) Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be attorneys for
Borrower), accountants, experts and other professional advisors selected by it;
and (ii) no Lenders shall have any right of action whatsoever against Agent as a
result of Agent acting or (where so instructed) refraining from acting under
this Agreement or the other instruments and agreements referred to herein in
accordance with the instructions of Lenders. Agent shall be entitled to refrain
from exercising any power, discretion or authority vested in it under this
Agreement or the other instruments and agreements referred to herein unless and
until it has obtained the instructions of Lenders.
(d) AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Agent in its individual capacity as Lender hereunder. With
respect to its participation in the Loans and the commitments of Lenders
hereunder, Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties and
functions delegated to it hereunder, and the term "Lender" or "Lenders" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity. Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Borrower or any Subsidiary as if they
were not performing the duties specified herein, and may accept fees and other
consideration from Borrower for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.
(e) AGENT'S DUTIES REGARDING COLLATERAL. Except as expressly provided
herein, and in the Security Documents, Agent shall have no duty to take any
affirmative steps with respect to the
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collection of amounts payable in respect of the Collateral. Agent shall incur no
liability to any Lender as a result of any private sale of the Collateral.
Lenders hereby consent, and agree upon written request by Agent to execute and
deliver such instruments and other documents as Agent may deem desirable to
confirm such consent, to the release of Liens in favor of Agent for the ratable
benefit of Lenders on any of the Collateral in connection with any sale,
transfer or other disposition of Collateral or any part thereof in accordance
with the Transaction Documents (as applicable). Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which Agent accords its own property, it being understood that none of
Agent or any Lender shall have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not Agent or Lenders have
or are deemed to have knowledge of such matters, or (ii) taking any necessary
steps to preserve rights against any parties with respect to any Collateral.
SECTION 11.03. REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR
APPRAISAL OF CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Borrower and its
Subsidiaries in connection with the making of the Loans hereunder, and has made
and shall continue to make its own appraisal of the creditworthiness of Borrower
and its Subsidiaries. Agent shall not have any duty or responsibility either
initially or on a continuing basis to make any such investigation or any such
appraisal on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto whether coming into its possession before the
making of any Loan or any time or times thereafter (except for information
received by Agent hereunder), and Agent shall further not have any
responsibility with respect to the accuracy of or the completeness of the
information provided to Lenders.
SECTION 11.04. RIGHT TO INDEMNITY.
Each Lender severally agrees to indemnify Agent, according to its pro
rata share of Loans Outstanding, to the extent Agent shall not have been
reimbursed by Borrower and/or any Subsidiary, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees and disbursements)
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in performing its duties hereunder or in
any way relating to or arising out of this Agreement, the Notes and/or any of
the other Transaction Documents; PROVIDED that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct. If any indemnity furnished to Agent for any
purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
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SECTION 11.05. PAYEE OF NOTE TREATED AS OWNER.
Agent may deem and treat the payee of any Note as the owner thereof for
all purposes hereof unless and until a written notice of the assignment or
transfer thereof shall have been filed with Agent in accordance with the terms
of this Agreement. Any request, authority or consent of any person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes issued in exchange
for such Note.
SECTION 11.06. RESIGNATION BY AGENT.
(a) In the event Agent reasonably determines that it can no longer serve
as agent hereunder by reason of a conflict of interest or restrictions imposed
by any law, rule or regulation applicable to it, Agent may resign from the
performance of all its functions and duties hereunder by giving thirty (30) days
prior written notice to Borrower and each Lender. Such resignation shall take
effect upon the acceptance by a successor agent of appointment pursuant to
clauses (b) or (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, Lenders shall appoint a
successor agent who shall be reasonably satisfactory to Borrower and shall be an
incorporated bank or trust company insured by the Federal Deposit Insurance
Corporation and having a combined surplus and undivided capital of at least Five
Hundred Million Dollars ($500,000,000).
(c) If a successor agent shall not have been so appointed within said
thirty (30) day period, the resigning agent, with the consent of Borrower (not
to be unreasonably withheld or delayed), shall then appoint a successor agent
who shall serve as Agent until such time, if any, as Lenders, with the consent
of Borrower (not to be unreasonably withheld or delayed), appoint a successor
agent as provided above.
(d) If no successor agent has been appointed pursuant to clause (b) or
(c) by the 40th day after the date such notice of resignation was given by the
resigning agent, the resigning agent's resignation shall become effective and
Lenders shall thereafter perform all the duties of the resigning agent hereunder
until such time, if any, as Lenders, with the consent of Borrower (not to be
unreasonably withheld or delayed), appoint a successor agent as provided above.
SECTION 11.07. SUCCESSOR AGENT.
Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, that successor agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retired agent, and the
retiring agent shall be discharged from its duties and obligations as Agent
under this Agreement. After any retiring agent's resignation as Agent the
provisions of this Article XI shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
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XII. MISCELLANEOUS
SECTION 12.01. SURVIVAL. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto, shall survive the making by Lenders of the Advances, the Loans
and the issuances of Letters of Credit and shall continue in full force and
effect so long as the Notes and any other Indebtedness of Borrower to Lenders is
outstanding and unpaid.
