EXHIBIT 10.2
MBR&M DRAFT
April 25, 2005
MOVIE GALLERY, INC.,
THE GUARANTORS
FROM TIME TO TIME PARTY HERETO
AND
SUNTRUST BANK,
AS TRUSTEE
INDENTURE
DATED AS OF APRIL 27, 2005
11% SENIOR NOTES DUE 2012
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE..................................... 1
Section 1.1 Definitions.................................................................... 1
Section 1.2 Incorporation by Reference of Trust Indenture Act.............................. 31
Section 1.3 Rules of Construction.......................................................... 32
ARTICLE II THE NOTES...................................................................... 32
Section 2.1 Form and Dating................................................................ 32
Section 2.2 Execution and Authentication................................................... 33
Section 2.3 Registrar and Paying Agent..................................................... 34
Section 2.4 Paying Agent to Hold Money in Trust............................................ 34
Section 2.5 Holder Lists................................................................... 35
Section 2.6 Global Note Provisions......................................................... 35
Section 2.7 Legends........................................................................ 36
Section 2.8 Transfer and Exchange.......................................................... 36
Section 2.9 Mutilated, Destroyed, Lost or Stolen Notes..................................... 40
Section 2.10 Temporary Notes................................................................ 40
Section 2.11 Cancellation................................................................... 41
Section 2.12 Defaulted Interest............................................................. 41
Section 2.13 Additional Notes............................................................... 42
Section 2.14 Additional Interest Under Registration Rights Agreements....................... 42
ARTICLE III COVENANTS...................................................................... 43
Section 3.1 Payment of Notes............................................................... 43
Section 3.2 Maintenance of Office or Agency................................................ 43
Section 3.3 Corporate Existence............................................................ 44
Section 3.4 Payment of Taxes and Other Claims.............................................. 44
Section 3.5 Compliance Certificate......................................................... 44
Section 3.6 Further Instruments and Acts................................................... 44
Section 3.7 Waiver of Stay, Extension or Usury Laws........................................ 44
Section 3.8 Repurchase Upon a Change of Control............................................ 45
Section 3.9 Incurrence of Indebtedness and Issuance of Preferred Stock..................... 46
Section 3.10 Restricted Payments............................................................ 47
Section 3.11 Asset Sales.................................................................... 50
Section 3.12 Limitation on Subordinated Indebtedness........................................ 52
Section 3.13 Designation of Restricted and Unrestricted Subsidiaries........................ 53
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Section 3.14 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries...... 54
Section 3.15 Liens.......................................................................... 56
Section 3.16 Transactions with Affiliates................................................... 56
Section 3.17 Business Activities............................................................ 57
Section 3.18 Reports........................................................................ 57
Section 3.19 Sale and Leaseback Transactions................................................ 58
Section 3.20 Payments for Consent........................................................... 58
ARTICLE IV SUCCESSOR ENTITY............................................................... 59
Section 4.1 Merger, Consolidation or Sale of Assets........................................ 59
ARTICLE V OPTIONAL REDEMPTION OF NOTES................................................... 61
Section 5.1 Optional Redemption............................................................ 61
Section 5.2 Election to Redeem............................................................. 61
Section 5.3 Notice of Redemption........................................................... 61
Section 5.4 Selection of Notes to Be Redeemed in Part...................................... 62
Section 5.5 Deposit of Redemption Price.................................................... 63
Section 5.6 Notes Payable on Redemption Date............................................... 63
Section 5.7 Unredeemed Portions of Partially Redeemed Note................................. 63
ARTICLE VI DEFAULTS AND REMEDIES.......................................................... 63
Section 6.1 Events of Default.............................................................. 63
Section 6.2 Acceleration................................................................... 65
Section 6.3 Other Remedies................................................................. 65
Section 6.4 Waiver of Past Defaults........................................................ 66
Section 6.5 Control by Majority............................................................ 66
Section 6.6 Limitation on Suits............................................................ 66
Section 6.7 Rights of Holders to Receive Payment........................................... 66
Section 6.8 Collection Suit by Trustee..................................................... 66
Section 6.9 Trustee May File Proofs of Claim, etc.......................................... 66
Section 6.10 Priorities..................................................................... 67
Section 6.11 Undertaking for Costs.......................................................... 67
ARTICLE VII TRUSTEE........................................................................ 68
Section 7.1 Duties of Trustee.............................................................. 68
Section 7.2 Rights of Trustee.............................................................. 69
Section 7.3 Individual Rights of Trustee................................................... 70
Section 7.4 Trustee's Disclaimer........................................................... 70
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Section 7.5 Notice of Defaults............................................................. 70
Section 7.6 Reports by Trustee to Holders.................................................. 70
Section 7.7 Compensation and Indemnity..................................................... 70
Section 7.8 Replacement of Trustee......................................................... 71
Section 7.9 Successor Trustee by Merger.................................................... 72
Section 7.10 Eligibility; Disqualification.................................................. 72
Section 7.11 Preferential Collection of Claims Against the Company.......................... 73
ARTICLE VIII DEFEASANCE; DISCHARGE OF INDENTURE............................................. 73
Section 8.1 Legal Defeasance and Covenant Defeasance....................................... 73
Section 8.2 Conditions to Defeasance....................................................... 73
Section 8.3 Application of Trust Money..................................................... 75
Section 8.4 Repayment to the Company....................................................... 75
Section 8.5 Indemnity for U.S. Government Obligations...................................... 75
Section 8.6 Reinstatement.................................................................. 75
Section 8.7 Satisfaction and Discharge..................................................... 76
ARTICLE IX AMENDMENTS..................................................................... 76
Section 9.1 Without Consent of Holders..................................................... 76
Section 9.2 With Consent of Holders........................................................ 77
Section 9.3 Compliance with Trust Indenture Act............................................ 78
Section 9.4 Revocation and Effect of Consents and Waivers.................................. 78
Section 9.5 Notation on or Exchange of Notes............................................... 79
Section 9.6 Trustee to Sign Amendments or Supplements...................................... 79
ARTICLE X SUBSIDIARY GUARANTEES.......................................................... 79
Section 10.1 Subsidiary Guarantees.......................................................... 79
Section 10.2 Limitation on Liability; Termination, Release and Discharge.................... 81
Section 10.3 Right of Contribution.......................................................... 81
Section 10.4 No Subrogation................................................................. 81
Section 10.5 Additional Subsidiary Guarantees; Opinion of Counsel........................... 82
ARTICLE XI MISCELLANEOUS.................................................................. 82
Section 11.1 Trust Indenture Act Controls................................................... 82
Section 11.2 Notices........................................................................ 82
Section 11.3 Communication by Holders with Other Holders.................................... 83
Section 11.4 Certificate and Opinion as to Conditions Precedent............................. 83
Section 11.5 Statements Required in Certificate or Opinion.................................. 83
Section 11.6 Rules by Trustee, Paying Agent and Registrar................................... 84
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Section 11.7 Legal Holidays................................................................. 84
Section 11.8 Governing Law; Waiver of Jury Trial; etc....................................... 84
Section 11.9 No Recourse Against Others..................................................... 85
Section 11.10 Successors..................................................................... 85
Section 11.11 Duplicate and Counterpart Originals............................................ 85
Section 11.12 Severability................................................................... 85
Section 11.13 Qualification of Indenture..................................................... 85
Section 11.14 Table of Contents; Headings.................................................... 85
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PAGE
EXHIBIT A FORM OF NOTE....................................................... A-1
EXHIBIT B FORM OF TRANSFER CERTIFICATE FOR TRANSFER TO QIB................... B-1
EXHIBIT C FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATIONS............................................ C-1
EXHIBIT D FORM OF RULE 144 CERTIFICATION..................................... D-1
EXHIBIT E FORM OF ADDITIONAL SUBSIDIARY GUARANTEE............................ E-1
EXHIBIT F FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS TO
INSTITUTIONAL ACCREDITED INVESTORS................................. F-1
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INDENTURE, dated as of April 27, 2004, among Movie Gallery, Inc., a
Delaware corporation (the "Company"), the Guarantors which may from time to time
become party hereto and SunTrust Bank, a corporation organized and existing
under the laws of the State of Georgia (the "Trustee"), as Trustee.
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of the Company's 11% Senior Notes
Due 2012 issued hereunder.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or
at the time it merges or consolidates with the Company or any of its Restricted
Subsidiaries or is assumed in connection with the acquisition of assets from
such Person. Such Indebtedness shall be deemed to have been Incurred at the time
such Person becomes a Restricted Subsidiary or at the time it merges or
consolidates with the Company or a Restricted Subsidiary or at the time such
Indebtedness is assumed in connection with the acquisition of assets from such
Person.
"Additional Note Board Resolutions" means resolutions duly adopted by the
Board of Directors of the Company and delivered to the Trustee in an Officers'
Certificate providing for the issuance of Additional Notes.
"Additional Subsidiary Guarantee" has the meaning assigned to it in
Section 10.5.
"Additional Guarantor" has the meaning assigned to it in Section 10.5.
"Additional Note Supplemental Indenture" means a supplement to this
Indenture duly executed and delivered by the Company, each Guarantor and the
Trustee pursuant to Article IX providing for the issuance of Additional Notes.
"Additional Notes" has the meaning assigned to it in Section 2.13.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; provided,
that beneficial ownership of ten percent (10%) or more of the Voting Stock of a
Person shall be deemed to be control. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" have correlative
meanings.
"Affiliate Transaction" has the meaning assigned to it in Section 3.16(a).
"Agent Members" has the meaning assigned to it in Section 2.6(b).
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"Asset Acquisition" means:
(1) an Investment by the Company or any Restricted Subsidiary in any
other Person pursuant to which such Person shall become a Restricted
Subsidiary, or shall be merged with or into the Company or any
Restricted Subsidiary;
(2) the acquisition by the Company or any Restricted Subsidiary of the
assets of any Person (other than a Subsidiary of the Company) which
constitute all or substantially all of the assets of such Person or
comprises any division or line of business of such Person or any
other properties or assets of such Person other than in the ordinary
course of business; or
(3) any Revocation with respect to an Unrestricted Subsidiary.
"Asset Sale" means any direct or indirect sale, disposition, issuance,
conveyance, transfer, lease, assignment or other transfer, including a Sale and
Leaseback Transaction (each, a "Disposition") by the Company or any Restricted
Subsidiary of:
(1) any Capital Stock (other than Capital Stock of the Company); or
(2) any property or assets (other than cash, Cash Equivalents or Capital
Stock) of the Company or any Restricted Subsidiary;
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) the Disposition of all or substantially all of the assets of the
Company and its Restricted Subsidiaries as permitted under Section
4.1.
(2) a Disposition of inventory or obsolete or worn-out equipment, in
each case in the ordinary course of business;
(3) Dispositions of assets with a Fair Market Value not to exceed $1.0
million in the aggregate;
(4) for purposes of Section 3.11 only, the making of a Permitted
Investment or a Restricted Payment permitted under Section 3.10;
(5) a Disposition to the Company or a Restricted Subsidiary, including a
Person that is or will become a Restricted Subsidiary immediately
after the Disposition;
(6) any exchange or asset swap of like property (pursuant to Section
1031 of the Internal Revenue Code of 1986, as amended) for use in a
Permitted Business; provided that the property received by the
Company and its Restricted Subsidiaries in such exchange or swap
(together with any cash or Cash Equivalents received by the Company
and its Restricted Subsidiaries in connection with such exchange or
swap) has a Fair Market Value at least equal to the property or
assets being transferred by the Company and its Restricted
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Subsidiaries and any cash or Cash Equivalents received by the
Company and its Restricted Subsidiaries shall be deemed to be Net
Cash Proceeds received in an Asset Sale for purposes of Section
3.11; and
(7) foreclosures on assets.
"Asset Sale Offer" has the meaning assigned to it in Section 3.11(c).
"Asset Sale Offer Amount" has the meaning assigned to it in Section
3.11(c).
"Asset Sale Offer Payment Date" has the meaning assigned to it in Section
3.11(d).
"Asset Sale Transaction" means any Asset Sale and, whether or not
constituting an Asset Sale, (1) any sale or other disposition of Capital Stock,
(2) any Designation with respect to an Unrestricted Subsidiary and (3) any sale
or other disposition of property or assets excluded from the definition of Asset
Sale by clause (4) of the second paragraph of that definition.
"Attributable Indebtedness" in respect of a Sale and Leaseback Transaction
means, at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for 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).
"Authenticating Agent" has the meaning assigned to it in Section 2.2(d).
"Bank Credit Facility" means the Credit Agreement, dated April 27, 2005,
between and among the Company, its Subsidiaries listed therein, the lenders
listed therein, and Wachovia Bank, National Association, as Administrative
Agent, and all amendments thereto, together with the related documents thereto
(including, without limitation, any Guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented, replaced, refinanced or
otherwise modified from time to time, in whole or in part, by one or more credit
agreements, including any agreement adding Subsidiaries of the Company as
additional borrowers or guarantors thereunder or extending the maturity of,
refinancing, replacing or otherwise restructuring all or any portion of the
Indebtedness under such agreement(s) or any successor or replacement
agreement(s) and whether by the same or any other agent, lender or group of
lenders.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state
or foreign law for the relief of debtors.
"Bankruptcy Law Event of Default" means:
(1) the entry by a court of competent jurisdiction of: (i) a decree or
order for relief in respect of the Company or any other Bankruptcy
Party in an involuntary case or proceeding under any Bankruptcy Law
or (ii) a decree or order (A) adjudging the Company or any other
Bankruptcy Party a bankrupt or insolvent, (B) approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of, or in respect of, the Company or any other
Bankruptcy Party
3
under any Bankruptcy Law, (C) appointing a Custodian of the Company
or any other Bankruptcy Party or of any substantial part of the
property of the Company or any other Bankruptcy Party, or (D)
ordering the winding-up or liquidation of the affairs of the Company
or any other Bankruptcy Party, and in each case, the continuance of
any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive calendar
days; or
(2) (i) the commencement by the Company or any other Bankruptcy Party of
a voluntary case or proceeding under any Bankruptcy Law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent,
(ii) the consent by the Company or any other Bankruptcy Party to the
entry of a decree or order for relief in respect of the Company or
such Bankruptcy Party in an involuntary case or proceeding under any
Bankruptcy Law or to the commencement of any bankruptcy or
insolvency case or proceeding against the Company or such Bankruptcy
Party, (iii) the filing by the Company or any other Bankruptcy Party
of a petition or answer or consent seeking reorganization or relief
under any Bankruptcy Law, (iv) the consent by the Company or any
other Bankruptcy Party to the filing of such petition or to the
appointment of or taking possession by a Custodian of the Company or
such Bankruptcy Party or of any substantial part of the property of
the Company or such Bankruptcy Party, (v) the making by the Company
or any other Bankruptcy Party of an assignment for the benefit of
creditors, (vi) the admission by the Company or any other Bankruptcy
Party in writing of its inability to pay its debts generally as they
become due, (vii) the approval by stockholders of the Company or any
other Bankruptcy Party of any plan or proposal for the liquidation
or dissolution of the Company or such Bankruptcy Party, or (viii)
the taking of corporate action by the Company or any other
Bankruptcy Party in furtherance of any such action.
"Bankruptcy Party" means (i) the Company; (ii) each Significant
Subsidiary; or (iii) one or more Restricted Subsidiaries that, taken together,
would constitute a Significant Subsidiary; it being understood that any
reference in this Indenture to any Bankruptcy Party shall, in the case of
multiple Restricted Subsidiaries that individually do not constitute a
Significant Subsidiary but that taken together do constitute a Significant
Subsidiary, only constitute a reference to all such Restricted Subsidiaries
taken together.
"Board of Directors" means, as to any Person, the board of directors,
management committee or similar governing body of such Person or any duly
authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banking institutions are authorized or required by law to close
in New York City.
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"Capitalized Lease Obligations" means, as to any Person, the obligations
of such Person under a lease that are required to be classified and accounted
for as capital lease obligations under GAAP. For purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means:
(1) with respect to any Person that is a corporation, any and all
shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person;
(2) with respect to any Person that is not a corporation, any and all
partnership or other equity or ownership interests of such Person;
and
(3) any warrants, rights or options to purchase any of the instruments
or interests referred to in clause (1) or (2) above.
"Cash Equivalents" means:
(1) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States government or issued by any agency
thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of
acquisition thereof;
(2) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the
date of acquisition thereof and, at the time of acquisition, having
one of the two highest ratings obtainable from either Standard &
Poor's Corporation ("S&P") or ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's");
(3) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of
at least A-1 from S&P or at least P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of a
non-U.S. bank having at the date of acquisition thereof combined
capital and surplus of not less than $500 million;
(5) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (1) above
entered into with any bank meeting the qualifications specified in
clause (4) above;
(6) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (1)
through (5) above; and
5
(7) solely in respect of the cash management activities of the
Restricted Subsidiaries of the Company that are not Domestic
Subsidiaries, equivalents to the investments described in clause (1)
above to the extent guaranteed by the country in which the
Restricted Subsidiary operates and equivalents of investments
described in clauses (4) and (5) above issued, accepted or offered
by the local office of any commercial bank organized under the laws
of the jurisdiction of organization of the applicable Restricted
Subsidiary, which bank has combined capital and surplus of not less
than $500 million.
"Certificated Note" means any Note issued in fully-registered certificated
form (other than a Global Note), which shall be substantially in the form of
Exhibit A, with appropriate legends as specified in Section 2.7 and Exhibit A.
"Change of Control" means the occurrence of one or more of the following
events:
(1) the direct or indirect sale, 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 properties or assets of the Company and its Restricted
Subsidiaries, taken as a whole, to any Person or Group;
(2) the adoption of a plan relating to the liquidation or dissolution of
the Company, whether or not in compliance with the provisions of the
Indenture;
(3) any Person or Group, other than the Permitted Holders, becomes the
ultimate beneficial owner, directly or indirectly, of 50% or more of
the voting power of the Voting Stock of the Company;
(4) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Company, together with any new directors whose election by such
Board of Directors or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of
the directors of the Company then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board of Directors of the
Company then in office; or
(5) the Company consolidates with, or merges with or into, any Person,
or any Person consolidates with, or merges with or into the Company,
in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of the Company or such other Person is
converted into or exchanged for cash, securities or other property,
other than any such transaction where (A) the Voting Stock of the
Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than
Disqualified Capital Stock) of the surviving or transferee Person
constituting a majority of the outstanding shares of such Voting
Stock of such surviving or transferee Person (immediately after
giving effect to such issuance) and (B) immediately after such
transaction, no Person or Group, other than the Permitted Holders,
becomes, directly or
6
indirectly, the beneficial owner of 50% or more of the voting power
of all classes of Voting Stock of the Company.
For purposes of this definition:
(1) "beneficial owner" shall have the meaning specified in Rules 13d-3
and 13d-5 under the Exchange Act, except that any Person or Group
shall be deemed to have "beneficial ownership" of all securities
that such Person or Group has the right to acquire, whether such
right is exercisable immediately, only after the passage of time or,
except in the case of the Permitted Holders, upon the occurrence of
a subsequent condition.
(2) "Person" and "Group" shall have the meanings for "person" and
"group" as used in Sections 13(d) and 14(d) of the Exchange Act; and
(3) any other Person or Group shall be deemed to beneficially own any
Voting Stock of a corporation held by any other corporation (the
"parent corporation") so long as such Person or Group, beneficially
owns, directly or indirectly, in the aggregate at least a majority
of the voting power of the Voting Stock of the parent corporation.
"Change of Control Offer" has the meaning assigned to it in Section
3.8(b).
"Change of Control Offer Notice" means a notice sent by the Company
pursuant to Section 3.8(b), which notice shall govern the terms of the Change of
Control Offer and shall state:
(1) that a Change of Control has occurred; the circumstances or
events causing such Change of Control; that a Change of Control Offer is
being made pursuant to Section 3.8(b); and that all Notes that are timely
tendered will be accepted for payment;
(2) the Change of Control Payment, and the Change of Control
Payment Date, which date shall be a Business Day no earlier than 30
calendar days before nor later than 60 calendar days subsequent to the
date such notice is mailed (other than as may be required by law);
(3) that any Notes or portions thereof not tendered or accepted
for payment will continue to accrue interest;
(4) that, unless the Company defaults in the payment of the Change
of Control Payment with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer shall cease
to accrue interest from and after the Change of Control Payment Date;
(5) that any Holder electing to have any Notes or portions thereof
purchased pursuant to a Change of Control Offer will be required to tender
such Notes, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of such Notes
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completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the
Change of Control Payment Date;
(6) that any Holder shall be entitled to withdraw such election if
the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a
facsimile transmission or letter, setting forth the name of the Holder,
the principal amount of Notes delivered for purchase, and a statement that
such Holder is withdrawing such Holder's election to have such Notes or
portions thereof purchased pursuant to the Change of Control Offer;
(7) that any Holder electing to have Notes purchased pursuant to
the Change of Control Offer must specify the principal amount that is
being tendered for purchase, which principal amount must be $1,000 or an
integral multiple thereof;
(8) that any Holder of Certificated Notes whose Certificated Notes
are being purchased only in part will be issued new Certificated Notes
equal in principal amount to the unpurchased portion of the Certificated
Note or Notes surrendered, which unpurchased portion will be equal in
principal amount to $1,000 or an integral multiple thereof;
(9) that the Trustee will return to the Holder of a Global Note
that is being purchased in part such Global Note, with a notation on
Schedule A thereof adjusting the principal amount thereof to be equal to
the unpurchased portion of such Global Note; and
(10) any other information necessary to enable any Holder to tender
Notes and to have such Notes purchased pursuant to Section 3.8.
"Change of Control Payment" has the meaning assigned to it in Section
3.8(a).
"Change of Control Payment Date" has the meaning assigned to it in Section
3.8(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, or any
successor agency thereto with respect to the regulation or registration of
securities.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common equity interests, whether outstanding on
the Issue Date or issued after the Issue Date, and includes, without limitation,
all series and classes of such common equity interests.
"Company" means the party named as such in the introductory paragraph to
this Indenture and its successors and assigns, including any Successor Entity
that becomes such in accordance with Article IV.
"Company Order" has the meaning assigned to it in Section 2.2(c).
8
"Consolidated EBITDA" means, for any period, Consolidated Net Income for
such period, plus or minus the following to the extent deducted or added in
calculating such Consolidated Net Income:
(1) Consolidated Income Tax Expense for such period; plus
(2) Consolidated Interest Expense for such period; plus
(3) Consolidated Non-cash Charges for such period; plus
(4) (x) fees and costs associated with the early extinguishment of debt,
(y) fees, charges and other expenses made or incurred in connection
with the transactions contemplated by the Merger Agreement that are
paid or accounted for (without duplication) within 180 days of the
consummation of the Merger and (z) any reasonable fees, expenses or
charges relating to any issuance of Capital Stock, Investment,
acquisition or Incurrence of Indebtedness, whether or not such
transaction is consummated; plus
(5) losses from Investments in any Person engaged in alternative
delivery of movie content (x) in an aggregate amount not to exceed
$5,750,000 for the fiscal year ended January 2, 2005 and (y) in an
aggregate amount not to exceed $5,000,000 for each subsequent fiscal
year; less
(6) (x) all non-cash credits and gains increasing Consolidated Net
Income for such period and (y) all cash payments during such period
relating to non-cash charges that were added back in determining
Consolidated EBITDA in any prior period.
Notwithstanding the foregoing, the items specified in clauses (1) and (3) above
for any Restricted Subsidiary shall be added to Consolidated Net Income in
calculating Consolidated EBITDA only:
(1) in proportion to the percentage of the total Capital Stock of such
Restricted Subsidiary held directly or indirectly by the Company,
and
(2) to the extent that a corresponding amount would be permitted at the
date of determination to be distributed to the Company by such
Restricted Subsidiary pursuant to its charter and bylaws and each
law, regulation, agreement or judgment applicable to such
distribution.
