CONFORMED COPY
INDENTURE
dated as of December 23, 1997
between
SPELL C. LLC,
Issuer
and
WILMINGTON TRUST COMPANY,
Trustee
__________________________________
Zero Coupon Secured Notes
TABLE OF CONTENTS
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ARTICLE 1
Definitions
Section 1.01. Definitions 3
Section 1.02. Rules of Construction 13
Section 1.03. Legal Holidays 13
ARTICLE 2
Issue, Execution, Form and Registration of Notes
Section 2.01. Authentication and Delivery of Notes 13
Section 2.02. Execution of Notes 14
Section 2.03. Certificate of Authentication 14
Section 2.04. Form, Denomination and Date of the Notes 14
Section 2.05. Payment of Notes 15
Section 2.06. Registration, Transfer or Exchange of Notes 16
Section 2.07. Replacement of Lost, Mutilated or Stolen Notes 19
Section 2.08. Tax Purposes 19
Section 2.09. Cancellation 19
Section 2.10. Quarterly Report 19
ARTICLE 3
The Collection Account
Section 3.01. Collection Account 20
Section 3.02. Distribution of Amounts on Deposit in the Collection
Account on the Closing Date 20
Section 3.03. Distribution of Amounts on Deposit in the Collection
Account on Note Payment Dates 20
Section 3.04. Distribution of Excess Amounts on Deposit in the
Collection Account 21
Section 3.05. Other Existing Licenses 21
Section 3.06. Investments in the Collection Account 21
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ARTICLE 4
Reserve Account
Section 4.01. Reserve Account 22
Section 4.02. Withdrawals from the Reserve Account 23
Section 4.03. Investments in the Reserve Account 23
ARTICLE 5
Information
ARTICLE 6
Inspection of Books and Records
ARTICLE 7
Covenants of the Issuer
Section 7.01. Payment of Principal and Make-Whole Amount 26
Section 7.02. Legal Existence; Payment of Taxes; Compliance with Laws 26
Section 7.03. Consolidation or Merger 27
Section 7.04. Protection of Trust Estate 27
Section 7.05. Performance under the Basic Documents 28
Section 7.06. Negative Covenants 28
ARTICLE 8
Events of Default
Section 8.01. Events of Default 29
Section 8.02. Application of Proceeds 32
Section 8.03. Waiver of Past Specified Events 33
Section 8.04. Provisions Relating to the Trust Estate 33
ARTICLE 9
Satisfaction and Discharge of Indenture; Unclaimed Moneys
Section 9.01. Satisfaction and Discharge of Indenture 37
Section 9.02. Application by Trustee of Funds Deposited for Payment of
Notes 37
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Section 9.03. Repayment of Moneys and Transfer of Eligible Investments
Held by Trustee 38
Section 9.04. Return of Moneys Held by Trustee 38
ARTICLE 10
Concerning the Trustee
Section 10.01. Duties of the Trustee; Certain Rights of the Trustee 38
Section 10.02. Trustee Not Liable for Trademark Licenses; Performance
of Trustee's Duties 40
Section 10.03. Resignation and Removal; Appointment of Successor
Trustee 41
Section 10.04. Acceptance of Appointment by Successor Trustee 42
Section 10.05. Merger or Consolidation of Trustee 42
Section 10.06. Certain Procedural Matters 42
Section 10.07. Trustee Fees and Indemnification 43
Section 10.08. Information 43
ARTICLE 11
Supplemental Indenture
Section 11.01. Supplemental Indenture Without Consent of Noteholders 44
Section 11.02. Supplemental Indenture with Consent of Noteholders 44
Section 11.03. Effect of Supplemental Indenture 45
Section 11.04. Documents to Be Given to Trustee 45
Section 11.05. Notation on Notes in Respect of Supplemental Indenture 45
ARTICLE 12
Concerning the Holders
Section 12.01. Control by Majority Holders 46
Section 12.02. Evidence of Action Taken by Holders 46
Section 12.03. Proof of Execution of Instruments 46
Section 12.04. Notes Owned by the Issuer 47
Section 12.05. Right of Revocation of Action Taken 47
Section 12.06. Right to Vote Notes in Part 47
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ARTICLE 13
Redemption of Notes
Section 13.01. Optional Redemptions 47
Section 13.02. Notice of Redemption; Make-Whole Computations 47
Section 13.03. Surrender of Notes; Notation Thereon 48
Section 13.04. Purchase of Notes 48
ARTICLE 14
Miscellaneous
Section 14.01. Binding Upon Assigns 48
Section 14.02. Notices 48
Section 14.03. Effect of Headings 50
Section 14.04. Severability 50
Section 14.05. Counterparts 50
Section 14.06. Further Assurance 50
Section 14.07. Governing Law 50
Section 14.08. Limitation on Recourse 50
Section 14.09. Jurisdiction and Process 50
Schedule I - Note Payment Dates
Exhibit A - Form of Note
Exhibit B - Form of Transferee Certificate
Exhibit C - Form of Transferor Certificate
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INDENTURE, dated as of December 23, 1997 (this "INDENTURE"), between
SPELL C. LLC, a Delaware limited liability company (together with its
successors, the "ISSUER"), and Wilmington Trust Company, a Delaware banking
corporation, in its capacity as indenture trustee (the "TRUSTEE"), providing
among other things for the issuance by the Issuer of $60,000,000 aggregate
principal amount of its Zero Coupon Secured Notes (the "NOTES").
W I T N E S S E T H:
WHEREAS, Cherokee, Inc., a Delaware corporation ("CHEROKEE"), and Xxxxxx
Xxxxxx Corporation, a Delaware corporation ("LICENSEE"), entered into a License
Agreement dated as of November 12, 1997 (the "LICENSE AGREEMENT"), whereby
Cherokee granted Licensee certain rights to use the Trademark, as such term is
defined below;
WHEREAS, the Issuer is a bankruptcy-remote limited purpose entity whose
sole member is Cherokee;
WHEREAS, the Issuer and Cherokee have entered into a Trademark Purchase and
License Assignment Agreement dated as of the date hereof (together with the
license from SPV to Cherokee entered into pursuant to Section 4.01 thereof, the
"TRADEMARK PURCHASE AND LICENSE ASSIGNMENT AGREEMENT"), whereby Issuer will
purchase on the Closing Date with the proceeds of the Notes the Assigned Rights
(as defined therein) from Cherokee and Cherokee will sell and assign the
Assigned Rights to Issuer;
WHEREAS, the Issuer has authorized an issue of Zero Coupon Secured Notes in
an aggregate principal amount of $60,000,000, the proceeds of which will be used
to finance the purchase of the Assigned Rights from Cherokee;
WHEREAS, the Notes will be secured by all of the Issuer's right, title and
interest in the Assigned Rights and other collateral pledged by the Issuer,
pursuant to this Indenture and the Security Agreement between the Issuer and the
Trustee dated as of the date hereof;
WHEREAS, the execution and delivery of this Indenture have been duly
authorized by the Issuer;
WHEREAS, the Trustee hereunder has accepted the trusts created by this
Indenture and in evidence thereof has joined in the execution hereof; and
WHEREAS, all things necessary to make the Notes when issued by the Issuer
and authenticated by the Trustee hereunder as in this Indenture provided the
legal, valid and binding obligations of the Issuer and to provide a security
interest in the Trust Estate (as hereinafter defined) have been done and
performed.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in consideration of the
premises, of the acceptance by the Trustee of the trusts hereby created, and of
the purchase and acceptance of the Notes by the owners thereof, the receipt and
sufficiency of which is hereby acknowledged, and for the purpose of fixing and
declaring the terms and conditions upon which the Notes are to be issued,
authenticated, delivered, secured and accepted by all Persons who shall from
time to time be or become owners thereof, and in order to secure the payment of
principal of all the Notes at any time issued and outstanding and interest, if
any, and Make-Whole Amount, if any, thereon according to their tenor, purpose
and effect, and in order to secure the performance and observance of all the
covenants, agreements and conditions contained therein, herein and in the other
Basic Documents and all Secured Obligations, the Issuer has executed and
delivered this Indenture and has Granted and does hereby Grant, pledge, assign,
transfer and convey to the Trustee hereunder on and subject to the terms set
forth in this Indenture:
GRANTING CLAUSES:
A security interest by way of a lien over, a pledge of and a lien on all
right, title and interest of the Issuer, whether now owned or hereafter
acquired, in, to and under (a) all moneys and securities including, without
limitation, all Eligible Investments (as hereinafter defined) from time to time
held by, or on behalf of, the Trustee under the terms of this Indenture,
including amounts set apart and transferred to any of the Trust Accounts (as
hereinafter defined) and all investment earnings of any of the foregoing,
subject to and until disbursements from the Trust Accounts in accordance with
the provisions of this Indenture; (b) the Assigned Rights; (c) all other
Trademark Collateral (as defined in the Security Agreement); (d) the Trademark
Purchase and License Assignment Agreement and the Administrative Services
Agreement (including the right (but not the obligation) to make requests, give
consents and take other actions on behalf of the Issuer, all as permitted or
required thereunder); (e) any and all other property of every kind and nature
from time to time which was heretofore or hereafter is by delivery or by writing
of any kind conveyed, mortgaged, pledged, assigned or transferred, as and for
additional security hereunder, by the Issuer or by any other Person, with or
without the consent of the Issuer, to the Trustee, which is hereby authorized to
receive any and all such property at any time and at all times to hold and apply
the same subject to the terms hereof, subject to and until disbursed from the
Trust Accounts in accordance with the provisions of this
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Indenture; and (f) all proceeds of any of the foregoing, subject to and until
disbursed from the Trust Accounts in accordance with the provisions of this
Indenture. Except as contemplated by the definition of Trademark License, the
Trust Estate does not include any interest in the Cherokee Licenses.
TO HAVE AND TO HOLD all the same absolutely with all privileges and
appurtenances hereby conveyed, transferred and assigned, or agreed or intended
so to be (collectively, the "TRUST ESTATE"), to the Trustee hereunder and its
successors as trustee and to them and their assigns for the benefit of the
Noteholders until such time as the Notes and all Secured Obligations payable
with respect thereto are paid in full in accordance with Article 9 hereof;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the
equal and proportionate benefit, security and protection of all Holders of the
Notes issued under and secured by this Indenture without privilege, priority or
distinction as to lien or otherwise of any of the Notes over any of the other
Notes, except as otherwise expressly provided in this Indenture, and for the
benefit, security and protection of the Noteholders, and the Trustee, with
respect to the payment of all amounts payable to the Noteholders or the Trustee
out of the Trust Accounts to the extent provided in this Indenture; provided,
however, that if the Issuer, its successors or assigns, shall pay, or cause to
be paid, the applicable principal of, default interest, if any, on, and Make-
Whole Amount, if any, in respect of the Notes and all other Secured Obligations
at the times and in the manner provided in the Notes and in the other Basic
Documents according to the true intent and meaning thereof and there shall be
made all the payments into the Trust Accounts as required under this Indenture,
and shall pay to the Trustee all sums of money due or to become due to it in
accordance with the terms and provisions hereof, and if all amounts payable to
the Noteholders and the Trustee, to the extent provided in this Indenture shall
have been paid in full, then upon such final payments this Indenture and the
rights hereby granted shall cease, determine and be void; otherwise, this
Indenture shall be and remain in full force and effect.
ARTICLE 1
Definitions
Section 1.01. Definitions. The following terms, as used herein, have the
following meanings:
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"ADMINISTRATIVE SERVICES AGREEMENT" means the Administrative Services
Agreement dated as of the date hereof between the Issuer and Cherokee.
"AFFILIATE" means with respect to any Person, any Person that directly or
indirectly through one or more intermediaries, controls such Person, is
controlled by such Person or is under direct or indirect common control with
such Person. As used herein, the term "CONTROL" means possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"ASSIGNED RIGHTS" has the meaning assigned to that term in the Trademark
Purchase and License Assignment Agreement.
"AUTHORIZED OFFICER" means (i) in the case of the Issuer, the Persons
specified by the Issuer as such in an Officers' Certificate signed by a Senior
Officer or, for purposes of Section 2.02, a certificate of the Secretary or
Assistant Secretary of the Issuer delivered from time to time to the Trustee and
(ii) in the case of the Trustee, a Responsible Officer or such other Persons as
may from time to time be designated as such by the Trustee in writing to the
Issuer.
"BASIC DOCUMENTS" means this Indenture, the Note Purchase Agreement, the
Security Agreement, the Notes, the Trademark Purchase and License Assignment
Agreement and the Administrative Services Agreement.
"BUSINESS DAY" means any day other than Saturday or Sunday and any day on
which commercial banking institutions in New York, New York or Wilmington,
Delaware are authorized or obligated by law or executive order to close.
"CHEROKEE" has the meaning assigned to that term in the first recital
hereof.
"CHEROKEE LICENSES" has the meaning assigned to that term in the Trademark
Purchase and License Assignment Agreement.
"CLOSING DATE" means the closing date for the issuance of the Notes pursuant
to the Note Purchase Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLECTION ACCOUNT" has the meaning assigned to that term in Section 3.01.
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"CURRENT VALUE" means, with respect to any Note at any date (the "DATE OF
DETERMINATION"), the sum of (i) for each unpaid installment of principal of such
Note due on a Note Payment Date on or prior to the date of determination, the
principal amount of such installment together with, if such unpaid installment
is past due, interest thereon at the Default Rate from and including the Note
Payment Date on which such principal amount was due to but not including the
date of determination and (ii) for each unpaid installment of principal of such
Note due on a Note Payment Date subsequent to the date of determination, the sum
of the Original Value of such installment plus earned Original Issue Discount
with respect thereto as of the date of determination. Calculations of amounts
due hereunder which are stated to include default interest shall not duplicate
amounts, if any, of default interest included in Current Value.
"DEFAULT" means any event or occurrence which with the giving of notice or
lapse of time or both would become an Event of Default.
"DEFAULT RATE" means the higher of (i) 9.00% per annum, and (ii) the rate
announced by the bank acting as the Trustee as of any date of determination as
its "prime rate" plus 2% per annum, in each case compounded semi-annually.
"DOLLARS" and the sign "$" mean lawful currency of the United States of
America.
"ELIGIBLE INVESTMENT" means any investment in (i) direct obligations of the
United States or any agency thereof, or obligations fully guaranteed by the
United States or any agency thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx Companies,
Inc. ("S&P") and P-1 by Xxxxx'x Investors Service, Inc. ("MOODY'S") which is
payable in full within 183 days from the date of original issue thereof (without
regard to the period held by the Trustee), (iii) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company (including Wilmington Trust Company) which is
organized under the laws of the United States or any state thereof and has total
shareholder equity aggregating at least $500,000,000 and the long term unsecured
senior debt of which (or of the holding company thereof) is rated at least AA-
by S&P and at least Aa3 by Moody's and (iv) money market mutual funds rated AAAm
by S&P (or an equivalent rating by Moody's), provided that:
(a) each Eligible Investment shall be evidenced by negotiable
certificates or instruments, or if non-negotiable or in book entry form,
then issued or registered in the name of the Trustee, or its nominee, as
secured party;
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(b) each Eligible Investment (together with any appropriate
instruments of transfer) shall be delivered to, and held by, the Trustee or
an agent thereof (which shall not be the Issuer or any of its Affiliates)
(other than any Eligible Investment in book entry form);
(c) each Eligible Investment shall mature not later than the next
succeeding Note Payment Date; provided that Eligible Investments in an
amount not less than the amounts required to be withdrawn by the Trustee
pursuant to Section 3.03 shall mature not later than one Business Day prior
to the next succeeding Note Payment Date.