SECTION 12.02. REIMBURSEMENT OF COSTS. Borrower agrees to reimburse
Lenders upon demand for all reasonable costs, charges and expenses of Lenders
(including reasonable fees and disbursements of counsel to Lenders) in
connection with (i) the preparation, execution and delivery of this Agreement,
the Notes and the Security Documents, (ii) the making of the Advances, (iii) the
making of the Loans and the issuance of Letters of Credit, (iv) any amendments,
modifications, consents or waivers in respect thereof, (v) any appraisals or
other valuation of collateral requested by Majority Lenders and (vi) any
enforcement thereof, and all reasonable costs and out-of-pocket expenses of
Lenders in connection with the conduct by Lenders or their representatives of
any field audit or examination of Borrower's properties and records. In
addition, Borrower shall pay on demand any and all stamp and other taxes and
fees payable or determined to be payable in connection with the execution and
delivery of this Agreement, the Notes, the Security Documents and the other
instruments and documents to be delivered hereunder, and Borrower agrees to save
Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees.
SECTION 12.03. INDEMNIFICATION. Borrower irrevocably agrees to, and
does hereby indemnify and hold harmless each Lender, its agents and employees
and each Person, if any, who controls Lenders within the meaning of Section 15
of the Securities Act of 1933, as amended, and each and all and any of them (the
"Indemnified Parties"), against any and all losses, claims, actions, causes of
action, damages or liabilities (including any amount paid in settlement of any
action, commenced or threatened), joint or several, to which they, or any of
them, may become subject under statutory law or at common law, insofar as such
losses, claims, damages, liabilities or actions arise out of or are related to
any act or omission of Borrower with respect to the Loans, including without
limitation, any such losses, claims, actions, causes of action, damages or
liabilities which arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact by or on behalf of Borrower contained in any
document distributed in connection therewith, or the omission or alleged
omission by or on behalf of Borrower to state in any of the foregoing a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and to reimburse the Indemnified
Parties for any legal or other expenses reasonably incurred by it or them in
connection with investigating, preparing for or defending against any such
actions, commenced or threatened.
Promptly upon receipt of notice of the commencement of any action, or
information as to any threatened action, against any of the Indemnified Parties
in respect of which indemnity or reimbursement may be sought from Borrower on
account of the agreement contained in this Section 12.03, notice shall be given
to Borrower in writing of the commencement or threat
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thereof, together with a copy of all papers served, but the omission so to
notify Borrower of any such action or threat shall not release Borrower from any
liability which it may have to such Indemnified Parties otherwise than on
account of the indemnity agreement contained in this Section 12.03.
In case any such action shall be brought against any of the Indemnified
Parties, Borrower shall be entitled to participate in (and, to the extent that
it shall wish, including the selection of counsel reasonably acceptable to the
Indemnified Parties, to direct) the defense thereof at its own expense. Any of
the Indemnified Parties shall have the right to employ its or their own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless the employment of such counsel shall
have been authorized in writing by Borrower in connection with the defense of
such action or Borrower shall not have employed counsel reasonably acceptable to
the Indemnified Parties to have charge of the defense of such action or such
Indemnified Party shall have been advised by legal counsel that there may be
defenses available to it which are different from or additional to those
available to Borrower (in which case Borrower shall not have the right to direct
the defense of such action on behalf of such Indemnified Party), in any of which
events the reasonable expenses of such Indemnified Party shall be borne by
Borrower. If and so long as Borrower has effectively waived any right to
question or challenge Borrower's liability to fully indemnify an Indemnified
Party for a claim, such Indemnified Party shall not be entitled to compromise or
settle such claim without Borrower's consent.
The provisions of Section 12.03 shall be effective only to the fullest
extent permitted by law.
SECTION 12.04. GOVERNING LAW. This Agreement and the Notes shall be
construed in accordance with, and governed by, the laws of the State of Rhode
Island applicable to contracts made and to be performed entirely within the
State of Rhode Island. Borrower and Lenders each acknowledge that this Agreement
and the Notes were executed by Borrower in New York but were delivered in the
State of Rhode Island.
SECTION 12.05. CONSENT. No modification or waiver of any provision of
this Agreement, or of the Notes, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in writing
(in the case of a waiver or consent, signed by Lenders, and in the case of a
modification, signed by Borrower and Lenders), and then such waiver or consent
shall be effective only in the specific instance, and for the purpose, for which
given. No notice to, or demand, on Borrower in one case, shall entitle Borrower
to any other or future notice or demand in the same, similar or other
circumstances.
SECTION 12.06. WAIVER. Neither any failure nor any delay on the part of
Lenders in exercising any right, power or privilege hereunder, or under the
Notes, or under any of the Security Documents or any other instrument given as
security for the Notes, shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or future exercise, or the exercise
of any other right, power or privilege.
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SECTION 12.07. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and mailed, telecopied or telegraphed or delivered to the
applicable party at the addresses indicated below, if to Lenders, to:
Fleet National Bank
111 Westminster Street
Providence, Rhode Island 02903
Attention: Robert T.P. Storer
Senior Vice President
Telephone: (401) 278-6472
Telecopy: (401) 751-1274
and if to Borrower, to:
French Fragrances, Inc.