"Consolidated Income Tax Expense" means, with respect to the Company for
any period, the provision for U.S. federal, state, local and non-U.S. income
taxes payable by the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the sum of, without
duplication determined on a consolidated basis in accordance with GAAP:
9
(1) the aggregate of cash and non-cash interest expense of the Company
and its Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including, without
limitation (whether or not interest expense in accordance with
GAAP):
(a) any amortization or accretion of debt discount or any interest
paid on Indebtedness of the Company in the form of additional
Indebtedness,
(b) any amortization of deferred financing costs,
(c) the net costs under Hedging Obligations (including
amortization of fees),
(d) all capitalized interest,
(e) the interest portion of any deferred payment obligation,
(f) commissions, discounts and other fees and charges Incurred in
respect of letters of credit or bankers' acceptances, and
(g) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on the assets of such Person
or one of its Restricted Subsidiaries (whether or not such
Guarantee or Lien is called upon); and
(2) the interest component of Capitalized Lease Obligations paid,
accrued and/or scheduled to be paid or accrued by the Company and
its Restricted Subsidiaries during such period.
"Consolidated Leverage Ratio" means, as of any date of determination, the
ratio of (1) the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries as of such date of determination ("Total Indebtedness")
minus cash and Cash Equivalents on hand to (2) Consolidated EBITDA for the most
recent four consecutive fiscal quarters ending prior to the date of such
determination for which financial statements are available (the "Four Quarter
Period"). For purposes of this definition, Consolidated EBITDA and Total
Indebtedness shall be calculated after giving effect on a pro forma basis in a
manner consistent with Regulation S-X under the Securities Act of 1933 for the
period of such calculation to:
(1) the Incurrence or repayment (excluding revolving credit borrowings
Incurred or repaid in the ordinary course of business for working
capital purposes) or redemption of any Indebtedness or Preferred
Stock of the Company or any of its Restricted Subsidiaries (and the
application of the proceeds thereof), including the Incurrence of
any Indebtedness or Preferred Stock (and the application of the
proceeds thereof) giving rise to the need to make such
determination, occurring during such Four Quarter Period or at any
time subsequent to the last day of such Four Quarter Period and on
or prior to such date of determination, as if such Incurrence or
repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of such Four Quarter Period; and
10
(2) any Asset Sale Transaction or Asset Acquisition (including, without
limitation, any Asset Acquisition giving rise to the need to make
such determination as a result of the Company or one of its
Restricted Subsidiaries (including any Person who becomes a
Restricted Subsidiary as a result of the Asset Acquisition)
Incurring Acquired Indebtedness and including, without limitation,
by giving pro forma effect to any Consolidated EBITDA (provided,
that such pro forma Consolidated EBITDA shall be calculated in a
manner consistent with the exclusions in the definition of
Consolidated Net Income) attributable to the assets which are the
subject of the Asset Sale Transaction or Asset Acquisition during
the Four Quarter Period) occurring during the Four Quarter Period or
at any time subsequent to the last day of the Four Quarter Period
and on or prior to such date of determination, as if such Asset Sale
Transaction or Asset Acquisition (including the Incurrence of any
such Acquired Indebtedness) occurred on the first day of the Four
Quarter Period; provided that the Company may elect not to include
the pro forma EBITDA attributable to any Asset Acquisition, the
consideration for which is less than $5.0 million, so long as the
pro forma EBITDA of such Asset Acquisition would be positive.
Furthermore, in calculating "Consolidated Interest Expense" and "Consolidated
EBITDA":
(1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the date of determination and which will continue to be
so determined thereafter shall be deemed to have accrued at a fixed
rate per annum equal to the rate of interest on such Indebtedness in
effect on such date of determination;
(2) if interest on any Indebtedness actually Incurred on such date of
determination may optionally be determined at an interest rate based
upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate in effect on
such date of determination will be deemed to have been in effect
during the Four Quarter Period; and
(3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is
covered by Hedging Obligations, shall be deemed to accrue at the
rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Net Income" means, for any period, the aggregate net income
(or loss) of the Company and its Restricted Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP; provided, that there
shall be excluded therefrom:
(1) net after-tax gains and losses from Asset Sales (without regard to
the $1.0 million limitation set forth in the definition thereof) or
abandonments or reserves relating thereto;
(2) net after-tax items classified as extraordinary, unusual or
non-recurring gains or losses;
11
(3) the net income of a Successor Entity prior to assuming the Company's
obligations under the Indenture and the Notes pursuant to Section
4.1;
(4) the net income (but not loss) of any Restricted Subsidiary to the
extent that a corresponding amount could not be distributed to the
Company at the date of determination as a result of any restriction
pursuant to such Restricted Subsidiary's charter or bylaws or any
law, regulation, agreement or judgment applicable to any such
distribution;
(5) the net income (but not loss) of any Person other than the Company
or a Restricted Subsidiary, except to the extent of cash dividends
or distributions paid to the referent Person or to a Wholly-Owned
Restricted Subsidiary of the referent Person by such Person;
(6) any restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made out of Consolidated
Net Income accrued at any time following the Issue Date;
(7) income or loss attributable to discontinued operations (including,
without limitation, operations disposed of during such period
whether or not such operations were classified as discontinued);
(8) the cumulative effect of changes in accounting principles;
(9) non-cash charges resulting from the impairment goodwill and other
intangible assets pursuant to Statement of Financial Accounting
Standards No. 142; and
(10) all non-cash compensation charges or expenses resulting from the
forgiveness of the exercise price of employee stock options or from
the grant of employee stock options having an exercise price below
the fair market value thereof.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, amortization (other than amortization of Rental Items, except for
one time and incremental charges resulting from changes in accounting
principles) and other non-cash expenses or losses of the Company and its
Restricted Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charge which constitutes an accrual of
or a reserve for cash charges for any future period or the amortization of a
prepaid cash expense paid in a prior period).
"Consolidated Tangible Assets" means, at any date, the total assets (less
accumulated depreciation and valuation reserves and other reserves and items
deductible from gross book value of specific asset accounts under GAAP) of the
Company and the Restricted Subsidiaries, after deducting therefrom all goodwill,
trade names, trademarks, patents, unamortized debt discount, organization
expenses and other like intangibles of the Company and the Restricted
Subsidiaries, all calculated in accordance with GAAP.
"Corporate Trust Office" means the principal office of the Trustee at
which at any time its corporate trust business shall be administered, which
office at the date hereof is located at 25
▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Division, or such other address as the Trustee may designate from time to time
by notice to the Holders and the Company, or the principal corporate trust
office of any successor Trustee (or such other address as such successor Trustee
may designate from time to time by notice to the Holders and the Company).
"Covenant Defeasance" has the meaning assigned to it in Section 8.1(b).
"Currency Agreement" means, in respect of any Person, any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Defaulted Interest" has the meaning assigned to it in paragraph 1 of the
Form of Reverse Side of Note contained in Exhibit A.
"Designated Preferred Stock" means Preferred Stock of the Company, other
than Disqualified Capital Stock, that is issued for cash, other than to a
Restricted Subsidiary, and is so designated pursuant to an Officers' Certificate
on the issuance date thereof, the cash proceeds of which are excluded from the
calculation set forth in Section 3.10(a)(4)(C).
"Designation" and "Designation Amount" have the meanings assigned to them
in Section 3.13.
"Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder
thereof), 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 sole option of the holder thereof, in any case, on or prior to the 91st
day after the final maturity date of the Notes.
"Distribution Compliance Period" means, in respect of any Regulation S
Global Note, the 40 consecutive days beginning on and including the later of (a)
the day on which any Notes represented thereby are offered to a U.S. person or
for the account or benefit of a U.S. person (other than distributors (as defined
in Regulation S under the Securities Act)) pursuant to Regulation S and (b) the
issue date for such Notes.
"Domestic Restricted Subsidiary" means any direct or indirect Restricted
Subsidiary that is organized under the laws of the United States, any state
thereof or the District of Columbia.
"DTC" means The Depository Trust Company, its nominees and their
respective successors and assigns, or such other depositary institution
hereinafter appointed by the Company that is a clearing agency registered under
the Exchange Act.
13
"Equity Offering" means an underwritten public offering of Qualified
Capital Stock of the Company pursuant to a registration statement (other than a
registration statement filed on Form S-4 or S-8) filed with the Commission in
accordance with the Securities Act or any private placement of Qualified Capital
Stock of the Company to any Person other than issuances upon exercise of options
by employees of the Company or any Restricted Subsidiary.
"Event of Default" has the meaning assigned to it in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"Exchange Notes" means debt securities of the Company, guaranteed by the
Guarantors, substantially identical in all material respects to the Notes (but
which will not contain terms with respect to transfer restrictions or provide
for additional interest), to be issued pursuant to this Indenture.
"Exchange Offer Registration Statement" shall have the meaning assigned to
such term in the Issue Date Registration Rights Agreement and any other
Registration Rights Agreement.
"Excluded Contributions" means the net cash proceeds received by the
Company after the Issue Date from any (x) contribution to the equity capital of
the Company not representing an interest in Disqualified Capital Stock or (y)
issuance and sale, other than to a Subsidiary of the Company, of Qualified
Capital Stock of the Company, in each case designated within 60 days of the
receipt of such net cash proceeds as Excluded Contributions in an Officers'
Certificate.
"Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; provided, that the Fair Market Value of
any such asset or assets shall be determined conclusively by the Board of
Directors of the Company acting in good faith, and shall be evidenced by a Board
Resolution.
"Four Quarter Period" has the meaning set forth in the definition of
Consolidated Leverage Ratio above.
"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 may be approved by a significant segment of the accounting
profession of the United States that are in effect as of the Issue Date.
"Game Crazy Assets" means the assets owned by Hollywood Entertainment
Corporation and its Subsidiaries comprising the business of renting and selling
video games and related services and products, including any Game Zone stores.
"Global Note" means any Note issued in fully-registered certificated form
to DTC (or its nominee), as depositary for the beneficial owners thereof, which
shall be substantially in the form of Exhibit A, with appropriate legends as
specified in Section 2.7 and Exhibit A.
14
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person:
(1) to purchase or pay, or advance or supply funds for the purchase or
payment of, such Indebtedness of such other Person, whether arising
by virtue of partnership arrangements, or by agreement to keep-well,
to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise, or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect
such obligee against loss in respect thereof, in whole or in part,
provided, that "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business. "Guarantee" used as a verb has a
corresponding meaning.
"Guarantor" means any Restricted Subsidiary which provides a Subsidiary
Guarantee pursuant to the Indenture until such time as its Subsidiary Guarantee
is released in accordance with the Indenture.
"Hedging Obligations" means the obligations of any Person pursuant to any
Interest Rate Agreement or Currency Agreement.
"Holder" means the Person in whose name a Note is registered in the Note
Register.
"Immaterial Subsidiary" means at any time, any Domestic Restricted
Subsidiary of the Company designated as such by the Board of Directors of the
Company; provided, however, that the book value of the total assets of all
Immaterial Subsidiaries shall not exceed $1.0 million. In the event that the
book value of the total assets of all Immaterial Subsidiaries exceeds $1.0
million, the Company will designate Domestic Restricted Subsidiaries that would
otherwise be Immaterial Subsidiaries to be excluded as Immaterial Subsidiaries
until such threshold is met. Notwithstanding the foregoing, no Domestic
Restricted Subsidiary that guarantees any Obligations under the Credit Agreement
will be deemed an Immaterial Subsidiary.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, Guarantee or otherwise become liable in respect of such
Indebtedness or other obligation on the balance sheet of such Person (and
"Incurrence," "Incurred" and "Incurring" shall have meanings correlative to the
preceding). Indebtedness of any Acquired Person or any of its Subsidiaries
existing at the time such Acquired Person becomes a Restricted Subsidiary (or is
merged into or consolidated with the Company or any Restricted Subsidiary),
whether or not such Indebtedness was Incurred in connection with, as a result
of, or in contemplation of, such Acquired Person becoming a Restricted
Subsidiary (or being merged into or consolidated with the Company or any
Restricted Subsidiary), shall be deemed Incurred at the time any such Acquired
Person becomes a Restricted Subsidiary or merges into or consolidates with the
Company or any Restricted Subsidiary.
15
"Indebtedness" means with respect to any Person, without duplication:
(1) the principal amount (or, if less, the accreted value) of all
obligations of such Person for borrowed money;
(2) the principal amount (or, if less, the accreted value) of all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(3) all Capitalized Lease Obligations of such Person;
(4) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding trade
accounts payable, including accounts payable arising from the
participation by such Person in any floor plan financing program,
and other accrued liabilities arising in the ordinary course of
business, or, to the extent they are on the same terms as such
accounts payable, notes in exchange therefor);
(5) all letters of credit, banker's acceptances or similar credit
transactions, including reimbursement obligations in respect thereof
(other than, solely for purposes of determining Consolidated
Leverage Ratio, letters of credit issued pursuant to clause (8) of
the definition of Permitted Indebtedness);
(6) Guarantees and other contingent obligations of such Person in
respect of Indebtedness referred to in clauses (1) through (5) above
and clauses (8) and (9) below;
(7) all Indebtedness of any other Person of the type referred to in
clauses (1) through (6) above which is secured by any Lien on any
property or asset of such Person, the amount of such Indebtedness
being deemed to be the lesser of the Fair Market Value of such
property or asset or the amount of the Indebtedness so secured;
(8) all obligations under Hedging Obligations of such Person; and
(9) all Disqualified Capital Stock issued by such Person with the amount
of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding
accrued dividends, if any; provided, that:
(a) if the Disqualified Capital Stock does not have a fixed
repurchase price, such maximum fixed repurchase price shall be
calculated in accordance with the terms of the Disqualified
Capital Stock as if the Disqualified Capital Stock were
purchased on any date on which Indebtedness shall be required
to be determined pursuant to the Indenture, and
16
(b) if the maximum fixed repurchase price is based upon, or
measured by, the fair market value of the Disqualified Capital
Stock, the fair market value shall be the Fair Market Value
thereof.
"Indenture" means this Indenture as amended or supplemented from time to
time, including the exhibits hereto.
"Independent Financial Advisor" means an accounting firm, appraisal firm,
investment banking firm or consultant of nationally recognized standing that is,
in the judgment of the Company's Board of Directors, qualified to perform the
task for which it has been engaged and which is independent in connection with
the relevant transaction.
"Interest Payment Date" means the stated due date of an installment of
interest on the Notes as specified in the Face of the Form of Note contained in
Exhibit A.
"Interest Rate Agreement" of any Person means any interest rate protection
agreement (including, without limitation, interest rate swaps, caps, floors,
collars, derivative instruments and similar agreements) and/or other types of
interest hedging agreements.
"Investment" means, with respect to any Person, any:
(1) direct or indirect loan or other extension of credit (including,
without limitation, a Guarantee) to any other Person,
(2) capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the
account or use of others) any other Person, or
(3) any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of
Indebtedness issued by, any other Person.
"Investment" shall exclude accounts receivable or deposits arising in the
ordinary course of business. "Invest," "Investing" and "Invested" shall have
corresponding meanings.
For purposes of Section 3.10, the Company shall be deemed to have made an
"Investment" in an Unrestricted Subsidiary at the time of its Designation, which
shall be valued at the Fair Market Value of the sum of the net assets of such
Unrestricted Subsidiary at the time of its Designation and the amount of any
Indebtedness of such Unrestricted Subsidiary Guaranteed by the Company or any
Restricted Subsidiary or owed to the Company or any Restricted Subsidiary
immediately following such Designation. Any property transferred to or from an
Unrestricted Subsidiary will be valued at its Fair Market Value at the time of
such transfer. If the Company or any Restricted Subsidiary sells or otherwise
disposes of any Common Stock of a Restricted Subsidiary (including any issuance
and sale of Capital Stock by a Restricted Subsidiary) such that, after giving
effect to any such sale or disposition, such Restricted Subsidiary would cease
to be a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to sum of the Fair
Market Value of the Capital Stock of such former Restricted Subsidiary held by
the Company or any Restricted Subsidiary
17
immediately following such sale or other disposition and the amount of any
Indebtedness of such former Restricted Subsidiary Guaranteed by the Company or
any Restricted Subsidiary or owed to the Company or any other Restricted
Subsidiary immediately following such sale or other disposition.
"Investment Return" means, in respect of any Investment (other than a
Permitted Investment) in any Person made after the Issue Date by the Company or
any Restricted Subsidiary:
(1) the cash proceeds received by the Company or a Restricted Subsidiary
upon the sale, liquidation or repayment of such Investment (not to
exceed the amount of Investments previously made by the Company or
any Restricted Subsidiary in such Person) or, in the case of a
Guarantee, the amount of the Guarantee upon the unconditional
release of the Company and its Restricted Subsidiaries in full, less
any payments previously made by the Company or any Restricted
Subsidiary in respect of such Guarantee;
(2) in the case of the Revocation of the Designation of an Unrestricted
Subsidiary, an amount equal to the lesser of:
(a) the Company's Investment in such Unrestricted Subsidiary at
the time of such Revocation;
(b) that portion of the Fair Market Value of the net assets of
such Unrestricted Subsidiary at the time of Revocation that is
proportionate to the Company's equity interest in such
Unrestricted Subsidiary at the time of Revocation; and
(c) the Designation Amount with respect to such Unrestricted
Subsidiary upon its Designation which was treated as a
Restricted Payment; and
(3) in the event the Company or any Restricted Subsidiary makes any
Investment in a Person that, as a result of or in connection with
such Investment, becomes a Restricted Subsidiary, an amount equal to
the Company's or any Restricted Subsidiary's existing Investment in
such Person,
in the case of each of (1), (2) and (3) above, up to the amount of such
Investment that was treated as a Restricted Payment less the amount of any
previous Investment Return in respect of such Investment.
"Issue Date" means the first date of issuance of Notes under this
Indenture.
"Issue Date Notes" means the $325,000,000 aggregate principal amount of
Notes originally issued on the Issue Date, and any replacement Notes, Private
Exchange Notes and Exchange Notes, issued therefor in accordance with this
Indenture.
"Issue Date Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 27, 2005, by and among the Company and Wachovia
Capital Markets, LLC,
18
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, Incorporated and CIBC World Markets,
Inc., as Initial Purchaser.
"Legal Defeasance" has the meaning assigned to it in Section 8.1(a).
"Legal Holiday" has the meaning assigned to it in Section 11.7.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest); provided that, the lessee in respect of a Capitalized
Lease Obligation shall be deemed to have Incurred a Lien on the property leased
thereunder.
"Maturity Date" means May 1, 2012.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
January 9, 2005, by and among Hollywood Entertainment Corporation, the Company
and TG Holdings, Inc.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents, including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents
received by the Company or any of its Restricted Subsidiaries from such Asset
Sale, net of:
(1) reasonable out-of-pocket expenses and fees relating to such Asset
Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions);
(2) taxes paid or payable in respect of such Asset Sale after taking
into account any reduction in consolidated tax liability due to
available tax credits or deductions and any tax sharing
arrangements;
(3) repayment of Indebtedness secured by a Lien permitted under this
Indenture that is required to be repaid in connection with such
Asset Sale; and
(4) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and
retained by the Company or any Restricted Subsidiary, as the case
may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.
"Non-U.S. Person" means a person who is not a U.S. person, as defined in
Regulation S.
"Note Custodian" means the custodian with respect to any Global Note
appointed by DTC, or any successor Person thereto, and shall initially be the
Trustee.
"Note Register" has the meaning assigned to it in Section 2.3(a).
19
"Notes" means any of the Company's 11% Senior Notes Due 2012 issued and
authenticated pursuant to this Indenture.
"Obligations" means, with respect to any Indebtedness, any principal,
interest (including, without limitation, Post-Petition Interest), penalties,
fees, indemnifications, reimbursements, damages, and other liabilities payable
under the documentation governing such Indebtedness, including in the case of
the Notes and the Subsidiary Guarantees, the Indenture and the Issue Date
Registration Rights Agreement.
"Officer" means the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Financial Officer, any Vice President, the Treasurer or
the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers or by
an Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company and who shall be reasonably acceptable to
the Trustee.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture, except:
(1) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(2) Notes, or portions thereof, for the payment, redemption or purchase
of which (including pursuant to an Asset Sale Offer or Change of
Control Offer) money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the
Company, a Note Guarantor or an Affiliate of the Company) in trust
or set aside and segregated in trust by the Company (if the Company,
a Note Guarantor or an Affiliate of the Company is acting as Paying
Agent) for the Holders of such Notes; provided that, if Notes (or
portions thereof) are to be redeemed or purchased, notice of such
redemption or purchase has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made;
(3) Notes which have been surrendered pursuant to Section 2.9 or in
exchange for or in lieu of which other Notes have been authenticated
and delivered pursuant to this Indenture, other than any such Notes
in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Notes are held by a bona fide
purchaser in whose hands such Notes are valid obligations of the
Company; and
(4) solely to the extent provided in Article VIII, Notes which are
subject to Legal Defeasance or Covenant Defeasance as provided in
Article VIII;
provided, however, that in determining whether the Holders of the requisite
aggregate principal amount of the Outstanding Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Notes
owned by the Company or any other obligor upon the
20
Notes or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, modification or waiver, only Notes
which a Trust Officer of the Trustee actually knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.
"Pari Passu Debt" has the meaning assigned to in Section 3.11.
"Permitted Business" means the business or businesses conducted by the
Company and its Restricted Subsidiaries as of the Issue Date and other
businesses and activities (including the sale or delivery of various products
and services, including delivery of media and entertainment content) that are
reasonably related, similar, ancillary or complimentary thereto or any other
reasonable extensions of such businesses.
"Permitted Holders" means ▇. ▇. ▇▇▇▇▇▇▇, H. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, any senior
executive officer of the Company on the Issue Date and their respective estates,
spouses and lineal descendants, and the legal representatives of any of the
foregoing, and the trustees of any bona fide trusts of which any of the
foregoing are the sole beneficiaries and grantors, or any corporation, limited
partnership, limited liability company or similar entity, a majority of the
Voting Stock of which is owned by any of the foregoing (or any combination of
the foregoing).
"Permitted Indebtedness" means, without duplication, each of the
following:
(1) Indebtedness not to exceed $325.0 million in respect of the Notes
originally issued on the Issue Date and Exchange Notes issued
therefor;
(2) Guarantees by any Guarantor of Indebtedness of the Company or any
other Guarantor permitted under the Indenture; provided, that if any
such Guarantee is of Subordinated Indebtedness, then the Subsidiary
Guarantee of such Guarantor shall be senior to such Guarantor's
Guarantee of such Subordinated Indebtedness;
(3) Indebtedness Incurred by the Company and any Guarantor pursuant to a
Bank Credit Facility in an aggregate principal amount at any time
outstanding not to exceed $925.0 million (less the amount of any
permanent prepayments or reductions of commitments in respect of
such Indebtedness made with the Net Cash Proceeds of an Asset Sale
in order to comply with Section 3.11);
(4) other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the Issue Date other than Indebtedness under the Bank
Credit Facility or otherwise specified under any of the other
clauses of this definition of Permitted Indebtedness;
(5) Hedging Obligations entered into in the ordinary course of business
and not for speculative purposes;
21
(6) intercompany Indebtedness between or among the Company and any of
its Restricted Subsidiaries; provided, that:
(a) if the Company or any Guarantor is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated
to the prior payment in full of all obligations under the
Notes and the Indenture, in the case of the Company, or such
Guarantor's Subsidiary Guarantee, in the case of any such
Guarantor, and
(b) in the event that at any time any such Indebtedness ceases to
be held by the Company or a Restricted Subsidiary, such
Indebtedness shall be deemed to be Incurred and not permitted
by this clause (6) at the time such event occurs;
(7) Indebtedness of the Company or any of its Restricted Subsidiaries
arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; provided, that such Indebtedness is
extinguished within five business days of Incurrence;
(8) Indebtedness of the Company or any of its Restricted Subsidiaries
represented by letters of credit for the account of the Company or
any Restricted Subsidiary, as the case may be, in order to provide
security for workers' compensation claims, payment obligations in
connection with self-insurance or similar requirements in the
ordinary course of business;
(9) Refinancing Indebtedness in respect of:
(a) Indebtedness (other than Indebtedness owed to the Company or
any Subsidiary) Incurred pursuant to Section 3.9(a) (it being
understood that no Indebtedness outstanding on the Issue Date
is Incurred pursuant to Section 3.9(a)), or
(b) Indebtedness Incurred pursuant to clause (1) or (4) above;
(10) Capitalized Lease Obligations and Purchase Money Indebtedness
(including Refinancings thereof) that do not exceed $10.0 million in
the aggregate at any one time outstanding;
(11) Indebtedness of any Restricted Subsidiary that is not a Domestic
Restricted Subsidiary in an aggregate principal amount not to exceed
$25.0 million at any one time outstanding provided, however, that
the Indebtedness is Incurred denominated and payable in United
States dollars or the local currencies of the jurisdictions of the
operations of such Subsidiary Incurring such Indebtedness;
(12) the issuance of Preferred Stock by a Restricted Subsidiary issued to
the Company or another Restricted Subsidiary; provided that any
subsequent issuance or transfer of any Capital Stock or any other
event that results in such Restricted
22
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of any shares of Preferred Stock, except to the Company or
another Restricted Subsidiary, shall be considered to be an issuance
of Preferred Stock not constituting Permitted Indebtedness under
this clause (12);
(13) Indebtedness arising from agreements of the Company or a Restricted
Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred in connection
with the disposition of any business, assets or Capital Stock of a
Subsidiary, other than guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such business, assets or
Capital Stock for the purpose of financing such acquisition;
provided that the maximum aggregate liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually
received by the Company and the Subsidiary in connection with such
disposition;
(14) Indebtedness Incurred in connection with the financing of the
Company's insurance premiums in the ordinary course of business
consistent with past practice;
(15) Indebtedness in an aggregate amount not to exceed $10.0 million at
any one time outstanding represented by unsecured notes issued by
the Company or any of its Restricted Subsidiaries to the seller (or
any Affiliate thereof), in connection with an Asset Acquisition,
which Indebtedness is contractually subordinated in right of payment
to the Notes;
(16) Additional Indebtedness of the Company or any Guarantor in an
aggregate principal amount not to exceed $50.0 million at any one
time outstanding; and
(17) Attributable Indebtedness in respect of a Sale and Leaseback
Transaction involving the corporate headquarters and inventory
distribution facility of the Company located in Dothan, Alabama.