"EMPLOYEE BENEFIT PLAN" means any "EMPLOYEE BENEFIT PLAN" as defined in
(S)3(3) of ERISA, or any "PLAN" as defined in Section 4975(e)(1) of the Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" has the meaning assigned to that term in Section 8.01.
"GAAP" means generally accepted accounting principles as in effect from time
to time in the United States of America.
"GOVERNMENTAL APPROVAL" means any authorization, consent, approval, license,
lease, ruling, permit, certification, exemption, filing for, or registration by
or with any Governmental Body in connection with (a) the execution, delivery and
performance of the Basic Documents by the Issuer, (b) the validity or
enforceability of the Basic Documents or (c) the grant by the Issuer of any Lien
granted hereunder or under the Security Agreement and the validity, perfection
and priority of such Lien.
"GOVERNMENTAL BODY" means any Federal, state, municipal or other
governmental department, commission, board, bureau, agency, ministry, authority
or other instrumentality of any jurisdiction, domestic or foreign, including but
not limited to the United States of America; and the term "ORDER" includes any
order, writ, injunction, decree, judgment, award, determination, direction or
demand.
"GRANT" means to grant, bargain, sell, warrant, alienate, remise, demise,
release, convey, assign, transfer, mortgage, pledge, create and grant a security
interest in and right of set-off against, deposit, set over and confirm. A
Grant of the Trust Estate or of any other instruments shall include all rights,
powers and options (but none of the obligations) of the granting party
thereunder, including the immediate continuing right to claim for, collect,
receive and receipt for principal and interest payments in respect to the Trust
Estate and all other monies
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payable thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"GUARANTEE" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, 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 (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "GUARANTEE"
used as a verb has a meaning correlative to the foregoing.
"HOLDERS" and "NOTEHOLDERS" and "HOLDERS" mean the registered holders from
time to time of any of the Notes.
"INDEBTEDNESS" of any Person means, without duplication, (A) all obligations
for borrowed money of such Person, (B) all obligations for the deferred purchase
price of property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all obligations of such Person
created or arising under any conditional sale or other title retention agreement
with respect to any property acquired by such Person), (C) all obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) property which are required to be classified and
accounted for as a capital lease or financial lease on a balance sheet of such
Person in accordance with GAAP, (D) all obligations for borrowed money secured
by any Lien upon or in any property owned by such Person whether or not such
Person has assumed or become liable for the payment of such obligations for
borrowed money and (E) all obligations of the type described in any of clauses
(A) through (D) above which are Guaranteed, directly or indirectly, or endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted with recourse by such Person.
"INDENTURE" has the meaning assigned to that term in the first paragraph
hereof.
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"INDEPENDENT COUNSEL" means Xxxxx Xxxx & Xxxxxxxx, or any other law firm
reasonably acceptable to the Majority Holders which is recognized nationally as
specializing in the substantive area of law to be opined to in the opinion in
question.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended.
"ISSUER" has the meaning assigned to that term in the first paragraph
hereof.
"LICENSE AGREEMENT" has the meaning assigned to that term in the recitals
hereof.
"LICENSEE" has the meaning assigned to that term in the recitals hereof.
"LIEN" means, as applied to property or assets, real or personal, tangible
or intangible, any pledge, mortgage, lien, charge, security interest or
encumbrance of any kind thereon (including, without limitation, any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement or the interest of the lessor under any capitalized lease and the
filing of or agreement to give any financing statement or similar document to
perfect any security interest under the Uniform Commercial Code of any
jurisdiction or any other similar filing to perfect any security interest).
"LLC AGREEMENT" means the Limited Liability Company Agreement of the Issuer
dated as of the date hereof.
"MAJORITY HOLDERS" or "MAJORITY NOTEHOLDERS" means at any time Noteholders
holding collectively Outstanding Notes evidencing at least 66 2/3% of the
aggregate unpaid principal amount of the Outstanding Notes.
"MAKE-WHOLE AMOUNT" means, at any time, in connection with any redemption of
a Note pursuant to Section 13.01 or any acceleration of a Note pursuant to
Section 8.01, the amount (but not less than zero) equal to:
(A) the sum of the Present Values (as hereinafter defined) of the
amounts which would have been payable in respect of such Note on each subsequent
Note Payment Date, MINUS
(B) the amount calculated pursuant to clause (ii) of the definition of
Current Value with respect to such Note at such time.
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For purposes of this definition, "PRESENT VALUE" shall be determined in
accordance with generally accepted financial practice in the United States of
America on a semi-annual basis at a discount rate equal to the sum of the
applicable Treasury Yield PLUS .40%; and the "TREASURY YIELD" for such purpose
shall be determined by reference to the yield for U.S. Treasury securities as
indicated by Telerate Access Service (page 500 or the relevant page at the date
of determination indicating such yields) (or, if such data ceases to be
available, any publicly available source of similar market data) at
approximately 11:00 A.M., New York City time, 3 Business Days prior to the date
of such redemption or acceleration of such Note, and shall be the yield on
actively traded U.S. Treasury securities having a constant maturity equal to the
then-remaining weighted average life to maturity (determined in accordance with
generally accepted financial practice in the United States of America) of such
Note; provided that if such then-remaining weighted average life to maturity is
not equal to the maturity of an actively traded U.S. Treasury security, such
yield shall be obtained by linear interpolation (calculated to the nearest one-
twelfth of a year) from the yields of actively traded U.S. Treasury securities
having a constant maturity closest to such then-remaining weighted average life
to maturity.
"MATERIAL ADVERSE EFFECT" means (A) a material adverse effect on the
validity, enforceability or value of the Assigned Rights, (B) a material adverse
effect on the ability of the Issuer to perform its obligations under any Basic
Document or (C) any adverse effect which a Noteholder could reasonably deem to
be material on the legality, validity or enforceability of any Basic Document,
the validity, perfection or priority of the Liens securing the Notes or the
rights and remedies of the Trustee or the Noteholders thereunder.
"MINIMUM GUARANTEED ROYALTY" has the meaning assigned to that term in the
License Agreement.
"NOTE PAYMENT DATE" means each date set forth in Schedule I.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement dated as of the
date hereof between the Issuer and the parties listed on the signature page
thereto.
"NOTE REGISTER" has the meaning assigned to that term in Section 2.06.
"NOTES" has the meaning assigned to that term in the first paragraph hereof.
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"OFFICERS' CERTIFICATE" means a certificate signed by an Authorized Officer
or a Senior Officer, as applicable, and a Secretary or Assistant Secretary of
the Issuer and delivered to the Trustee.
"OPINION OF COUNSEL" means an opinion in writing signed by legal counsel and
delivered to the Trustee, which counsel may be an employee of the Issuer or
other counsel satisfactory to the Trustee.
"ORIGINAL ISSUE DISCOUNT" means, as to any installment of principal of any
Note due on any Note Payment Date, the difference between the Original Value of
such installment and the principal amount of such installment. Determinations of
earned Original Issue Discount shall be made in accordance with generally
accepted financial practice on the constant interest method at an annual rate of
7.00% from the Closing Date to the date as of which earned Original Issue
Discount is to be determined.
"ORIGINAL VALUE" means, with respect to any installment of principal of any
Note due on any Note Payment Date, the amount of such installment discounted to
present value at the Closing Date at the rate of 7.00% per annum, compounded
semi-annually. The aggregate Original Values for the aggregate principal amount
of the Notes due on each Note Payment Date are set forth in Schedule I hereto.
"OTHER EXISTING LICENSES" has the meaning assigned to that term in the
Trademark Purchase and License Assignment Agreement.
"OTHER PERMITTED LICENSES" has the meaning assigned to that term in the
Trademark Purchase and License Assignment Agreement.
"OUTSTANDING", used with reference to the Notes, means at any time, subject
to the provisions of Section 12.04, all Notes authenticated and delivered by the
Trustee under the Indenture, except
(A) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(B) Notes, or portions thereof, for the payment of which moneys in the
necessary amount shall have been deposited in trust with the Trustee; provided
that if such Notes are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as herein provided, or provision
satisfactory to the Trustee shall have been made for the giving of such notice;
and
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(C) Notes in substitution or exchange for which other Notes shall
have been authenticated and delivered.
"PERMITTED LIEN" means a Lien on all or a portion of the Trust Estate
permitted by Section 7.06(a)(ii) hereof.
"PERSON" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"RECORD DATE" means the first day of the month in which any Note Payment
Date occurs.
"REGISTRAR" shall mean the entity appointed by the Issuer to act as
registrar for any Notes, which shall initially be the Trustee.
"RESERVE ACCOUNT" has the meaning assigned to such term in Section 4.01.
"RESPONSIBLE OFFICER" means, with respect to the Trustee, any Vice President
or Assistant Vice President, Assistant Secretary, Assistant Treasurer, and, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"RULE 144A INFORMATION" has the meaning assigned to that term in Section
2.06(j).
"SECURED OBLIGATIONS" has the meaning assigned to that term in Section 1 of
the Security Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENT" means the Security Agreement dated as of the date
hereof, between the Issuer and the Trustee.
"SENIOR OFFICER" means any of the following officers of the Issuer:
President and Treasurer.
"SUBSIDIARY" means with respect to any Person any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other individuals
performing similar functions, are at the time directly or indirectly owned by
such Person.
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"TAX" means any tax (whether income, documentary, sales, stamp,
registration, issue, capital, property, excise or otherwise), duty, levy,
impost, fee, charge or withholding, directly or indirectly, imposed, assessed,
levied or collected by or for the account of any Governmental Body, excluding
net income and franchise taxes imposed on the Holder by the jurisdiction under
the laws of which such Holder is organized or any political subdivision thereof
or by any jurisdiction in which the office at which the Holder has acquired or
booked the Notes is located or any political subdivision thereof.
"TRADEMARK" has the meaning assigned to that term in the Trademark Purchase
and License Assignment Agreement.
"TRADEMARK LICENSE" means (i) the License Agreement and (ii) to the extent
the same shall have been assigned to the Issuer as contemplated by Section 4.02
of the Trademark Purchase and License Assignment Agreement, any of the Other
Existing Licenses with Brylane, Caldor and/or Pamida.
"TRADEMARK PURCHASE AND LICENSE ASSIGNMENT AGREEMENT" has the meaning
assigned to that term in the third recital hereof.
"TRANSFEREE CERTIFICATE" has the meaning assigned to that term in Section
2.06(f).
"TRANSFEROR CERTIFICATE" has the meaning assigned to that term in Section
2.06(f).
"TRUST ACCOUNTS" means the Collection Account and the Reserve Account.
"TRUST ESTATE" has the meaning assigned to that term in the Granting
Clauses.
"TRUST OFFICE" means the principal office in Wilmington, Delaware, at which
at any particular time the corporate trust business of the Trustee shall be
administered, which office is located at the time of the execution of this
Indenture at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000 or such other office as the Trustee or any successor Trustee may from time
to time designate in writing to the Issuer and the Noteholders.
"TRUSTEE" means Wilmington Trust Company in its capacity as Trustee under
this Indenture, and its successors in such capacity.
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"UNITED STATES" means the States, District of Columbia, territories,
possessions and territorial waters of the United States of America.
Section 1.02. Rules of Construction. Words of the masculine gender shall
be deemed and construed to include correlative words of the feminine and neuter
genders. Unless the context shall otherwise indicate, the words "Note",
"owner", "Holder", "holder", "Noteholders" and "Person" shall include the plural
as well as the singular number.
References herein to specific Persons include their legal successors (or
their successors fulfilling the function specified herein) and permitted
assigns, and references herein to specific agreements and contracts include
references to such agreements and contracts as amended or supplemented from time
to time, to the extent herein and therein permitted.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Trustee
hereunder shall be prepared, in accordance with GAAP. All calculations made for
the purposes of determining compliance with this Indenture shall (except as
otherwise expressly provided herein) be made by application of GAAP.
Section 1.03. Legal Holidays. In any case where any Note Payment Date or
any date for the making of a deposit or distribution hereunder shall fall on a
day which is not a Business Day, such payment, deposit or distribution need not
be made on such date, but may be made on the next succeeding day that is a
Business Day with the same force and effect as if made on such Note Payment Date
or other date for a deposit or distribution.
ARTICLE 2
Issue, Execution, Form and Registration of Notes
Section 2.01. Authentication and Delivery of Notes. Upon the execution
and delivery of this Indenture, Notes in an aggregate principal amount not in
excess of U.S.$60,000,000, at any one time Outstanding will be issued and
executed by the Issuer in the manner prescribed in Section 2.02 and delivered by
the Issuer to the Trustee for authentication, accompanied by a certificate of an
Authorized Officer of the Issuer directing such authentication and the Trustee
shall thereupon authenticate and deliver, or cause the authentication and
delivery of, such Notes to the respective Holders thereof upon the written order
of the
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Issuer signed by an Authorized Officer of the Issuer, without any further
action by the Issuer.
Section 2.02. Execution of Notes. The Notes shall be executed on behalf
of the Issuer by an Authorized Officer of the Issuer. Such signature may be the
manual or facsimile signature of any present or any future such Authorized
Officer. With the delivery of this Indenture, the Issuer is furnishing to the
Trustee a certificate of a Secretary or Assistant Secretary of the Issuer, and
from time to time thereafter may furnish to the Trustee, an Officers'
Certificate, in each case identifying and certifying the incumbency and specimen
signature(s) of the Authorized Officers. Until the Trustee receives a subsequent
Officers' Certificate, the Trustee shall be entitled to rely on the last such
Officers' Certificate delivered to it for purposes of determining the Authorized
Officers.
In case any Authorized Officer who shall have signed any of the Notes shall
cease to be such Authorized Officer before the Note so signed shall be
authenticated and delivered by the Trustee or disposed of by or on behalf of the
Issuer, such Note nevertheless may be authenticated and delivered or disposed of
as though the Person who signed such Note had not ceased to be such Authorized
Officer; and any Note may be signed on behalf of the Issuer by such Persons as,
at the actual date of the execution of such Note, shall be an Authorized
Officer, and such Note shall be a valid and binding obligation of the Issuer
notwithstanding that at the date of the execution and delivery of this Indenture
any such Person was not an Authorized Officer.
Section 2.03. Certificate of Authentication. Only such Notes as shall
bear thereon a certification of authentication substantially as set forth in the
form of the Note annexed as Exhibit A hereto, such certification to be executed
by the Trustee by manual signature of one of its Authorized Officers, shall be
entitled to the benefits of this Indenture or be valid or obligatory for any
purpose. Such certification by the Trustee upon any Note executed by or on
behalf of the Issuer shall be conclusive evidence that the Note so authenticated
has been duly authenticated and delivered hereunder and that the Holder is
entitled to the benefits of this Indenture.
Section 2.04. Form, Denomination and Date of the Notes. (a) The Notes
will be issued in fully registered form substantially in the form of Exhibit A
hereto. The Notes shall be numbered, lettered, or otherwise distinguished in
such manner as the Authorized Officer of the Issuer executing the same may
determine with the approval of the Trustee prior to the issuance of the Notes.
Any of the Notes may be issued with appropriate insertions, omissions,
substitutions and variations, and may have imprinted or otherwise reproduced
thereon such legend or legends, not inconsistent with the provisions of this
Indenture, as may be
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required to comply with any law or with any rules or regulations pursuant
thereto, or to conform to general usage.
(b) The final maturity of the Notes shall be February 20, 2004. Prior to
such final maturity, installments of principal on the Notes shall be due on each
Note Payment Date in the aggregate amount specified in Schedule I. The Notes
shall bear interest, to the extent enforceable under applicable law, on any
overdue principal and Make-Whole Amount, if any, at the Default Rate.