14100 N.W. 60th Avenue
Miami Lakes, Florida 33014
Attention: William J. Mueller
C.F.O.
and
Oscar Marina
V.P., General Counsel
Telephone: (305) 818-8000
Telecopy: (305) 818-8020
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties complying as to delivery with the terms
of this Section. All such notices, requests, demands and other communications
shall, when mailed, telecopied or telegraphed, respectively, be deemed to be
effective three (3) days after deposited in the mails by registered or certified
mail, postage prepaid, return receipt requested, or when transmitted by
telecopier or delivered to the telegraph company, respectively, addressed or
sent as aforesaid.
SECTION 12.08. UNCONDITIONAL OBLIGATIONS. Borrower's obligation to make
all payments provided for in this Agreement and/or the Notes shall be
unconditional. Each such payment shall be made without deduction for any claim,
defense or offset of any type, including without limitation, any withholdings
and other deductions on account of income or other taxes and regardless of
whether any claims, defenses or offsets of any type exist. However, this Section
12.08 shall not constitute a waiver of any claims Borrower may hereafter have at
law against Lenders.
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SECTION 12.09. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lenders, and their respective
successors and assigns, except that Borrower shall not have any right to assign
its rights hereunder or any interest herein without the prior written consent of
Lenders.
SECTION 12.10. CONSENT TO JURISDICTION; WAIVER OF TRIAL BY JURY.
Borrower, to the extent that it may lawfully do so, hereby consents to the
jurisdiction of the courts of the State of Rhode Island and the United States
District Court for the District of Rhode Island and to the courts of the State
of Florida and the United States District Court for the Southern District of
Florida, as well as to the jurisdiction of all courts from which an appeal may
be taken from such courts, for the purpose of any suit, action or other
proceeding arising out of any of its obligations arising hereunder or with
respect to the transactions contemplated hereby, and expressly waives any and
all objections which it may have as to venue in any of such courts. TO THE
EXTENT PERMITTED BY LAW, BORROWER AND LENDERS ALSO WAIVE TRIAL BY JURY IN ANY
ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES, THE SECURITY
DOCUMENTS AND ANY OTHER AGREEMENTS EXECUTED IN CONNECTION HEREWITH. NEITHER
BORROWER, LENDERS, AGENT NOR ANY ASSIGNEE OF OR SUCCESSOR TO BORROWER, LENDERS,
OR AGENT, SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR
ANY OTHER LITIGATION OR PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT,
THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER DOCUMENTS, INSTRUMENTS AND
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THEREWITH OR THE DEALINGS OR
THE RELATIONSHIP BETWEEN OR AMONG THE PARTIES HERETO, OR ANY OF THEM. NO PARTY
WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED,
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
THE PROVISIONS OF THIS SECTION 12.10 HAVE BEEN FULLY DISCUSSED BY THE PARTIES
HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTION. NO PARTY HAS IN
ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF
THIS SECTION 12.10 WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
SECTION 12.11. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 12.12. HEADINGS. The Articles and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 12.13. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original of this Agreement,
and all such counterparts shall constitute a part of this Agreement.
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SECTION 12.14. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding between the parties hereto and supersedes all prior
agreements and understandings relating to the subject matter hereof.
SECTION 12.15. PARTICIPATIONS. Upon the prior notification to the
Agent, any Lender may sell participations in all or part of the Loans and/or its
commitment hereunder or any other interest herein or in the Notes to another
Person, but in any such event the participant shall not have any rights under
this Agreement, the Notes, the Security Documents or any other document
delivered in connection herewith (the participant's rights against Lenders in
respect of that participation to be those set forth in the agreement executed by
that Lender in favor of the participant relating thereto), and all amounts
payable by Borrower hereunder or thereunder shall be determined as if Lenders
had not sold such participation. Lenders may furnish any information concerning
Lenders and Borrower in the possession of Lenders from time to time to
participants (including prospective participants); provided that any such
provision of any confidential information about Borrower to any such participant
or prospective participant shall obtain such participant's or prospective
participant's agreement to keep any such confidential information confidential.
SECTION 12.16. NO MODIFICATION.
No amendment or waiver of any provision of this Agreement, the Notes, the
Letter of Credit Documents or any other Transaction Documents, nor consent to
any departure by Borrower therefrom, nor the release by Agent of any material
items of Collateral (other than in connection with the sale or disposition of
Collateral permitted under any Transaction Document or the payment in full of
all Indebtedness and termination of the Revolving Credit Commitment), shall be
effective unless the same shall be in writing and signed or approved by Majority
Lenders; PROVIDED, HOWEVER, that no amendment, waiver or consent nor any such
release shall have the effect of any of the following unless the same shall be
in writing and signed or approved by all Lenders: (i) increasing the maximum
principal amount of the Revolving Credit Facility, (ii) reducing the principal
amount of, or the rate of interest on, the Notes or any unpaid Letter of Credit
Reimbursement Obligations or other sum due and payable hereunder, or releasing
or discharging Borrower from its obligations to make payments of any such sums,
(iii) postponing any date fixed for payment or prepayment of principal of, or
interest on, the Notes or any unpaid Letter of Credit Reimbursement Obligations
or other sum due and payable hereunder, (iv) extending or renewing the maturity
date for the Revolving Credit Facility, (v) amending this Section 12.17 or (vi)
releasing Collateral (other than in connection with the sale or disposition of
Collateral permitted under any Transaction Document or the payment in full of
all Indebtedness and termination of the Revolving Credit Commitment) if the
aggregate net book value of all Collateral released by Agent exceeds $2,000,000
in the aggregate during any one fiscal year or exceeds $5,000,000 in the
aggregate while any Loans are outstanding and unpaid; and PROVIDED, FURTHER,
HOWEVER, that no amendment, waiver or consent (x) shall affect the rights or
duties of Agent under this Agreement, any Note, the Letter of Credit Documents
or any other Transaction Documents, unless the same shall be in writing and
signed by Agent in addition to Lenders required above, and (y) subject to
Section 4.06 hereof, shall change the Commitment Share of any Lender, unless the
same shall be in writing and signed by Agent and Lenders so affected.