"Permitted Investment" means:
(1) Investments by the Company or any Restricted Subsidiary in any
Person that is, or that result in any Person becoming, immediately
after such Investment, a Wholly Owned Restricted Subsidiary or a
Guarantor or constituting a merger or consolidation of such Person
into the Company or with or into a Wholly Owned Restricted
Subsidiary or a Guarantor, except for a Guarantee of Indebtedness of
a Restricted Subsidiary that is not a Guarantor;
(2) Investments by any Restricted Subsidiary in the Company;
(3) Investments in cash and Cash Equivalents;
(4) any extension, modification or renewal of any Investments existing
as of the Issue Date (but not Investments involving additional
advances, contributions or other investments of cash or property or
other increases thereof, other than as a result of
23
the accrual or accretion of interest or original issue discount or
payment-in-kind pursuant to the terms of such Investment as of the
Issue Date);
(5) Investments permitted pursuant to Section 3.16(b)(2);
(6) Investments received as a result of the bankruptcy, reorganization
or recapitalization of any Person or taken in settlement, workout or
restructuring of or other resolution of claims, accounts receivable
or disputes, and, in each case, extensions, modifications and
renewals thereof;
(7) Investments made by the Company or its Restricted Subsidiaries as a
result of non-cash consideration permitted to be received in
connection with an Asset Sale made in compliance with the covenant
described under Section 3.11;
(8) Investments, the consideration for which consists solely of
Qualified Capital Stock of the Company;
(9) Investments in any Person received as consideration for the
contribution or transfer to such Person of all or a portion of the
Game Crazy Assets; and
(10) other Investments not to exceed $25.0 million at any one time
outstanding.
"Permitted Liens" means any of the following:
(1) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed
by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or
other appropriate provision, if any, as shall be required by GAAP
shall have been made in respect thereof;
(2) Liens Incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and
other types of social security, including any Lien securing letters
of credit issued in the ordinary course of business consistent with
past practice in connection therewith, or to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of
borrowed money);
(3) any interest or title of a lessor under any Capitalized Lease
Obligation; provided, that such Liens do not extend to any property
which is not leased property subject to such Capitalized Lease
Obligation;
(4) purchase money Liens securing Purchase Money Indebtedness Incurred
to finance the acquisition of property of the Company or a
Restricted Subsidiary used in a Permitted Business; provided, that:
24
(a) the related Purchase Money Indebtedness shall not exceed the
cost of such property and shall not be secured by any property
of the Company or any Restricted Subsidiary other than the
property so acquired, and
(b) the Lien securing such Indebtedness shall be created within 90
days of such acquisition;
(5) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such
Person to facilitate the purchase, shipment or storage of such
inventory or other goods;
(6) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds
thereof;
(7) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the
Company or a Restricted Subsidiary, including rights of offset and
set-off;
(8) Liens existing on the Issue Date and Liens to secure any Refinancing
Indebtedness which is Incurred to Refinance any Indebtedness which
has been secured by a Lien permitted under the covenant described
under Section 3.15 and which Indebtedness has been Incurred in
accordance with Section 3.9; provided, that such new Liens:
(a) are no less favorable to the Holders of Notes and are not more
favorable to the lienholders with respect to such Liens than
the Liens in respect of the Indebtedness being Refinanced, and
(b) do not extend to any property or assets other than the
property or assets securing the Indebtedness Refinanced by
such Refinancing Indebtedness;
(9) Liens securing Acquired Indebtedness Incurred in accordance with
Section 3.9 not Incurred in connection with, or in anticipation or
contemplation of, the relevant acquisition, merger or consolidation;
provided, that:
(a) such Liens secured such Acquired Indebtedness at the time of
and prior to the Incurrence of such Acquired Indebtedness by
the Company or a Restricted Subsidiary and were not granted in
connection with, or in anticipation of the Incurrence of such
Acquired Indebtedness by the Company or a Restricted
Subsidiary, and
(b) such Liens do not extend to or cover any property of the
Company or any Restricted Subsidiary other than the property
that secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of the Company or a
Restricted Subsidiary and are no more favorable to the
lienholders than the Liens securing the Acquired
25
Indebtedness prior to the Incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary;
(10) Liens securing Indebtedness and other Obligations under a Bank
Credit Facility to the extent such Indebtedness is permitted under
clause (3) of the definition of the term "Permitted Indebtedness;
(11) Liens securing Hedging Obligations permitted to be Incurred pursuant
to clause (5) of the definition of Permitted Indebtedness;
(12) 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
concluded; provided, however, that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have
been made therefor;
(13) judgment Liens not giving rise to an Event of Default related to
litigation being contested in good faith by appropriate proceedings
and for which adequate reserves have been made; and
(14) Liens on the assets of subsidiary that is not a Domestic Restricted
Subsidiary securing Indebtedness Incurred pursuant to clause (11) of
the definition of Permitted Indebtedness, provided, however, that no
asset of the Company or any Domestic Restricted Subsidiary shall be
subject to any such Lien.
"Person" means an individual, partnership, corporation, company, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Post-Petition Interest" means all interest accrued or accruing after the
commencement of any insolvency or liquidation proceeding (and interest that
would accrue but for the commencement of any insolvency or liquidation
proceeding) in accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing any Indebtedness, whether or not,
pursuant to applicable law or otherwise, the claim for such interest is allowed
as a claim in such insolvency or liquidation proceeding.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights over any other Capital Stock of such Person with
respect to dividends, distributions or redemptions or upon liquidation.
"Private Exchange Notes" shall have the meaning assigned to such term in
the Issue Date Registration Rights Agreement and any other Registration Rights
Agreement. "Private Placement Legend" has the meaning assigned to it in Section
2.7(b).
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price, or other
26
cost of construction or improvement of any property; provided, that the
aggregate principal amount of such Indebtedness does not exceed the lesser of
the Fair Market Value of such property or such purchase price or cost, including
any Refinancing of such Indebtedness that does not increase the aggregate
principal amount (or accreted amount, if less) thereof as of the date of
Refinancing.
"QIB" means any "qualified institutional buyer" (as defined in Rule 144A).
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock and any warrants, rights or options to purchase or acquire Capital
Stock that is not Disqualified Capital Stock that are not convertible into or
exchangeable into Disqualified Capital Stock.
"Record Date" has the meaning assigned to it in the Form of Face of Note
contained in Exhibit A.
"Redemption Date" means, with respect to any redemption of Notes, the date
fixed for such redemption pursuant to this Indenture and the Notes.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary, to the extent that such Refinancing does not:
(1) result in an increase in the aggregate principal amount of the
Indebtedness of such Person as of the date of such proposed
Refinancing (plus the amount of any accrued or accreted interest,
premium required to be paid under the terms of the instrument
governing such Indebtedness and plus the amount of reasonable
expenses incurred by the Company in connection with such
Refinancing); provided that Refinancing Indebtedness may be incurred
(a) prior to the repayment in full of the Indebtedness being
Refinanced if the net proceeds thereof are irrevocably committed to
such repayment in full and (b) after the repayment in full of the
Indebtedness being Refinanced if incurred within 30 days after, or
during the same fiscal quarter as, such repayment; or
(2) create Indebtedness with:
(a) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the Indebtedness being
Refinanced or
(b) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced; provided, that:
- if such Indebtedness being Refinanced is Indebtedness of
the Company, then such Refinancing Indebtedness shall be
Indebtedness of the Company (except that any Restricted
27
Subsidiary that shall have guaranteed or otherwise been
obligated with respect to the Indebtedness of the
Company being Refinanced may similarly guarantee or be
obligated with respect to such Refinancing
Indebtedness),
- if such Indebtedness being Refinanced is Indebtedness of
a Guarantor, then such Indebtedness shall be
Indebtedness of the Company and/or such Guarantor,
- if such Indebtedness being Refinanced is Subordinated
Indebtedness, then such Refinancing Indebtedness shall
be subordinate to the Notes or the relevant Subsidiary
Guarantee, if applicable, at least to the same extent
and in the same manner as the indebtedness being
Refinanced, and
- if the Indebtedness being Refinanced is pari passu in
right of payment to the Notes or the Subsidiary
Guarantees, such Refinancing Indebtedness is pari passu
or subordinated in right of payment to the Notes.
"Registered Exchange Offer" means an exchange offer by the Company
registered under the Securities Act pursuant to which Notes originally issued
pursuant to an exemption from registration under the Securities Act are
exchanged for Notes of like principal amount not bearing the Private Placement
Legend.
"Registrar" has the meaning assigned to it in Section 2.3(a).
"Registration Rights Agreement" means any registration rights agreement
between the Company, the Guarantors and one or more investment banks acting as
initial purchasers in connection with any issuance of Notes under this
Indenture, including the Issue Date Registration Rights Agreement.
"Registration Statement" means an effective Exchange Offer Registration
Statement or Shelf Registration Statement.
"Regulation S" means Regulation S under the Securities Act or any
successor regulation.
"Regulation S Global Note" has the meaning assigned to it in Section
2.1(e).
"Rental Items" means, with respect to any Person, videotapes, video discs
(regardless of format), video games, audiotapes and related equipment to the
extent that such items were acquired by such Person or its Restricted
Subsidiaries for sale or rental to their customers or are held by such Person or
its Restricted Subsidiaries for sale or rental to their customers.
"Replacement Assets" has the meaning set forth under Section 3.11.
"Resale Restriction Termination Date" means, for any Restricted Note that
is an Issue Date Note (or beneficial interest therein), two years (or such other
period specified in Rule
28
144(k)) from the Issue Date or, for any Additional Notes (or beneficial
interests therein) that are Restricted Notes two years (or such other period
specified in Rule 144(k)) from the latest such original issue date of such
Additional Notes.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.
"Restricted Note" means any Issue Date Note (or beneficial interest
therein) or any Additional Note (or beneficial interest therein) not originally
issued and sold pursuant to an effective registration statement under the
Securities Act until such time as:
(i) such Issue Date Note (or beneficial interest therein) or Additional
Note (or beneficial interest therein) has been exchanged for a corresponding
Exchange Note pursuant to an Exchange Offer Registration Statement or has been
transferred pursuant to a Shelf Registration Statement;
(ii) the Resale Restriction Termination Date therefor has passed;
(iii) such Note is a Regulation S Global Note and the Distribution
Compliance Period therefor has terminated and the Trustee has received the
certifications specified in Rule 903(b)(3)(ii)(b) of Regulation S; or
(iv) the Private Placement Legend therefor has otherwise been removed
pursuant to Section 2.8(d) or, in the case of a beneficial interest in a Global
Note, such beneficial interest has been exchanged for an interest in a Global
Note not bearing a Private Placement Legend.
"Restricted Payment" has the meaning set forth in Section 3.10.
"Restricted Subsidiary" means any Subsidiary of the Company which at the
time of determination is not an Unrestricted Subsidiary.
"Revocation" has the meaning set forth in Section 3.13.
"Rule 144" means Rule 144 under the Securities Act (or any successor
rule).
"Rule 144A" means Rule 144A under the Securities Act (or any successor
rule).
"Rule 144A Global Note" has the meaning assigned to it in Section 2.1(d).
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party providing for the leasing
to the Company or a Restricted Subsidiary of any property, whether owned by the
Company or any Restricted Subsidiary at the Issue Date or later acquired, which
has been or is to be sold or transferred by
29
the Company or such Restricted Subsidiary to such Person or to any other Person
by whom funds have been or are to be advanced on the security of such Property.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" shall have the meaning assigned to such
term in the Issue Date Registration Rights Agreement and any other Registration
Rights Agreement.
"Significant Subsidiary" shall mean a Subsidiary of the Company
constituting a "Significant Subsidiary" in accordance with Rule 1-02(w) of
Regulation S-X under the Securities Act in effect on the date hereof.
"Special Record Date" has the meaning assigned to it in Section 2.12(a).
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Indebtedness" means, with respect to the Company or any
Guarantor, any Indebtedness of the Company or such Guarantor, as the case may be
which is contractually subordinated in right of payment to the Notes or the
relevant Subsidiary Guarantee, as the case may be.
"Subsidiary," with respect to any Person, means any other Person of which
such Person owns, directly or indirectly, more than 50% of the voting power of
the other Person's outstanding Voting Stock.
"Subsidiary Guarantee" means any guarantee of the Company's Obligations
under the Notes and the Indenture provided by a Restricted Subsidiary pursuant
to the Indenture.
"Successor Entity" has the meaning assigned to it in Section 4.1.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in effect on the date of this Indenture (except as otherwise
provided in this Indenture).
"Trustee" means the party named as such in the introductory paragraph of
this Indenture until a successor replaces it in accordance with the terms of
this Indenture and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"U.S. Government Obligations" means (i) securities that are (a) direct
obligations of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (b) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
30
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof; and (ii) depositary receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any U.S. Government Obligation which is specified in clause (i) above and held
by such bank for the account of the holder of such depositary receipt, or with
respect to any specific payment of principal or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal or interest of the U.S. Government Obligation evidenced by such
depositary receipt.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Unrestricted Subsidiary" means any Subsidiary of the Company Designated
as such pursuant to Section 3.13. Any such Designation may be revoked by a Board
Resolution of the Company, subject to the provisions of Section 3.13.
"Voting Stock" with respect to any Person, means securities of any class
of Capital Stock of such Person entitling the holders thereof (whether at all
times or only so long as no senior class of stock has voting power by reason of
any contingency) to vote in the election of members of the Board of Directors
(or equivalent governing body) of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the then outstanding aggregate principal amount or liquidation
preference, as the case may be, of such Indebtedness into
(2) the sum of the products obtained by multiplying:
(a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal or
liquidation preference, as the case may be, including payment
at final maturity, in respect thereof, by
(b) the number of years (calculated to the nearest one-twelfth)
which will elapse between such date and the making of such
payment.
"Wholly Owned Restricted Subsidiary" of the Company means any Restricted
Subsidiary of which all the outstanding Capital Stock (other than in the case of
a Restricted Subsidiary not organized in the United States, directors'
qualifying shares or an immaterial amount of shares required to be owned by
other Persons pursuant to applicable law) are owned by the Company or any Wholly
Owned Restricted Subsidiary.
Section 1.2 Incorporation by Reference of Trust Indenture Act. If any
provision of this Indenture limits, qualifies or conflicts with the duties that
would be imposed by any of
31
Sections 310 to 317 of the TIA through operation of Section 318(c) thereof on
any person if this Indenture were qualified under the TIA, such imposed duties
shall control. The following TIA term has the following meaning:
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by Rules or
Regulations of the Commission have the meanings assigned to them by such
definitions.
Section 1.3 Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "premium" means "premium, if any";
(4) "or" is not exclusive;
(5) "include", "includes", "including" means "include, without
limitation", "includes, without limitation", and "including, without
limitation";
(6) "will" means and has the same effect as the word "shall";
(7) words in the singular include the plural and words in the
plural include the singular; and
(8) references to the payment of principal of the Notes shall
include applicable premium, if any; and
(9) any pronoun includes the corresponding masculine, feminine and
neuter forms.
ARTICLE II
THE NOTES
Section 2.1 Form and Dating.
(a) The Issue Date Notes are being originally offered and sold by the
Company pursuant to a Purchase Agreement, dated as of April 25, 2005, between
the Company, Wachovia Capital Markets, LLC, ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇, Incorporated and CIBC World Markets, Inc. The Notes will be issued in
fully-registered certificated form without coupons, and only in denominations of
$1,000 and any integral multiple thereof. The Notes and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A.
32
(b) The terms and provisions of the Notes, the form of which is in
Exhibit A, shall constitute, and are hereby expressly made, a part of this
Indenture, and, to the extent applicable, the Company, the Guarantors and the
Trustee, by their execution and delivery of this Indenture expressly agree to
such terms and provisions and to be bound thereby. Except as otherwise expressly
permitted in this Indenture, all Notes shall be identical in all respects.
Notwithstanding any differences among them, all Notes issued under this
Indenture shall vote and consent together on all matters as one class.
(c) The Notes may have notations, legends or endorsements as specified
in Section 2.7 and Exhibit A or as otherwise required by law, stock exchange
rule or DTC rule or usage. The Company and the Trustee shall approve the form of
the Notes and any notation, legend or endorsement on them. Each Note shall be
dated the date of its authentication.
(d) Notes originally offered and sold to QIBs in reliance on Rule 144A
will be issued in the form of one or more Global Notes (each, a "Rule 144A
Global Note").
(e) Notes originally offered and sold outside the United States of
America will be issued in the form of one or more Global Notes (each, a
"Regulation S Global Note").
Section 2.2 Execution and Authentication.
(a) The Notes shall be signed for the Company by manual or facsimile
signature by the Chairman of the Board, the President, the Chief Executive
Officer, the Chief Financial Officer or any Vice President of the Company. If an
Officer whose signature is on a Note no longer holds that office at the time the
Trustee authenticates the Note, the Note shall be valid nevertheless.
(b) A Note shall not be valid until an authorized signatory of the
Trustee manually authenticates the Note. The signature of the Trustee on a Note
shall be conclusive evidence that such Note has been duly and validly
authenticated and delivered under this Indenture.
(c) At any time and from time to time after the execution and delivery
of this Indenture, the Trustee shall authenticate and make available for
delivery Notes upon a written order of the Company signed by one Officer of the
Company (a "Company Order"). A Company Order shall specify the amount of the
Notes to be authenticated and the date on which the original issue of Notes is
to be authenticated. The aggregate principal amount of Notes that may be
authenticated and delivered under this Indenture is unlimited, subject to
compliance with Section 3.9.
(d) The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Notes. Unless limited
by the terms of such appointment, any such Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by the Authenticating
Agent.
(e) In case a Successor Entity has executed an indenture supplemental
hereto with the Trustee pursuant to Article IV, any of the Notes authenticated
or delivered prior to such transaction may, from time to time, at the request of
the Successor Entity, be exchanged for other
33
Notes executed in the name of the Successor Entity with such changes in
phraseology and form as may be appropriate, but otherwise identical to the Notes
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Order of the Successor Entity, shall authenticate and deliver Notes
as specified in such order for the purpose of such exchange. If Notes shall at
any time be authenticated and delivered in any new name of a Successor Entity
pursuant to this Section 2.2 in exchange or substitution for or upon
registration of transfer of any Notes, such Successor Entity, at the option of
the Holders but without expense to them, shall provide for the exchange of all
Notes at the time Outstanding for Notes authenticated and delivered in such new
name.
Section 2.3 Registrar and Paying Agent.
(a) The Company shall maintain an office or agency in the Borough of
Manhattan, City of New York, where Notes may be presented for registration of
transfer or for exchange (the "Registrar"), where Notes may be presented or
surrendered for payment (the "Paying Agent") and for the service of notices and
demands to or upon the Company in respect of the Notes and this Indenture. The
Registrar shall keep a register of the Notes and of their transfer and exchange
(the "Note Register"). The Company may have one or more co-Registrars and one or
more additional paying agents. The term "Paying Agent" includes any additional
paying agent.
(b) The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-Registrar not a party to this Indenture, which
shall incorporate the terms 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 each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Company or any Guarantor may act as Paying Agent, Registrar, co-Registrar or
transfer agent.
(c) The Company initially appoints the Trustee at its corporate trust
office in the Borough of Manhattan, City of New York (the "New York Corporate
Trust Office"), ▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as Registrar, Paying Agent and agent for
service of demands and notices in connection with the Notes and this Indenture,
until such time as another Person is appointed as such.
Section 2.4 Paying Agent to Hold Money in Trust. The Company shall require
each Paying Agent (other than the Trustee) to agree in writing that such Paying
Agent shall hold in trust for the benefit of Holders or the Trustee all money
held by such Paying Agent for the payment of principal of, or interest on, the
Notes and shall notify the Trustee in writing of any Default by the Company or
any Guarantor in making any such payment. If the Company or any Guarantor or an
Affiliate of the Company or any Guarantor acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund. The Company at any time may require a Paying Agent (other than the
Trustee) to pay all money held by it to the Trustee and to account for any funds
disbursed by such Paying Agent. Upon complying with this Section 2.4, the Paying
Agent (if other than the Company or a Guarantor) shall have no further liability
for the money delivered to the Trustee. Upon any proceeding under any Bankruptcy
Law with respect to the Company or any Guarantor or any Affiliate of the
34
Company or any Guarantor, if the Company, a Guarantor or such Affiliate is then
acting as Paying Agent, the Trustee shall replace the Company, such Guarantor or
such Affiliate as Paying Agent.
Section 2.5 Holder Lists. The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to it of the names
and addresses of Holders. If the Trustee is not the Registrar, or to the extent
otherwise required under the TIA, the Company shall furnish to the Trustee, in
writing 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.
Section 2.6 Global Note Provisions.
(a) Each Global Note initially shall: (i) be registered in the name of
DTC or the nominee of DTC, (ii) be delivered to the Note Custodian, and (iii)
bear the appropriate legend, as set forth in Section 2.7 and Exhibit A. Any
Global Note may be represented by more than one certificate. The aggregate
principal amount of each Global Note may from time to time be increased or
decreased by adjustments made on the records of the Note Custodian, as provided
in this Indenture.
(b) Members of, or participants in, DTC ("Agent Members") shall have no
rights under this Indenture with respect to any Global Note held on their behalf
by DTC or by the Note Custodian under such Global Note, and DTC may be treated
by the Company, the Trustee, the Paying Agent and the Registrar and any of their
agents as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee, the Paying Agent or the Registrar or any of their agents from giving
effect to any written certification, proxy or other authorization furnished by
DTC or impair, as between DTC and its Agent Members, the operation of customary
practices of DTC governing the exercise of the rights of an owner of a
beneficial interest in any Global Note. The registered Holder of a Global Note
may grant proxies and otherwise authorize any person, including Agent Members
and persons that may hold interests through Agent Members, to take any action
that a Holder is entitled to take under this Indenture or the Notes.
(c) Except as provided below, owners of beneficial interests in Global
Notes will not be entitled to receive Certificated Notes. Certificated Notes
shall be issued to all owners of beneficial interests in a Global Note in
exchange for such interests if:
(i) DTC notifies the Company that it is unwilling or unable
to continue as depositary for such Global Note and a successor
depositary is not appointed by the Company within 90 days of such
notice or DTC ceases to be a clearing agency registered under the
Exchange Act at a time when DTC is required to be so registered in
order to act as depositary,
(ii) the Company executes and delivers to the Trustee and
Registrar an Officers' Certificate stating that such Global Note
shall be so exchangeable, or
35
(iii) a Default or Event of Default has occurred and is
continuing and the Registrar has received a request from DTC.