(c) Except as provided in the last sentence of subsection (b) above, the
Notes shall not bear interest. Instead, Original Issue Discount shall accrete
thereon from the Closing Date to the respective Note Payment Dates. The amount
payable by the Issuer in respect of principal of any Note (exclusive of any
Make-Whole Amount) at any date shall not exceed the Current Value of such Note
at such date.
(d) Each Note shall be dated the date of its authentication and shall take
effect therefrom.
(e) The Notes shall be issuable in registered form without coupons in
minimum denominations of $500,000.
Section 2.05. Payment of Notes. (a) Payments at Trust Office. The
principal of and Make-Whole Amount, if any, on the Notes shall be payable to the
Holder of record as of the Record Date at the Trust Office in lawful money of
the United States of America, in funds immediately available at such office
against surrender of such Notes in the case of payment in full, except as
provided in Section 2.05(b).
(b) Home Office Payment. Notwithstanding any provision of this Indenture
or the Notes to the contrary, payments of all amounts which become due and
payable in respect of any Note shall be made by the Trustee, by wire transfer of
immediately available funds for receipt not later than 2:00 p.m. New York time
on the date any such payment is due, directly to the Holder of such Note,
without surrender or presentation thereof to the Trustee (except that upon
written request of the Trustee or the Issuer made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, each Holder
shall surrender its Note for cancellation to the Trustee at its Trust Office or
at such other location as is specified by the Trustee and the Issuer), if there
shall be filed with the Trustee a copy of an agreement between the Issuer and
such Noteholder (or the person for whom such Noteholder is a nominee) providing
that such payments will be so made and such Noteholder agrees not to sell,
transfer or otherwise dispose of such Note unless the amount of all prepayments
of principal
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previously made thereon shall be noted thereon. The Trustee shall have no
responsibility regarding notations of payment by any Noteholder who has entered
into such an agreement and the Trustee shall be responsible only for maintaining
its records in accordance with this Indenture and absent manifest error the
records of the Trustee shall be controlling as to payments and prepayments in
respect of the Notes.
Section 2.06. Registration, Transfer or Exchange of Notes. (a) The
Issuer shall keep or cause to be kept at the Trust Office one or more books
(herein called the "NOTE REGISTER") for the registration and registration of
transfer or exchange of any of the Notes. The Issuer hereby appoints the Trustee
its registrar to keep the Note Register and the Trustee hereby accepts such
appointment.
The Note Register shall contain the following information regarding all
Noteholders:
(i) the names and addresses of such Holders;
(ii) the percentage of the aggregate principal amount of the Notes
held by each Holder;
(iii) the date on which the name of each Person was entered on such
register as a Holder; and
(iv) the date on which any Person ceased to be a Holder;
provided that registration as provided under this Section shall be made within
30 days of the date of issuance of each Note as provided under this Indenture.
Any Note may be surrendered for transfer or exchange at the Trust Office,
accompanied in the case of a transfer by a Transferor Certificate and Transferee
Certificate in form reasonably acceptable to the Trustee, duly executed by the
Holder of such Note, and thereupon the Issuer shall execute, in the case of a
transfer in the name of the transferee or transferees, and the Trustee shall
authenticate and deliver, a new Note or Notes for the same aggregate unpaid
principal amount as the Note so surrendered.
(b) The ownership of any Note shall be proved by the Note Register. The
Trustee may deem and treat the registered Holder of any Note as the absolute
owner of such Note for all purposes and, prior to due presentment for
registration of transfer, shall not be affected by any notice to the contrary.
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(c) No fee shall be charged to any Holder for any registration of transfer
or exchange, but the Trustee or the Issuer may require payment by the Holder
requesting such registration of a sum sufficient to reimburse it for any
governmental, regulatory, or other similar charge or other expense to which the
Trustee or the Issuer is subject in connection therewith.
(d) All Notes authenticated and delivered by the Trustee upon any transfer
or exchange pursuant to this Indenture shall be entitled to the same benefits
under this Indenture as the Note or Notes surrendered upon such transfer or
exchange.
(e) The Trustee shall permit each Holder of a Note to inspect and copy the
Note Register and the other books and records of the Trustee relating to the
Notes upon written request during regular business hours of the Trustee.
(f) No Note may be sold or transferred (including, without limitation, by
pledge or hypothecation) unless such sale or transfer is exempt from the
registration requirements of the Securities Act and is exempt under applicable
state securities laws. The Trustee shall require, prior to any sale or other
transfer of a Note, that the Noteholder's prospective transferee deliver to the
Trustee and the Issuer a certificate relating to such transfer substantially in
the form of Exhibit B annexed hereto (the "TRANSFEREE CERTIFICATE"). In
addition, the Trustee shall require, prior to any sale or other transfer of a
Note, that the Noteholder deliver to the Trustee and the Issuer a certificate
relating to such transfer substantially in the form of Exhibit C (the
"TRANSFEROR CERTIFICATE"). The Transferee Certificates and the Transferor
Certificates furnished pursuant to this Section 2.06(f) hereof may be relied on
conclusively by the Trustee in determining whether the provisions of this
Section 2.06(f) hereof have been complied with. None of the Issuer, the Trustee
or any other person shall be required or obligated to register the Notes under
the Securities Act or any state securities laws.
(g) Subject to its prior receipt of a Transferee Certificate from a
transferee, the Issuer shall be deemed to have made the representations set
forth in the second paragraph of Section 2.10 of the Note Purchase Agreement to
such transferee as of the date such transferee acquired a Note that is the
subject of such Transferee Certificate; provided, however, that the Issuer shall
have five (5) business days to review such Transferee Certificate and to notify
the Trustee that due to either (x) a change in an applicable provision of ERISA
or the Code or (y) the disclosure made to the Issuer pursuant to Item (e)(iv) of
the Transferee Certificate, the Issuer is unable to make the representations set
forth in such second paragraph.
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(h) No Note may be sold or transferred in denominations of less than U.S.
$500,000, provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a denomination of less
than U.S. $500,000.
(i) No Note may be sold or transferred (including, without limitation, by
pledge or hypothecation) unless the prospective transferee represents in the
Transferee Certificate that the purchaser is a "qualified purchaser" for
purposes of Section 3(c)(7) of the Investment Company Act. Notwithstanding
anything to the contrary in this Indenture, no transfer of a Note may be made if
such transfer would require registration of the Issuer under the Investment
Company Act.
(j) At any time when the Issuer is not subject to Section 13 or 15(d) of
the United States Securities Exchange Act of 1934, as amended, upon the request
of any Noteholder, the Issuer shall promptly furnish to such Noteholder or to a
prospective purchaser of any Note designated by such Noteholder, as the case may
be, the information which the Issuer determines to be required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act ("RULE 144A INFORMATION")
in order to permit compliance by such Noteholder with Rule 144A in connection
with the resale of such Note by such Noteholder. Upon request by the Issuer,
the Trustee shall reasonably cooperate with the Issuer in mailing or otherwise
distributing (at the Issuer's expense) to such Noteholders or prospective
purchasers, at and pursuant to the Issuer's written direction, the foregoing
materials prepared and provided by the Issuer; provided, however, that the
Trustee shall be entitled to affix thereto or enclose therewith such disclaimers
as the Trustee reasonably shall deem appropriate, at its discretion (such as,
for example, a disclaimer that such Rule 144A Information was assembled by the
Issuer and not by the Trustee, that the Trustee has not reviewed or verified the
accuracy thereof, and that it makes no representation as to the sufficiency of
such information under Rule 144A or for any other purpose).
(k) Notwithstanding any terms herein to the contrary, the Trustee shall
not be responsible for ascertaining whether any transfer complies with, or
otherwise to monitor or determine compliance with, the requirements or terms of
the Securities Act, applicable state securities laws, ERISA, the Code or the
Investment Company Act; except that if a certificate is specifically required by
the terms of this Section 2.06 to be provided to the Trustee, the Trustee shall
be under a duty to receive and examine the same to determine whether it
substantially conforms on its face to the applicable requirements of this
Section.
(l) No Noteholder may sell or transfer a Note to a Person that such
Noteholder reasonably should know is a competitor of the Issuer, Cherokee or the
Licensee; provided that such Noteholder may rely conclusively on the transferee
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certification in subsection (m) of the relevant Transferee Certificate. For
purposes of this subsection (l), "competitor" shall mean any manufacturer,
distributor or retailer of goods of the type covered by the Trademark or the
License Agreement or the owner or licensor of a trademark for goods of such
type.
Section 2.07. Replacement of Lost, Mutilated or Stolen Notes. In case any
Note shall become mutilated or defaced or be lost, destroyed or stolen, then on
the terms herein set forth, and not otherwise, the Issuer shall execute and the
Trustee shall authenticate and deliver to the Holder a new Note of like tenor
and date, and bearing such identifying number or designation as the Trustee may
determine, in exchange and substitution for, and upon cancellation of, the
mutilated or defaced Note, or in lieu of and in substitution for the same if
lost, destroyed or stolen. The applicant for a new Note pursuant to this
Section 2.07 shall, in the case of any mutilated or defaced Note, surrender such
Note to the Trustee and furnish to the Trustee, in the case of any lost,
destroyed or stolen Note, evidence reasonably satisfactory to the Trustee of
such loss, destruction or theft and, in each case, evidence satisfactory to the
Trustee of the ownership and authenticity of such Note and furnish such security
or indemnity as may be reasonably required by the Trustee and the Issuer to
indemnify and defend and save them harmless (provided that if such Noteholder is
an original Holder of any Note, or a nominee or affiliate thereof, or any other
institutional Holder of a Note, such Holder's own unsecured agreement of
indemnity shall be deemed satisfactory to the Issuer). Any defaced or mutilated
Note shall be destroyed by the Trustee, or retained in accordance with its
standard retention policy, upon delivery by it of a new Note to the Holder.
Section 2.08. Tax Purposes. Each Holder by acceptance of its Note agrees
to treat its Note as debt for United States federal income tax purposes.
Section 2.09. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption, or deemed lost or stolen,
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. All canceled Notes held by the
Trustee shall be destroyed or held by the Trustee in accordance with its
standard retention policy.
Section 2.10. Quarterly Report. The Trustee shall deliver to each Holder
of a Note and the Issuer a quarterly report immediately following each Note
Payment Date detailing the Outstanding principal amount of the Notes and the
status of each of the Trust Accounts including receipts and disbursements
therefrom since the preceding Note Payment Date and the amount of the funds and
the types of Eligible Investments then held by the Trustee under this Indenture.
Each Holder of a Note and the Issuer may, from time to time, on a
19
reasonable basis, request any additional reports and information regarding
activity in the Trust Accounts regularly prepared or maintained by the Trustee.
ARTICLE 3
The Collection Account
Section 3.01. Collection Account. The Trustee will establish a special
purpose trust account (Account No. 43558-1) designated as Wilmington Trust
Company, as Trustee--account u/i/d December 23, 1997 made by SPELL C. LLC--
Collection Account (the "COLLECTION ACCOUNT") over which the Trustee shall have
sole and exclusive control and sole and exclusive right of withdrawal and into
which payments due to the Issuer under any Trademark License, including all cash
proceeds thereof, shall be made directly. In addition, the Trustee shall
deposit into the Collection Account (i) the proceeds of the issuance of the
Notes, which shall be distributed pursuant to Section 3.02 hereof and (ii) any
principal, interest or other payment or distribution received by the Trustee
from time to time in respect of Eligible Investments made with amounts on
deposit in the Reserve Account. All right, title and interest in and to the
cash amounts on deposit from time to time in the Collection Account shall
constitute part of the Trust Estate and shall be held for the benefit of the
Noteholders, the Trustee, and the Issuer as their interests shall appear
hereunder and shall not constitute payment of the Secured Obligations (or any
other obligations to which such funds are provided hereunder to be applied)
until applied thereto as hereinafter provided.
Section 3.02. Distribution of Amounts on Deposit in the Collection Account
on the Closing Date. On the Closing Date, the Trustee shall make the following
transfers from the Collection Account:
(i) to the account specified pursuant to Section 3.03 of the
Trademark Purchase and License Assignment Agreement, $47,845,558.83;
(ii) to the Reserve Account in escrow to fund the Trustee's fees,
indemnities and expenses as provided in Section 10.07, $24,000; and
(iii) the balance to or as directed by the Issuer.
Section 3.03. Distribution of Amounts on Deposit in the Collection Account
on Note Payment Dates. Amounts deposited into the Collection Account on any
date shall be held therein and applied or transferred by the
20
Trustee on the immediately succeeding Note Payment Date in the following order
of priorities:
(i) to the payment of any overdue principal owing on the Notes, for
receipt not later than 2:00 p.m., New York time;
(ii) to the ratable payment of the aggregate amount of principal
due and payable on the Notes on such Note Payment Date, for receipt not
later than 2:00 p.m., New York time;
(iii) to the ratable payment of the Make-Whole Amount, if any,
payable on the Notes on such Note Payment Date, for receipt not later than
2:00 p.m., New York time;
(iv) to the ratable payment of any other amounts, if any, payable
on the Notes pursuant to the terms of this Indenture or any other Basic
Document, for receipt not later than 2:00 p.m., New York time;
(v) (A) if a Default or Event of Default shall have occurred and be
continuing, to retain the balance in the Collection Account until such
Default or Event of Default shall have been cured or waived or such balance
shall have been otherwise applied in accordance with this Indenture or (B)
otherwise, to the Issuer or to such other Person as the Issuer shall direct
in writing to the Trustee.
Section 3.04. Distribution of Excess Amounts on Deposit in the Collection
Account. If on any date other than a Note Payment Date (a) the amount on
deposit in the Collection Account exceeds the aggregate amount of principal of
the Notes due and payable on the next succeeding Note Payment Date, and (b) no
Default or Event of Default has occurred and is then continuing, such excess
amount shall be distributed to the Issuer or to such other Person as the Issuer
shall direct in writing to the Trustee.
Section 3.05. Other Existing Licenses. Notwithstanding anything to the
contrary in this Article 3, if at any time any Other Existing Licenses become
Trademark Licenses, then all payments received by the Trustee for the account of
the Issuer in accordance with Section 4.02 of the Trademark Purchase and License
Assignment Agreement shall be transferred to the Reserve Account promptly after
the receipt of such funds, and shall not be available for distribution pursuant
to Sections 3.03 and 3.04 hereof.
Section 3.06. Investments in the Collection Account. (a) Any income
received by, or on behalf of, the Trustee with respect to the balance from time
to
21
time on deposit in the Collection Account, including any interest or capital
gains on Eligible Investments made with amounts on deposit therein, shall
remain, or be deposited, in such Trust Account until transferred or paid in
accordance with this Indenture. All rights, title and interest in and to the
cash amounts on deposit from time to time in the Collection Account, together
with any Eligible Investments from time to time made pursuant to this Section
shall constitute part of the Trust Estate and shall be held for the benefit of
the Noteholders, the Trustee, and the Issuer as their interests shall appear
hereunder and shall not constitute payment of the Secured Obligations (or any
other obligations to which such funds are provided hereunder to be applied)
until applied thereto as hereinafter provided.
(b) If immediately available cash on deposit in the Collection Account is
not sufficient to make any distribution or application referred to in Section
3.03, the Trustee shall liquidate as promptly as practicable Eligible
Investments made with amounts on deposit in the Collection Account as required
to obtain cash to make such distribution or application. Upon the occurrence
and continuation of an Event of Default, the Trustee shall, if so instructed in
writing by the Majority Holders, apply or cause to be applied (subject to
collection) any or all of the balance from time to time on deposit in the
Collection Account in the manner specified in Section 8.02.