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SECTION 12.17. SYNDICATIONS. (a) Each Lender shall have the right to
further syndicate the its Revolving Credit Commitments hereunder or any other
interest herein or in the Notes to one or more Persons (an "Assignee") on such
terms and in accordance with such documentation as shall be satisfactory to
Lenders in their sole discretion (provided the terms of the Loans are not
modified or revised), so long as (i) Fleet and its Affiliates retain in the
aggregate a fifty-one percent (51%) or more interest in, the Revolving Credit
Commitment and the Notes and (ii) any action to be taken by Lenders and such
Assignee would require consent of Lenders holding a 51% or more interest
therein. Borrower hereby agrees at Lenders' or such Assignee's expense so long
as no Event of Default exists (and at Borrower's expense if an Event of Default
exists) to execute and deliver any and all documents requested by Lenders to
effectuate or facilitate such syndication, including, without limitation, an
amendment to this Agreement adding the Assignee as a Lender and new Notes
evidencing the interest of Lenders and such Assignee in the Revolving Credit
Commitment.
(b) Upon the syndication of the Revolving Credit Commitment hereunder,
the respective rights of Lenders and Borrower against each other under this
Agreement, the Notes, the Security Documents or any other document delivered in
connection herewith with respect to the portion of the Loans being assigned or
delegated shall be terminated and Lenders and Borrower shall each be released
from all further obligations to the other hereunder with respect thereto (all
such rights and obligations being so terminated or released being referred to in
this Section 12.17(b) as "Discharged Rights and Obligations"), and Borrower and
Assignee shall each acquire rights against each other and assume obligations
toward each other which differ from the Discharged Rights and Obligations only
in so far as Borrower and Assignee have assumed and/or acquired the same in
place of Lenders.
SECTION 12.18. ACTUAL KNOWLEDGE.
For purposes of this Agreement, neither Agent nor any Lender shall be
deemed to have actual knowledge of any fact or state of facts unless the senior
loan officer or any other officer responsible for Borrower's account established
pursuant to this Agreement, shall, in fact, have actual knowledge of such fact
or state of facts or unless written notice of such fact shall have been received
by Agent or such Lender in accordance with Section 12.07.
SECTION 12.19. RELATIONSHIP; LIMITATION ON DAMAGES.
(a) THE RELATIONSHIP AMONG BORROWER, AGENT AND LENDERS SHALL BE SOLELY
THAT OF BORROWER, AGENT AND LENDERS. AGENT AND LENDERS SHALL NOT HAVE ANY
FIDUCIARY RESPONSIBILITIES TO BORROWER.
(b) AGENT AND LENDERS SHALL NOT HAVE ANY LIABILITY WITH RESPECT TO, AND
BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR, ANY
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES SUFFERED BY BORROWER IN
CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS
CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, THE OTHER
TRANSACTION DOCUMENTS OR ANY OTHER AGREEMENT ENTERED INTO IN CONNECTION
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HEREWITH OR THEREWITH OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
HEREWITH OR THEREWITH, UNLESS IT IS DETERMINED BY A JUDGMENT OF A COURT THAT IS
BINDING ON AGENT OR SUCH LENDER (WHICH JUDGMENT SHALL BE FINAL AND NOT SUBJECT
TO REVIEW ON APPEAL), THAT SUCH DAMAGES WERE THE RESULT OF ACTS OR OMISSIONS ON
THE PART OF AGENT OR SUCH LENDER CONSTITUTING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. THIS SECTION SHALL NOT BE DEEMED TO LIMIT OR PROHIBIT ANY CLAIMS BY
BORROWER AGAINST A DELINQUENT LENDER AS CONTEMPLATED BY SECTION 4.06 HEREOF.
SECTION 12.20. INTEGRATION.
This Agreement supersedes Borrower's application for the Loans, the term
sheets and/or commitment letters of Lenders generally describing the Loans and
all other prior dealings among Borrower, Agent, any of Lenders and any of their
respective agents, employees or officers with respect to the Loans.
SECTION 12.21. CONFIDENTIALITY.