In connection with the exchange of an entire Global Note for Certificated Notes
pursuant to this paragraph (c), such Global Note shall be deemed to be
surrendered to the Trustee for cancellation, and the Company shall execute, and
upon Company Order the Trustee shall authenticate and deliver, to each
beneficial owner identified by DTC in exchange for its beneficial interest in
such Global Note, an equal aggregate principal amount of Certificated Notes of
authorized denominations.
(d) In connection with the exchange of a portion of a Certificated Note
for a beneficial interest in a Global Note, the Trustee shall cancel such
Certificated Note, and the Company shall execute, and the Trustee shall
authenticate and deliver to the exchanging Holder, a new Certificated Note
representing the principal amount not so exchanged unless such principal amount
is to be exchanged for a beneficial interest in a Global Note pursuant to
Section 2.8(d).
Section 2.7 Legends.
(a) Each Global Note shall bear the legend specified therefor in Exhibit
A on the face thereof.
(b) Each Restricted Note shall bear the private placement legend (the
"Private Placement Legend") specified therefor in Exhibit A on the face thereof.
Section 2.8 Transfer and Exchange.
(a) The following provisions shall apply with respect to any proposed
transfer of an interest in a Rule 144A Global Note that is a Restricted Note: If
(1) the owner of a beneficial interest in a Rule 144A Global Note wishes to
transfer such interest (or portion thereof) to a Non-U.S. Person pursuant to
Regulation S and (2) such Non-U.S. Person wishes to hold its interest in the
Notes through a beneficial interest in the Regulation S Global Note, (i) upon
receipt by the Note Custodian and Registrar of:
(A) instructions from the Holder of the Rule 144A Global Note
directing the Note Custodian and Registrar to credit or cause to be
credited a beneficial interest in the Regulation S Global Note equal to
the principal amount of the beneficial interest in the Rule 144A Global
Note to be transferred, and
(B) a certificate in the form of Exhibit C from the transferor,
and (ii) subject to the rules and procedures of DTC, the Note Custodian
and Registrar shall increase the Regulation S Global Note and decrease the Rule
144A Global Note by such amount in accordance with the foregoing.
(b) If the owner of an interest in a Regulation S Global Note that is a
Restricted Note wishes to transfer such interest (or any portion thereof) to a
QIB pursuant to Rule 144A, (i) upon receipt by the Note Custodian and Registrar
of:
36
(A) instructions from the Holder of the Regulation S Global Note
directing the Note Custodian and Registrar to credit or cause to be
credited a beneficial interest in the Rule 144A Global Note equal to the
principal amount of the beneficial interest in the Regulation S Global
Note to be transferred, and
(B) a certificate in the form of Exhibit B duly executed by the
transferor,
and (ii) in accordance with the rules and procedures of DTC, the Note
Custodian and Registrar shall increase the Rule 144A Global Note and decrease
the Regulation S Global Note by such amount in accordance with the foregoing.
(c) Other Transfers.
(1) If the owner of an interest in a Restricted Note wishes to
transfer such interest (or any portion thereof) to an institutional
"accredited investor" (within the meaning of Rules 501(a)(1), (2), (3) or
(7) under the Securities Act), the transferee shall furnish a certificate
in the form of Exhibit F and, if such transfer is in respect of an
aggregate principal amount of less than $100,000, an opinion of counsel
acceptable to the Company that such transfer is in compliance with the
Securities Act. Upon receipt of such certificate, the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
Certificated Notes of like tenor and amount and bearing the Private
Placement Legend and, if the transferor is transferring an interest in a
Global Note, the Note Custodian and Registrar shall decrease such Global
Note by such amount in accordance with the foregoing.
(2) Any transfer of Restricted Notes not described above (other
than a transfer of a beneficial interest in a Global Note that does not
involve an exchange of such interest for a Certificated Note or a
beneficial interest in another Global Note, which must be effected in
accordance with applicable law and the rules and procedures of DTC, but is
not subject to any procedure required by this Indenture) shall be made
only upon receipt by the Registrar of such opinions of counsel,
certificates and/or other information reasonably required by and
satisfactory to it in order to ensure compliance with the Securities Act
or in accordance with Section 2.8(d).
(d) Use and Removal of Private Placement Legends. Upon the transfer,
exchange or replacement of Notes (or beneficial interests in a Global Note) not
bearing (or not required to bear upon such transfer, exchange or replacement) a
Private Placement Legend, the Note Custodian and Registrar shall exchange such
Notes (or beneficial interests) for beneficial interests in a Global Note (or
Certificated Notes if they have been issued pursuant to Section 2.6(c)) that
does not bear a Private Placement Legend. Upon the transfer, exchange or
replacement of Notes (or beneficial interests in a Global Note) bearing a
Private Placement Legend, the Note Custodian and Registrar shall deliver only
Notes (or beneficial interests in a Global Note) that bear a Private Placement
Legend unless:
(i) such Notes (or beneficial interests) are exchanged in a
Registered Exchange Offer;
37
(ii) such Notes (or beneficial interests) are transferred
pursuant to a Shelf Registration Statement;
(iii) such Notes (or beneficial interests) are transferred
pursuant to Rule 144 upon delivery to the Registrar of a certificate
of the transferor in the form of Exhibit D and an Opinion of Counsel
reasonably satisfactory to the Registrar;
(iv) such Notes (or beneficial interests) are transferred,
replaced or exchanged after the Resale Restriction Termination Date
therefor; or
(v) in connection with such transfer, exchange or
replacement the Registrar shall have received an Opinion of Counsel
and other evidence reasonably satisfactory to it, the Company and
the Guarantors to the effect that neither such Private Placement
Legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities
Act.
The Private Placement Legend on any Note shall be removed at the request of the
Holder on or after the Resale Restriction Termination Date therefor. The Holder
of a Global Note may exchange an interest therein for an equivalent interest in
a Global Note not bearing a Private Placement Legend (other than a Regulation S
Global Note) upon transfer of such interest pursuant to any of clauses (i)
through (v) of this paragraph (d). The Company and the Guarantors shall deliver
to the Trustee an Officers' Certificate promptly upon effectiveness, withdrawal
or suspension of any Registration Statement.
(e) Consolidation of Global Notes and Exchange of Certificated Notes for
Beneficial Interests in Global Notes. If a Global Note not bearing a Private
Placement Legend (other than a Regulation S Global Note) is Outstanding at the
time of a Registered Exchange Offer, any interests in a Global Note exchanged in
such Registered Exchange Offer shall be exchanged for interests in such
Outstanding Global Note.
(f) Retention of Documents. The Registrar shall retain copies of all
letters, notices and other written communications received pursuant to this
Article II. The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
(g) Execution, Authentication of Notes, etc.
(i) Subject to the other provisions of this Section 2.8,
when Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such
Notes for an equal principal amount of Notes of other authorized
denominations, the Registrar or co-Registrar shall register the
transfer or make the exchange as requested if its requirements for
such transaction are met; provided that any Notes presented or
surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Registrar or co-Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing. To permit
registrations of transfers and exchanges and subject to the other
terms and conditions of this Article II, the Company will execute
and upon Company Order,
38
the Trustee will authenticate Certificated Notes and Global Notes at
the Registrar's or co-Registrar's request. In accordance with the
Issue Date Registration Rights Agreement, upon the effectiveness of
any Exchange Offer Registration Statement, the Company will execute
and upon Company Order, the Trustee will authenticate Exchange Notes
or Private Exchange Notes, as the case may be, in exchange for Issue
Date Notes. In accordance with a Registration Rights Agreement in
respect of Additional Notes, upon the effectiveness of any Exchange
Offer Registration Statement in respect of such Additional Notes,
the Company will execute and upon Company Order, the Trustee will
authenticate Exchange Notes in exchange for such Additional Notes.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax, assessments,
or similar governmental charge payable in connection therewith
(other than any such transfer taxes, assessments or similar
governmental charges payable upon exchange or transfer pursuant to a
Registered Exchange Offer or to Section 3.8, 3.11, 5.1 or 9.5).
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of any Note for a period
beginning: (1) 15 days before the mailing of a notice of an offer to
repurchase or redeem Notes and ending at the close of business on
the day of such mailing or (2) on the Record Date for an Interest
Payment Date and ending on such Interest Payment Date.
(iv) Prior to the due presentation for registration of
transfer of any Note, the Company, the Trustee, the Paying Agent,
the Registrar or any co-Registrar may deem and treat the person in
whose name a Note is registered as the absolute owner of such Note
for the purpose of receiving payment of principal of and interest on
such Note and for all other purposes whatsoever, whether or not such
Note is overdue, and none of the Company, the Trustee, the Paying
Agent, the Registrar or any co-Registrar shall be affected by notice
to the contrary.
(h) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation
to any beneficial owner of an interest in a Global Note, a member
of, or a participant in, DTC or other Person with respect to the
accuracy of the records of DTC or its nominee or of any participant
or member thereof, with respect to any ownership interest in the
Notes or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than DTC) of any notice
(including any notice of redemption) or the payment of any amount or
delivery of any Notes (or other security or property) under or with
respect to such Notes. All notices and communications to be given to
the Holders and all payments to be made to Holders in respect of the
Notes shall be given or made only to or upon the order of the
registered Holders (which shall be DTC or its nominee in the case of
a Global Note). The rights of beneficial owners in any Global Note
shall be exercised only through DTC subject to the applicable rules
and procedures of
39
DTC. The Trustee may rely and shall be fully protected in relying
upon information furnished by DTC with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Note (including any
transfers between or among DTC participants, members or beneficial
owners in any Global Note) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the
terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements
hereof.
Section 2.9 Mutilated, Destroyed, Lost or Stolen Notes.
(a) If a mutilated Note is surrendered to the Registrar or if the Holder
of a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall execute and upon Company Order the Trustee shall authenticate a
replacement Note if the requirements of Section 8-405 of the Uniform Commercial
Code are met and the Holder satisfies any other reasonable requirements of the
Trustee. If required by the Trustee or the Company, such Holder shall furnish an
affidavit of loss and indemnity bond sufficient in the judgment of the Company
and the Trustee to protect the Company, the Trustee, the Paying Agent, the
Registrar and any co-Registrar from any loss that any of them may suffer if a
Note is replaced, and, in the absence of notice to the Company or the Trustee
that such Note has been acquired by a protected purchaser, the Company shall
execute and upon Company Order the Trustee shall authenticate and make available
for delivery, in exchange for any such mutilated Note or in lieu of any such
destroyed, lost or stolen Note, a new Note of like tenor and principal amount,
bearing a number not contemporaneously Outstanding.
(b) Upon the issuance of any new Note under this Section 2.9, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
(c) Every new Note issued pursuant to this Section 2.9 in exchange for
any mutilated Note, or in lieu of any destroyed, lost or stolen Note, shall
constitute an original additional contractual obligation of the Company, any
Guarantor and any other obligor upon the Notes, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all benefits of this Indenture equally and proportionately
with any and all other Notes duly issued hereunder.
Section 2.10 Temporary Notes. Until definitive Notes are ready for
delivery, the Company may execute and upon Company Order the Trustee will
authenticate temporary Notes. Temporary Notes will be substantially in the form
of definitive Notes but may have variations that the Company considers
appropriate for temporary Notes. Without unreasonable delay, the Company will
prepare and execute and upon Company Order the Trustee will authenticate
40
definitive Notes. After the preparation of definitive Notes, the temporary Notes
will be exchangeable for definitive Notes upon surrender of the temporary Notes
at any office or agency maintained by the Company for that purpose and such
exchange shall be without charge to the Holder. Upon surrender for cancellation
of any one or more temporary Notes, the Company will execute and upon Company
Order the Trustee will authenticate and make available for delivery in exchange
therefor one or more definitive Notes representing an equal principal amount of
Notes. Until so exchanged, the Holder of temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as a Holder of definitive
Notes.
Section 2.11 Cancellation. The Company at any time may deliver Notes to
the Trustee for cancellation. The Registrar and the Paying Agent shall forward
to the Trustee any Notes surrendered to them for registration of transfer,
exchange or payment. The Trustee and no one else shall cancel and dispose of
cancelled Notes in accordance with its policy of disposal or return to the
Company all Notes surrendered for registration of transfer, exchange, payment or
cancellation. The Company may not issue new Notes to replace Notes it has paid
or delivered to the Trustee for cancellation for any reason other than in
connection with a transfer or exchange upon Company Order.
Section 2.12 Defaulted Interest. When any installment of interest becomes
Defaulted Interest, such installment shall forthwith cease to be payable to the
Holders in whose names the Notes were registered on the Record Date applicable
to such installment of interest. Defaulted Interest (including any interest on
such Defaulted Interest) may be paid by the Company, at its election, as
provided in clause (a) or (b) below.
(a) The Company may elect to make payment of any Defaulted Interest
(including any interest on such Defaulted Interest) to the Holders in whose
names the Notes are registered at the close of business on a special record date
for the payment of such Defaulted Interest (a "Special Record Date"), which
shall be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid and the date of
the proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Holders entitled
to such Defaulted Interest as provided in this clause (a). Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest,
which shall be not more than 15 calendar days and not less than ten calendar
days prior to the date of the proposed payment and not less than ten calendar
days after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
sent, first-class mail, postage prepaid, to each Holder at such Holder's address
as it appears in the registration books of the Registrar, not less than ten
calendar days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the Holders in
whose names the Notes are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause (b).
41
(b) Alternatively, the Company may make payment of any Defaulted
Interest (including any interest on such Defaulted Interest) in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause (b), such manner of payment shall be deemed
practicable by the Trustee.
Section 2.13 Additional Notes. The Company may, from time to time, subject
to compliance with any other applicable provisions of this Indenture, without
the consent of the Holders, create and issue pursuant to this Indenture
additional Notes ("Additional Notes") having terms and conditions set forth in
Exhibit A identical to those of the other Outstanding Notes, except that
Additional Notes:
(i) may have a different issue date from other Outstanding
Notes;
(ii) may have a different amount of interest payable on the
first Interest Payment Date after issuance than is payable on other
Outstanding Notes;
(iii) may have terms specified in the Additional Note Board
Resolution or Additional Note Supplemental Indenture for such
Additional Notes making appropriate adjustments to this Article II
and Exhibit A (and related definitions) applicable to such
Additional Notes in order to conform to and ensure compliance with
the Securities Act (or other applicable securities laws) and any
registration rights or similar agreement applicable to such
Additional Notes, which are not adverse in any material respect to
the Holder of any Outstanding Notes (other than such Additional
Notes); and
(iv) may be entitled to additional interest as provided in
Section 2.14 not applicable to other Outstanding Notes and may not
be entitled to such additional interest applicable to other
Outstanding Notes.
Section 2.14 Additional Interest Under Registration Rights Agreements.
Under certain circumstances, the Company may be obligated to pay additional
interest to Holders, all as and to the extent set forth in the Issue Date
Registration Rights Agreement or any Registration Rights Agreement applicable to
Additional Notes. The terms thereof are hereby incorporated herein by reference
and such additional interest is deemed to be interest for purposes of this
Indenture.
42
ARTICLE III
COVENANTS
Section 3.1 Payment of Notes.
(a) The Company shall pay the principal of and interest (including
Defaulted Interest) on the Notes in U.S. Legal Tender on the dates and in the
manner provided in the Notes and in this Indenture. Subject to the provisions of
Section 2.12, prior to 10:00 a.m. New York City time on each Interest Payment
Date and the Maturity Date, the Company shall deposit with the Paying Agent in
immediately available funds U.S. Legal Tender sufficient to make cash payments
due on such Interest Payment Date or Maturity Date, as the case may be. If the
Company, a Guarantor or an Affiliate of the Company or a Guarantor is acting as
Paying Agent, the Company, such Guarantor or such Affiliate shall, prior to
10:00 a.m. New York City time on each Interest Payment Date and the Maturity
Date, segregate and hold in trust U.S. Legal Tender sufficient to make cash
payments due on such Interest Payment Date or Maturity Date, as the case may be.
Principal and interest shall be considered paid on the date due if on such date
the Trustee or the Paying Agent (other than the Company, a Guarantor or an
Affiliate of the Company or a Guarantor) holds in accordance with this Indenture
U.S. Legal Tender designated for and sufficient to pay all principal and
interest then due and the Trustee or the Paying Agent, as the case may be, is
not prohibited from paying such money to the Holders on that date pursuant to
the terms of this Indenture.
(b) Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
Section 3.2 Maintenance of Office or Agency.
(a) The Company shall maintain each office or agency required under
Section 2.3. The Company will give prompt written notice to the Trustee of any
change in the location of any such office or agency. If at any time the Company
shall fail to maintain 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 New York Corporate Trust Office
of the Trustee, and the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and demands.
(b) The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Notes may
be presented or surrendered for any or all such purposes and may from time to
time rescind any such designation; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in The City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and any change in the location of any such other office or agency.
43
Section 3.3 Corporate Existence. Subject to Article IV, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence.
Section 3.4 Payment of Taxes and Other Claims. The Company will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all material taxes, assessments and governmental charges levied
or imposed upon the Company or any Restricted Subsidiary or for which it or any
of them are otherwise liable, or upon the income, profits or property of the
Company or any Restricted Subsidiary and (ii) all lawful claims for labor,
materials and supplies, which, if unpaid, might by law become a liability or
Lien upon the property of the Company or any Restricted Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which appropriate reserves, if necessary (in the good faith
judgment of management of the Company), are being maintained in accordance with
GAAP or where the failure to effect such payment will not be disadvantageous to
the Holders.
Section 3.5 Compliance Certificate. The Company and each Guarantor shall
deliver to the Trustee within 90 days after the end of each fiscal year of the
Company an Officers' Certificate, one of the signers of which is the chief
executive, chief financial or chief accounting officer of the Company, that
complies with TIA Section 314(a)(4), stating that in the course of the
performance by the signers of their duties as Officers of the Company or the
Guarantor they would normally have knowledge of any Default or Event of Default
and whether or not the signers know of any Default or Event of Default that
occurred during such period. If they do, the certificate shall describe the
Default or Event of Default, its status and what action the Company or such
Guarantor is taking or proposes to take with respect thereto.
Section 3.6 Further Instruments and Acts. The Company and each Guarantor
will execute and deliver such further instruments and do such further acts as
may be reasonably necessary or proper or as the Trustee may reasonably request
to carry out more effectively the purpose of this Indenture.
Section 3.7 Waiver of Stay, Extension or Usury Laws. The Company and each
Guarantor covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company or such Guarantor from paying all or
any portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture. The Company and each Guarantor
hereby expressly waives (to the extent that it may lawfully do so) all benefit
or advantage of any such law, and covenants (to the extent that it may lawfully
do so) that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
44
Section 3.8 Repurchase Upon a Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require that the Company purchase all or a portion (in integral
multiples of $1,000) of the Holder's Notes at a purchase price equal to one
hundred one percent (101%) of the principal amount thereof, plus accrued and
unpaid interest thereon through the date of purchase (the "Change of Control
Payment").
(b) Within 20 days following the date upon which the Change of Control
occurred, the Company must send, by first-class mail, a Change of Control Offer
Notice to each Holder, with a copy to the Trustee, offering to purchase the
Notes as described above (a "Change of Control Offer"). The Change of Control
Offer shall state, among other things, the purchase date, which must be no
earlier than 30 days nor later than 60 days from the date the notice is mailed,
other than as may be required by law (the "Change of Control Payment Date").
(c) On the Change of Control Payment Date, the Company will, to the
extent lawful:
(1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent funds in an amount equal to the
Change of Control Payment in respect of all Notes or portions thereof so
tendered; and
(3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the
Company.
(d) If only a portion of a Note is purchased pursuant to a Change of
Control Offer, a new Note in a principal amount equal to the portion thereof not
purchased will be issued in the name of the Holder thereof upon cancellation of
the original Note (or appropriate adjustments to the amount and beneficial
interests in a Global Note will be made, as appropriate). Notes (or portions
thereof) purchased pursuant to a Change of Control Offer will be cancelled and
cannot be reissued.
(e) Holders will not be entitled to require the Company to purchase
their Notes in the event of a takeover, recapitalization, leveraged buyout or
similar transaction that does not constitute a Change of Control.
(f) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other applicable securities laws and regulations in
connection with the purchase of Notes in connection with a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with this Section 3.8, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this Indenture by doing so.
(g) The Company is not required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements in this
Section 3.8 applicable to a Change of
45
Control Offer made by the Company and purchases all Notes validly tendered and
not withdrawn under such Change of Control Offer.
Section 3.9 Incurrence of Indebtedness and Issuance of Preferred Stock.
(a) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness,
including Acquired Indebtedness, or permit any Restricted Subsidiary to Incur
Preferred Stock, except that the Company and any Guarantor may Incur
Indebtedness, including Acquired Indebtedness, if, at the time of and
immediately after giving pro forma effect to the Incurrence thereof and the
application of the proceeds therefrom, no Default or Event of Default shall have
occurred and be continuing and the Consolidated Leverage Ratio would be greater
than zero and less than 3.50 to 1.0.
(b) Notwithstanding Section 3.9(a), the Company and its Restricted
Subsidiaries may Incur Permitted Indebtedness as provided in the definition
thereof. For purposes of determining compliance with this Section 3.9, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of "Permitted Indebtedness" described in clauses (1) through (16) of
the definition thereof, the Company shall, in its sole discretion, classify (or
later reclassify) such item of Indebtedness in any manner that complies with
this covenant.
(c) For purposes of determining compliance with, and the outstanding
principal amount of, any particular Indebtedness Incurred pursuant to and in
compliance with this covenant, the amount of Indebtedness issued at a price that
is less than the principal amount thereof will be equal to the amount of the
liability in respect thereof determined in accordance with GAAP. Accrual of
interest, the accretion or amortization of original issue discount, the payment
of regularly scheduled interest in the form of additional Indebtedness of the
same instrument or the payment of regularly scheduled dividends on Disqualified
Capital Stock or Preferred Stock in the form of additional Disqualified Capital
Stock or Preferred Stock with the same terms will not be deemed to be an
Incurrence of Indebtedness or Preferred Stock for purposes of this covenant.
(d) For purposes of determining compliance with any U.S.
dollar-denominated restriction on the Incurrence of Indebtedness where the
Indebtedness Incurred is denominated in a different currency, the amount of such
Indebtedness will be the U.S. Dollar Equivalent, determined on the date of the
Incurrence, of such Indebtedness; provided, however, that if any such
Indebtedness denominated in a different currency is subject to a Currency
Agreement with respect to U.S. dollars covering all principal, premium, if any,
and interest payable on such Indebtedness, the amount of such Indebtedness
expressed in U.S. dollars will be as provided in such Currency Agreement. The
principal amount of any Refinancing Indebtedness Incurred in the same currency
as the Indebtedness being Refinanced will be the U.S. Dollar Equivalent of the
Indebtedness Refinanced, determined in accordance with the preceding sentence,
except to the extent that the principal amount of the Refinancing Indebtedness
exceeds the principal amount of the Indebtedness being Refinanced, in which case
the U.S. Dollar Equivalent of such excess will be determined on the date such
Refinancing Indebtedness is Incurred.
46
Section 3.10 Restricted Payments.