(c) Amounts on deposit in the Collection Account shall be invested and re-
invested from time to time in such Eligible Investments as the Issuer shall
timely direct the Trustee in writing, which Eligible Investments shall be held
in the name and be under the control of the Trustee.
(d) All amounts on deposit in the Collection Account shall be paid to the
Issuer upon payment of all amounts due under the Notes in accordance with the
terms hereof and thereof and all other Secured Obligations.
ARTICLE 4
Reserve Account
Section 4.01. Reserve Account. The Trustee will establish a special
purpose trust account (Account No. 43558-2) designated as "Wilmington Trust
Company, as Trustee--account--u/i/d December 23, 1997 made by SPELL C. LLC --
Reserve Account" (the "RESERVE ACCOUNT") over which the Trustee shall have sole
and exclusive control and sole and exclusive right of withdrawal. The Trustee
shall deposit into the Reserve Account amounts transferred from the Collection
Account pursuant to Sections 3.02(ii) and 3.05.
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Section 4.02. Withdrawals from the Reserve Account. Except as elsewhere
provided in this Indenture, all amounts in the Reserve Account shall be applied
by the Trustee upon the instruction of the Issuer (i) in the case of amounts
transferred to the Reserve Account pursuant to Section 3.05, to make payments to
Licensee as required pursuant to Section 7(b)(v)(a) of the License Agreement,
and (ii) in the case of amounts transferred to the Reserve Account pursuant to
Section 3.02(ii), to make payments of the expenses in respect of which such
reserve was established.
Section 4.03. Investments in the Reserve Account. (a) Any income received
by, or on behalf of, the Trustee with respect to the balance from time to time
on deposit in the Reserve Account, including any interest or capital gains on
Eligible Investments made with amounts on deposit therein, shall remain, or be
deposited, in such Trust Account until transferred or paid in accordance with
this Indenture. All right, title and interest in and to the cash amounts on
deposit from time to time in the Reserve Account, together with any Eligible
Investments from time to time made pursuant to this Section shall constitute
part of the Trust Estate and shall be held for the benefit of the Noteholders,
the Trustee, and the Issuer as their interests shall appear hereunder and shall
not constitute payment of the Secured Obligations (or any other obligations to
which such funds are provided hereunder to be applied) until applied thereto as
hereinafter provided.
(b) If immediately available cash on deposit in the Reserve Account is not
sufficient to make any distribution or application referred to in Section 8.02,
the Trustee shall liquidate as promptly as practicable Eligible Investments made
with amounts on deposit in the Reserve Account as required to obtain cash to
make such distribution or application. Upon the occurrence and continuation of
an Event of Default, the Trustee shall, if so instructed in writing by the
Majority Holders, apply or cause to be applied (subject to collection) any or
all of the balance from time to time on deposit in the Reserve Account in the
manner specified in Section 8.02.
(c) Amounts on deposit in the Reserve Account shall be invested and re-
invested from time to time in such Eligible Investments as the Issuer shall
timely direct the Trustee in writing, which Eligible Investments shall be held
in the name and be under the control of the Trustee.
(d) All amounts on deposit in the Reserve Account shall be paid to the
Issuer upon payment of all amounts due under the Notes in accordance with the
terms hereof and thereof and all other Secured Obligations.
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ARTICLE 5
Information
The Issuer will furnish to the Trustee sufficient copies and the Trustee
will furnish to each Noteholder:
(a) promptly, but in any event within five Business Days after an officer
of the Issuer becomes aware thereof, notice of (i) the occurrence of any Default
or Event of Default, (ii) any litigation or governmental proceeding pending or
threatened against the Issuer which could reasonably be expected to have a
Material Adverse Effect, (iii) any action by any Governmental Body to condemn,
seize or appropriate all or any part of the assets of the Issuer if such action
could reasonably be expected to have a Material Adverse Effect and (iv) any
other event, act or condition (excluding general economic conditions) which
could reasonably be expected to have Material Adverse Effect;
(b) promptly after delivery or receipt thereof, a copy of all notices or
documents given or received by the Issuer pursuant to any of the Trademark
Licenses concerning (i) any default or alleged default under, breach or alleged
breach of, or other noncompliance with, any Trademark License in any material
respect, (ii) any prospective inability to perform under any Trademark License
in any material respect, (iii) any termination or attempted termination of any
Trademark License, (iv) any amendment, supplement or other modification of any
Trademark License which the parties propose or (v) any claim against the Issuer
arising under any Trademark License;
(c) promptly upon receipt thereof, copies of all materials delivered to
the Issuer pursuant to Section 3(h) of the Administrative Services Agreement or
Section 5(e) of the License Agreement and copies of all notices given to the
Issuer pursuant to Section 3(b) or 3(c) of the Administrative Services
Agreement; and
(d) promptly, such other information, including financial statements and
computations, relating to the performance of the provisions of this Indenture
and the other Basic Documents and the affairs of the Issuer as the Trustee at
the request of any such Holder may from time to time reasonably request.
If at any time Licensee ceases to be a company required to provide public
financial information pursuant to the reporting requirements of the Securities
and Exchange Commission, the Issuer shall timely request interim and audited
financial statements from the Licensee pursuant to Section 5(e) of the License
Agreement.
24
Notwithstanding anything to the contrary in this Article 5, the Issuer
shall not be required to provide any information to the Trustee or the
Noteholders that the Issuer reasonably determines would cause it to violate the
License Agreement, it being understood that provision of the materials specified
in subsections (b) and (c) above would not cause such a violation.
ARTICLE 6
Inspection of Books and Records
Prior to the occurrence of a Default or an Event of Default, the Trustee
and each Holder of a Note shall have the right to discuss the affairs, finances
and accounts of the Issuer with, and to be advised as to the same by, the
Issuer's officers and employees upon reasonable notice, at such reasonable times
during regular business hours and intervals and to such reasonable extent as the
Trustee or such Holder may desire. Following the occurrence and during the
continuance of a Default or an Event of Default, the Trustee and each Holder of
a Note shall have the right to visit and inspect any of the offices of the
Issuer, to examine the books of account and records of the Issuer, to make or be
provided with copies and extracts therefrom and, to discuss the affairs,
finances and accounts of the Issuer with, and to be advised as to the same by,
its officers and employees all at such reasonable times during regular business
hours and intervals and to such reasonable extent as the Trustee or such Holder
may desire.
The Trustee agrees and each Holder of a Note shall be deemed to have agreed
by acceptance of such Note, that all information (other than publicly available
information) received pursuant to this Indenture or otherwise in connection
herewith or with any Basic Document, will be held by the Trustee and such Holder
as confidential in accordance with its customary procedures for handling
confidential information, but such Holder may make disclosure to the extent
necessary to any bona fide prospective institutional investor transferee in
connection with the contemplated transfer of Notes (provided that (i) prior to
disclosure by such Holder after the date hereof to any prospective transferee of
a Note of any information covered by this paragraph, such Holder will obtain
from such prospective transferee in favor of the Issuer its agreement to be
bound by the provisions of this paragraph provided that such Holder shall not in
any event be liable to any Person because of the failure of such prospective
transferee to comply with such provisions and (ii) at such time as any
disclosure is made to a transferee, such Holder will notify the Issuer in
writing of the information released and the identity of the recipient of such
information) or as required by, in appropriate response to a request by, or as
otherwise customarily disclosed to, any
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Governmental Body (including without limitation the National Association of
Insurance Commissioners or any successor thereto) or representative thereof, or
pursuant to legal process or pursuant to any litigation that any Holder is
involved in, or to the accountants, counsel or other professional advisers of
such Holder in the course of their respective duties (provided that such Holder
requests any such adviser to whom it discloses such information to treat all
such information as non-public data).
ARTICLE 7
Covenants of the Issuer
The Issuer agrees that so long as any amount payable hereunder or under any
Note remains unpaid:
Section 7.01. Payment of Principal and Make-Whole Amount. The Issuer
shall duly and punctually pay the principal of and Make-Whole Amount, if any, on
the Notes in accordance with the terms of, and to the extent provided under, the
Notes and this Indenture. The Issuer's obligations to make such payments on any
date shall be satisfied if on such date immediately available funds in an amount
sufficient to make all payments then due are on deposit in the Collection
Account and available for such purpose and not subject to any legal restraint on
payment by the Trustee from the Collection Account to the Holders. All payments
of amounts due and payable with respect to any Notes that are to be made from
amounts withdrawn from the Collection Account shall be made on behalf of the
Issuer by the Trustee.
Section 7.02. Legal Existence; Payment of Taxes; Compliance with Laws.
The Issuer shall:
(a) do or cause to be done all things necessary to preserve and keep in
full force and effect its legal existence, rights (charter and statutory),
franchises, permits and licenses and all necessary Governmental Approvals;
provided, however, that the Issuer shall not be required to preserve any right,
franchise, permit or license of the Issuer if the board of directors of the
Issuer shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Issuer and that the loss thereof could not,
individually or in the aggregate, have a Material Adverse Effect;
(b) pay and discharge or cause to be paid and discharged all taxes,
assessments and governmental charges or levies imposed upon it or upon its
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income or profits or upon any of its property, or upon any part thereof, when
due, as well as all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a Lien upon its property; provided, however, that
the Issuer shall not be required to pay any such tax, assessment, charge, levy
or claim if (i) the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings, and if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor or (ii) such nonpayment could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(c) comply in all material respects with all applicable statutes,
regulations and Orders of, and all applicable restrictions imposed by, any
Governmental Body, necessary to the conduct of its business and the ownership of
its properties, except such as are being contested in good faith by appropriate
proceedings; and
(d) not alter the provisions of the LLC Agreement.
Section 7.03. Consolidation or Merger. The Issuer shall not, directly or
indirectly, consolidate with or merge with or into, or sell, lease or otherwise
dispose of its assets as an entirety or substantially as an entirety to, any
Person.
Section 7.04. Protection of Trust Estate. (a) The Issuer shall from time
to time at the reasonable request of the Trustee upon the instruction of the
Majority Holders execute and deliver all such instruments of further assurance
and other instruments and take such other action as may be necessary or
advisable to:
(i) Grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the Lien (and the priority thereof) of
this Indenture or to carry out more effectively the purposes hereof;
(iii) perfect, publish notice of, or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce the Trademark Licenses in accordance with their terms;
(v) preserve and defend title to the Trust Estate and the rights
therein of the Trustee and the Noteholders against the claims of all
persons and parties; and
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(vi) promptly upon request, provide to the Trustee all information
and evidence it may reasonably request concerning the Trust Estate to
enable the Trustee to enforce the provisions of this Indenture and the
Security Agreement.
(b) Promptly upon receipt thereof, the Issuer shall furnish to the Trustee
a copy of any notice of default given pursuant to Section 8 of the License
Agreement.
Section 7.05. Performance under the Basic Documents. The Issuer shall
perform all of its obligations under, and observe all of the limitations imposed
on it by, each Basic Document, the License Agreement and the LLC Agreement.
Section 7.06. Negative Covenants. (a) The Issuer shall not, without the
prior written consent of the Majority Noteholders, (i) sell, lease, license,
exchange, assign or otherwise dispose of, or grant any option with respect to,
any of the Assigned Rights, except pursuant to or as expressly permitted by the
Basic Documents (including, without limitation, the Other Permitted Licenses),
(ii) create, assume, incur or suffer to exist any Lien upon or with respect to
the Trust Estate, except for the Liens created pursuant to the Basic Documents
(including, without limitation, the Other Permitted Licenses), (iii) agree or
consent to any amendment, modification or termination of or material forbearance
or written waiver with respect to any provision of any Basic Document, Trademark
License or (to the extent the Issuer's consent thereto is required under the
Trademark Purchase and License Assignment Agreement) Other Permitted License or
(iv) take any action that would cause the Lien in favor of the Trustee on behalf
of the Noteholders contemplated by this Indenture and the Security Agreement not
to constitute a valid first priority perfected security interest in the Trust
Estate.
(b) The Issuer shall not acquire directly or indirectly (by purchase,
participation, prepayment or otherwise) any of the Outstanding Notes except by
way of payment or prepayment in accordance with the provisions of the Notes and
of this Indenture.
(c) The Issuer shall not incur or have outstanding, assume, or Guarantee
any Indebtedness, or assume or Guarantee any Indebtedness of any Person other
than the Notes, or issue any membership or other equity interest to any Person
other than Cherokee, or any successor thereof by merger, consolidation or sale
of substantially all assets.
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(d) The Issuer shall not engage in any business or activity other than
(i) the issuance, selling and redemption of the Notes and the performance of its
obligations under this Indenture and the Notes and any other instrument or
property included in the Trust Estate in connection therewith, (ii) activity
necessary to consummate the transactions contemplated by the Basic Documents and
to perform its obligations and preserve and enforce its rights thereunder and
(iii) other activities that are reasonably necessary to accomplish the foregoing
or are incidental thereto.
(e) The Issuer shall not create any Subsidiaries.
(f) The Issuer shall not voluntarily appoint or cause to be appointed or
commence any proceeding to appoint any receiver or liquidator over all or any of
its property.