Lenders shall, with respect to any and all financial statements or other
reports or documents delivered by Borrower to Agent pursuant to Section 7.04, to
the extent that Borrower shall have specifically designated any information
contained therein to be treated as confidential (provided that pro forma
financial statements and projections shall be deemed confidential although not
designated as such) and to the extent that such information therein contained
has not theretofore otherwise been disclosed in such a manner as to render such
information no longer confidential, employ reasonable procedures designed to
maintain the confidential nature of the information therein contained; provided,
however, that any Lender may disclose or disseminate such information to: (a)
such Lender's respective employees, agents, attorneys and accountants who would
ordinarily have access to such information in the normal course of the
performance of their duties in connection with the administration of the Loans;
(b) upon notice to Borrower, such third parties as such Lender may, in its
reasonable discretion, deem reasonably necessary in connection with or in
response to (i) compliance with any law, ordinance or governmental order,
regulation, rule, policy, subpoena, investigation or request, or (ii) any order,
decree, judgment, subpoena, notice of discovery or similar ruling or pleading
issued, filed, served or purported on its face to be issued, filed or served (x)
by or under authority of any court, tribunal, arbitration board or any
governmental agency, commission, authority board or similar entity or (y) in
connection with any proceeding, case or matter pending (or on its face purported
to be pending) before any court, tribunal, arbitration board or any governmental
agency, commission, authority, board or similar entity, provided sufficient
notice has been given to such Borrower to enable such Borrower to seek an
appropriate protective order or (iii) collection of any of the Indebtedness now
or hereafter owing by Borrower and/or any Subsidiary to any of Lenders or
enforcement of any rights or remedies now or hereafter possessed by any of
Lenders; (c) subject to Sections 12.15 and 12.17, any prospective purchaser
(including an Affiliate of any Lender), in connection with the resale or
proposed resale by it of any portion of its Note or other participation in its
Commitment Share or Loans Outstanding, provided that such prospective purchaser
agrees to be bound by the confidentiality provisions set forth above; and (d)
any entity utilizing such information to rate or
-68-
<PAGE>
classify any Lender's debt or equity securities for sale to the public, provided
that such entity agrees to be bound by the confidentiality provisions set forth
above.
IN WITNESS WHEREOF, Agent, Lenders and Borrower have each caused this
Agreement to be duly executed under seal by their duly authorized
representatives, all as of the day and year first above written.
LENDERS:
FLEET NATIONAL BANK, AS LENDER
By: /s/ Robert T.P. Storer
-----------------------------------------
Title: Senior Vice President
BORROWER:
FRENCH FRAGRANCES, INC.
By: /s/ Oscar E. Marina
-------------------------------------------
Title: Vice President
FLEET NATIONAL BANK, AS AGENT
By: /s/ Robert T.P. Storer
-----------------------------------------
Title: Senior Vice President
-69-
<PAGE>
EXHIBITS AND SCHEDULES
Exhibit A - Amendment Letter
Exhibit B- Borrowing Base Certificate
Exhibit C- Request for Advance
Exhibit D- Form of Revolving Credit Note
Exhibit E- Compliance Certificate
Schedule 1.01(A) Eligible Accounts Receivable
Schedule 1.01(B) Lenders' Commitment Share
Schedule 5.03 Required Consents
Schedule 5.06 Liens and Encumbrances
Schedule 5.07(A) Capitalization
Schedule 5.07(B) Subsidiaries
Schedule 5.12 Taxes
Schedule 5.13 Employee Benefit Plans
Schedule 5.15 Location of Tangible Assets
Schedule 5.16 Licenses, Trademarks and Tradenames
Schedule 5.17 Material Contracts
Schedule 5.18 Compliance
Schedule 5.19 Environmental
Schedule 8.01(D) Capitalized Lease Obligations or Purchase Money Indebtedness
<PAGE>
EXHIBIT A
[], 199[]
French Fragrances, Inc.
14100 N.W. 60th Avenue
Miami Lakes, Florida 33014
Re: AMENDMENT LETTER
Ladies and Gentlemen:
Upon your acceptance of the terms of this letter agreement as evidenced
by your execution and delivery to Fleet National Bank as agent (the "Agent") on
behalf of Fleet National Bank, as a lender (the "Lenders") on or before [],
19[], the date upon which the foregoing amendments shall take effect, of a copy
of this letter, French Fragrances, Inc. (the "Borrower") and the Lenders agree
to amend (i) that certain Credit Agreement dated as of May 13, 1997, by and
among the Lenders, the Agent and Borrower, as amended to date (the "Original
Credit Agreement"); (ii) the Revolving Credit Notes (as defined in the Credit
Agreement and/or (iii) the Security Documents (as defined in the Credit
Agreement), as follows:
1. All capitalized terms not defined herein shall have the same
meanings ascribed to such terms as provided in the Credit Agreement.
2. [Choose appropriate paragraphs to be amended].
3. After giving effect to the amendments contemplated by this Letter
Agreement, Borrower hereby reaffirms and restates, as of the date hereof, all of
the representations and warranties made by it in the Original Credit Agreement,
except to the extent altered by actions permitted pursuant to the terms of the
Original Credit Agreement or expressly contemplated pursuant to the terms
hereof, or to the extent the Agent has been advised in writing of any inaccuracy
with respect to such representations or warranties and has waived the same in
writing.