(a) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, take any of the following
actions (each, a "Restricted Payment"):
(1) declare or pay any dividend or return of capital or make any
distribution on or in respect of shares of Capital Stock of the Company or
any Restricted Subsidiary to holders of such Capital Stock, other than (i)
dividends or distributions payable in Qualified Capital Stock of the
Company or (ii) dividends or distributions payable to the Company and/or a
Restricted Subsidiary;
(2) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any Restricted Subsidiary, or any direct
or indirect parent of the Company, other than Capital Stock held by the
Company or another Restricted Subsidiary, including in connection with any
merger or consolidation and including the exercise of any option to
exchange any Capital Stock (other than into Qualified Capital Stock of the
Company);
(3) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund
payment, as the case may be, any Subordinated Indebtedness; or
(4) make any Investment (other than Permitted Investments);
if at the time of the Restricted Payment and immediately after giving effect
thereto:
(A) a Default or an Event of Default shall have occurred and be
continuing;
(B) the Company is not able to Incur at least $1.00 of additional
Indebtedness pursuant to Section 3.9(a); or
(C) the aggregate amount (the amount expended for these purposes,
if other than in cash, being the Fair Market Value of the relevant
property) of Restricted Payments, including the proposed Restricted
Payment, made subsequent to the Issue Date up to the date thereof, less
any Investment Return calculated as of the date thereof, shall exceed the
sum of:
(i) fifty percent (50%) of cumulative Consolidated Net
Income or, if cumulative Consolidated Net Income is a loss, minus
one hundred percent (100%) of the loss, accrued during the period,
treated as one accounting period, beginning on the first full fiscal
quarter after the Issue Date to the end of the most recent fiscal
quarter for which consolidated financial information of the Company
is available; plus
(ii) one hundred percent (100%) of the aggregate net cash
proceeds received by the Company from any Person from any:
47
(x) (a) contribution to the equity capital of the Company not
representing an interest in Disqualified Capital Stock or (b)
issuance and sale of Qualified Capital Stock of the Company,
in each case, subsequent to the Issue Date, or
(y) issuance and sale subsequent to the Issue Date (and, in the
case of Indebtedness of a Restricted Subsidiary, at such time
as it was a Restricted Subsidiary) of any Indebtedness for
borrowed money of the Company or any Restricted Subsidiary
that has been converted into or exchanged for Qualified
Capital Stock of the Company, excluding, in each case, any net
cash proceeds:
a. received from a Subsidiary of the Company;
b. applied in accordance with Section 3.10(b); or
c. from Excluded Contributions.
(b) Notwithstanding the preceding Section 3.10(a), this covenant does
not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of such dividend if the dividend would have been permitted on
the date of declaration;
(2) if no Default or Event of Default shall have occurred and be
continuing,
(i) the acquisition of any shares of Capital Stock of the
Company in exchange for Qualified Capital Stock of the Company, or
(ii) the acquisition of any shares of Capital Stock of the
Company or the payment of dividends or distributions with respect to
shares of Capital Stock of the Company through the application of
the net cash proceeds received by the Company from a substantially
concurrent sale of Qualified Capital Stock of the Company or a
contribution to the equity capital of the Company not representing
an interest in Disqualified Capital Stock, in each case not received
from a Subsidiary of the Company;
provided, that the value of any such Qualified Capital Stock issued in exchange
for such acquired Capital Stock and any such net cash proceeds shall be excluded
from Section 3.10(a)(C)(ii) (and were not included therein at any time);
(3) if no Default or Event of Default shall have occurred and be
continuing, the voluntary prepayment, purchase, defeasance, redemption or
other acquisition or retirement for value of any Subordinated Indebtedness
solely in exchange for, or through the application of net cash proceeds of
a substantially concurrent sale, other than to a Subsidiary of the
Company, of:
(i) Qualified Capital Stock of the Company or
48
(ii) Refinancing Indebtedness for such Subordinated
Indebtedness;
provided, that the value of any Qualified Capital Stock issued in exchange for
Subordinated Indebtedness and any net cash proceeds referred to above shall be
excluded from Section 3.10(a)(C)(ii) (and were not included therein at any
time);
(4) if no Default or Event of Default shall have occurred and be
continuing, repurchases by the Company of Common Stock of the Company or
options, warrants or other securities exercisable or convertible into
Common Stock of the Company from employees or directors of the Company or
any of its Subsidiaries or their authorized representatives pursuant to
any management equity subscription agreement, stock option agreement or
similar agreement or plan upon the death, disability or termination of
employment or directorship of the employees or directors, in an aggregate
amount in any calendar year not to exceed the sum of (a) $3.5 million and
(b) the cash proceeds of key man life insurance policies received by the
Company and its Restricted Subsidiaries after the Issue Date, with the
unused amount in any calendar year being carried forward to the next
calendar year;
(5) the payment of any dividends by the Company on outstanding
shares of its Common Stock in an aggregate amount not to exceed $6.0
million in any calendar year, with the unused amount in any calendar year
being carried forward to the next calendar year;
(6) the payment of any dividend by a Restricted Subsidiary of the
Company to the holders of its Capital Stock on a pro rata basis; provided
that the aggregate amount of dividends paid pursuant to this clause (6) to
any Person other than the Company or a Restricted Subsidiary in any
calendar year shall not exceed $1.0 million, with the unused amount in any
calendar year being carried forward to the next calendar year;
(7) the payment of regularly scheduled dividends to holders of
Designated Preferred Stock if (a) no Default or Event of Default shall
have occurred and be continuing and (b) the Consolidated Leverage Ratio on
the date of payment of such dividend, on a pro forma basis, is less than
2.5 to 1.0;
(8) Investments that are made with Excluded Contributions;
(9) repurchases of Capital Stock deemed to occur upon the exercise
of stock options if such Capital Stock represents a portion of the
exercise price of such options; and
(10) if no Default or Event of Default shall have occurred and be
continuing, Restricted Payments not to exceed $10.0 million in the
aggregate.
(c) In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date, amounts expended pursuant to clauses (1) (without
duplication for the declaration of the relevant dividend), (4), (5), (6), (7)
and (10) of this Section 3.10(b) shall be included in such calculation and
amounts expended pursuant to clauses (2), (3) (8) and (9) of this Section
3.10(b) shall not be included in such calculation.
49
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 complies with the Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal quarterly
financial statements.
Section 3.11 Asset Sales.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) the Company or the applicable Restricted Subsidiary, as the
case may be, receives consideration at the time of the Asset Sale at least
equal to the Fair Market Value of the assets sold or otherwise disposed
of, and
(2) at least seventy-five percent (75%) of the consideration
received for the assets sold by the Company or the Restricted Subsidiary,
as the case may be, in the Asset Sale shall be in the form of cash or Cash
Equivalents received at the time of such Asset Sale. For purposes of this
clause (2), each of the following will be deemed to be cash:
(i) any liabilities, as shown on the Company's or the
applicable Restricted Subsidiary's most recent balance sheet, of the
Company or the applicable Restricted Subsidiary that are assumed by
the transferee of any such assets and from which the Company and its
Restricted Subsidiaries are unconditionally released from further
liability, in each case other than (i) contingent liabilities, (ii)
liabilities that are by their terms subordinated to the Notes or any
Guarantee, and (iii) liabilities consisting of Disqualified Capital
Stock; and
(ii) any securities, Notes or other obligations received by
the Company or any Restricted Subsidiary in an Asset Sale from the
transferee that are converted into cash, to the extent of the cash
received in that conversion, within 90 days of the closing of such
Asset Sale; provided that such cash shall be treated as Net Cash
Proceeds attributable to such Asset Sale.
(b) The Company or such Restricted Subsidiary, as the case may be, may
apply the Net Cash Proceeds of any such Asset Sale within 360 days thereof to:
(1) repay Indebtedness under a Bank Credit Facility and
permanently reduce the commitments with respect thereto without
Refinancing, or
(2) purchase from a Person other than the Company and its
Restricted Subsidiaries:
(i) property, plant or equipment or other assets to be used
by the Company or any Restricted Subsidiary in a Permitted Business
(including capital expenditures), or
50
(ii) Capital Stock of a Person engaged solely in a Permitted
Business that will become, upon purchase, a Restricted Subsidiary
(collectively, "Replacement Assets"), or
(3) any combination of (1) and (2) above,
(c) To the extent all or a portion of the Net Cash Proceeds of any Asset
Sale are not applied within the 360 days of the Asset Sale as described in
Section 3.11(b)(1), (2) or (3), the Company will make an offer to purchase Notes
(the "Asset Sale Offer"), at a purchase price equal to one hundred percent
(100%) of the principal amount of the Notes to be purchased, plus accrued and
unpaid interest thereon, to the date of purchase (the "Asset Sale Offer
Amount"). Pursuant to an Asset Sale Offer, the Company shall purchase from all
tendering Holders on a pro rata basis, and, at the Company's option, on a pro
rata basis with the holders of any other Indebtedness that is not, by its terms,
expressly subordinated in right of payments to the Notes and the terms of which
require an offer to purchase such other Indebtedness to be made with the
proceeds from the sale of assets ("Pari Passu Debt"), that principal amount (or
accreted value in the case of Indebtedness issued with original issue discount)
of Notes and Pari Passu Debt to be purchased equal to such unapplied Net Cash
Proceeds.
(d) Within 20 days following the 360th day following the date upon which
the Asset Sale occurred, the Company must send, by first-class mail, a notice to
the record Holders as shown on the Note Register on such 360th day, with a copy
to the Trustee, offering to purchase the Notes as described in Section 3.11(c).
The Asset Sale Offer shall state, among other things, the purchase date, which
must be no earlier than 30 days nor later than 60 days from the date the notice
is mailed, other than as may be required by law (the "Asset Sale Offer Payment
Date").
(e) Upon receiving notice of an Asset Sale Offer, Holders may elect to
tender their Notes in whole or in part in integral multiples of $1,000 in
exchange for cash. The Company may, however, defer an Asset Sale Offer until
there is an aggregate amount of unapplied Net Cash Proceeds from one or more
Asset Sales equal to or in excess of $10.0 million. At that time, the entire
amount of unapplied Net Cash Proceeds, and not just the amount in excess of
$10.0 million, shall be applied as required pursuant to this covenant. Pending
application in accordance with this covenant, Net Cash Proceeds may be applied
to temporarily reduce revolving credit borrowings which can be reborrowed or
invested in Cash Equivalents.
(f) On the Asset Sale Offer Payment Date, the Company will, to the
extent lawful:
(1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Asset Sale Offer;
(2) deposit with the Paying Agent funds in an amount equal to the
Asset Sale Offer Amount in respect of all Notes or portions thereof so
tendered; and
(3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the
Company.
51
(g) To the extent Holders of Notes and holders of other Pari Passu Debt,
if any, which are the subject of an Asset Sale Offer properly tender Notes or
the other Pari Passu Debt in an aggregate amount exceeding the amount of
unapplied Net Cash Proceeds, the Company will purchase the Notes and the other
Pari Passu Debt on a pro rata basis (based on amounts tendered). If only a
portion of a Note is purchased pursuant to an Asset Sale Offer, a new Note in a
principal amount equal to the portion thereof not purchased will be issued in
the name of the Holder thereof upon cancellation of the original Note (or
appropriate adjustments to the amount and beneficial interests in a Global Note
will be made, as appropriate). Notes (or portions thereof) purchased pursuant to
an Asset Sale Offer will be cancelled and cannot be reissued.
(h) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other applicable securities laws in connection with the
purchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any applicable securities laws or regulations conflict with this
Section 3.11, the Company shall comply with these laws and regulations and shall
not be deemed to have breached its obligations under this Section 3.11 by doing
so.
(i) Upon completion of an Asset Sale Offer, the amount of Net Cash
Proceeds will be reset at zero. Accordingly, to the extent that the aggregate
amount of Notes and other Indebtedness tendered pursuant to an Asset Sale Offer
is less than the aggregate amount of unapplied Net Cash Proceeds, the Company
may use any remaining Net Cash Proceeds for general corporate purposes of the
Company and its Restricted Subsidiaries.
(j) In the event of the transfer of substantially all (but not all) of
the property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 4.1, the Successor
Entity shall be deemed to have sold the properties and assets of the Company and
its Restricted Subsidiaries not so transferred for purposes of this covenant,
and shall comply with the provisions of this covenant with respect to the deemed
sale as if it were an Asset Sale. In addition, the Fair Market Value of
properties and assets of the Company or its Restricted Subsidiaries so deemed to
be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant.
(k) If at any time any non-cash consideration received by the Company or
any Restricted Subsidiary, as the case may be, in connection with any Asset Sale
is converted into or sold or otherwise disposed of for cash (other than interest
received with respect to any non-cash consideration), the conversion or
disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with this covenant within
360 days of conversion or disposition.
Section 3.12 Limitation on Subordinated Indebtedness.
(a) The Company will not, directly or indirectly, Incur any Indebtedness
that is contractually subordinate or junior in right of payment to any other
Indebtedness of the Company unless it is contractually subordinate in right of
payment to the Notes to the same extent.
(b) The Company will not permit any Guarantor to Incur any Indebtedness
that is contractually subordinate or junior in right of payment to any other
Indebtedness of such
52
Guarantor unless it is contractually subordinate in right of payment to such
Guarantor's Subsidiary Guarantee to the same extent.
Section 3.13 Designation of Restricted and Unrestricted Subsidiaries.
(a) The Company may designate after the Issue Date any Subsidiary of the
Company as an "Unrestricted Subsidiary" under this Section 3.13 (a
"Designation") only if:
(1) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation and
any transactions between the Company or any of its Restricted Subsidiaries
and such Unrestricted Subsidiary are in compliance with Section 3.16; or
(2) the Company would be permitted to make an Investment at the
time of Designation (assuming the effectiveness of such Designation and
treating such Designation as an Investment at the time of Designation)
pursuant to Section 3.10(a) (other than a Permitted Investment) or
pursuant to clause (10) of the definition of Permitted Investments in an
amount (the "Designation Amount") equal to the amount of the Company's
Investment in such Subsidiary on such date.
(b) Neither the Company nor any Restricted Subsidiary will at any time:
(1) provide credit support for, subject any of its property or
assets (other than the Capital Stock of any Unrestricted Subsidiary) to
the satisfaction of, or guarantee, any Indebtedness of any Unrestricted
Subsidiary (including any undertaking, agreement or instrument evidencing
such Indebtedness);
(2) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary; or
(3) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated
or payable prior to its final scheduled maturity upon the occurrence of a
default with respect to any Indebtedness of any Unrestricted Subsidiary,
except for any non-recourse guarantee given solely to support the pledge
by the Company or any Restricted Subsidiary of the Capital Stock of any
Unrestricted Subsidiary,
except:
(4) in the case of Section 3.13(b) (1) or (2), to the extent
treated and permitted as a Restricted Payment or Permitted Investment in
accordance with Section 3.10 and as an Incurrence of Indebtedness
permitted under Section 3.9, and
(5) in the case of Section 3.13(b)(3), to the extent that the
ability to declare a default or accelerate the payment is limited to a
default on the obligation or instrument of the Company or a Restricted
Subsidiary treated as a Restricted Payment or Permitted Investment and
Incurrence of Indebtedness in accordance with clause (a) above.
53
(c) The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") only if:
(1) No Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation; and
(2) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred for all purposes of the
Indenture.
(d) Any Designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be deemed to include the Designation of all of the Subsidiaries
of such Subsidiary. Any Designation of a Subsidiary of the Company as an
Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
Designation and an Officers' Certificate certifying that such Designation
complied with the preceding conditions and was permitted by the preceding
provisions.
Section 3.14 Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.
(a) Except as provided in Section 3.14(b), the Company will not, and
will not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or permit to exist or become effective any
encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on or in respect
of its Capital Stock to the Company or any other Restricted Subsidiary or
pay any Indebtedness owed to the Company or any other Restricted
Subsidiary;
(2) make loans or advances to, or Guarantee any Indebtedness or
other obligations of, or make any Investment in, the Company or any other
Restricted Subsidiary; or
(3) transfer any of its property or assets to the Company or any
other Restricted Subsidiary.
(b) Section 3.14(a) will not apply to encumbrances or restrictions
existing under or by reason of:
(1) the Bank Credit Facility as in effect on the Issue Date, and
any amendments, restatements, renewals, replacements or refinancings
thereof; provided, that any amendment, restatement, renewal, replacement
or refinancing is not more restrictive with respect to such encumbrances
or restrictions than those in existence on the Issue Date;
(2) this Indenture;
54
(3) any agreement in effect on the Issue Date as any such
agreement is in effect on such date;
(4) applicable law;
(5) customary non-assignment provisions of any contract and
customary provisions restricting assignment or subletting in any lease
governing a leasehold interest of any Restricted Subsidiary, or any
customary restriction on the ability of a Restricted Subsidiary to
dividend, distribute or otherwise transfer any asset which secures
Indebtedness secured by a Lien, in each case permitted to be Incurred
under the Indenture;
(6) any instrument governing Acquired Indebtedness not Incurred in
connection with, or in anticipation or contemplation of, the relevant
acquisition, merger or consolidation, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person,
other than the Person or the properties or assets of the Person so
acquired;
(7) restrictions with respect to a Restricted Subsidiary of the
Company imposed pursuant to a binding agreement which has been entered
into for the sale or disposition of Capital Stock or assets of such
Restricted Subsidiary; provided, that such restrictions apply solely to
the Capital Stock or assets of such Restricted Subsidiary being sold;
(8) customary restrictions imposed on the transfer of copyrighted
or patented materials;
(9) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business;
(10) any agreement relating to any Indebtedness of any Restricted
Subsidiary that is not a Domestic Restricted Subsidiary permitted to be
Incurred pursuant to Section 3.9; provided, however, that such
encumbrances or restrictions are ordinary and customary with respect to
the type of Indebtedness being incurred;
(11) the subordination in right of payment of any intercompany
obligations between the Company and any Restricted Subsidiary to any
unsubordinated Indebtedness; provided that any such intercompany
obligations are subordinated to the Notes to at least the same extent as
such intercompany obligations are subordinated to other unsubordinated
Indebtedness;
(12) restrictions in any agreement with a holder (other than an
Affiliate) of Capital Stock of any Restricted Subsidiary requiring the
consent of such holder to the payment of dividends, the payment of any
Indebtedness, the making of loans or advances or the transfer of assets by
such Restricted Subsidiary or requiring that such payments or transfers be
made on a pro rata basis; or
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(13) an agreement governing Indebtedness Incurred to Refinance the
Indebtedness issued, assumed or Incurred pursuant to an agreement referred
to in clauses (2), (3) or (6) of this paragraph; provided, that such
agreement is not more restrictive (as determined in good faith by the
Board of Directors of the Company) with respect to such encumbrances or
restrictions than those contained in the agreement governing the
Indebtedness being Refinanced.
Section 3.15 Liens.
(a) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, Incur any Liens of any kind
(except for Permitted Liens) against or upon any of their respective properties
or assets, whether owned on the Issue Date or acquired after the Issue Date, or
any proceeds therefrom, unless contemporaneously therewith effective provision
is made:
(1) in the case of the Company or any Restricted Subsidiary other
than a Guarantor, to secure the Notes and all other amounts due under this
Indenture; and
(2) in the case of a Guarantor, to secure such Guarantor's
Subsidiary Guarantee of the Notes and all other amounts due under this
Indenture;
in each case, equally and ratably with such Indebtedness (or, in the event that
such Indebtedness is subordinated in right of payment to the Notes or such
Subsidiary Guarantee, as the case may be, prior to such Indebtedness) with a
Lien on the same properties and assets securing such Indebtedness for so long as
such Indebtedness is secured by such Lien.
Section 3.16 Transactions with Affiliates.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transaction or series of
related transactions (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary than those
that could reasonably be expected to be obtained in a comparable
transaction at such time on an arm's-length basis by the Company or such
Restricted Subsidiary from a Person that is not an Affiliate of the
Company; and
(2) the Company delivers to the Trustee:
(i) with respect to any Affiliate Transaction involving
aggregate payments, or transfers of property or services with a Fair
Market Value, in excess of $5.0 million, a Board Resolution set
forth in an Officers' Certificate certifying that such transaction
complies with the preceding provisions and that the terms of such
Affiliate Transaction have been approved by a majority of the
members of the Board of Directors of the Company (including a
majority of the disinterested members thereof); and
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(ii) with respect to any Affiliate Transaction involving
aggregate payments, or transfers of property or services with a Fair
Market Value, in excess of $25.0 million, a favorable opinion as to
the fairness to the Company or the relevant Restricted Subsidiary
(if any) of such Affiliate Transaction from a financial point of
view from an Independent Financial Advisor.
(b) The following items shall not be deemed to be Affiliate
Transactions, and therefore Section 3.16(a) above shall not apply to:
(1) transactions with or among the Company and any Wholly Owned
Restricted Subsidiary or between or among Wholly Owned Restricted
Subsidiaries;
(2) fees and compensation paid to, and any indemnity provided on
behalf of, officers, directors, employees, consultants or agents of the
Company or any Restricted Subsidiary as determined in good faith by the
Company's Board of Directors;
(3) any transactions undertaken pursuant to any contractual
obligations or rights in existence on the Issue Date as in effect on the
Issue Date;
(4) any Restricted Payments made in cash or any payments made with
Capital Stock of the Company (other than Disqualified Capital Stock)
pursuant to Section 3.10; or
(5) transactions with suppliers or purchasers of goods or services
(other than an Unrestricted Subsidiary) that is an Affiliate of the
Company solely because the Company or a Restricted Subsidiary is a holder
of Capital Stock of such Person, in each case in the ordinary course of
business on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that could reasonably be
expected to be obtained in a comparable transaction at such time on an
arm's-length basis by the Company or such Restricted Subsidiary from a
Person that is not an Affiliate of the Company.
Not later than the date of entering into any Affiliate Transaction, the
Company shall deliver to the Trustee an Officers' Certificate certifying that
such Affiliate Transaction complies with Section 3.16(a)(1) above.
Section 3.17 Business Activities.
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any businesses other than a Permitted Business, except to such extent
as would not be material to the Company and its Restricted Subsidiaries, taken
as a whole.
Section 3.18 Reports.
(a) Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, so long as any Notes
remain Outstanding, the Company will:
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(1) provide the Trustee and the Holders with, and make available
to others upon request, the annual reports and information, documents and
other reports as are specified in Sections 13 and 15(d) of the Exchange
Act and applicable to a U.S. corporation subject to such Sections within
15 days after the times specified for the filing of the information,
documents and reports under such Sections; and
(2) file with the Commission, to the extent permitted, the
information, documents and reports referred to in Section 3.18(a)(1)
within the periods specified for such filings under the Exchange Act
(whether or not applicable to the Company).
(b) In addition, at any time when the Company is not subject to or is
not current in its reporting obligations under Section 3.18(a)(2), the Company
will make available, upon request, to any holder and any prospective purchaser
of Notes the information required pursuant to Rule 144A(d)(4) under the
Securities Act.
Section 3.19 Sale and Leaseback Transactions.
(a) The Company will not, and will not cause or permit any Restricted
Subsidiary to, directly or indirectly, enter into any Sale and Leaseback
Transaction; provided, that the Company or any Restricted Subsidiary may enter
into a Sale and Leaseback Transaction if:
(1) except with respect to a Sale and Leaseback Transaction
involving the corporate headquarters and inventory distribution facility
of the Company located in Dothan, Alabama, the Company or such Restricted
Subsidiary could have Incurred Indebtedness in the amount of the
Attributable Indebtedness of such Sale and Leaseback Transaction pursuant
to Section 3.9;
(2) the net proceeds received by the Company or such Restricted
Subsidiary from such Sale and Leaseback Transaction are at least equal to
the Fair Market Value of the related assets; and
(3) the Company applies the proceeds of such Sale and Leaseback
Transaction in compliance with Section 3.11.
Section 3.20 Payments for Consent.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any
terms or provisions of the Notes, unless the consideration is offered to be paid
or agreed to be paid to all Holders of the Notes who so consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
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ARTICLE IV
SUCCESSOR ENTITY
Section 4.1 Merger, Consolidation or Sale of Assets.