ARTICLE 8
Events of Default
Section 8.01. Events of Default. If one or more of the following events
(herein referred to as "EVENTS OF DEFAULT") (whatever the reason for such Events
of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) shall
have occurred and be continuing:
(a) default shall be made in the due and punctual payment of all
or any part of the principal of, or Make-Whole Amount (if any) on, any
Note, when and as the same shall became due and payable, whether at stated
maturity, by acceleration, by prepayment or otherwise;
(b) default shall be made by the Issuer in the observance of any
of its obligations or undertakings contained in any of Article 5(a)(i) or
Sections 7.03, 7.04(b) and 7.06;
(c) default shall be made by the Issuer in the observance of any
of its other obligations or undertakings under this Indenture or any other
Basic Document and such default shall have continued for a period of at
least 30 days after the Trustee, acting upon the instruction of the
Majority Holders, shall have notified the Issuer thereof; provided that
unless such default could reasonably be expected to have a Material Adverse
Effect,
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no Event of Default shall arise under this subsection (c) with respect
thereto for so long as the Issuer shall be diligently attempting to cure
such default;
(d) any representation or warranty made by the Issuer in this
Indenture or in any other Basic Document or in any certificate or other
instrument delivered hereunder or thereunder or pursuant hereto or thereto
or in connection with any provision hereof shall prove to be false,
incorrect or breached on the date as of which made in any respect material
to the transactions contemplated hereby;
(e) the License Agreement shall have been terminated or any party
shall be in default thereunder in a manner that could reasonably be
expected to have a Material Adverse Effect;
(f) the Issuer or the Licensee shall (1) apply for or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or administrator of itself or of all or a substantial
part of its property, (2) be generally unable to pay its debts as such
debts become due, (3) make a general assignment for the benefit of its
creditors, (4) commence a voluntary case under the United States Bankruptcy
Code (as now or hereafter in effect), (5) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (6) fail to
controvert in a timely or appropriate manner, or acquiesce in writing to,
any petition filed against it in an involuntary case under the United
States Bankruptcy Code, (7) take any action under the laws of its
jurisdiction of organization (or any other jurisdiction) analogous to any
of the foregoing, or (8) take any corporate or entity action for the
purpose of effecting any of the foregoing;
(g) a proceeding or case in respect of the Issuer or the Licensee
shall be commenced, without the application or consent of the Issuer or the
Licensee in any court of competent jurisdiction, seeking (1) liquidation,
reorganization, dissolution, winding up, or composition or readjustment of
its debts, (2) the appointment of a trustee, receiver, custodian,
liquidator, administrator or the like of it or of all or any substantial
part of its properties, or (3) similar relief in respect of it, under any
law providing for the relief of debtors and such proceeding or case shall
continue undismissed, or unstayed and in effect, for a period of 60 days;
or an order for relief shall be entered in an involuntary case under the
United States Bankruptcy Code against the Issuer or the Licensee; or action
under the laws of the jurisdiction of incorporation of the Issuer or the
Licensee (or any other jurisdiction) analogous to any of the foregoing
shall be taken
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with respect to the Issuer or the Licensee and shall continue unstayed and
in effect for any period of 60 consecutive days;
(h) any judgment or judgments of a court or courts of competent
jurisdiction shall be rendered against the Issuer for the payment of money
in excess of U.S.$100,000 in the aggregate and any one or more of such
judgments exceeding such amount in the aggregate shall not be discharged or
execution thereof stayed pending appeal, within 30 days after entry
thereof, or, in the event of such a stay, such judgment or judgments shall
not be discharged within 30 days after such stay expires;
(i) the Liens created by this Indenture and the Security Agreement
shall at any time not constitute valid and perfected Liens on the Trust
Estate intended to be covered thereby in favor of the Trustee (except by
reason of the failure of the Trustee to retain possession of property
required to be retained by it hereunder), free and clear of any other
Liens, or, except for expiration in accordance with its terms, the Security
Agreement shall for whatever reason be terminated or cease to be in full
force and effect, or the enforceability thereof shall be contested by the
Issuer; or
(j) there shall be a vacancy in the position of Independent
Director (as defined in the LLC Agreement), and such vacancy shall not be
filled with an individual meeting the criteria specified in the LLC
Agreement within 60 days;
then (1) upon the occurrence of any Event of Default described in Subsection (f)
or (g) above the Current Value of each Note, and, to the extent permitted by
law, the Make-Whole Amount in respect of such Note and all other amounts payable
by the Issuer hereunder in respect of each such Note, shall automatically become
immediately due and payable, (2) upon the occurrence of any Event of Default
described in Subsection (a) above with respect to any Note, the Holder of such
Note may, by written notice to the Issuer (with a copy to the Trustee), declare
the Current Value of such Note to be, and the same shall forthwith become, due
and payable and, to the extent permitted by law, the Make-Whole Amount in
respect of such Note and all other amounts payable by the Issuer hereunder in
respect of each such Note or (3) upon the occurrence of any Event of Default
(other than as described in Subsection (f) or (g) above), the Majority Holders
may, and the Trustee shall, upon the direction of such Holders, in each case by
written notice to the Issuer, declare the aggregate Current Values of all Notes
to be, and the same shall forthwith become, due and payable and, to the extent
permitted by law, the Make-Whole Amount in respect of each such Note and all
other amounts payable by the Issuer hereunder in respect of each such Note, in
each case under the
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foregoing clauses (1), (2) and (3) without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Issuer. If any Holder of any Note shall exercise the option specified in clause
(2) above, the Issuer will forthwith give written notice thereof to the Holders
of all other outstanding Notes and each such Holder (including such original
Holder) may (whether or not such notice is given or received), by written notice
to the Issuer (with a copy to the Trustee) declare the aggregate Current Values
of all Notes held by it (but not a portion thereof) to be, and the same shall
forthwith become, due and payable, and, to the extent permitted by law, the
Make-Whole Amount in respect of each such Note, and all other amounts payable by
the Issuer hereunder in respect of each such Note, all without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by the Issuer.
The provisions of this Section are subject, however, to the condition that
if, within 30 days after any Note shall have become due and payable, the Issuer
shall pay all principal of and Make-Whole Amount (if any) on the Notes which
shall have become due otherwise than by acceleration (with interest on such
principal and Make-Whole Amount (if any) at the Default Rate) and all Events of
Default (other than nonpayment of principal and Make-Whole Amount (if any) due
and payable solely by virtue of acceleration) shall be remedied or waived, then,
and in every such case, the Holders of 66 2/3% of the aggregate unpaid principal
amount of the Outstanding Notes, by written notice to the Issuer (with a copy to
the Trustee) given within 90 days after such amounts shall have become due and
payable, may rescind and annul any such acceleration and its consequences; but
no such action shall affect any subsequent Default or Event of Default or impair
any right consequent thereon.
Section 8.02. Application of Proceeds. Any moneys collected by the
Trustee pursuant to this Article, any moneys held by the Trustee pursuant to the
terms of the Indenture or the Security Agreement and all moneys at the time on
deposit in the Collection Account and the Reserve Account shall at the direction
of the Majority Holders, upon the occurrence and during the continuance of an
Event of Default, be applied in the following order at the date or dates fixed
by the Trustee:
(i) to the payment of all amounts due to the Trustee under
Section 10.07;
(ii) to the payment of the whole amount then due and unpaid upon
all the Notes for principal or Make-Whole Amount, if any, as the case may
be, with interest upon any such overdue amounts at the Default Rate; and in
case such moneys shall be insufficient to pay in full the whole amount so
due and unpaid upon the Notes, then to the payment of such
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interest, principal and Make-Whole Amount, if any, and, without preference
or priority of any Note over any other Note, ratably to the aggregate of
such unpaid interest, principal and Make-Whole Amount, if any; and
(iii) to the payment of the remainder, if any, to the Issuer or any
other Person lawfully entitled thereto.
Section 8.03. Waiver of Past Specified Events. Prior to the declaration
of the acceleration of the Notes as provided in Section 8.01, the Majority
Holders may on behalf of the Holders of all the Notes waive any past Event of
Default hereunder and its consequences, except a default (a) in the payment of
principal of or Make-Whole Amount, if any, on any of the Notes or (b) in respect
of a covenant or provision hereof which cannot be modified or amended without
the consent of the Holder of each Note affected. In the case of any such waiver,
the Issuer, the Trustee and the Noteholders shall be restored to their former
positions and rights hereunder, respectively, and the relevant Event of Default
shall cease to exist and be deemed to have been cured and not to have occurred
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereon.
Section 8.04. Provisions Relating to the Trust Estate.
(a) Proceedings in Event of Default. In addition to the actions provided
in Section 8.01 and under the Security Agreement, upon the occurrence of any
Event of Default the Trustee may, at the direction of the Majority Holders,
institute proceedings to seek or enforce any remedy to protect and enforce any
of its rights or powers with respect to the Trust Estate, including to foreclose
upon the Trust Estate under a decree of a court or courts of competent
jurisdiction, and may, at the direction of the Majority Holders, to the extent
permitted by applicable law take any other action of a secured party under such
law. The Trustee shall not be bound to institute any such proceedings or take
any other action, unless (i) it shall have been so directed in writing by the
Majority Holders and (ii) it shall have been furnished, by the Noteholders or
otherwise, indemnity to its reasonable satisfaction.
(b) Trustee's Actions in Event of Default Proceedings. At any time after
the occurrence and during the continuance of an Event of Default the following,
in each case subject to Section 14.08, shall be applicable:
(i) the Trustee in its own name, and as trustee of an express
trust, shall be entitled and empowered to institute any suits, actions or
proceedings at law, in equity or otherwise, to recover judgment against the
33
Issuer on this Indenture or the Notes or against any other party to a
Trademark License, for the whole amount due and unpaid from the Issuer or
any other party to such Trademark License under the applicable agreement,
and may prosecute any such claims or proceedings to judgment or final
decree against the Issuer or any other party to such Trademark License, and
collect the moneys adjudged or decreed to be payable in any manner provided
by law, whether before or after or during the pendency of any proceedings
for the enforcement of the Lien of this Indenture or under the Security
Agreement, or of any of the Trustee's rights or the rights of the Holders
under this Indenture or under the Security Agreement, and such power of the
Trustee shall not be affected by the exercise of any other right, power or
remedy for the enforcement of the provisions of this Indenture or the
Security Agreement or for the foreclosure of the Lien hereof;
(ii) the Trustee in its own name, or as trustee of an express
trust, as the case may be, or in any one or more of such capacities shall
be entitled and empowered to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee and of the Holders (whether such claims be based upon the
provisions of such Notes or of this Indenture or the Security Agreement)
allowed in any receivership, insolvency, bankruptcy, moratorium,
liquidation, readjustment, reorganization or any other judicial or other
proceedings relative to the Issuer, the creditors of the Issuer or any
other party to a Trademark License and any receiver, assignee, trustee,
liquidator, sequestrator (or other similar official) in any such judicial
or other proceeding is hereby authorized 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, disbursements and advances
of the Trustee, its agents and counsel;
(iii) all rights of action and of asserting claims under this
Indenture, the Security Agreement or any Trademark License or under any of
the Notes enforceable by the Trustee may be enforced by the Trustee to the
extent permitted by law without possession of any of such Notes or the
production thereof at the trial or other proceedings relative thereto;
(iv) in the case the Trustee shall have proceeded to enforce any
right under this Indenture or any Trademark License by suit, foreclosure or
otherwise and such proceedings shall have been discontinued or abandoned
for any reason, or shall have been determined adversely to the Trustee,
then in every such case the Issuer and the Trustee shall, to the
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extent permitted by law, be restored without further act to their
respective former positions and rights under this Indenture, and all
rights, remedies and powers of the Trustee shall continue as though no such
proceedings had been taken, except to the extent determined in litigation
adversely to the Trustee; and
(v) the Trustee shall incur no liability as a result of the sale
of the Trust Estate, or any part thereof, at any private sale conducted in
a commercially reasonable manner. The Issuer hereby waives any claims
against the Trustee arising by reason of the fact that the price at which
the Trust Estate may have been sold at such a private sale was less than
the price that might have been obtained at a public sale or was less than
the aggregate amount of the Notes, even if the Trustee accepts the first
offer received and does not offer the Trust Estate to more than one
offeree; provided such sale was conducted in a commercially reasonable
manner.
(c) Waiver of Appraisement, Valuation and Right to Marshalling. To the
extent it may lawfully do so, the Issuer for itself and for any Person who may
claim through or under it hereby:
(i) agrees that neither it nor any such Person will plead, claim
or in any manner whatsoever take advantage of, any appraisement, valuation
or redemption laws, now or hereafter in force in any jurisdiction, which
may delay, prevent or otherwise hinder (A) the performance, enforcement or
foreclosure of this Indenture or of the Security Agreement, or (B) the sale
or other enforcement of the Trust Estate as provided herein and therein;
(ii) waives all benefit or advantage of any such laws;
(iii) waives and releases all rights to have the Trust Estate
marshalled upon any foreclosure, sale or other enforcement of this
Indenture or of the Security Agreement; and
(iv) consents and agrees that, subject to the terms of this
Indenture and the Security Agreement, the instruments constituting the
Trust Estate and regulations applicable thereto, all the Trust Estate may
upon any such sale be sold by the Trustee as an entirety.
(d) Bankruptcy. In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other similar judicial proceeding relative to the Issuer or the property of the
Issuer or its creditors, the Trustee (irrespective of whether the principal of
the Notes
35
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made demand on the
Issuer for the payment of overdue principal or Make-Whole Amount, if any, or
default interest, if any) shall be entitled and empowered, by intervention in
such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of principal,
Make-Whole Amount, if any, and default interest, if any, owing and unpaid
in respect of the Notes and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claims for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of
the Holders allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or similar
official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event the Trustee
shall consent to the making of such payments directly to the Holders, to
pay the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any proposal,
plan of reorganization, arrangement, adjustment or composition or other similar
arrangement affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holders in any such
proceeding.
(e) Remedies Cumulative; Delay or Omission Not a Waiver. To the extent
permitted by law, every remedy given hereunder or under the Security Agreement
to the Trustee or to any of the Holders shall not be exclusive of any other
remedy or remedies, and every such remedy shall be cumulative and in addition to
every other remedy given hereunder or now or hereafter given by statute, law,
equity or otherwise. The Trustee may exercise all or any of the powers, rights
or remedies given to it hereunder or which may be now or hereafter given by
statute, law, equity or otherwise, in its absolute discretion. No course of
dealing between the Issuer and the Trustee or the Holders or any delay or
omission of the Trustee or of the Holders to exercise any right, remedy or power
accruing upon any Event of Default shall impair any right, remedy or power or
shall be construed to be a waiver of any such Event of Default or of any right
of
36
the Trustee or of any Holder or acquiescence therein, and every right, remedy
and power given by this Article 8 to the Trustee or to the Holders may, to the
extent permitted by law, be exercised from time to time and as often as may be
deemed expedient by the Trustee or by the Holders.
(f) Control by the Holders. The Majority Holders shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; provided that: (i) such direction shall not be in conflict with any
rule of law or with this Indenture or expose the Trustee to personal expense or
liability; and (ii the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
ARTICLE 9
Satisfaction and Discharge of Indenture; Unclaimed Moneys
Section 9.01. Satisfaction and Discharge of Indenture. If at any time (a)
the Issuer shall have paid the principal of and Make-Whole Amount, if any, on
all the Notes Outstanding hereunder and other amounts, if any, due hereunder or
under any of the other Basic Documents as and when the same shall have become
due and payable, by prepayment or otherwise or (b) the Issuer shall have
delivered to the Trustee for cancellation all Notes theretofore authenticated
(other than any Notes which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section 2.07), the Trustee, at
the cost and expense of the Issuer, shall execute instruments prepared by the
Issuer acknowledging such satisfaction of and discharging this Indenture and
releasing the assignments made pursuant to this Indenture and the Security
Agreement. The Issuer agrees to reimburse or cause the reimbursement of the
Trustee hereunder for any documented costs or expenses thereafter reasonably and
properly incurred and to compensate the Trustee hereunder for any services
thereafter reasonably and properly rendered by the Trustee in connection with
this Indenture or the Notes.
Section 9.02. Application by Trustee of Funds Deposited for Payment of
Notes. Subject to Section 9.04, all moneys deposited with the Trustee to
accomplish the purposes of Section 9.01 shall be held in trust by the Trustee
and applied by it first to the payment of all sums payable hereunder by the
Issuer (other than the amounts referred to in clause second) and second to the
Holders of the particular Notes for the payment of which such moneys have been
deposited with the Trustee, of all sums due and to become due thereon as
principal or Make-
37
Whole Amount, if any, but such money need not be segregated from other funds
except to the extent required by law.
Section 9.03. Repayment of Moneys and Transfer of Eligible Investments
Held by Trustee. Following the satisfaction and discharge of this Indenture,
all moneys and Eligible Investments then held by the Trustee under the
provisions of this Indenture shall, upon written demand of the Issuer, be repaid
or, as the case may be, assigned or transferred to the Issuer and upon receipt
thereof by the Issuer, the Trustee shall be released from all further liability
with respect to such moneys and such Eligible Investments.
Section 9.04. Return of Moneys Held by Trustee. Any moneys deposited with
or paid to the Trustee for the payment of the principal of or Make-Whole Amount,
if any, on any Note and not applied but remaining unclaimed for three years
after the date upon which such principal or Make-Whole Amount, if any, shall
have become due and payable shall be repaid to or for the account of the Issuer
by the Trustee (upon receipt of a written request from the Issuer), the receipt
of such repayment to be confirmed promptly in writing by or on behalf of the
Issuer, and, to the extent permitted by law, the Holder of such Note shall
thereafter look only to the Issuer for any payment which such Holder may be
entitled to collect, and all liability of the Trustee with respect to such
moneys shall upon receipt thereof by the Issuer cease.