4. All references to obligations of the Borrower in the Security
Documents shall be deemed amended to include all obligations of Borrower under
the Original Credit Agreement, as amended by the terms hereto. All references to
the "Credit Agreement", the "Loans", the "Revolving Credit Notes", the "Notes",
the Security Documents and any other defined terms amended hereby as set forth
in the Transaction Documents shall, to the extent applicable, be deemed amended
to be references to such terms, agreements and documents as amended by the terms
of this Letter Amendment.
5. Each of the Borrower and Lenders hereby agree that nothing contained
herein or done pursuant hereto shall limit or be construed to limit the security
interest or lien previously
<PAGE>
granted by Borrower to the Agent for the benefit of the Lenders under the
Security Documents, or the priority thereof over other liens, encumbrances and
security interests. The Security Document shall remain in full force and effect
and Borrower hereby ratifies and confirms the Security Documents in all other
respects, including, without limitation, the continuing grant of a lien on and
security interest in the collateral covered thereby.
6. All representations and warranties made in this Letter Amendment
shall survive execution and delivery hereof and the closing of the transactions
contemplated hereby.
7. Borrower ratifies and confirms all of its obligations, covenants,
duties and agreements set forth in the Transaction Documents, as amended by the
terms hereof.
8. All reasonable costs and expenses, including reasonable attorneys'
fees, relating to the negotiation, preparation, execution and delivery of this
Agreement and all instruments, agreements and documents contemplated hereby
shall be the responsibility of the Borrower.
9. The Borrower hereby acknowledges and agrees that the Credit
Agreement and each of the other Transaction Documents, as amended by the terms
hereof, are not subject as of the date hereof to any defenses rights of setoff,
claims or counterclaims that might limit the enforceability thereof.
9. This Agreement shall be governed by and construed in accordance with
the laws of the State of Rhode Island applicable to contracts made and to be
performed within such state. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers hereunto duly authorized, all as of the
day and year first above written.
Very truly yours,
FLEET NATIONAL BANK
By__________________________________
Title____________________________
By__________________________________
Title____________________________
<PAGE>
Accepted and agreed as of
the [] day of []. 19[].
FRENCH FRAGRANCES, INC.
By___________________________
Title _________________________
<PAGE>
EXHIBIT B
BORROWING BASE CERTIFICATE
Fleet National Bank
111 Westminster Street Date:
Providence, RI 02903
Attention: Robert T.P. Storer
Senior Vice President
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.01 of that certain Credit
Agreement (the "Agreement") dated as of May 13, 1997, among Fleet National Bank,
as agent, French Fragrances, Inc., as Borrower, and Fleet National Bank, as a
lender, the undersigned hereby represents and warrants that the aggregate
principal amount of Advances (as defined in the Agreement) outstanding under the
Revolving Credit Notes dated as of May 13, 1997 (the "Note") of the undersigned
in the aggregate principal amount of $40,000,000, after taking into
consideration the amount of the Advance, if any, requested this date, is less
than or equal to the "Revolving Credit Commitment" (as defined in the Agreement)
in effect on the date hereof (as calculated below in accordance with the
Agreement).
COMMITMENT: Lesser of:
A. $40,000,000
(OR)
B. Borrowing Base:
1. Total Accounts Receivable (as of , 19 ): $________
(a) Insured Eligible Accounts Receivable:
0-30 Days: $__________
31-60 Days: $__________
61-90 Days: $__________
Total Insured Eligible AR: $_________
Percentage advance: 85%
Insured AR Borrowing Base: $_________
<PAGE>
(b) Approved Eligible Accounts Receivable
0-30 Days: $__________
31-60 Days: $__________
61-90 Days: $__________
Total Approved Eligible AR: $_________
Percentage advance: 85%
Approved AR Borrowing Base: $_________
(c) Eligible Accounts Receivable (other than Insured Eligible
Accounts Receivable or Approved Eligible Accounts Receivable):
0-30 Days: $__________
31-60 Days: $__________
61-90 Days: $__________
Total Approved Eligible AR: $_________
Percentage advance: 80%
Approved AR Borrowing Base: $_________
TOTAL AR BORROWING BASE $_________
2. Inventory Borrowing Base
(a) Eligible In-House Inventory; at $________
(b) Less a reserve against Total Eligible In-House
Inventory of $1,200,000
(c) Capped at a maximum of $20,000,000
TOTAL INVENTORY
BORROWING BASE $_________
<PAGE>
3. Total Borrowing Base:
AR Borrowing Base: $_________
PLUS
Inventory Borrowing Base $_________
TOTAL $_________
Very truly yours
FRENCH FRAGRANCES, INC.
By:______________________________________
Title:________________________________
<PAGE>
EXHIBIT C
REQUEST FOR ADVANCE
[], 19[]
Fleet National Bank, as Agent
111 Westminster Street
Providence, RI 02903
Attention: Robert T.P. Storer, Senior Vice President
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.01 of that certain Credit
Agreement (the "Agreement") dated as of May 13, 1997, among French Fragrances,
Inc., as borrower, Fleet National Bank, as agent and Fleet National Bank, as a
lender, the undersigned hereby requests an "Advance", as that term is defined in
the Agreement, of $[] to be made on [], 19[] pursuant to Section 2.01 of the
Agreement, which Advance shall be evidenced by the Secured Revolving Credit
Notes of the undersigned, dated as of May 13, 1997.