(a) The Company will not, in a single transaction or series of related
transactions, directly or indirectly: (1) consolidate or merge with or into any
Person (whether or not the Company is the surviving or continuing Person), or
(2) sell, assign, transfer, lease, convey or otherwise dispose of (or cause or
permit any Restricted Subsidiary to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's properties and
assets (determined on a consolidated basis for the Company and its Restricted
Subsidiaries), to any Person unless:
(1) either:
(i) the Company shall be the surviving or continuing
corporation, or
(ii) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person
which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of the Company and of
the Company's Restricted Subsidiaries substantially as an entirety
(the "Successor Entity"):
(x) is a corporation organized and validly existing
under the laws of the United States or any State
thereof or the District of Columbia, and
(y) expressly assumes, by supplemental indenture (in
form and substance reasonably satisfactory to the
Trustee), executed and delivered to the Trustee,
the due and punctual payment of the principal of,
and premium, if any, and interest on all of the
Notes and the performance and observance of every
covenant of the Notes, the Indenture and each
Registration Rights Agreement on the part of the
Company to be performed or observed;
(2) immediately after giving effect to such transaction and the
assumption contemplated by Section 4.1(a)(1)(ii)(y) (including, without
limitation, giving effect on a pro forma basis to any Indebtedness,
including any Acquired Indebtedness, Incurred or anticipated to be
Incurred in connection with or in respect of such transaction), the
Company or such Successor Entity, as the case may be, shall be able to
Incur at least $1.00 of additional Indebtedness pursuant to Section
3.9(a);
(3) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by Section 4.1(a)(1)(ii)(y)
(including, without limitation, giving effect on a pro forma basis to any
Indebtedness, including any Acquired Indebtedness, Incurred or anticipated
to be Incurred and any Lien granted in
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connection with or in respect of the transaction), no Default or Event of
Default shall have occurred or be continuing;
(4) each Guarantor (including Persons that become Guarantors as a
result of the transaction) shall have confirmed by supplemental indenture
that its Subsidiary Guarantee shall apply for the Obligations of the
Successor Entity in respect of this Indenture and the Notes; and
(5) the Company or the Successor Entity shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that the consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if required in connection with such
transaction, the supplemental indenture, comply with the applicable
provisions of this Indenture and that all conditions precedent in this
Indenture relating to the transaction have been satisfied.
For purposes of this covenant, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
(b) Section 4.1(a)(2) shall not apply to:
(1) any transfer of the properties or assets of a Restricted
Subsidiary to the Company or to a Guarantor;
(2) any merger of a Restricted Subsidiary into the Company or a
Guarantor;
(3) any merger of the Company into a Wholly Owned Restricted
Subsidiary created for the purpose of holding the Capital Stock of the
Company;
(4) a merger between the Company and a newly-created Affiliate
incorporated solely for the purpose of reincorporating the Company in
another State of the United States,
so long as, in each case the Indebtedness of the Company and its
Restricted Subsidiaries is not increased thereby.
(c) Upon any consolidation, combination or merger or any transfer of all
or substantially all of the properties and assets of the Company and its
Restricted Subsidiaries in accordance with this covenant, in which the Company
is not the continuing corporation, the Successor Entity formed by such
consolidation or into which the Company is merged or to which such conveyance,
lease or transfer is made will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture and the Notes
with the same effect as if such Successor Entity had been named as such. For the
avoidance of doubt, compliance with this covenant will not affect the
obligations of the Company (including a Successor Entity, if applicable) under
Section 3.8, if applicable.
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(d) Each Guarantor will not, and the Company will not cause or permit
any Guarantor to, consolidate with or merge into, or sell or dispose of all or
substantially all of its assets to, any Person (other than the Company) that is
not a Guarantor unless:
(1) such Person (if such Person is the surviving entity) assumes
all of the obligations of such Guarantor in respect of its Subsidiary
Guarantee by executing a supplemental indenture and providing the Trustee
with an Officers' Certificate and Opinion of Counsel, and such transaction
is otherwise in compliance with this Indenture;
(2) such Subsidiary Guarantee is to be released as provided under
Section 10.2; or
(3) such sale or other disposition of substantially all of such
Guarantor's assets is made in accordance with Section 3.11.
ARTICLE V
OPTIONAL REDEMPTION OF NOTES
Section 5.1 Optional Redemption. The Company may redeem the Notes, at its
option, in whole at any time or in part from time to time, subject to the
conditions and at the redemption prices specified in paragraph 5 of the Form of
Reverse Side of Note contained in Exhibit A.
Section 5.2 Election to Redeem. The Company shall evidence its election to
redeem any Notes pursuant to Section 5.1 by a Board Resolution.
Section 5.3 Notice of Redemption.
(a) The Company shall give or cause the Trustee to give notice of
redemption, in the manner provided for in Section 11.2, by first-class mail,
postage prepaid, at least 30 but not more than 60 days prior to the Redemption
Date, to each Holder of Notes to be redeemed at its registered address. If the
Company itself gives the notice, it shall also deliver a copy to the Trustee.
(b) If either (i) the Company is not redeeming all Outstanding Notes, or
(ii) the Company elects to have the Trustee give notice of redemption, then the
Company shall deliver to the Trustee, at least 45 days prior to the Redemption
Date (unless the Trustee is satisfied with a shorter period), an Officers'
Certificate requesting that the Trustee select the Notes to be redeemed and/or
give notice of redemption and setting forth the information required by Section
5.3(c) (with the exception of the identification of the particular Notes, or
portions of the particular Notes, to be redeemed in the case of a partial
redemption). If the Company elects to have the Trustee give notice of
redemption, the Trustee shall give the notice in the name of the Company and at
the Company's expense.
(c) All notices of redemption shall state:
(1) the Redemption Date,
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(2) the redemption price and the amount of any accrued interest
payable as provided in Section 5.6,
(3) whether or not the Company is redeeming all Outstanding Notes,
(4) if the Company is not redeeming all Outstanding Notes, the
aggregate principal amount of Notes that the Company is redeeming and the
aggregate principal amount of Notes that will be Outstanding after the
partial redemption, as well as the identification of the particular Notes,
or portions of the particular Notes, that the Company is redeeming,
(5) if the Company is redeeming only part of a Note, the notice
that relates to that Note shall state that on and after the Redemption
Date, upon surrender of that Note, the Holder will receive, without
charge, a new Note or Notes of authorized denominations for the principal
amount of the Note remaining unredeemed (or appropriate adjustments to the
amount and beneficial interests in a Global Note will be made, as
appropriate),
(6) that on the Redemption Date the redemption price and any
accrued interest payable to the Redemption Date as provided in Section 5.6
will become due and payable in respect of each Note, or the portion of
each Note, to be redeemed, and, unless the Company defaults in making the
redemption payment, that interest on each Note, or the portion of each
Note, to be redeemed, will cease to accrue on and after the Redemption
Date,
(7) the place or places where a Holder must surrender the Holder's
Notes for payment of the redemption price, and
(8) the CUSIP or ISIN number, if any, listed in the notice or
printed on the Notes, and that no representation is made as to the
accuracy or correctness of such CUSIP or ISIN number.
Section 5.4 Selection of Notes to Be Redeemed in Part.
(a) If the Company is not redeeming all Outstanding Notes, the Trustee
shall select the Notes to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed
or, if the Notes are not then listed on a national securities exchange, on a pro
rata basis, by lot or by any other method as the Trustee shall in its sole
discretion deem fair and appropriate. If a partial redemption is made with the
proceeds of a Equity Offering, selection of the Notes or portions thereof for
redemption shall, subject to the preceding sentence, be made by the Trustee only
on a pro rata basis or on as nearly a pro rata basis as is practicable (subject
to the procedures of DTC), unless the method is otherwise prohibited. No Notes
of a principal amount of $1,000 or less shall be redeemed in part and Notes of a
principal amount in excess of $1,000 may be redeemed in part in multiples of
$1,000 only.
(b) Notice of any redemption shall be mailed by first-class mail,
postage prepaid, at least 30 but not more than 60 days before the Redemption
Date to each Holder of Notes to be redeemed at its registered address. If Notes
are to be redeemed in part only, the notice of
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redemption shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof (if any) will be issued in the name of the Holder thereof upon
cancellation of the original Note (or appropriate adjustments to the amount and
beneficial interest in a Global Note will be made, as appropriate).
(c) The Company will pay the redemption price for any Note together with
accrued and unpaid interest thereon through the Redemption Date. On and after
the Redemption Date, interest will cease to accrue on Notes or portions thereof
called for redemption as long as the Company has deposited with the Paying Agent
funds in satisfaction of the applicable redemption price pursuant to this
Indenture.
Section 5.5 Deposit of Redemption Price. Prior to 10:00 a.m. New York City
time on the relevant Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as Paying Agent, segregate
and hold in trust as provided in Section 2.4) an amount of money in immediately
available funds sufficient to pay the redemption price of, and accrued interest
on, all the Notes that the Company is redeeming on that date.
Section 5.6 Notes Payable on Redemption Date. If the Company, or the
Trustee on behalf of the Company, gives notice of redemption in accordance with
this Article V, the Notes, or the portions of Notes, called for redemption,
shall, on the Redemption Date, become due and payable at the redemption price
specified in the notice (together with accrued interest, if any, to the
Redemption Date), and from and after the Redemption Date (unless the Company
shall default in the deposit of the redemption price and accrued interest
pursuant to Section 5.5) the Notes or the portions of Notes shall cease to bear
interest. Upon surrender of any Note for redemption in accordance with the
notice, the Company shall pay the Notes at the redemption price, together with
accrued interest, if any, to the Redemption Date (subject to the rights of
Holders of record on the relevant record date to receive interest due on the
relevant Interest Payment Date). If the Company shall fail to pay any Note
called for redemption upon its surrender for redemption, the principal shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Notes.
Section 5.7 Unredeemed Portions of Partially Redeemed Note. Upon
cancellation of a Note that is to be redeemed in part, the Company shall
execute, and the Trustee shall authenticate and make available for delivery to
the Holder of the Note at the expense of the Company, a new Note or Notes, of
any authorized denomination as requested by the Holder, in an aggregate
principal amount equal to, and in exchange for, the unredeemed portion of the
principal of the Note surrendered, provided that each new Note will be in a
principal amount of $1,000 or integral multiple of $1,000 (or appropriate
adjustments to the amount and beneficial interests in a Global Note will be
made, as appropriate).
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.
(a) Each of the following is an "Event of Default":
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(1) default for 30 days or more in the payment when due of
interest on any Notes (including additional interest payable under the
Registration Rights Agreement);
(2) default in the payment when due of the principal of or
premium, if any, on any Notes, including the failure to make a required
payment to purchase Notes tendered pursuant to an optional redemption,
Change of Control Offer or an Asset Sale Offer;
(3) the failure by the Company or any Restricted Subsidiary to
comply with any other covenant or agreement contained herein or in the
Notes for 45 days or more after written notice to the Company from the
Trustee or the Holders of at least 25% in aggregate principal amount of
the Outstanding Notes (except in the case of a default with respect to
Section 4.1, which will constitute an Event of Default with such notice
requirement but without such passage of time requirement);
(4) default by the Company or any Restricted Subsidiary under any
Indebtedness which:
(i) is caused by a failure to pay principal of or premium,
if any, or interest on such Indebtedness prior to the expiration of
any applicable grace period provided in such Indebtedness on the
date of such default; or
(ii) results in the acceleration of such Indebtedness prior
to its stated maturity;
and, in each case, the principal amount of Indebtedness covered by
(i) or (ii) at the relevant time aggregates $25.0 million or more.
(5) failure by the Company or any of its Restricted Subsidiaries
to pay one or more final non-appealable judgments against any of them
which are not covered by adequate insurance by a solvent insurer of
national or international reputation which has acknowledged its
obligations in writing, aggregating $25.0 million or more, which
judgment(s) are not paid, discharged, bonded or stayed for a period of 60
days or more;
(6) a Bankruptcy Law Event of Default; or
(7) except as otherwise permitted by this Indenture, any
Subsidiary Guarantee is held to be unenforceable or invalid in a judicial
proceeding or ceases for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, denies or
disaffirms such Guarantor's obligations under its Subsidiary Guarantee.
The foregoing will constitute Events of Default whatever the reason for any such
Event of Default and whether it is voluntary or involuntary or is effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
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(b) The Company shall deliver to the Trustee upon becoming aware of any
Default or Event of Default written notice in the form of an Officers'
Certificate of any Default or Event of Default, their status and what action the
Company proposes to take in respect thereof.
Section 6.2 Acceleration.
(a) If an Event of Default (other than an Event of Default specified in
Section 6.1(a)(7) with respect to the Company) shall occur and be continuing,
the Trustee or the Holders of at least twenty-five percent (25%) in principal
amount of Outstanding Notes may declare the unpaid principal of (and premium, if
any) and accrued and unpaid interest on all the Notes to be immediately due and
payable by notice in writing to the Company and the Trustee specifying the Event
of Default and that it is a "notice of acceleration." If an Event of Default
specified in Section 6.1(a)(7) occurs with respect to the Company, then the
unpaid principal of (and premium, if any) and accrued and unpaid interest on all
the Notes will become immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.
(b) At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph (a), the Holders of a majority in
principal amount of the Notes may rescind and cancel such declaration and its
consequences:
(1) if the rescission would not conflict with any judgment or
decree;
(2) if all existing Events of Default have been cured or waived,
except nonpayment of principal or interest that has become due solely
because of the acceleration;
(3) to the extent the payment of such interest is lawful, interest
on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been
paid; and
(4) if the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its reasonable expenses,
disbursements and advances, including counsel fees and expenses.
No rescission shall affect any subsequent Default or impair any rights
relating thereto.
Section 6.3 Other Remedies.
(a) If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of and interest
on the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
(b) The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.
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Section 6.4 Waiver of Past Defaults. The Holders of a majority in
principal amount of the Notes may waive any existing Default or Event of Default
under this Indenture, and its consequences, except a default in the payment of
the principal of, premium, if any, or interest on any Notes.
Section 6.5 Control by Majority. The Holders of a majority in principal
amount of the Outstanding Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. Subject to Sections 7.1
and 7.2, however, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
Section 6.6 Limitation on Suits. No Holder of any Notes will have any
right to institute any proceeding with respect to this Indenture or for any
remedy hereunder, unless:
(a) such Holder gives to the Trustee written notice of a continuing
Event of Default;
(b) Holders of at least twenty-five percent (25%) in principal amount of
the then Outstanding Notes make a written request to pursue the remedy;
(c) such Holders of the Notes provide to the Trustee indemnity
satisfactory to it;
(d) the Trustee does not comply within 60 days; and
(e) during such 60-day period the Holders of a majority in principal
amount of the Outstanding Notes do not give the Trustee a written direction
which, in the opinion of the Trustee, is inconsistent with the request;
provided, that a Holder of a Note may institute suit for enforcement of payment
of the principal of and premium, if any, or interest on such Note on or after
the respective due dates expressed in such Note.
Section 6.7 Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture (including Section 6.6), the right of any
Holder to receive payment of principal of or interest on the Notes held by such
Holder, on or after the respective due dates, Redemption Dates or repurchase
date expressed in this Indenture or the Notes, 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 such Holder.
Section 6.8 Collection Suit by Trustee. If an Event of Default specified
in Section 6.1(a)(1) and (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
and each Guarantor for the whole amount then due and owing (together with
applicable interest on any overdue principal and, to the extent lawful, interest
on overdue interest) and the amounts provided for in Section 7.7.
Section 6.9 Trustee May File Proofs of Claim, etc.
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(a) The Trustee may (irrespective of whether the principal of the Notes
is then due):
(i) 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 and
the Holders under this Indenture and the Notes allowed in any bankruptcy,
insolvency, liquidation or other judicial proceedings relative to the
Company, any Guarantor or any Subsidiary of the Company or their
respective creditors or properties; and
(ii) collect and receive any moneys or other property payable or
deliverable in respect of any such claims and distribute them in
accordance with this Indenture.
Any receiver, trustee, liquidator, sequestrator (or other similar
official) in any such proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, taxes, disbursements
and advances of the Trustee, its agent and counsel, and any other amounts due to
the Trustee pursuant to Section 7.7.
(b) Nothing in this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 6.10 Priorities. If the Trustee collects any money or property
pursuant to this Article VI, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: if the Holders proceed against the Company directly without the
Trustee in accordance with this Indenture, to Holders for their collection
costs;
THIRD: to Holders for amounts due and unpaid on the Notes for principal
and interest, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes for principal and interest,
respectively; and
FOURTH: to the Company or, to the extent the Trustee collects any amount
pursuant to Article X from any Guarantor, to such Guarantor, or to such party as
a court of competent jurisdiction shall direct.
The Trustee may, upon notice to the Company, fix a record date and payment date
for any payment to Holders pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due
67
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7 or a suit by Holders of more than twenty-five
percent (25%) in principal amount of Outstanding Notes.
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is continuing,
the Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such certificates and opinions to
determine whether or not they conform on their face to the requirements of
this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) this paragraph (c) does not limit the effect of Section
7.1(b);
(2) 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
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.2, 6.4 or 6.5.
(d) 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.
(e) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
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(f) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Article VII and to the provisions of the TIA.
(h) 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.
(i) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses (including
reasonable attorneys' fees and expenses) and liabilities that might be incurred
by it in compliance with such request or direction.
Section 7.2 Rights of Trustee. Subject to Section 7.1:
(a) The Trustee may conclusively rely on any document reasonably
believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting at the direction of
the Company, it may require an Officers' Certificate or an Opinion of Counsel.
The Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability with respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) If the Trustee shall determine, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney.
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer of the Trustee has actual knowledge
thereof or unless written notice of any
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event which is in fact such a default is received by the Trustee at the
Corporate Trust Office of the Trustee, and such notice references the Notes and
this Indenture.
(h) The rights, privileges, protections, immunities and benefits given
to the Trustee, including its right to be indemnified, are extended to, and
shall be enforceable by, the Trustee in each of its capacities hereunder, and to
each agent, custodian and other Person employed to act hereunder.
(i) The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
Section 7.3 Individual Rights of Trustee. The Trustee in its individual or
any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Company, the Guarantors or any of their Affiliates with the same
rights it would have if it were not Trustee. Any Paying Agent, Registrar or
co-Registrar may do the same with like rights. However, the Trustee must comply
with Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer. The Trustee shall not be responsible for
and makes no representation as to the validity or adequacy of this Indenture or
the Notes, it shall not be accountable for the Company's use of the proceeds
from the Notes, and it shall not be responsible for any statement of the Company
in this Indenture or in any document issued in connection with the sale of the
Notes or in the Notes other than the Trustee's certificate of authentication.
Section 7.5 Notice of Defaults. If a Default or Event of Default occurs
and is continuing and if a Responsible Officer has actual knowledge thereof, the
Trustee shall mail to each Holder notice of the Default or Event of Default
within 90 days after the occurrence thereof. Except in the case of a Default or
Event of Default in payment of principal of, premium, if any, or interest on any
Note, the Trustee may withhold notice if and so long as a committee of its Trust
Officers in good faith determines that withholding notice is in the interests of
the Holders.
Section 7.6 Reports by Trustee to Holders. The Trustee shall comply with
TIA Section 313. The Company agrees to notify promptly the Trustee whenever the
Notes become listed on any stock exchange and of any desisting thereof.
Section 7.7 Compensation and Indemnity.
(a) The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
Company and the Trustee shall from time to time agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, costs of preparing and reviewing reports, certificates and other
documents, costs of preparation and mailing of notices to Holders and reasonable
costs of counsel retained by the
70
Trustee in connection with the delivery of an Opinion of Counsel or otherwise,
in addition to the compensation for its services. Such expenses shall include
the reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts.
(b) The Company and the Guarantors shall jointly and severally indemnify
the Trustee against any and all loss, damage, claim liability, expense
(including reasonable attorneys' fees and expenses) and taxes (other than those
measured by or determined by the income of the Trustee) incurred by it without
negligence, willful misconduct or bad faith on its part in connection with the
acceptance and administration of this trust and the performance of its duties
hereunder, including the costs and expenses of enforcing this Indenture
(including this Section 7.7) and of defending itself against any claims (whether
asserted by any Holder, the Company, any Guarantor or otherwise). 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. The Company shall defend the claim and the Trustee
may have separate counsel and the Company shall pay the fees and expenses of
such counsel. The Company need not reimburse any expense or indemnify against
any loss, liability or expense incurred by the Trustee through the Trustee's own
negligence, willful misconduct or bad faith.
(c) To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Notes. The Trustee's right to receive
payment of any amounts due under this Section 7.7 shall not be subordinate to
any other liability or Indebtedness of the Company.
(d) The Company's payment obligations pursuant to this Section 7.7 shall
survive the discharge of this Indenture and the resignation or removal of the
Trustee. When the Trustee incurs expenses after the occurrence of a Bankruptcy
Law Event of Default specified in Section 6.1(a)(7), the expenses are intended
to constitute expenses of administration under any Bankruptcy Law; provided,
however, that this shall not affect the Trustee's rights as set forth in this
Section 7.7 or Section 6.10.
Section 7.8 Replacement of Trustee.
(a) The Trustee may resign at any time by so notifying the Company. The
Holders of a majority in principal amount of the Outstanding Notes may remove
the Trustee by so notifying the Trustee and may appoint a successor Trustee
reasonably acceptable to the Company. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
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(b) If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Outstanding Notes and such
Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy
exists in the office of the Trustee for any reason (the Trustee in such event
being referred to herein as the retiring Trustee), the Company shall promptly
appoint a successor Trustee.
(c) 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. 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 7.7.
(d) If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
ten percent (10%) in principal amount of the Outstanding Notes may petition, at
the Company's expense, any court of competent jurisdiction for the appointment
of a successor Trustee.
(e) If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
(f) Notwithstanding the replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
Section 7.9 Successor Trustee by Merger.
(a) If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee.
(b) In case at the time such successor or successors to the Trustee
shall succeed to the trusts created by this Indenture, any of the Notes shall
have been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor trustee, and deliver
such Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Notes or in this Indenture provided that
the certificate of the Trustee shall have.
Section 7.10 Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA Section 310(a). The Trustee shall have a
combined capital and surplus of at least $50 million as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
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Section 7.11 Preferential Collection of Claims Against the Company. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
DEFEASANCE; DISCHARGE OF INDENTURE
Section 8.1 Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the Outstanding Notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the Outstanding
Notes on the 91st day after the deposit specified in clause (1) of Section 8.2,
except for:
(i) the rights of Holders to receive payments in respect of
the principal of, premium, if any, and interest on such Notes when
the payments are due,
(ii) the Company's obligations with respect to such Notes
under Article II and Section 3.2;
(iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection
therewith, and
(iv) this Article VIII.
(b) In addition, the Company may, at its option and at any time, elect
to have its obligations released with respect to certain covenants that are
described in this Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event or
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
reorganization and insolvency events) described in Section 6.1 will no longer
constitute an Event of Default with respect to the Notes.
Section 8.2 Conditions to Defeasance. In order for the Company to exercise
either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders cash in U.S. dollars, certain direct
non-callable obligations of, or guaranteed by, the United States, or a
combination thereof, in such amounts as will be sufficient without
reinvestment, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any,
and interest on the Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be;
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(2) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee and independent of the Company to the
effect that:
(i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or
(ii) since the Issue Date, there has been a change in the
applicable U.S. federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel
shall state that, the Holders will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such Legal Defeasance and will be
subject to U.S. 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;
(3) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee and independent of the Company to the
effect that the Holders will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of the deposit pursuant to Section 8.2(1) (except
any Default or Event of Default resulting from the failure to comply with
Section 3.9 as a result of the borrowing of the funds required to effect
such deposit) and, insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit, and the Trustee shall have received
Officers' Certificates to such effect on the date of such deposit and, in
the case of Legal Defeasance, on such 91st day;
(5) the Trustee shall have received an Officers' Certificate
stating that such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under this Indenture
or any other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound;
(6) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that:
(i) after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, and
(ii) the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the
Trustee and independent of the Company to the effect that the trust
resulting from the deposit
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does not constitute an investment company under the Investment
Company Act of 1940;
(7) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company
or any Subsidiary of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or
others; and
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.3 Application of Trust Money. The Trustee shall hold in trust
U.S. Legal Tender or U.S. Government Obligations, together with earnings thereon
deposited with it pursuant to this Article VIII. It shall apply the deposited
money and the U.S. Legal Tender from U.S. Government Obligations, together with
earnings thereon, through the Paying Agent and in accordance with this Indenture
to the payment of principal of and interest on the Notes. The U.S. Legal Tender
or U.S. Government Obligations so held in trust and deposited with the Trustee
in compliance with Section 8.2 shall not be part of the trust estate under this
Indenture, but shall constitute a separate trust fund for the benefit of all
Holders entitled thereto.
Section 8.4 Repayment to the Company.
(a) The Trustee and the Paying Agent shall promptly turn over to the
Company, or if deposited with the Trustee by any Guarantor, to such Guarantor,
upon request any excess money or securities held by them upon payment of all the
obligations under this Indenture.
(b) Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company or any Guarantor, as the case may be,
upon request, any money held by them for the payment of principal of, premium or
interest on the Notes that remains unclaimed for two years, and, thereafter,
Holders entitled to money must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another Person.