ARTICLE 10
Concerning the Trustee
Section 10.01. Duties of the Trustee; Certain Rights of the Trustee. (a)
The Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. Neither the Trustee, its agents nor
Affiliates shall be liable for any act or omission made in connection with this
Indenture or the other Basic Documents or any Trademark License except in the
case of its gross negligence or willful misconduct. In furtherance, and not in
limitation, of the Trustee's rights, duties and protections hereunder, and
unless otherwise specifically provided in this Indenture, the Trustee shall
(subject to the terms hereof) grant such consents, make such requests and
determinations and take or refrain from taking such actions (including, without
limitation, actions with respect to an Event of Default, of which the Trustee
has notice) as are permitted (but not expressly required) to be granted, made or
taken by the Trustee under this Indenture, as the Majority Holders shall direct
in writing. No provision
38
of this Indenture shall be construed to relieve the Trustee from liability for
its own gross negligence or willful misconduct; provided, however, that:
(i) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture to which the Trustee is
a party and the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth herein, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee;
(ii) in the absence of gross negligence or bad faith on the part of
the Trustee, the Trustee may conclusively rely as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Trustee pursuant to
this Indenture and conforming to the requirements of this Indenture;
(iii) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the written direction of the Majority Holders under, or reasonably
believed by it to be authorized or permitted by, this Indenture, and shall
not be liable for accepting, or acting on, any decision made by the Holders
in accordance with the provisions hereof; and
(iv) the Trustee shall be under no duty to verify, recompute or
recalculate information supplied to it by any Person; provided that, in
accordance with Section 10.08, the Trustee shall forward to Noteholders any
calculations received from the Issuer pursuant to the terms of this
Indenture; and provided further that the Trustee shall verify amounts in
the Trust Accounts in accordance with its customary business practice and
as required by the terms hereof.
(b) Certain Rights of Trustee. (i) The Trustee may request and rely upon,
and shall be protected in acting or refraining from acting upon, and shall not
be bound to make any investigation into the facts or matters stated in, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, note, guaranty or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties, but the Trustee in its sole discretion may make such further inquiry or
investigation into such facts or matters as it may see fit;
(ii) 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, including the Majority Holders,
pursuant
39
to the provisions of this Indenture or any of the other Basic Documents,
unless such Holders shall have furnished to the Trustee reasonable security
or indemnity (including reasonable advances) against the costs, expenses
and liabilities (including, without limitation, attorneys' fees and
expenses) which might be incurred therein or thereby;
(iii) none of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers;
(iv) as a condition to the taking or omitting of any action by it
hereunder for the benefit of the Holders, the Trustee may consult with
counsel or other professionals and the advice of such counsel or other
professionals or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or omitted by
it hereunder in good faith and in reliance thereon; and
(v) for all purposes under this Indenture, the Trustee shall not
be deemed to have notice or knowledge of any Default or Event of Default
(other than the Event of Default specified in Section 8.01(a)) unless a
Responsible Officer assigned to and working in the Trust Office has
received written notice of such a Default or Event of Default and such
notice references the Notes generally, the Issuer, the Trust Estate or this
Indenture.
Section 10.02. Trustee Not Liable for Trademark Licenses; Performance of
Trustee's Duties. (a) Neither the Trustee nor its agents shall be liable to any
Person for any delay in or failure of the payment under any Trademark License or
for any nonperformance or default on the part of any party (other than the
Trustee) under the Basic Documents. THE TRUSTEE MAKES NO REPRESENTATION OR
WARRANTY EXPRESS OR IMPLIED AS TO THE EXISTENCE, TITLE, VALUE, CONDITION, OR
COLLECTABILITY OF ANY TRADEMARK LICENSE OR THE VALIDITY, PERFECTION, PRIORITY OR
ENFORCEABILITY OF ANY INTERESTS THEREIN OR IN RESPECT OF ANY OF THE BASIC
DOCUMENTS, WHETHER BY OPERATION OF LAW OR BY REASON OF ANY ACTION OR OMISSION TO
ACT ON ITS PART HEREUNDER OR ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY TRADEMARK LICENSE WHATSOEVER.
(b) The Trustee may, in the execution and exercise of all or any of the
trusts, powers, authorities and discretions vested in it by this Indenture, act
by
40
Responsible Officers or a Responsible Officer of the Trustee or its Affiliates,
and the Trustee may also whenever it deems it expedient in the interests of the
Noteholders, whether by power of attorney or otherwise, delegate to any Person
or fluctuating body of Persons all or any of the trusts, powers, authorities and
discretions vested in it by the Basic Documents and any such delegation may be
made upon such terms and conditions and subject to such regulations (including
power to subdelegate) as the Trustee may deem fit and it shall not be bound to
supervise the proceedings and shall not in any way or to any extent be
responsible for any loss incurred by any misconduct or default on the part of
such delegate or subdelegate; provided that the Trustee shall have exercised
reasonable care in the selection of such delegate and provided further that the
Trustee shall not delegate its disbursement obligations or its obligations to
hold the Trust Accounts contained in Articles 3 and 4 hereunder. The Trustee
shall give prompt notice to the Issuer of the appointment (and termination
thereof) of any delegate as aforesaid and shall procure that any delegate shall
also give prompt notice to the Issuer of any subdelegate.
(c) Neither the Trustee nor any director or officer of the Trustee shall be
precluded from underwriting, guaranteeing the subscription of or subscribing for
some or all of the Notes with or without a commission or other remuneration or
from purchasing or otherwise acquiring, holding, dealing in or disposing of the
Notes or any of them or any notes, bonds, debentures, debenture stock, shares or
securities whatsoever of, or from acting as banker (including, without
limitation, engaging in normal banking, trust and investment banking business),
paying agent or process agent for or with, the Issuer and any Affiliate thereof
or from otherwise at any time contracting or entering into any financial or
other transactions with the Issuer or any Affiliate thereof.
Section 10.03. Resignation and Removal; Appointment of Successor Trustee.
(a) The Trustee may resign and be discharged of the trusts created by this
Indenture by giving 30 days' written notice to the Issuer and the Holders, and
such resignation shall take effect upon receipt by the Trustee of an instrument
of acceptance of appointment executed by a successor trustee as herein provided
in Sections 10.04 and 10.05.
(b) The Trustee may be removed from its duties under the Indenture upon
written notice by the Majority Holders delivered to the Trustee and to the
Issuer.
(c) If at any time the Trustee shall resign or be removed or otherwise
become incapable of acting, or if at any time a vacancy shall occur in the
office of the Trustee for any other cause, the Issuer shall use its best efforts
to locate and recommend a qualified successor trustee to act under this
Indenture and a
41
successor trustee may be appointed by the Majority Holders to act under this
Indenture (whether or not such successor shall have been located or recommended
by the Issuer) upon written notice to the Issuer and the Trustee. If the
successor trustee is to be appointed by the Majority Holders as provided in the
preceding sentence, such appointment shall be subject to the receipt of the
consent of the Issuer, such consent not to be unreasonably withheld. In the
event that no such successor trustee is appointed by the Majority Holders to act
under this Indenture, the Trustee may request a court to make such appointment.
Any successor trustee appointed pursuant to this Section 10.03 shall be a
licensed bank or trust company organized under the law of the United States or
any State thereof having a corporate trust department and a total shareholder
equity aggregating at least $500,000,000 if there be such an institution willing
and able to accept the trust upon reasonable or customary terms.
Section 10.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 10.03 shall execute,
acknowledge and deliver to the Issuer and to its predecessor trustee an
instrument accepting such appointment hereunder, and, subject to the provisions
of Section 10.03, thereupon the resignation or removal of the predecessor
Trustee shall become effective and such successor trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, duties
and obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein; but, nevertheless, at the written direction of the
Majority Holders or written request of the successor trustee, the Trustee
ceasing to act shall execute and deliver an instrument transferring to such
successor Trustee all the rights and powers of the Trustee so ceasing to act.
Upon written request of any such successor Trustee, the Holders shall execute
any and all instruments in writing for more fully and certainly vesting in and
confirming to such successor Trustee all such rights and powers. Any
predecessor Trustee shall nevertheless retain a Lien upon all property or funds
held or collected by such Trustee to secure any amounts then due it pursuant to
the provisions of the Indenture and shall remain liable for any willful
misconduct or gross negligence on its part while acting as Trustee.
Section 10.05. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party shall be the successor of
the Trustee hereunder, provided that such corporation shall be qualified under
the provisions of Section 10.03(c), without the execution or filing of any paper
or any further act on the part of any of the parties hereto or the Holders,
notwithstanding anything contained herein to the contrary.
42
Section 10.06. Certain Procedural Matters. The Trustee, in its own name
and as trustee of an express trust, at the written direction of the Majority
Holders, shall be entitled and empowered to institute any action or proceeding
at law or in equity for the collection of any amounts due and unpaid or the
enforcement of any other rights of the Holders, prosecute any such action or
proceeding to judgment or final decree, and shall at the written direction of
the Majority Holders enforce any such judgment or final decree and collect in
the manner provided by law the moneys adjudged or decreed to be payable.
Section 10.07. Trustee Fees and Indemnification. (a) The Issuer covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, compensation as agreed between the Issuer and the Trustee in
writing (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust). Such compensation and the
reasonable fees and expenses of Xxxxxxxx Xxxxxx & Finger, P.A., counsel to the
Trustee, shall be payable for the first time upon the Closing Date.
(b) The Issuer covenants and agrees to pay or reimburse the Trustee, and
each successor Trustee, upon its request for all documented expenses,
disbursements and advances reasonably incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture or the other Basic
Documents (including, without limitation, the compensation, documented expenses
and disbursements reasonably incurred of its counsel and of all agents except
any such expense, disbursement or advance as may arise from its gross negligence
or willful misconduct).
(c) The Issuer covenants and agrees to indemnify, or cause to be
indemnified, the Trustee and each of its officers, directors, agents and
employees for, and to hold it, and its officers, directors, agents and employees
harmless against, any loss, liability or reasonable expense incurred without
gross negligence, wilful misconduct or bad faith, on its part, arising out of or
in connection with the execution, delivery, performance or enforcement of this
Indenture. The Trustee shall notify the Issuer promptly of any claim for which
it may seek indemnity. The Issuer shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Issuer
will pay the reasonable fees and expenses of such counsel. The Issuer need not
pay for any settlement made without its consent. This indemnity shall survive
the resignation or removal of the Trustee and termination of this Indenture.
Section 10.08. Information. The Trustee will promptly forward to the
Noteholders any Issuer notices, financial statements, Officers' Certificates or
other forms of written communication that it receives pursuant to the terms of
this Indenture.
43
ARTICLE 11
Supplemental Indenture
Section 11.01. Supplemental Indenture Without Consent of Noteholders. The
Issuer and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Notes any property or assets; and
(b) to cure any ambiguity or to correct or supplement any provision
contained herein, in the Notes, in any Trademark License or other Basic Document
or in any supplemental indenture which may be defective or inconsistent with any
other provision contained herein or in the Notes or in any supplemental
indenture; or to make such other provisions in regard to matters or questions
arising under this Indenture, the Notes or under any supplemental indenture as
the Issuer and the Trustee may deem necessary or desirable and which shall not
adversely affect the interests of the Noteholders; provided, however, that an
opinion of Independent Counsel shall be addressed and delivered to the Trustee
and the Noteholders opining that such supplemental indenture does not adversely
affect the rights of the Noteholders under this Indenture.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or under the other Basic Documents or otherwise.
Any supplemental indenture authorized by the provisions of this Section may
be executed without the consent of the Holders of any of the Notes at the time
Outstanding, notwithstanding any of the provisions of Section 11.02.
Section 11.02. Supplemental Indenture with Consent of Noteholders. With
the consent (evidenced as provided in Article 12) of the Majority Holders, the
Issuer and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture, the Notes or of any supplemental indenture or of modifying in
any manner the rights of the Noteholders, provided, that no such supplemental
44
indenture shall (a) change the final maturity of any Note or the time of payment
of any principal thereof, or reduce the principal amount thereof, or any Make-
Whole Amount thereon or reduce any amount payable on redemption thereof or
reduce the amount of principal or Make-Whole Amount that would be due and
payable upon the occurrence of an Event of Default, or impair or affect the
rights of any Noteholder to institute suit for the payment thereof without the
consent of each Noteholder so affected, (b) reduce any amount required to be
collected or retained in any Trust Account, (c) except as provided in Articles 3
and 4, release any part of the Trust Estate or (d) reduce the aforesaid
percentage of Notes the consent of the Holders of which is required for any
supplemental indenture, acceleration or rescission without the consent of the
Holders of each Note so affected.
Upon the request of the Issuer, accompanied by a copy of the supplemental
indenture and upon the filing with the Trustee of evidence of the consent of the
Majority Holders or any greater percentage of Holders as required by this
Section 11.02 and other documents, if any, required by Section 12.02, the
Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under the Indenture or otherwise, in which case the Trustee
may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
Section 11.03. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture and
the Notes shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Issuer and the
Noteholders shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 11.04. Documents to Be Given to Trustee. The Trustee, subject to
the provisions of Sections 11.01 and 11.02, shall be entitled to receive one or
more certificate or certificates of an Authorized Officer and Opinion or
Opinions of Counsel as evidence that any such supplemental indenture complies
with the applicable provisions of this Indenture.
Section 11.05. Notation on Notes in Respect of Supplemental Indenture.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to the provisions of this Article may bear a notation in form
and manner approved by the Trustee as to any matter provided for by such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
Notes so modified as to conform to any modification of this Indenture contained
in any
45
such supplemental indenture may be prepared by the Issuer at its expense,
authenticated by the Trustee and delivered in exchange for the Notes then
Outstanding.
ARTICLE 12
Concerning the Holders
Section 12.01. Control by Majority Holders. Except as provided below, the
Majority Holders, by a written direction to the Trustee, shall have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee; provided, however, that the Trustee shall have the right to decline to
follow any such direction (i) if the Trustee shall be advised by counsel that
the action so directed may not lawfully be taken or (ii) if the Trustee shall be
advised by counsel that the action so directed may involve it in personal
liability unless it shall have been furnished a reasonably satisfactory
indemnity or security therefor.
Section 12.02. Evidence of Action Taken by Holders. Whenever in this
Indenture or in any other Basic Document it is provided that the Majority
Holders may take any action (including the making of any demand or request, the
giving of any notice, direction, instruction, consent or waiver or the taking of
any other action), the fact that at the time of taking any such action the
Majority Holders have joined therein shall be evidenced in writing by one or
more instruments of similar tenor executed by such Holders in person or by agent
or proxy appointed in writing. Such action by the Majority Holders shall become
effective when such instrument or instruments are delivered to and received by
the Trustee. The Trustee shall thereafter notify the Issuer of the
effectiveness of such action.
Section 12.03. Proof of Execution of Instruments. The fact and date of
the execution of any instrument by a Holder or his agent or proxy may be proved
by the certificate of any notary public or other officer of any jurisdiction
within or without the United States authorized to take acknowledgments of deeds
to be recorded in such jurisdiction that the person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or other such officer. Where such
execution is by or on behalf of any legal entity other than an individual, such
certificate or affidavit shall also constitute proof of the authority of the
individual executing the same.
46
Section 12.04. Notes Owned by the Issuer. In determining whether the
Holders have concurred in any direction, request, consent or waiver under the
Indenture, Notes which are owned by the Issuer or any of its Affiliates shall be
disregarded in both the numerator and denominator of the fraction used to
determine the requisite percentage.
Section 12.05. Right of Revocation of Action Taken. At any time prior to
(but not later than) the evidencing to the Trustee, as provided in Section
12.02, of the taking of any action by the Holders, any Holder of a Note the
serial number of which is shown by the evidence to be included in those Notes
the Holders of which have consented to such action may, by filing written notice
with the Trustee at the Trust Office and upon proof of holding as provided in
Section 2.06, revoke such action insofar as it concerns such Note. Unless
revoked pursuant to the foregoing provisions, any such action taken by a Holder
shall be conclusive and binding upon such Holder and upon all future Holders and
owners of such Note and of any Note issued in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon such
Note. Except as otherwise provided herein, any action taken by the Majority
Holders shall be conclusive and binding upon the Issuer, the Trustee and the
Holders of all Notes.