The undersigned hereby ratifies, reaffirms and confirms that the
representations and warranties set forth in Sections 5.02 through 5.20 and
Section 10.03 of the Agreement are true and accurate as of the date such Advance
is to be made, except to the extent altered by actions permitted by the
Agreement and except to the extent you have been advised in writing of any
inaccuracy with respect to such representations and warranties and have waived
the same in writing. The undersigned hereby further represents and warrants that
(i) there has occurred no material adverse change in the financial condition,
business, assets, operations or properties of the undersigned since the date of
the most recent financial statements required to be delivered under Section 7.04
of the Agreement and (ii) no "Event of Default", as that term is defined in the
Agreement, has occurred, nor has any event occurred, nor will any event have
occurred after giving effect to such proposed Advance, which would constitute
such an Event of Default but for the requirement that notice be given or time
elapse, or both.
Very truly yours,
FRENCH FRAGRANCES, INC.
By:_______________________________
Title:_________________________
<PAGE>
EXHIBIT D
SECURED REVOLVING CREDIT NOTE
$40,000,000 As of May 13, 1997
New York, New York
FOR VALUE RECEIVED, the undersigned FRENCH FRAGRANCES, INC., a Florida
corporation (together with the predecessor Florida corporation, "Borrower"),
hereby promises to pay to the order of FLEET NATIONAL BANK, a national banking
association organized under the laws of the United States having a place of
business at 111 Westminster Street, Providence, Rhode Island 02903 (the
"Lender"), as hereinafter provided, the principal sum of Forty Million Dollars
($40,000,000) or, if less, the aggregate unpaid principal amount of advances
made by the Lender to Borrower pursuant to that certain Credit Agreement of even
date herewith by and among Borrower, Fleet National Bank, as Agent and Lender,
as a lender (the "Credit Agreement"), together with interest, whether before or
after maturity, at the rate hereinafter provided, on any and all principal
amounts outstanding hereunder from time to time from the date hereof until
payment in full hereof.
This Note is one of the so-called "Revolving Credit Notes" referred to
in, and is entitled to the benefits of, the Credit Agreement. The terms and
provisions of the Credit Agreement are hereby incorporated herein by reference
as if fully set forth herein. All capitalized terms used herein and not
otherwise defined shall have the meanings given to them in the Credit Agreement.
From the date hereof until this Note is paid in full, interest on
principal amounts outstanding hereunder shall accrue and be payable at a rate
per annum equal to (i) the Applicable Revolving Funded Debt Rate or (ii) the
applicable Eurodollar Rate for the applicable Interest Period, or both, in
accordance with the terms of the Credit Agreement. Interest hereon shall be
calculated on the basis of a year of three hundred sixty (360) days counting the
actual number of days elapsed.
Interest on the principal amounts outstanding hereunder shall be due and
payable monthly in arrears on the first day of each month, commencing June 1,
1997 and continuing on the first day of each month thereafter until payment in
full hereof; PROVIDED, HOWEVER, that in addition to any such monthly payment of
interest all accrued and unpaid interest outstanding under any Eurodollar Loan
shall be paid in full on the Interest Adjustment Date for such Eurodollar Loan.
Principal amounts outstanding hereunder in excess of the Revolving Credit
Commitment then in effect, as reduced from time to time pursuant to the Credit
Agreement, shall be immediately due and payable without further notice or demand
as provided in the Credit Agreement. All principal amounts outstanding
hereunder, together with all unpaid interest hereon, shall be due and payable on
the Revolving Credit Maturity Date, or on such earlier date or dates as said
principal, or any part thereof, may become due and payable pursuant to the
Credit Agreement.
<PAGE>
Payments of principal and interest due hereunder shall be made by
Borrower to the Lender in lawful money of the United States of America at the
office of Agent at 111 Westminster Street, Providence, Rhode Island, or such
other place as the Lender may designate to Borrower in writing, in accordance
with the Credit Agreement. Payments of principal and interest hereunder may be
made by the Lender by debiting the demand deposit account(s) of Borrower, if
any, maintained with Agent or in such other reasonable manner as may be
designated by the Lender in writing to Borrower, and in any event shall be made
in immediately available funds prior to 12:00 o'clock Noon (Providence time) on
the Business Day such payment is due. Borrower hereby authorizes Agent to so
debit such demand deposit account(s).
The Borrower hereby agrees to pay to the Lender, upon demand, to the
extent permitted by law, a late charge in an amount equal to five percent (5%)
of each payment of principal and/or interest, and/or in respect of any other sum
or amount, which is not paid in full within ten (10) days of the date on which
such payment is due (without giving effect to any applicable grace period).
This Note is secured by, and is entitled to all the benefits of, the
Security Documents referred to in the Credit Agreement. Reference is made to the
Credit Agreement for rights and obligations as to (i) advances and readvances of
the principal sums evidenced hereby, (ii) mandatory and voluntary reductions of
the Revolving Credit Commitment under the Credit Agreement, (iii) mandatory and
voluntary repayment of principal and interest hereunder, (iv) acceleration of
the maturity hereof and (v) rights of prepayment as set forth in Section 2.06
the Credit Agreement. The occurrence or existence of an Event of Default shall
constitute a default under this Note and shall entitle the Lender to accelerate
the entire indebtedness hereunder and to take such other action as may be
provided for in the Credit Agreement and the Security Documents.