Section 8.5 Indemnity for U.S. Government Obligations. The Company shall
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
Section 8.6 Reinstatement. If the Trustee or Paying Agent is unable to
apply any U.S. Legal Tender or U.S. Government Obligations in accordance with
this Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then and only then the obligations of
the Company and each Guarantor under this Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to this
Article VIII until such time as the Trustee or Paying Agent is permitted to
apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with this Article VIII; provided, however, that, if the
75
Company or the Guarantors, as the case may be, have made any payment of
principal of, premium or interest on any Notes because of the reinstatement of
its obligations, the Company or the Guarantors, as the case may be, shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the U.S. Legal Tender or U.S. Government Obligations held by the Trustee or
Paying Agent.
Section 8.7 Satisfaction and Discharge. This Indenture will be discharged
and will cease to be of further effect (except as to surviving rights or
registration of transfer or exchange of the Notes, as expressly provided for in
the Indenture) as to all Outstanding Notes when:
(a) either:
(1) all the Notes theretofore authenticated and delivered (except
lost, stolen or destroyed Notes which have been replaced or paid and Notes
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust) have been delivered to the Trustee
for cancellation, or
(2) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable by reason of the mailing of a
notice of redemption or otherwise or will become due and payable within
one (1) year, and the Company has irrevocably deposited or caused to be
deposited with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient without reinvestment to pay and discharge the
entire Indebtedness on the Notes not theretofore delivered to the Trustee
for cancellation, for principal of, premium, if any, and interest on the
Notes to maturity or redemption, together with irrevocable instructions
from the Company directing the Trustee to apply such funds to the payment
of the Notes at maturity or the redemption date, as the case may be;
(b) no Default or Event of Default will have occurred and be continuing
on the date of such deposit or will occur as a result of such deposit and such
deposit will not result in a breach or violation of, or constitute a default
under, any other instrument to which the Company or any Guarantor is a party or
by which the Company or any Guarantor is bound;
(c) the Company has paid all other sums payable by it under this
Indenture and the Notes; and
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent under this
Indenture relating to the satisfaction and discharge of this Indenture have been
complied with.
ARTICLE IX
AMENDMENTS
Section 9.1 Without Consent of Holders.
(a) The Company, the Guarantors and the Trustee, without the consent of
the Holders, may amend this Indenture or the Notes for the purposes specified
below:
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(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article IV in respect of the assumption by a
Successor Entity of the obligations of the Company under the Notes and
this Indenture;
(3) to provide for uncertificated Notes in addition to or in place
of certificated Notes; provided, however, that the uncertificated Notes
are issued in registered form for purposes of Section 163(f) of the Code;
(4) to add guarantees with respect to the Notes or to secure the
Notes;
(5) to make any change that does not, in the opinion of the
Trustee, adversely affect the rights of any Holder in any material respect
(it being understood that the Trustee will be entitled to rely on such
evidence it deems appropriate in formulating this opinion, including
solely on an Opinion of Counsel and Officer's Certificate);
(6) to provide for the issuance of the Exchange Notes and Private
Exchange Notes, which will have terms substantially identical to the other
Outstanding Notes except for the requirement of a Private Placement Legend
and related transfer restrictions under the Securities Act and this
Indenture and as to the applicability of additional interest payable as
provided in Section 2.14, and which will be treated, together with any
other Outstanding Notes, as a single issue of securities; or
(7) to provide for the issuance of Additional Notes as permitted
by Sections 2.2(c) and 2.13, which will have terms substantially identical
to the other Outstanding Notes except as specified in Section 2.13 or
2.14, and which will be treated, together with any other Outstanding
Notes, as a single issue of securities.
(b) After an amendment or supplement under this Section 9.1 becomes
effective, the Company shall mail to Holders a notice briefly describing such
amendment or supplement. The failure to give such notice to all Holders, or any
defect therein, shall not impair or affect the validity of an amendment or
supplement under this Section 9.1.
Section 9.2 With Consent of Holders.
(a) The Company, the Guarantors and the Trustee may make other
modifications to or amend or supplement this Indenture or the Notes without
notice to any Holder but with the written consent of the Holders of at least a
majority in principal amount of the Outstanding Notes (including consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes). Subject to Section 6.4, the Holder or Holders of a majority in
aggregate principal amount of the Outstanding Notes may waive compliance by the
Company with any provision of this Indenture or the Notes without notice to any
other Holder. However, without the consent of each Holder affected thereby, an
amendment, supplement or waiver may not:
(1) reduce the amount of Notes whose Holders must consent to an
amendment or waiver;
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(2) reduce the rate of or change or have the effect of changing
the time for payment of interest, including Defaulted Interest, on any
Notes;
(3) reduce the principal of or change or have the effect of
changing the fixed maturity of any Notes, or change the date on which any
Notes may be subject to redemption, or reduce the redemption price
therefor;
(4) make any Notes payable in money other than that stated in the
Notes;
(5) make any change in provisions of this Indenture entitling each
Holder to receive payment of principal of, premium, if any, and interest
on such Note on or after the due date thereof or to bring suit to enforce
such payment, or permitting Holders of a majority in principal amount of
Notes to waive Defaults or Events of Default;
(6) amend, change or modify the obligation of the Company
(including the definitions relating thereto) to make and consummate a
Change of Control Offer in respect of a Change of Control that has
occurred or make and consummate an Asset Sale Offer with respect to any
Asset Sale that has been consummated;
(7) eliminate or modify in any manner a Guarantor's obligations
with respect to its Subsidiary Guarantee which adversely affects Holders,
except as otherwise permitted in this Indenture; or
(8) subordinate the Notes or any Guarantee in right of payment to
any other obligation of the Company or any Guarantor.
(b) It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
(c) After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to Holders a notice briefly describing
such amendment, supplement or waiver. The failure to give such notice to all
Holders, or any defect therein, shall not impair or affect the validity of an
amendment, supplement or waiver under this Section 9.2.
Section 9.3 Compliance with Trust Indenture Act. Every amendment to this
Indenture or the Notes shall comply with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents and Waivers.
(a) A consent to an amendment or a supplement or a waiver by a Holder of
a Note shall bind the Holder and every subsequent Holder of that Note or portion
of the Note that evidences the same debt as the consenting Holder's Note, even
if notation of the consent or waiver is not made on the Note. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Note or portion of the Note if the Trustee receives the notice of revocation
before the date the amendment, a supplement or waiver becomes effective. After
an amendment, a supplement or waiver becomes effective, it shall bind every
Holder. An
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amendment, a supplement or waiver shall become effective upon receipt by the
Trustee of the requisite number of written consents under Section 9.2.
(b) The Company may, but shall not be obligated to, fix a record date,
which need not be the date provided in 316(c) of the TIA to the extent it would
otherwise be applicable, for the purpose of determining the Holders entitled to
give their consent or take any other action described above or required or
permitted to be taken pursuant to this Indenture. If a record date is fixed,
then notwithstanding the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall become
valid or effective more than 90 days after such record date or, if none is set,
after the date given.
Section 9.5 Notation on or Exchange of Notes. If an amendment or a
supplement changes the terms of a Note, the Trustee may require the Holder of
the Note to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note regarding the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note will execute and upon Company Order the Trustee will
authenticate a new Note that reflects the changed terms. Failure to make the
appropriate notation or to issue a new Note shall not affect the validity of
such amendment or supplement.
Section 9.6 Trustee to Sign Amendments or Supplements. The Trustee shall
sign any amendment or supplement authorized pursuant to this Article IX if the
amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may but need
not sign it. In signing such amendment or supplement, the Trustee shall be
entitled to receive indemnity reasonably satisfactory to it and to receive, and
(subject to Sections 7.1 and 7.2) shall be fully protected in relying upon, such
evidence as it deems appropriate, including solely on an Opinion of Counsel
stating that such amendment or supplement is authorized or permitted by this
Indenture.
ARTICLE X
SUBSIDIARY GUARANTEES
Section 10.1 Subsidiary Guarantees.
(a) Each Guarantor hereby fully, unconditionally and irrevocably
guarantees, as primary obligor and not merely as surety, jointly and severally
with each other Guarantor, to each Holder and the Trustee the full and punctual
payment when due, whether at maturity, by acceleration, by redemption or
otherwise, of the Obligations (such guaranteed Obligations, the "Guaranteed
Obligations"). Each Guarantor further agrees (to the extent permitted by law)
that the Obligations may be extended or renewed, in whole or in part, without
notice or further assent from it, and that it will remain bound under this
Article X notwithstanding any extension or renewal of any Obligation. Each
Guarantor hereby agrees to pay, in addition to the amounts stated above, any and
all expenses (including reasonable counsel fees and expenses) incurred by the
Trustee or the Holders in enforcing any rights under any Subsidiary Guarantee.
79
(b) Each Guarantor waives presentation to, demand of payment from and
protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. Each Guarantor waives notice of any default under the
Notes or the Obligations. The obligations of each Guarantor hereunder shall not
be affected by (i) the failure of any Holder to assert any claim or demand or to
enforce any right or remedy against the Company or any other Person under this
Indenture, the Notes or any other agreement or otherwise; (ii) any extension or
renewal of any thereof; (iii) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Indenture, the Notes or any other
agreement; (iv) the release of any security held by any Holder or the Trustee
for the Obligations or any of them; (v) the failure of any Holder to exercise
any right or remedy against any other Guarantor; or (vi) any change in the
ownership of the Company.
(c) Each Guarantor further agrees that its Subsidiary Guarantee herein
constitutes a guarantee of payment when due (and not a guarantee of collection)
and waives any right to require that any resort be had by any Holder to any
security held for payment of the Obligations.
(d) The obligations of each Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason (other than
payment of the Obligations in full), including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense of
setoff, counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Guarantor herein shall not be discharged or impaired or otherwise affected by
the failure of any Holder to assert any claim or demand or to enforce any remedy
under this Indenture, the Notes or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of such Guarantor or would otherwise
operate as a discharge of such Guarantor as a matter of law or equity.
(e) Each Guarantor further agrees that its Subsidiary Guarantee herein
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of principal of or interest on any of the
Obligations is rescinded or must otherwise be restored by any Holder upon the
bankruptcy or reorganization of the Company or otherwise.
(f) In furtherance of the foregoing and not in limitation of any other
right which any Holder has at law or in equity against each Guarantor by virtue
hereof, upon the failure of the Company to pay any of the Obligations when and
as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, each Guarantor hereby promises to and will, upon
receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in
cash, to the Holders an amount equal to the sum of:
(i) the unpaid amount of such Obligations then due and owing; and
(ii) accrued and unpaid interest on such Obligations then due and owing
(but only to the extent not prohibited by law).
80
(g) Each Guarantor further agrees that, as between such Guarantor, on
the one hand, and the Holders, on the other hand:
(i) the maturity of the Obligations guaranteed hereby may be accelerated
as provided in this Indenture for the purposes of its Subsidiary Guarantee
herein, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed hereby; and
(ii) in the event of any such declaration of acceleration of such
Obligations, such Obligations (whether or not due and payable) shall forthwith
become due and payable by such Guarantor for the purposes of its Subsidiary
Guarantee.
Section 10.2 Limitation on Liability; Termination, Release and Discharge.
(a) The obligations of each Guarantor hereunder will be limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Subsidiary Guarantee or pursuant
to its contribution obligations under this Indenture, result in the obligations
of such Guarantor under its Subsidiary Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under U.S. federal or state law.
(b) A Guarantor will be released and relieved of its obligations under
its Subsidiary Guarantee in the event:
(1) there is a Legal Defeasance of the Notes as described in
Section 8.1;
(2) there is a sale or other disposition of Capital Stock of such
Guarantor following which such Guarantor is no longer a direct or indirect
Subsidiary of the Company; or
(3) such Guarantor is designated as an Unrestricted Subsidiary in
accordance with Section 3.13;
provided, that the transaction pursuant to which a Guarantor is released and
relieved of its obligations under its Subsidiary Guarantee is carried out
pursuant to and in accordance with any other applicable provisions of this
Indenture.
Section 10.3 Right of Contribution. Each Guarantor that makes a payment or
distribution under a Subsidiary Guarantee will be entitled to a contribution
from each other Guarantor in a pro rata amount, based on the net assets of each
Guarantor determined in accordance with GAAP. The provisions of this Section
10.3 shall in no respect limit the obligations and liabilities of each Guarantor
to the Trustee and the Holders and each Guarantor shall remain liable to the
Trustee and the Holders for the full amount guaranteed by such Guarantor
hereunder.
Section 10.4 No Subrogation. Each Guarantor agrees that it shall not be
entitled to any right of subrogation in respect of any Guaranteed Obligations
until payment in full in cash of all
81
Obligations. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full in cash, such amount shall be held by such Guarantor in trust for
the Trustee and the Holders, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the Trustee
in the exact form received by such Guarantor (duly endorsed by such Guarantor to
the Trustee, if required), to be applied against the Obligations.
Section 10.5 Additional Subsidiary Guarantees; Opinion of Counsel.
(a) The Company will cause any Person that shall become a Domestic
Restricted Subsidiary (including upon a Revocation of the Designation of a
Subsidiary as an Unrestricted Subsidiary, but excluding any Immaterial
Subsidiary) after the date hereof (an "Additional Guarantor") to concurrently,
and in no event later than 30 days from the date that such Person becomes a
Domestic Restricted Subsidiary, grant a guarantee (an "Additional Subsidiary
Guarantee") of the Company's obligations under this Indenture, any applicable
Registration Rights Agreement and the Notes to the same extent that any existing
Note Guarantors have guaranteed the Company's obligations under this Indenture,
the Issue Date Registration Rights Agreement and the Notes by executing a
Supplemental Indenture substantially in the form of Exhibit E; provided,
however, that the foregoing shall not apply to any subsidiary which has been
properly designated an Unrestricted Subsidiary pursuant to Section 3.13 for so
long as such subsidiary continues to constitute an Unrestricted Subsidiary; and
provided, further, however, that each Additional Guarantor will be automatically
and unconditionally released and discharged from its obligations under such
Additional Subsidiary Guarantee only in accordance with Section 10.2.
(b) On the date on which any Domestic Restricted Subsidiary shall become
a Guarantor pursuant to Section 10.5(a), the Company shall deliver to the
Trustee an Officer's Certificate and an Opinion of Counsel, each to the effect
that the Supplemental Indenture executed and delivered on such date by such
Guarantor has been duly authorized, executed and delivered by such Additional
Guarantor, and constitutes the legal, valid and binding obligation of such
Additional Guarantor, enforceable against such Additional Guarantor in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control.
Section 11.2 Notices.
(a) Any notice or communication shall be in writing and delivered in
person or mailed by first-class mail addressed as follows:
if to the Company or the Guarantors:
82
Movie Gallery, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
if to the Trustee:
SunTrust Bank
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Division
The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
(b) Any notice or communication mailed to a registered Holder shall be
mailed to the Holder at the Holder's address as it appears on the registration
books of the Registrar and shall be sufficiently given if so mailed within the
time prescribed.
(c) Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
(d) Any notice or communication delivered to the Company under the
provisions herein shall constitute notice to the Guarantors.
Section 11.3 Communication by Holders with Other Holders. Holders may
communicate pursuant to TIA Section 312(b) with other Holders with respect to
their rights under this Indenture, the Notes or the Subsidiary Guarantees. The
Company, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 11.4 Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 11.5 Statements Required in Certificate or Opinion. Each
certificate or opinion, including any Opinion of Counsel, with respect to
compliance with a covenant or condition provided for in this Indenture shall
include:
83
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
In giving such Opinion of Counsel, counsel may rely as to factual matters
on an Officers' Certificate or on certificates of public officials.
Section 11.6 Rules by Trustee, Paying Agent and Registrar. The Trustee may
make reasonable rules for action by, or a meeting of, Holders. The Registrar and
the Paying Agent may make reasonable rules for their functions.
Section 11.7 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or
other day on which commercial banking institutions are authorized or required to
be closed in New York City. If a payment date is a Legal Holiday, payment shall
be made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
Section 11.8 Governing Law; Waiver of Jury Trial; etc.
(a) THIS INDENTURE (INCLUDING EACH SUBSIDIARY GUARANTEE) AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK. THE PARTIES HERETO EACH HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS INDENTURE,
EACH SUBSIDIARY GUARANTEE OR THE NOTES OR ANY TRANSACTION RELATED HERETO OR
THERETO.
(b) The Company and each Guarantor hereby:
(i) agrees that any suit, action or proceeding against it
arising out of or relating to this Indenture (including the
Subsidiary Guarantees) or the Notes, as the case may be, may be
instituted in any Federal or state court sitting in The City of New
York,
(ii) waives to the fullest extent permitted by applicable
law, any objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding, and any claim that
any suit, action or proceeding in such a court has been brought in
an inconvenient forum,
84
(iii) irrevocably submits to the non-exclusive jurisdiction of
such courts in any suit, action or proceeding,
(iv) agrees that final judgment in any such suit, action or
proceeding brought in such a court shall be conclusive and binding
may be enforced in the courts of the jurisdiction of which it is
subject by a suit upon judgment, and
(v) agrees that service of process by mail to the addresses
specified herein shall constitute personal service of such process
on it in any such suit, action or proceeding.
(c) Nothing in this Section 11.8 shall affect the right of the Trustee
or any Holder of the Notes to serve process in any other manner permitted by
law. Section 11.9 No Recourse Against Others. An incorporator, director,
officer, employee, stockholder or controlling person, as such, of the Company or
any Guarantor shall not have any liability for any obligations of the Company or
such Guarantor under the Notes (including the Subsidiary Guarantees) or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Note, each Holder waives and
releases all such liability. The waiver and release shall be part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.
Section 11.10 Successors. All agreements of the Company and the Guarantors
in this Indenture and the Notes shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successors.
Section 11.11 Duplicate and Counterpart Originals. The parties may sign
any number of copies of this Indenture. One signed copy is enough to prove this
Indenture. This Indenture may be executed in any number of counterparts, each of
which so executed shall be an original, but all of them together represent the
same agreement.
Section 11.12 Severability. In case any provision in this Indenture or in
the 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 11.13 Qualification of Indenture. The Company shall qualify this
Indenture under the TIA in accordance with the terms and conditions of the Issue
Date Registration Rights Agreement and shall pay all reasonable costs and
expenses (including attorneys' fees and expenses for the Company, the
Guarantors, the Trustee and the Holders) incurred in connection therewith,
including, but not limited to, costs and expenses of qualification of this
Indenture and the Notes and printing this Indenture and the Notes. The Trustee
shall be entitled to receive from the Company any such Officers' Certificates,
Opinions of Counsel or other documentation as it may reasonably request in
connection with any such qualification of this Indenture under the TIA.
Section 11.14 Table of Contents; Headings. The table of contents and
headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are
85
not intended to be considered a part hereof and shall not modify or restrict any
of the terms or provisions hereof.
86
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
MOVIE GALLERY, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and
Chief Executive Officer
MOVIE GALLERY US, INC.
By: /s/ S. Page ▇▇▇▇
------------------------------------
Name: S. Page ▇▇▇▇
Title: Executive Vice President
and Secretary
MOVIE GALLERY SERVICES, INC.
By: /s/ S. Page ▇▇▇▇
------------------------------------
Name: S. Page ▇▇▇▇
Title: Executive Vice President
and Secretary
MOVIE GALLERY LICENSING, INC.
By: /s/ S. Page ▇▇▇▇
------------------------------------
Name: S. Page ▇▇▇▇
Title: Vice President
and Assistant Secretary
MOVIE GALLERY FINANCE, INC.
By: /s/ S. Page ▇▇▇▇
------------------------------------
Name: S. Page ▇▇▇▇
Title: Vice President
and Assistant Secretary
MOVIE GALLERY ASSET
MANAGEMENT, INC.
By: /s/ S. Page ▇▇▇▇
------------------------------------
Name: S. Page ▇▇▇▇
Title: President
M.G.A. REALTY I, LLC
By: /s/ S. Page ▇▇▇▇
------------------------------------
Name: S. Page ▇▇▇▇
Title: Executive Vice President
and Secretary
M.G. DIGITAL, LLC
By: /s/ S. Page ▇▇▇▇
------------------------------------
Name: S. Page ▇▇▇▇
Title: Executive Vice President
and Secretary
HOLLYWOOD ENTERTAINMENT
CORPORATION
By: /s/ S. Page ▇▇▇▇
------------------------------------
Name: S. Page ▇▇▇▇
Title: Executive Vice President
and Secretary
HOLLYWOOD MANAGEMENT
COMPANY
By: /s/ S. Page ▇▇▇▇
------------------------------------
Name: S. Page ▇▇▇▇
Title: Executive Vice President
and Secretary
SUNTRUST BANK, as Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
87
EXHIBIT A
FORM OF NOTE
[Include the following legend for Global Notes only:
"THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO
HEREINAFTER.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF."]
[Include the following Private Placement Legend on all Notes that are Restricted
Notes:]
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
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 SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT: (A) SUCH SECURITY
MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY: (i)(a) TO A
PERSON WHOM 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, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE
A-1
SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(a)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR")) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $100,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL AND
OTHER CERTIFICATIONS AND DOCUMENTS IF THE ISSUER SO REQUESTS), (ii) TO THE
ISSUER, OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND IN EACH CASE SUBJECT TO
ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THIS SECURITY BY THE HOLDER OR BY
ANY INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL;
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE. THIS SECURITY MAY NOT BE ACQUIRED OR HELD WITH THE
ASSETS OF (I) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO ERISA,
(II) A "PLAN" DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF1986, AS
AMENDED (THE "CODE"), (III) ANY ENTITY DEEMED TO HOLD "PLAN ASSETS" OF ANY OF
THE FOREGOING BY REASON OF AN EMPLOYEE BENEFIT PLAN'S OR PLAN'S INVESTMENT IN
SUCH ENTITY, OR (IV) A GOVERNMENTAL PLAN OR CHURCH PLAN SUBJECT TO APPLICABLE
LAW THAT IS SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY OR PROHIBITED
TRANSACTION PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE, UNLESS THE
ACQUISITION AND HOLDING OF THIS SECURITY BY THE PURCHASER OR TRANSFEREE,
THROUGHOUT THE PERIOD THAT IT HOLDS THIS SECURITY, ARE EXEMPT FROM THE
PROHIBITED TRANSACTION RESTRICTIONS UNDER ERISA AND SECTION 4975 OF THE CODE OR
ANY PROVISIONS OF SIMILAR LAW, AS APPLICABLE, PURSUANT TO ONE OR MORE PROHIBITED
TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS. BY ITS ACQUISITION OR
HOLDING OF THIS SECURITY, EACH PURCHASER AND TRANSFEREE WILL BE DEEMED TO HAVE
REPRESENTED AND WARRANTED THAT THE FOREGOING REQUIREMENTS HAVE BEEN SATISFIED.]
A-2
MOVIE GALLERY, INC.
11% SENIOR NOTES DUE 2012
Principal Amount $-
as revised by the Schedule of Increases and
Decreases in Global Note attached hereto
No.: [___]
CUSIP NO. -
ISIN NO. -
Movie Gallery, Inc., a Delaware corporation, promises to pay to Cede &
Co., or registered assigns, the principal sum of - Dollars ($-), as revised by
the Schedule of Increases and Decreases in Global Note attached hereto, on May
1, 2012.
Interest Payment Dates: May 1 and November 1
Record Dates:April 15 and October 15
[Intentionally left blank]
A-3
Additional provisions of this Note are set forth on the other side of this
Note.
MOVIE GALLERY, INC.
By: ____________________________________
Name:
Title:
Dated: _________ ___, _____
A-4
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
SunTrust Bank, as Trustee, certifies that this is one of the Notes
referred to in the Indenture.
By: ____________________________________
Authorized Signatory
Date: __________________________________
A-5
GUARANTEES
Each Guarantor listed below hereby fully, unconditionally and irrevocably
guarantees, as primary obligor and not merely as surety, jointly and severally
with each other Guarantor, to each Holder and the Trustee the full and punctual
payment when due, whether at maturity, by acceleration, by redemption or
otherwise, of principal and interest and other Guaranteed Obligations with
respect to the Company's $325,000,000 principal amount of 11% Senior Notes due
2012 in accordance with the terms set forth in the Indenture. Each Guarantor
further agrees (to the extent permitted by law) that the Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
it, and that it will remain bound under this Guarantee notwithstanding any
extension or renewal of any Obligation. Each Guarantor hereby agrees to pay, in
addition to the amounts stated above, any and all expenses (including reasonable
counsel fees and expenses) incurred by the Trustee or the Holders in enforcing
any rights under any Subsidiary Guarantee.