Section 12.06. Right to Vote Notes in Part. Notwithstanding anything in
this Indenture to the contrary, each Holder may deliver directions to the
Trustee with respect to a portion of the principal amount of the Note or Notes
held by such Holder.
ARTICLE 13
Redemption of Notes
Section 13.01. Optional Redemptions. Upon notice given as provided in
Section 13.02 of this Indenture, the Issuer, at its option, may redeem the Notes
at any time as a whole (but not in part) at an optional redemption price equal
to the aggregate Current Values of the Notes at the date of redemption, together
with a premium equal to the Make-Whole Amount.
Section 13.02. Notice of Redemption; Make-Whole Computations. The Issuer
shall call Notes for redemption under Section 13.01 by giving written notice
thereof to each Holder (with a copy of such notice to the Trustee), which notice
shall be given not less than 30 nor more than 60 days prior to the date fixed
for such redemption and shall specify the date fixed for such redemption. Upon
the giving of such notice of redemption, the aggregate Current Values of the
47
Notes plus the Make-Whole Amount shall become due and payable on the specified
redemption date.
Any notice of redemption pursuant to this Section 13.02 shall include
computations in reasonable detail showing the manner of calculation of what the
applicable Make-Whole Amount would have been if the Notes had been redeemed on
the date of such notice. The Issuer shall determine the Make-Whole Amount on
the third Business Day prior to the date fixed for any redemption under Section
13.02. Two Business Days prior to such redemption date, the Issuer will furnish
to the Holders and the Trustee a certificate signed by an Authorized Officer of
the Issuer setting forth computations in reasonable detail showing the manner of
calculation of such Make-Whole Amount and attaching a copy of the source of the
market data by reference to which the Treasury Yield was determined in
connection with such computations. In the event of any disagreement between the
Holders and the Issuer as to the calculation of any Make-Whole Amount, the
calculation thereof by the Required Holders shall, absent manifest error, be
conclusive.
Section 13.03. Surrender of Notes; Notation Thereon. Subject to the
provisions of Section 2.05(b), the Issuer may, as a condition of payment on
account of any Note, require the Holder to present the Note for notation of such
payment and, if such Note be paid in full, require the surrender thereof.
Section 13.04. Purchase of Notes. The Issuer will not acquire directly or
indirectly by purchase or redemption or otherwise any of the Outstanding Notes
except by way of payment or redemption in accordance with the provisions of the
Notes and of the Indenture.
ARTICLE 14
Miscellaneous
Section 14.01. Binding Upon Assigns. Except as otherwise provided herein,
the provisions of this Indenture (including any amendments, modifications and
waivers hereof properly adopted) shall be binding upon and shall inure to the
benefit of the parties hereto, the holders and their respective successors and
assigns.
Section 14.02. Notices. (a) Except as otherwise expressly provided
herein, all notices, request, demands, directions or other communications to or
upon the respective parties hereto, and the Holders shall be in writing, with a
copy
48
sent by facsimile on the date the notice is sent in each case, and shall become
effective when received. Any written notice shall either be (i) mailed (by
certified or registered mail, return receipt requested with proper postage for
airmail prepaid), (ii sent in the form of a telex (with answerback received) or
facsimile (with confirmation that the appropriate number of pages has been
received by the addressee, and promptly followed by hard copy mailed as provided
in clause (iii)), (iii) delivered by overnight delivery service (providing for
delivery receipts) or (iv) delivered by hand.
(b) All notices, requests, demands, directions or other communications
under this Indenture shall be addressed as follows (or to such other address as
a party hereto may hereafter specify for such purpose by notice to the other
parties hereto):
To the Trustee:
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Issuer:
SPELL C. LLC
000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
With a copy to:
Cherokee, Inc.,
Administrator
0000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
(c) The Trustee shall not be liable for any error or failure in the
sending, dispatching or transmission of any notice, request, demand, direction
or other communication under this Indenture.
49
Section 14.03. Effect of Headings. The Table of Contents hereto and the
Article and Section headings herein are for convenience only and shall not
affect the construction hereof.
Section 14.04. Severability. Any provision of this Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 14.05. Counterparts. This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
Section 14.06. Further Assurance. The Issuer shall, from time to time on
being required to do so by the Trustee, now or at any time in the future, do or
procure the doing of all such acts and/or execute all such documents in a form
reasonably satisfactory to the Trustee as the Trustee may reasonably consider
necessary for giving full effect to this Indenture and securing to the Trustee
the full benefit of the rights, powers and remedies conferred upon the Trustee
in this Indenture.
Section 14.07. Governing Law. THIS INDENTURE AND THE NOTES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH LAW OF THE STATE OF NEW YORK.
Section 14.08. Limitation on Recourse. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any Note,
or because of any indebtedness evidenced thereby shall be had against any
incorporator or any past or present or future stockholder, officer or director,
as such, of the Issuer or of any successor entity, either directly or through
the Issuer or any successor entity, under any rule of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived
and released by the acceptance of the Notes by the Holders and as part of the
consideration for the issue of the Notes.
Section 14.09. Jurisdiction and Process. THE ISSUER AGREES THAT ANY LEGAL
ACTION OR PROCEEDING ARISING OUT OF THIS INDENTURE OR ANY DOCUMENT EXECUTED IN
CONNECTION HEREWITH, OR ANY LEGAL ACTION OR PROCEEDING TO EXECUTE
50
OR OTHERWISE ENFORCE ANY JUDGMENT OBTAINED AGAINST THE ISSUER, FOR BREACH HEREOF
OR THEREOF, OR AGAINST ANY OF ITS PROPERTIES, MAY BE BROUGHT IN THE COURTS OF
THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK BY OR ON BEHALF OF THE TRUSTEE OR BY OR ON BEHALF OF ANY
HOLDER OF A NOTE, AS SUCH HOLDER MAY ELECT, AND THE ISSUER HEREBY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS
(WITHOUT LIMITING THE JURISDICTION OF OTHER COURTS) FOR PURPOSES OF ANY SUCH
LEGAL ACTION OR PROCEEDING. THE ISSUER HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THE
BASIC DOCUMENTS MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO
THE ISSUER AT ITS ADDRESS SET FORTH IN SECTION 14.02 OR AT SUCH OTHER ADDRESS OF
WHICH THE TRUSTEE SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. IN ADDITION, THE
ISSUER (A) HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR ANY OTHER
DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH BROUGHT IN THE COURTS OF
THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM; AND (B)
HEREBY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS INDENTURE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
51
IN WITNESS WHEREOF, the undersigned have caused this Indenture to be duly
executed as a deed as of the date hereof by their respective officers hereunto
duly authorized.
SPELL C. LLC
as Issuer
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Secretary and Treasurer
WILMINGTON TRUST COMPANY
as Trustee
By: /s/ Xxxxxx X. XxxXxxxxx
--------------------------
Name: Xxxxxx X. XxxXxxxxx
Title: Assistant Vice President
52
Schedule I
----------
Note Payment Dates
Date Principal Amount Due Original Value
---- -------------------- --------------
May 20, 1998 $ 2,250,000 $ 2,187,667.08
August 20, 1998 $ 2,250,000 $ 2,150,359.43
November 20, 1998 $ 2,250,000 $ 2,113,688.00
February 20, 1999 $ 2,250,000 $ 2,077,641.96
May 20, 1999 $ 2,250,000 $ 2,042,210.63
August 20, 1999 $ 2,250,000 $ 2,007,383.54
November 20, 1999 $ 2,250,000 $ 1,973,150.37
February 20, 2000 $ 2,250,000 $ 1,939,501.00
May 20, 2000 $ 2,625,000 $ 2,224,163.06
August 20, 2000 $ 2,625,000 $ 2,186,233.01
November 20, 2000 $ 2,625,000 $ 2,148,949.81
February 20, 2001 $ 2,625,000 $ 2,112,302.43
May 20, 2001 $ 2,625,000 $ 2,076,280.01
August 20, 2001 $ 2,625,000 $ 2,040,871.91
November 20, 2001 $ 2,625,000 $ 2,006,067.65
February 20, 2002 $ 2,625,000 $ 1,971,856.92
May 20, 2002 $ 2,625,000 $ 1,938,229.61
August 20, 2002 $ 2,625,000 $ 1,905,175.77
November 20, 2002 $ 2,625,000 $ 1,872,685.61
February 20, 2003 $ 2,625,000 $ 1,840,749.53
May 20, 2003 $ 2,625,000 $ 1,809,358.08
August 20, 2003 $ 2,625,000 $ 1,778,501.96
November 20, 2003 $ 2,625,000 $ 1,748,172.06
February 20, 2004 $ 2,625,000 $ 1,718,359.39
--------------
$60,000,000 $47,869,558.83
53
CUSIP No. 84780P AA 2 EXHIBIT A
THE ISSUER OF THE SECURITIES EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT COMPANY
ACT"), AND SUCH SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT BY THE HOLDER HEREOF IN
ACCORDANCE WITH THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAW OF ANY
STATE OF THE UNITED STATES, AND PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF SUCH SECURITIES UNDER RULE 144(k) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), ONLY TO A PERSON (i)(A) WHOM
SUCH HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT OR (B) WHO IS AN
INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT AND (ii) WHO IS PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A PERSON THAT IS EITHER (A) A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
OR (B) AN INSTITUTIONAL ACCREDITED INVESTOR. IN ADDITION, SUCH SECURITIES
MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED TO A PERSON WHO (i) IS A
QUALIFIED PURCHASER AS SUCH TERM IS DEFINED IN THE INVESTMENT COMPANY ACT
AND (ii) IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A PERSON
THAT IS A QUALIFIED PURCHASER, AND WHO DELIVERS A DULY EXECUTED TRANSFEREE
CERTIFICATE AND SUCH INFORMATION AS SET FORTH THEREIN TO THE TRUSTEE AND
THE ISSUER, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES
OF THE UNITED STATES AND OTHER JURISDICTIONS. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE, THE HOLDER HEREOF AGREES TO DELIVER A DULY EXECUTED
TRANSFEROR CERTIFICATE AND SUCH INFORMATION SET FORTH THEREIN TO THE
TRUSTEE AND THE ISSUER.
A-1
THE FOLLOWING INFORMATION IS PROVIDED PURSUANT TO UNITED STATES TREASURY
REGULATION SECTION 1.1275-3(b): THIS NOTE HAS BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE HOLDER
OF THIS NOTE MAY OBTAIN THE INFORMATION DESCRIBED IN UNITED STATES TREASURY
REGULATION SECTION 1.1275-3(b)(1)(i) FROM THE TREASURER OF THE ISSUER, AT
THE FOLLOWING ADDRESS: 000 XXXXXX XXXX, XXXXXXXX, XXXXXXXXXX 00000.
No. ____________________ U.S. $________________
SPELL C. LLC
------------
Zero Coupon Secured Note
SPELL C. LLC, a Delaware limited liability company (the "Issuer"), for
value received, hereby promises to pay to [_______________] or registered
assigns, at the Trust Office of the Trustee, _________% of each of the
respective principal amounts indicated on Schedule I hereto at the applicable
times indicated on Schedule I hereto and to pay on demand interest at a rate per
annum equal to the Default Rate on any overdue principal and Make-Whole Amount,
if any, all in the manner provided in and subject to the terms of the Indenture
(the "Indenture") dated as of December 23, 1997 among the Issuer and Wilmington
Trust Company, as Trustee (the "Trustee"), in 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. This Note is one of the Notes referred to
in the Indenture.
Reference is made to the further provisions of this Note set forth on the
following pages. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Trustee.
A-2
IN WITNESS WHEREOF, SPELL C. LLC has caused this instrument to be duly
executed.
Dated: SPELL C. LLC
By: _____________________________________
Name: ____________________________________
Title:____________________________________
A-3
THIS is one of the Notes referred to in the within-mentioned Indenture.
Authenticated without recourse,
warranty or liability
WILMINGTON TRUST COMPANY
as Trustee
By __________________________________________________
Name: ____________________________________________
Title: ___________________________________________
Date of Authentication:
_______________________
A-4
SPELL C. LLC
Zero Coupon Secured Note
This Note is one of a duly authorized issue of secured notes (herein called
the "Notes") issued in one series by SPELL C. LLC (herein called the "Issuer"),
with such series being issued under and pursuant to the Indenture dated as of
December 23, 1997 (herein called the "Indenture"; terms defined in the Indenture
being used herein as therein defined), duly executed and delivered by the Issuer
and Wilmington Trust Company, as Trustee.
Reference is hereby made to the Indenture and all indentures supplemental
thereto for a description of the rights, limitations of rights, obligations,
recourse, duties and immunities thereunder of the Trustee thereunder, the Issuer
and the Noteholders.
In case an Event of Default shall have occurred and be continuing, the
Current Value hereof may be declared, or otherwise become, due and payable, in
the manner, with the effect and subject to the conditions provided in the
Indenture.
The Notes shall bear interest, to the extent enforceable under applicable
law, on any overdue principal and Make-Whole Amount, if any, at the Default
Rate.
The amount payable by the Issuer in respect of principal of this Note
(exclusive of any Make-Whole Amount) at any date shall not exceed the Current
Value of this Note at such date.
The Indenture contains provisions permitting the Issuer and the Trustee to
enter into supplemental indentures for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee as security
for the Notes any property or assets; and (b) to cure any ambiguity or to
correct or supplement any provision contained in the Indenture, in the Notes or
in any Trademark License or other Basic Document or in any supplemental
indenture which may be defective or inconsistent with any other provision
contained in the Indenture or in the Notes or in any supplemental indenture; or
to make such other provisions in regard to matters or questions arising under
the Indenture, the Notes or under any supplemental indenture as the Issuer and
the Trustee may deem necessary or desirable and which shall not adversely affect
the interests of the Noteholders.
A-5
The Indenture contains provisions permitting the Issuer and the Trustee,
with the consent of the Majority Holders evidenced as in the Indenture provided,
to execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture, the Notes or of
any supplemental indenture or modifying in any manner the rights of the
Noteholders; provided, however, that no such supplemental indenture shall (i)
change the final maturity of any Note or the time of payment of any principal
thereof, or reduce the principal amount thereof, or any Make-Whole Amount
thereon or reduce any amount payable on redemption thereof or reduce the amount
of principal that would be due and payable upon the occurrence of an Event of
Default, or impair or affect the rights of any Noteholder to institute suit for
the payment thereof without the consent of each Noteholder so affected, (ii)
reduce any amount required to be collected or retained in any Trust Account,
(iii) release any part of the Trust Estate or (iv) reduce the aforesaid
percentage of Notes the consent of the Holders of which is required for any
supplemental indenture, acceleration or rescission without the consent of the
Holders of each Note so affected. It is also provided in the Indenture that,
prior to the declaration of the acceleration of the Notes as provided in Section
8.01 of the Indenture, the Majority Holders may on behalf of the Holders of all
the Notes waive any past Event of Default under the Indenture and its
consequences, except a default (i) in the payment of principal of or Make-Whole
Amount, if any, on any of the Notes or (ii) in respect of a covenant or
provision of the Indenture which cannot be modified or amended without the
consent of the Holder of each Note affected. In the case of any such waiver,
the Issuer, the Trustee and the Noteholders shall be restored to their former
positions and rights under the Indenture, respectively, and the relevant Event
of Default shall cease to exist and be deemed to have been cured and not to have
occurred for every purpose under the Indenture; but no such waiver shall extend
to any subsequent or other Event of Default or impair any right consequent
thereon.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of this Note in the manner, at
the respective times and in the coin or currency herein prescribed.