All advances, readvances, repayments and prepayments of principal
hereunder may be recorded by the Lender on this Note or in its internal records,
and the Lender is hereby authorized to make all such entries on this Note or in
such records.
In the event that the Lender shall exercise or endeavor to exercise any
remedies hereunder or under the Credit Agreement or any Security Documents,
Borrower shall pay all reasonable costs and expenses incurred in connection
therewith, including, without limitation, reasonable attorneys' fees, and the
Lender may take judgment for all such amounts in addition to all other sums due
hereunder.
Borrower hereby expressly waives presentment, dishonor, protest and
demand, diligence, notice of protest, of demand and of dishonor, and any other
notice otherwise required to be given under the law in connection with the
delivery, acceptance, performance, default, enforcement or collection of this
Note, and expressly agrees that this Note, or any payment hereunder, may be
extended or subordinated (by forbearance or otherwise) from time to time,
without in any way affecting the liability of Borrower.
2
<PAGE>
No consent or waiver by the holder hereof with respect to any action or
failure to act which, without such consent or waiver, would constitute a breach
of any provision of this Note shall be valid and binding unless in writing and
signed by Borrower and the Lender.
All agreements between Borrower and the Lender are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
prepayment, acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount charged, reserved, paid or agreed to be paid to the
Lender for the use, forbearance or detention of the indebtedness evidenced
hereby and by the Credit Agreement exceed the maximum permissible under
applicable law. As used herein, the term "applicable law" shall mean the law in
effect as of the date hereof; PROVIDED, HOWEVER, that in the event there is a
change in the law which results in a higher permissible rate of interest, then
this Note shall be governed by such new law as of its effective date. If, from
any circumstance whatsoever, fulfillment of any provision hereof or of any of
the Security Documents or the Credit Agreement at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, IPSO FACTO, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any circumstance the Lender
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all agreements
between Borrower and the Lender.
This Note shall be construed in accordance with the laws of the State of
Rhode Island applicable to contracts made and to be performed entirely within
such State without resort to its conflict of laws rules, except to the extent
that such laws are superseded by Federal enactments.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed under
seal by its duly authorized officers as of the date first above written.
Witness: FRENCH FRAGRANCES, INC.
By
- --------------------------------- ----------------------------------
Title:
-------------------------
3
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF _________ )
On the __ day of May, 1997, before me personally came _____________, to
me known, who, being by me duly sworn, did depose and say that he resides at
____________________; that he is the ______________ of ______________________,
the corporation described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the board of directors of said
corporation.
-----------------------------------
Notary Public
<PAGE>
EXHIBIT E
Fleet National Bank
111 Westminster Street
Providence, RI 02903
Attention: Robert T.P. Storer
Senior Vice President
RE: Compliance Certificate required by Section 7.04(d) of Credit
Agreement (the "Agreement") dated as of May 13, 1997, by and between French
Fragrances, Inc., as borrower, Fleet National Bank, as agent and Fleet National
Bank, as a lender.
Dear Bob:
This certificate is submitted by the undersigned pursuant to Section
7.04(d) of the Agreement. Capitalized terms used herein have the same meaning as
in the Agreement.
The undersigned hereby certify that the following information is true,
accurate and complete as of_____________.
I. Section 7.08: Indebtedness to Capital Base
Ratio as of ____________: _______
Ratio required by Agreement: 3.0:1.0
II. Section 7.09: Shareholders' Equity Base
Current Amount: ________
Amount required by Agreement: $37,000,000
(through 1/31/97); to be increased
thereafter
III. Section 7.10: Debt Service
Ratio as of ____________: ________
Ratio required by Agreement: 1.25:1.0 through fiscal
quarter ending 1/31/98;
1.40:1.0 thereafter
<PAGE>
IV. Section 7.11: Operating Cash Flow to
Interest Expense
Ratio as of ____________: ________
Amount required by Agreement: 1.35:1.0 through fiscal
quarter ending 1/31/98;
1.50:1.0 thereafter
V. Section 8.01(d): Permitted Indebtedness
Capitalized Lease Obligations
and Purchase-Money Indebtedness: _________
Maximum permitted by Agreement: Existing plus $100,000
VI. Section 8.01(l): Permitted Indebtedness
Foreign Currency Exchange _________
Maximum Permitted by Agreement: $200,000
VII. Section 8.06: Permitted Advances
Aggregate Advances to Employees: _________
Maximum Permitted by Agreement: $ 25,000
VIII. Section 8.09: Dividends
Distributions __________
IX. Section 8.10: Capital Expenditure Limitation
Capital Expenditures: __________
Maximum permitted by Agreement: $2,500,000
X. Section 8.11: Operating Lease Limitation
Operating lease obligations: __________
Maximum permitted by Agreement: $100,000
The undersigned further certifies that he has examined the financial
statements delivered in connection herewith and the provisions of the Agreement
and that, to the best of his
<PAGE>
knowledge after diligent inquiry, as of the date hereof no Event of Default, nor
any event which upon notice or lapse of time, or both, would constitute an Event
of Default, has occurred.
FRENCH FRAGRANCES, INC.
By:_________________________________
Title:_________________________