Each Guarantor waives presentation to, demand of payment from and protest
to the Company of any of the Obligations and also waives notice of protest for
nonpayment. Each Guarantor waives notice of any default under the Notes or the
Obligations. The obligations of each Guarantor hereunder shall not be affected
by (i) the failure of any Holder to assert any claim or demand or to enforce any
right or remedy against the Company or any other Person under the Indenture, the
Notes or any other agreement or otherwise; (ii) any extension or renewal of any
thereof; (iii) any rescission, waiver, amendment or modification of any of the
terms or provisions of the Indenture, the Notes or any other agreement; (iv) the
release of any security held by any Holder or the Trustee for the Obligations or
any of them; (v) the failure of any Holder to exercise any right or remedy
against any other Guarantor; or (vi) any change in the ownership of the Company.
Each Guarantor further agrees that its Subsidiary Guarantee herein
constitutes a guarantee of payment when due (and not a guarantee of collection)
and waives any right to require that any resort be had by any Holder to any
security held for payment of the Obligations.
THE TERMS OF ARTICLE X OF THE INDENTURE ARE INCORPORATED HEREBY BY
REFERENCE.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Notes upon which these guarantees
are Noted shall have been executed by the Trustee under the Indenture by the
manual signature of an authorized officer.
Capitalized terms used herein have the meanings given in the Indenture.
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[GUARANTORS:]
By: ____________________________________
Name:
Title:
Date: _________ ___, _____
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(REVERSE OF NOTE)
11% SENIOR NOTES DUE 2012
1. Interest.
Movie Gallery, Inc., a Delaware corporation (such corporation, and its
successors and assigns under this Indenture hereinafter referred to as the
"Company"), promises to pay interest on the principal amount of this Note, at
the rate per annum shown above, semiannually in arrears, on each Interest
Payment Date of each year commencing _______________ to the Holders of record of
the Notes at the close of business on the Record Date immediately preceding the
applicable Interest Payment Date.
Interest on the Notes will accrue from the most recent date to which
interest has been paid on the Notes or, if no interest has been paid, from and
including the Issue Date. [MODIFY AS APPROPRIATE FOR EXCHANGE NOTES AND
ADDITIONAL NOTES]
Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
The redemption of Notes with unpaid and accrued interest to the Redemption
Date will not affect the right of Holders of record on a record date to receive
interest due on an Interest Payment Date.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and, to the extent
such payments are lawful, interest on overdue installments of interest
("Defaulted Interest") without regard to any applicable grace periods at the
rate of two percent (2.0%) per annum in excess of the rate shown on this Note,
as provided in the Indenture.
2. Method of Payment.
Prior to 10:00 a.m. New York City time on the date on which any principal
of or interest on any Note is due and payable, the Company shall irrevocably
deposit with the Trustee or the Paying Agent money sufficient to pay such
principal and/or interest. The Company will pay interest (except Defaulted
Interest) to the Persons who are registered Holders of Notes at the close of
business on the Record Date preceding the Interest Payment Date even if Notes
are canceled, repurchased or redeemed after the Record Date and on or before the
relevant Interest Payment Date. Holders must surrender Notes to a Paying Agent
to collect principal payments. The Company will pay principal and interest in
U.S. Legal Tender.
Payments in respect of Notes represented by a Global Note (including
principal and interest) will be made by the transfer of immediately available
funds to the accounts specified by DTC. The Company will make all payments in
respect of a Certificated Note (including principal and interest) by mailing a
check to the registered address of each Holder thereof; provided, however, that
payments on the Notes may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Notes, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating
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such account no later than 15 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar.
Initially, SunTrust Bank (the "Trustee"), will act as Trustee, Paying
Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-Registrar without notice to any Holder. The Company or any
Guarantor may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Guarantees.
The Company issued the Notes under an Indenture, dated as of April 27,
2005 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the TIA. Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The Notes
are subject to all such terms, and Holders are referred to the Indenture and the
TIA for a statement of those terms. Each Holder, by accepting a Note, agrees to
be bound by all of the terms and provisions of the Indenture, as amended or
supplemented from time to time.
The Notes are general unsecured obligations of the Company unlimited in
aggregate principal amount, of which $325,000,000 in aggregate principal amount
will be initially issued on the Issue Date. All Notes will be treated as a
single class of securities under the Indenture.
The Indenture imposes certain limitations on, among other things, the
ability of the Company and its Restricted Subsidiaries to: Incur Indebtedness,
make Restricted Payments, incur Liens, make Asset Sales, enter into transactions
with Affiliates, or consolidate or merge or transfer or convey all or
substantially all of the Company's and its Restricted Subsidiaries' assets.
To guarantee the due and punctual payment of the principal of, premium, if
any, and interest on the Notes and all other amounts payable by the Company
under this Indenture and the Notes when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Notes and the Indenture, each Guarantor and each future Domestic
Restricted Subsidiary will unconditionally guarantee, jointly and severally,
such obligations pursuant to the terms of the Indenture. Each Subsidiary
Guarantee will be subject to release as provided in the Indenture.
5. Redemption.
Optional Redemption. Except as stated below, the Company may not redeem
the Notes prior to May 1, 2008. The Company may redeem the Notes, at its option,
in whole at any time or in part from time to time, on and after May 1, 2008, at
the following redemption prices, expressed as percentages of the principal
amount thereof, if redeemed during the twelve-month period commencing on May 1
of any year set forth below:
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YEAR PERCENTAGE
---- ----------
2008 105.500%
2009 103.667%
2010 101.833%
2011 and thereafter 100.000%
Optional Redemption upon Public Equity Offerings. At any time, or from
time to time, on or prior to May 1, 2008, the Company may, at its option, use
the net cash proceeds of one or more Equity Offerings to redeem in the aggregate
up to 35% of the aggregate principal amount of the Notes originally issued at a
redemption price equal to 111.0% of the principal amount thereof, plus accrued
and unpaid interest thereon to the date of redemption; provided, that:
(1) after giving effect to any such redemption at least 65% of the
aggregate principal amount of the Notes originally issued remains
outstanding; and
(2) the Company shall mail the notice of redemption not more than 60
days after the consummation of such Equity Offering.
"Equity Offering" means an underwritten public offering of Qualified
Capital Stock of the Company pursuant to a registration statement (other than a
registration statement filed on Form S-4 or S-8) filed with the Commission in
accordance with the Securities Act or any private placement of Qualified Capital
Stock of the Company to any Person other than issuances upon exercise of options
by employees of the Company or any Restricted Subsidiary.
Partial Redemption. In the case of any partial redemption, selection of
the Notes for redemption will be made in accordance with Article V of the
Indenture. On and after the redemption date, interest will cease to accrue on
Notes or portions thereof called for redemption as long as the Company has
deposited with the Paying Agent funds in satisfaction of the applicable
redemption price pursuant to the Indenture.
6. Repurchase Provisions.
Change Of Control Offer. Upon the occurrence of a Change of Control, each
Holder of Notes will have the right to require that the Company purchase all or
a portion (in integral multiples of $1,000) of the Holder's Notes at a purchase
price equal to one hundred and one percent (101%) of the principal amount
thereof, plus accrued and unpaid interest thereon through the date of purchase.
Within 20 days following the date upon which the Change of Control occurred, the
Company must make a Change of Control Offer pursuant to a Change of Control
Offer Notice. As more fully described in the Indenture, the Change of Control
Offer Notice shall state, among other things, the Change of Control Payment
Date, which must be no earlier than 30 days nor later than 60 days from the date
the Change of Control Offer Notice is mailed, other than as may be required by
law.
Asset Sale Offer. The Indenture imposes certain limitations on the ability
of the Company and its Restricted Subsidiaries to make Asset Sales. In the event
the proceeds from a
A-10
permitted Asset Sale exceed certain amounts and are not applied as specified in
the Indenture, the Company will be required to make an Asset Sale Offer to
purchase to the extent of such remaining proceeds each Holder's Notes, and at
the Company's option, on a pro rata basis with other Pari Passu Debt with
similar provisions requiring the Company to offer to purchase such Indebtedness
with the proceeds of Asset Sales. The Company may defer an Asset Sale Offer
until the aggregate unapplied Net Cash Proceeds from Asset Sales equals or
exceeds $10.0 million.
7. Denominations; Transfer; Exchange.
The Notes are in fully registered form without coupons, and only in
denominations of principal amount of $1,000 and any integral multiple thereof. A
Holder may transfer or exchange Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange (i) any Notes selected for redemption (except, in the case of a Note
to be redeemed in part, the portion of the Note not to be redeemed) for a period
beginning 15 days before the mailing of a notice of Notes to be redeemed and
ending on the date of such mailing or (ii) any Notes for a period beginning on
the Record Date for an Interest Payment Date and ending on such Interest Payment
Date.
8. Persons Deemed Owners.
The registered holder of this Note may be treated as the owner of it for
all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent shall pay the money back to the Company
at its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
10. Discharge Prior to Redemption or Maturity.
Subject to certain conditions set forth in the Indenture, the Company at
any time may terminate some or all of its obligations under the Notes and the
Indenture if the Company deposits with the Trustee U.S. Legal Tender or U.S.
Government Obligations for the payment of principal of and interest on the Notes
to redemption or maturity, as the case may be.
11. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended or supplemented with the written consent
of the Holders of at least a majority in principal amount of the then
Outstanding Notes and (ii) any default (other than with respect to nonpayment or
in respect of a provision that cannot be amended or supplemented without the
written consent of each Holder affected) or noncompliance with any provision may
be waived with the written consent of the Holders of a majority in aggregate
principal amount of the then Outstanding Notes. Subject to certain exceptions
set forth in the Indenture, without the consent
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of any Holder, the Company and the Trustee may amend or supplement the Indenture
or the Notes to, among other things, cure any ambiguity, omission, defect or
inconsistency, or to comply with Article IV of the Indenture, or to provide for
uncertificated Notes in addition to or in place of certificated Notes, or to add
guarantees with respect to the Notes or to secure the Notes, or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the TIA, or to make any change that does not adversely affect
the rights of any Holder, or to provide for the issuance of Exchange Notes or
Additional Notes.
12. Defaults and Remedies.
If an Event of Default (other than certain events of bankruptcy or
insolvency) shall occur and be continuing, the Trustee or the Holders of at
least twenty-five percent (25%) in principal amount of Outstanding Notes may
declare the unpaid principal of (and premium, if any) and accrued and unpaid
interest on all the Notes to be immediately due and payable by notice in writing
to the Company and the Trustee specifying the Event of Default and that it is a
"notice of acceleration." Certain events of bankruptcy or insolvency are Events
of Default which will result in the unpaid principal of (and premium, if any)
and accrued and unpaid interest on all the Notes will become immediately due and
payable without any deceleration or other act on the part of the Trustee or
Holder.
Holders may not enforce the Indenture or the Notes except as provided in
the Indenture. The Trustee is under no obligation to exercise any of its rights
or powers under this Indenture at the request, order or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable indemnity.
Subject to all provisions of the Indenture and applicable law, the Holders of a
majority in aggregate principal amount of the then Outstanding Notes have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee. The Trustee may withhold from Holders notice of any continuing
Default or Event of Default (except a Default or Event of Default in the payment
of principal or, premium, if any, or interest on any Note) if and so long as a
committee of its Trust Officers in good faith determines that withholding notice
is in the interests of the Holders.
13. Trustee Dealings with the Company.
Subject to certain limitations set forth in the Indenture, the Trustee
under this Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with and collect obligations
owed to it by the Company or its Affiliates and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee.
14. No Recourse Against Others.
An incorporator, director, officer, employee, stockholder or controlling
person, as such, of the Company or any Guarantor shall not have any liability
for any obligations of the Company under the 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. By accepting a Note, each Holder waives
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and releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
15. Authentication.
This Note shall not be valid until an authorized signatory of the Trustee
(or an authenticating agent acting on its behalf) manually signs the certificate
of authentication on the other side of this Note.
16. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
17. CUSIP and ISIN 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 Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company has caused ISIN numbers to be printed on the Notes and has
directed the Trustee to use ISIN numbers in notices of redemption as a
convenience to Holders. No representation is made as to the accuracy of such
numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
18. Governing Law.
This Note shall be governed by, and construed in accordance with, the laws
of the State of New York.
The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture. Requests may be made to:
Movie Gallery, Inc.
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Attention: Chief Financial Officer
A-13
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
_____________________________________________________
(Print or type assignee's name, address and zip code)
______________________________________________________
(Insert assignee's Social Security or Tax I.D. Number)
and irrevocably appoint ____________________ agent to transfer this 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
other side of this Note.
Signature Guarantee: ___________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by
an eligible guarantor institution
(banks, stockbrokers, savings and loan
associations and credit unions with
membership in an approved signature
guarantee medallion program), pursuant
to Exchange Act Rule 17Ad-15.
A-14
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made:
Principal
Amount of Amount of Amount of this Signature of
decrease in increase in Global Note authorized
Principal Principal following such signatory of
Date of Amount of this Amount of this decrease or Trustee or Note
Exchange Global Note Global Note increase Custodian
-------- -------------- -------------- -------------- ---------------
A-15
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 3.8 or Section 3.11 of the Indenture, check either box:
[ ] [ ]
SECTION 3.8 SECTION 3.11
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 3.8 or Section 3.11 of the Indenture, state the
principal amount (which must be an integral multiple of $1,000) that you want to
have purchased by the Company: $
Date: _____________ Your Signature _______________________________
(Sign exactly as your name appears on the
other side of the Note)
Signature Guarantee: __________________________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed
by an eligible guarantor institution
(banks, stockbrokers, savings and
loan associations and credit unions
with membership in an approved
signature guarantee medallion
program), pursuant to Exchange Act
Rule 17Ad-15.
A-16
EXHIBIT B
FORM OF TRANSFER CERTIFICATE FOR TRANSFER TO QIB
[Date]
SunTrust Bank
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Attention: Corporate Trust Division
Re: 11% Senior Notes Due 2012 (the "Notes")
of Movie Gallery, Inc. (the "Company")
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of April 27, 2005 (as
amended and supplemented from time to time, the "Indenture"), between the
Company, the Guarantors from time to time party thereto and SunTrust Bank, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.
This letter relates to the transfer of $[_________] aggregate principal
amount of Notes [in the case of a transfer of an interest in a Regulation S
Global Note: , which represents an interest in a Regulation S Global Note
beneficially owned] by the undersigned (the "Transferor") in exchange for an
equivalent beneficial interest in the Rule 144A Global Note.
In connection with such request, and with respect to such Notes, the
Transferor does hereby certify that such Notes are being transferred in
accordance with Rule 144A under the Securities Act of 1933, as amended ("Rule
144A"), to a transferee that the Transferor reasonably believes is purchasing
the Notes for its own account or an account with respect to which the transferee
exercises sole investment discretion, and the transferee, as well as any such
account, is a "qualified institutional buyer" within the meaning of Rule 144A,
in a transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By: _________________________________
_____________________________________
Authorized Signature
B-1
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
[Date]
SunTrust Bank
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Attention: Corporate Trust Division
Re: 11% Senior Notes Due 2012 (the "Notes")
of Movie Gallery, Inc. (the "Company")
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of April 27, 2005 (as
amended and supplemented from time to time, the "Indenture"), between the
Company, the Guarantors from time to time party thereto and SunTrust Bank, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.
In connection with the proposed sale of $[___________] aggregate principal
amount of the Notes [in the case of a transfer of an interest in a 144A Global
Note: , which represents an interest in a 144A Global Note beneficially owned]
by the undersigned (the "Transferor"), we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent
that:
(a) the offer of the Notes 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 we and any person acting on
our 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 off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(c) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable;
(d) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(e) we are the beneficial owner of the principal amount of Notes
being transferred.
B-2
In addition, if the sale is made during a Distribution Compliance Period,
(i) the beneficial interest will be held through the Euroclear System or
Clearstream Banking (as indirect participants in DTC), and (ii) if the
provisions of Rule 904(b)(1) or Rule 904(b)(2) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 904(b)(1) or Rule 904(b)(2), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this letter have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: _________________________________
_____________________________________
Authorized Signature
C-2
EXHIBIT D
FORM OF RULE 144 CERTIFICATION
[Date]
SunTrust Bank
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Attention: Corporate Trust Division
Re: 11% Senior Notes Due 2012 (the "Notes")
of Movie Gallery, Inc. (the "Company")
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of April 27, 2005 (as
amended and supplemented from time to time, the "Indenture"), between the
Company, the Guarantors from time to time party thereto and SunTrust Bank, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.
In connection with the proposed sale of $[___________] aggregate principal
amount of the Notes [in the case of a transfer of an interest in a 144A Global
Note: , which represents an interest in a 144A Global Note beneficially owned]
by the undersigned (the "Transferor"), we confirm that such sale has been
effected pursuant to and in accordance with Rule 144 under the Securities Act.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By: _________________________________
_____________________________________
Authorized Signature
D-1
EXHIBIT E
FORM OF ADDITIONAL SUBSIDIARY GUARANTEE
This Supplemental Indenture, dated as of [___________] (this "Supplemental
Indenture"), between [name of Additional Guarantor], a [_____________]
[corporation][limited liability company] (the "New Guarantor"), Movie Gallery,
Inc., a Delaware corporation (together with its successors and assigns, the
"Company"), each other Guarantor under this Indenture referred to below, and
SunTrust Bank, as Trustee under this Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Company and the Trustee have heretofore executed and
delivered an Indenture, dated as of April 27, 2005 (as amended, supplemented,
waived or otherwise modified, the "Indenture"), providing for the issuance of
11% Senior Notes Due 2012 of the Company (the "Notes");
WHEREAS, pursuant to Section 10.5 of the Indenture, the Company is
required to cause each Domestic Restricted Subsidiary created or acquired by the
Company to execute and deliver to the Trustee an Additional Subsidiary Guarantee
pursuant to which such Domestic Restricted Subsidiary will unconditionally
guarantee, jointly and severally with the other Guarantors, if any, the
Company's full and prompt payment of the Obligations (as defined in the
Indenture) in respect of the Indenture and the Notes; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee, the
Company and the existing Guarantors (if any) are authorized to execute and
deliver this Supplemental Indenture to amend or supplement the Indenture,
without the consent of any Holder;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor, the Company, each other Guarantor (if any) and the Trustee mutually
covenant and agree for the equal and ratable benefit of the holders of the Notes
as follows:
Article I
Definitions
Section 1.1. Defined Terms. Unless otherwise defined in this Supplemental
Indenture, terms defined in the Indenture are used herein as therein defined.
Article II
Agreement to be Bound; Guarantee
Section 2.1. Agreement to be Bound. The New Guarantor hereby becomes a
party to the Indenture as a Guarantor and as such will have all of the rights
and be subject to all of the obligations and agreements of a Guarantor under
this Indenture. The New Guarantor hereby agrees to be bound by all of the
provisions of the Indenture applicable to a
E-1
Guarantor and to perform all of the obligations and agreements of a
Guarantor under this Indenture.
Section 2.2. Guarantee. The New Guarantor hereby fully, unconditionally
and irrevocably guarantees, as primary obligor and not merely as surety, jointly
and severally with each other Guarantor (if any), to each Holder of the Notes
and the Trustee, the full and punctual payment when due, whether at maturity, by
acceleration, by redemption or otherwise, of the Obligations, all as more fully
set forth in Article X of the Indenture.
Article III
Miscellaneous
Section 3.1. Notices. Any notice or communication delivered to the Company
under the provisions of the Indenture shall constitute notice to the New
Guarantor.
Section 3.2. Parties. Nothing expressed or mentioned herein is intended or
shall be construed to give any Person, firm or corporation, other than the
Holders and the Trustee, any legal or equitable right, remedy or claim under or
in respect of this Supplemental Indenture or the Indenture or any provision
herein or therein contained.
Section 3.3. Governing Law, etc. This Supplemental Indenture shall be
governed by the provisions set forth in Section 11.8 of the Indenture.
Section 3.4. Severability. In case any provision in this Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and such provision shall be ineffective only to the extent of
such invalidity, illegality or unenforceability.
Section 3.5. Ratification of Indenture; Supplemental Indenture Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Notes heretofore or
hereafter authenticated and delivered shall be bound hereby. The Trustee makes
no representation or warranty as to the validity or sufficiency of this
Supplemental Indenture.
Section 3.6. Duplicate and Counterpart Originals. The parties may sign any
number of copies of this Supplemental Indenture. One signed copy is enough to
prove this Supplemental Indenture. This Supplemental Indenture may be executed
in any number of counterparts, each of which so executed shall be an original,
but all of them together represent the same agreement.
Section 3.7. Headings. The headings of the Articles and Sections in this
Supplemental Indenture have been inserted for convenience of reference only, are
not intended to be considered as a part hereof and shall not modify or restrict
any of the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
MOVIE GALLERY, INC.
By: ____________________________________
Name:
Title:
[NAME OF NEW GUARANTOR],
as a Guarantor
By: ____________________________________
Name:
Title:
[COMPLETE THE FOLLOWING SIGNATURE BLOCK
FOR EACH EXISTING NOTE GUARANTOR, IF ANY:]
[NAME OF GUARANTOR],
as a Guarantor
By: ____________________________________
Name:
Title:
SUNTRUST BANK, as Trustee
By: ____________________________________
Name:
Title:
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EXHIBIT F
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS
TO INSTITUTIONAL ACCREDITED INVESTORS
[Date]
SunTrust Bank
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Division
Re: 11% Senior Notes Due 2012 (the "Notes")
of Movie Gallery, Inc. (the "Company")
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of April 27, 2005 (as
amended and supplemented from time to time, the "Indenture"), between the
Company, the Guarantors from time to time party thereto and SunTrust Bank, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.
In connection with the proposed sale of $[___________] aggregate principal
amount of the Notes [in the case of a transfer of an interest in a 144A Global
Note: , which represents an interest in a 144A Global Note beneficially owned]
[in the case of a transfer of an interest in a Regulation S Global Note: , which
represents an interest in a Regulation S Global Note beneficially owned] by the
undersigned (the "Transferor"), we hereby confirm that:
1. We understand that any subsequent transfer of the Notes is subject
to certain restrictions and conditions set forth in the Indenture and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with such restrictions and conditions
and the Securities Act.
2. We understand that the Notes have not been registered under the
Securities Act or any other applicable securities law, and that the Notes may
not be offered, sold or otherwise transferred except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should offer, sell,
transfer, pledge, hypothecate or otherwise dispose of any Notes within two years
after the original issuance of the Notes, we will do so only (a) to a person
whom we reasonably believe is a qualified institutional buyer (as defined in
Rule 144A under the Securities Act) in a transaction meeting the requirements of
Rule 144A, (b) in a transaction meeting the requirements of Rule 144 under the
Securities Act, (c) outside the United States to a non-U.S. person in a
transaction meeting the requirements of Rule 903 or 904 under the Securities
Act, (d) to an institutional "accredited investor" (as defined in rule
501(a)(1),(2),(3) or (7) under the Securities Act) that,
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prior to such transfer, furnishes the Trustee a signed letter containing the
representations and agreements set forth herein and, if such transfer is in
respect of an aggregate principal amount of Notes less than $100,000, an opinion
of counsel acceptable to the Company that such transfer is in compliance with
the Securities Act, or (e) in accordance with another exemption from the
registration requirements of the Securities Act (and based upon an opinion of
counsel and other certifications and documents if the issuer so requests), (ii)
to the Company, or (iii) pursuant to an effective registration statement, and,
in each case, in accordance with any applicable securities laws of any state of
the United States or any other applicable jurisdiction. We further understand
that the Notes purchased by us will bear a legend to the foregoing effect.
3. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) and have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Notes, and we and any accounts for
which we are acting are acquiring the Notes for investment purposes and not with
a view to, or offer of sale in connection with, any distribution in violation of
the Securities Act, and we are each able to bear the economic risk of our or its
investment.
4. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
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