The Notes are issuable in registered form without coupons in minimum
denominations of $500,000 and in the manner and subject to the limitations
provided in the Indenture.
The Notes may be redeemed at the option of the Issuer at any time as a
whole (but not in part) at a redemption price equal to the Current Value thereof
plus the Make-Whole Amount. The Trustee may rely upon the Note Register as
conclusive evidence of the aggregate Outstanding principal amount of the Notes.
A-6
Upon due presentment for registration of transfer of this Note at the Trust
Office a new Note or Notes of authorized denominations for an equal unpaid
principal amount will be issued to the transferee in exchange therefor, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith; provided, that
such transferor shall deliver a Transferor Certificate and transferee shall
deliver a Transferee Certificate.
The Issuer, the Trustee and any authorized agent of the Issuer or the
Trustee may deem and treat the registered Holder hereof as the absolute owner of
this Note for all purposes and, prior to due presentment for registration of
transfer, shall not be affected by any notice to the contrary.
This Note shall not be entitled to any benefit under the Indenture or be
valid or become obligatory for any purpose until this Note shall be
authenticated by the execution by the manual signature of a duly Authorized
Officer of the Trustee of the Trustee's certificate of authentication hereon.
It is hereby certified and recited that all conditions, acts and things
required by law and the Indenture to exist, to have happened and to have been
performed precedent to and in the issuance of this Note exist, have happened and
have been performed in due time, form and manner as required by law and the
Indenture, and that the issuance of this Note and the issue of which it forms a
part are within every debt and other limit prescribed by the laws of the State
of New York.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH NEW YORK
LAW.
A-7
EXHIBIT B
FORM OF TRANSFEREE CERTIFICATE
[Trustee's Address]
[Issuer's Address]
Attention: ____________
Re: Zero Coupon Secured Notes
of SPELL C. LLC
-------------------------
Ladies and Gentlemen:
Reference is hereby made to Section 2.06(f) of the Indenture, dated as of
December 23, 1997 (the "Indenture"), between SPELL C. LLC (the "Issuer") and
Wilmington Trust Company, as trustee (the "Trustee"). Capitalized terms used
but not defined herein shall have the meanings assigned to them in the
Indenture.
In connection with our proposed purchase of U.S. $_____________ aggregate
principal amount of Zero Coupon Secured Notes of the Issuer, pursuant to Section
2.06(f) of the Indenture, we (the "Transferee") acknowledge, represent, agree
and confirm, as of the date hereof, for your benefit and the benefit of the
Issuer and the Transferee's transferor, that:
(a) The Transferee is a "qualified purchaser" (as defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act") and related rules
and is aware that the Issuer will not be registered as an investment company
under the Investment Company Act and is acquiring the Notes for its own or one
or more accounts, each of which is a qualified purchaser, and as to each of
which the Transferee exercises sole investment discretion, and in a principal
amount of not less than U.S. $500,000 for the Transferee and for each such
account, in each case solely for investment and not with a view to resale or
distribution thereof in violation of the Securities Act.
(b) The Transferee is either (check one or more items in (i), (ii) or (iii)
below as appropriate):
(i) ___ acquiring the Notes from a transferor that qualifies under
paragraph (a) of the Transferor Letter
B-1
(ii) ___ a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) and is aware that the sale of the Notes to
it is being made in reliance on the exemption from registration
provided by Rule 144A under the Securities Act and is acquiring
the Notes for its own account or for one or more accounts, each
of which is a qualified institutional buyer that is aware that
the sale of the Notes to it is being made in reliance on the
exemption from registration provided by Rule 144A under the
Securities Act.
(iii) ___ a sophisticated investor who is an institutional "accredited
investor," as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act, that is acquiring the Notes for its own
account (or for the account of another as specified in writing
to the Trustee and the Issuer). If such Transferee is acquiring
the Notes for the account of another, it confirms that such
other investor is (x) a sophisticated institutional "accredited
investor," as so defined, or (y) a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act), and
is aware of the restrictions on transfer of the Notes, and as to
each such account the Transferee exercises sole investment
discretion, and is acquiring Notes in a principal amount of not
less than U.S. $500,000 for the Transferee and for each such
account, in each case solely for investment and not with a view
to resale or distribution thereof in violation of the Securities
Act.
(c) The Transferee has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment in the Notes, and the Transferee and any accounts for which it is
acting are each able to bear the economic risk of investing in the Notes.
(d) The Transferee is not a defined contribution plan (such as a 401(k)
plan), or a partnership or other investment vehicle (i) in which its partners or
participants have or will have any discretion to determine whether or how much
of the Transferee's assets are invested in any investment made or to be made by
the Transferee (including the Transferee's investment in the Notes) or (ii) that
is otherwise an entity managed to facilitate the individual decisions of its
beneficial owners to invest in the Notes.
(e) The Transferee hereby represents that at least one of the following
statements is an accurate representation as to each source of funds (a "Source")
to
B-2
be used by the Transferee to pay the purchase price of the Notes to be purchased
by the Transferee hereunder:
(i) if the Transferee is an "insurance company" as defined in Section V(d)
of Prohibited Transaction Exemption ("PTE") 95-60 (as issued by the
United States Department of Labor) and the Source is an "insurance
company general account" as defined in Section V(e) of PTE 95-60 then,
in accordance with Section I(a) of PTE 95-60, there is no Employee
Benefit Plan, treating as a single Employee Benefit Plan all plans
maintained by the same employer or employee organization, with respect
to which the amount of the reserves and liabilities for all general
account contracts held by or on behalf of such Plan exceed ten percent
(10%) of the total reserves and liabilities of such general account
(exclusive of separate account liabilities) plus surplus;
(ii) the Source is either an insurance company pooled separate account,
within the meaning of PTE 90-1 (issued January 29, 1990) or a bank
collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as the Transferee has disclosed to
the Issuer in writing pursuant to this paragraph (ii), no Employee
Benefit Plan or group of Employee Benefit Plans maintained by the same
employer or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account or collective
investment fund; or
(iii) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no Employee Benefit Plan's assets that are
included in such investment fund, when combined with the assets of all
other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of
the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Issuer and the identity of such QPAM and the names of
all Employee Benefit Plans whose assets are included in
B-3
such investment fund have been disclosed to the Issuer in writing
pursuant to this paragraph (iii);
(iv) the Source is one or more Employee Benefit Plans, or a separate
account or trust fund comprised of one or more Employee Benefit Plans,
each of which has been identified expressly as such to the Issuer in
writing pursuant to this paragraph (iv);
(v) the Source constitutes assets of a Employee Benefit Plan managed by an
"in-house asset manager" (within the meaning of Part IV(a) of PTE 96-
23) which has made or properly authorized the decision for such Plan
to purchase the Notes under the circumstances described in PTE 96-23;
or
(vi) the Source does not include assets of any Employee Benefit Plan.
As used in this Section (e), the term "separate account" shall have
the meaning assigned to such term in Section 3 of ERISA.
(f) The Transferee understands that the Notes were originally issued in a
transaction not involving any public offering in the United States within the
meaning of the Securities Act, the Notes have not been and will not be
registered under the Securities Act and if in the future the Transferee decides
to offer, resell, pledge or otherwise transfer the Notes, such Notes may be
offered, resold, pledged or otherwise transferred only in accordance with the
terms of the Indenture, the Note Purchase Agreement and the legend on such
Notes. The Transferee acknowledges that no representation is made by the Issuer
or its transferor as to the availability of any exemption under the Securities
Act or any State securities laws for resale of the Notes.
(g) In connection with the purchase of Notes by the Transferee and this
Transferee Certificate and any other documentation relating to this Transferee
Certificate to which the Transferee is a party or that the Transferee is
required by this Transferee Certificate to deliver: (i) neither the Issuer nor
its transferor is acting as a fiduciary or financial or investment adviser for
the Transferee; (ii) the Transferee is not relying (for purposes of making any
investment decision or otherwise) upon any advice, counsel or representations
(whether written or oral) of the Issuer or its transferor (except as may be set
forth in any agreement between the Transferee and its transferor); (iii) neither
the Issuer nor its transferor has given to the Transferee (directly or
indirectly through any other person) any assurance, guarantee, or representation
whatsoever as to the expected or projected success, profitability, return,
performance, result, effect, consequence, or benefit (including legal,
regulatory, tax, financial, accounting, or otherwise) of this
B-4
Transferee Certificate, the Basic Documents or other documentation (except as
may be set forth in any agreement between the Transferee and its transferor);
(iv) the Transferee has consulted with its own legal, regulatory, tax, business,
investment, financial, and accounting advisers to the extent it has deemed
necessary, and it has made its own investment decisions (including decisions
regarding the suitability of any transaction pursuant to the Indenture) based
upon its own judgment and upon any advice from such advisers as it has deemed
necessary and not upon any view expressed by the Issuer or its transferor; (v)
the Transferee is not relying on its transferor with respect to the
appropriateness or fairness of the prices of the Notes (except as may be set
forth in any agreement between the Transferee and its transferor), and all
trading decisions have been the result of arms' length negotiations between the
Transferee and its transferor; (vi) the Transferee is purchasing the Notes with
a full understanding of all of the risks thereof (economic and otherwise), and
it is capable of assuming and willing to assume (financially and otherwise)
those risks; and (vii) the Transferee is a sophisticated investor.
(h) (i) The Transferee understands that the Notes will bear a legend to the
following effect:
"THE ISSUER OF THE SECURITIES EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT
COMPANY ACT"), AND SUCH SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT BY THE HOLDER HEREOF
IN ACCORDANCE WITH THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAW OF
ANY STATE OF THE UNITED STATES, AND PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF SUCH SECURITIES UNDER RULE 144(k) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), ONLY TO A PERSON (i)(A) WHOM
SUCH HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT OR (B) WHO IS AN
INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT AND (ii) WHO IS PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A PERSON THAT IS EITHER (A) A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
OR (B) AN INSTITUTIONAL ACCREDITED INVESTOR. IN
B-5
ADDITION, SUCH SECURITIES MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED TO A
PERSON WHO (i) IS A QUALIFIED PURCHASER AS SUCH TERM IS DEFINED IN THE
INVESTMENT COMPANY ACT AND (ii) IS PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A PERSON THAT IS A QUALIFIED PURCHASER, AND WHO DELIVERS A
DULY EXECUTED TRANSFEREE CERTIFICATE AND SUCH INFORMATION AS SET FORTH
THEREIN TO THE TRUSTEE AND THE ISSUER, IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
IN CONNECTION WITH ANY TRANSFER OF THIS NOTE, THE HOLDER HEREOF AGREES TO
DELIVER A DULY EXECUTED TRANSFEROR CERTIFICATE AND SUCH INFORMATION SET
FORTH THEREIN TO THE TRUSTEE AND THE ISSUER.
"THE FOLLOWING INFORMATION IS PROVIDED PURSUANT TO UNITED STATES TREASURY
REGULATION SECTION 1.1275-3(b): THIS NOTE HAS BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE HOLDER
OF THIS NOTE MAY OBTAIN THE INFORMATION DESCRIBED IN UNITED STATES TREASURY
REGULATION SECTION 1.1275-3(b)(1)(i) FROM THE TREASURER OF THE ISSUER, AT
THE FOLLOWING ADDRESS: 000 XXXXXX XXXX, XXXXXXXX, XXXXXXXXXX 00000."
(ii) The Transferee understands that the Notes will be represented by one
or more fully registered Notes. Before any interest in any Note may be
offered, resold, pledged or otherwise transferred to any person, both
the transferor and the transferee will be required to provide the
Trustee with a written certification (in the form provided in this
Transferee Certificate, in the case of the Transferee) as to
compliance with the transfer restrictions referred to in the legend
set forth on the Notes.
(i) The Transferee will not, at any time, offer to buy or offer to sell
the Notes by any form of general solicitation or advertising, including, but nor
limited to, any advertisement, article, notice or other communication published
in any newspaper, magazine or similar medium or broadcast over television or
radio or seminar or meeting whose attendees have been invited by general
solicitations or advertising.
B-6
(j) The Transferee understands that prior to any proposed transfer of
Notes, the Transferee may be required to furnish to the Issuer such
certifications, legal opinions or other information as the Issuer may reasonably
require to confirm that the proposed transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and applicable state securities laws. Any
such legal opinion may be from the Transferee's internal counsel or, at the
Issuer's expense, from such other counsel as the Issuer may select.
(k) The Transferee's Taxpayer Identification Number is __________________.
(l) The Transferee shall preserve copies of this letter and all related
letters, certificates, legal opinions, notices and other documents, and upon
request shall furnish you with copies thereof. You are entitled to rely on such
documents, and the Transferee irrevocably authorizes you to produce such
documents in connection with any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
(m) The Transferee is not, to the best of its knowledge, a competitor of
the Issuer, Cherokee or the Licensee. For purposes of this subsection (m),
"competitor" shall mean any manufacturer, distributor or retailer of goods of
the type covered by the Trademark or the License Agreement or the owner or
licensor of a trademark for goods of such type.
The undersigned represents and warrants that, as of the date hereof, the
foregoing information is complete and accurate.
[TRANSFEREE]
By:___________________________
Name:
Title:
Dated: __________________
B-7
EXHIBIT C
FORM OF TRANSFEROR CERTIFICATE
[Trustee's Address]
[Issuer's Address]
Attention: ____________
Re: Zero Coupon Secured Notes
of SPELL C. LLC
-------------------
Ladies and Gentlemen:
Reference is hereby made to Section 2.06(f) of the Indenture, dated as of
December 23, 1997 (the "Indenture"), between SPELL C. LLC (the "Issuer") and
Wilmington Trust Company (the "Trustee"). Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Indenture.
This letter relates to U.S. $_________ aggregate principal amount of Zero
Coupon Secured Notes (the "Notes") of the Issuer which are registered in the
name of [insert name of transferor] (the "Transferor"). The Transferor has
requested a transfer of such Notes for Notes registered in the name of [insert
name of transferee] (the "Purchaser").
In connection with such request, and in respect of such Notes, the
Transferor does hereby certify that such Notes are being transferred (x) to a
Person that the Transferor reasonably believes is a "qualified purchaser" within
the meaning of the Investment Company Act and that is purchasing such Notes for
its own account or for the account of a Person that is a qualified purchaser,
(y) in accordance with (i) the transfer restrictions set forth in Section 2.06
of the Indenture and the Notes and (ii) any applicable securities laws of any
state of the United States or any other jurisdiction and (z) to a Person that
either (check one or more items as appropriate):
(a) ___ is eligible to purchase such Notes from the Transferor pursuant
to Rule 144(k) under the Securities Act (or any successor
provision);
(b) ___ the Transferor reasonably believes that the Purchaser is a
"qualified institutional buyer" within the meaning of Rule
C-1
144A and that is aware that the sale to it is being made in
reliance upon Rule 144A and is purchasing such Notes for its own
account or for the account of a Person that is a qualified
institutional buyer and that is aware that the sale to it is
being made in reliance upon Rule 144A, in a transaction meeting
the requirements of Rule 144A; or
(c) ___ the Transferor reasonably believes that the Purchaser is an
institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of the Securities Act that is
purchasing such Notes for its own account or for the account of a
Person that is (x) an institutional accredited investor or (y) a
"qualified institutional buyer" within the meaning of Rule 144A.
This letter and the statements contained herein are made for your benefit.
[Insert Name of Transferor]
By______________________________________
Name:
Title:
Dated: ____________________
C-2