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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 26, 1997
__________________
LSB INDUSTRIES, INC.
____________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 1-7677 73-1015226
__________________ __________________ ____________________
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
16 South Pennsylvania, Oklahoma City, Oklahoma 73107
______________________________________________ _______________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (405) 235-4546
________________
Not applicable
____________________________________________________________
(Former name or former address, if changed since last report)
Item 5. Other Events.
_____________
On November 26, 1997, the Registrant's wholly owned
subsidiary, ClimaChem, Inc., an Oklahoma corporation ("ClimaChem"),
issued $105 million of its 10 3/4% Senior Notes due 2007 (the
"Notes"). The Notes are unsecured and are unconditionally
guaranteed by certain subsidiaries of ClimaChem (the "Guarantors").
The Notes were issued pursuant to the terms of an Indenture, dated
November 26, 1997, between ClimaChem, the Guarantors, and Bank One,
NA, as the trustee. The Notes were sold pursuant to an exemption
from registration under Section 4(2) and Rule 144A of the
Securities Act of 1933, as amended (the "Act"), and, therefore,
were not registered under the Act. Accordingly, the Notes may not
be offered or sold in the United States absent registration or
pursuant to an applicable exemption from the registration
requirements of the Act. The net proceeds from the sale of the
Notes were used to repay certain term loans, to reduce the
outstanding amounts under various revolving credit facilities, to
fund a loan to the Registrant of $10 million, and for ClimaChem's
general corporate purposes.
ClimaChem owns the Registrant's Chemical Business, which is
engaged in the manufacture and sale of chemical products for the
mining, agricultural and industrial markets, and the Registrant's
Climate Control Business, which is engaged in the manufacture and
sale of a broad range of hydronic fan coils and water source heat
pumps as well as other air conditioning products for commercial and
residential applications.
A copy of the related press release issued November 26, 1997,
in accordance with Rule 135c promulgated under the Act is attached
as an exhibit hereto.
Item 7. Financial Statements and Exhibits.
__________________________________
(c) Exhibits.
4.1 Indenture, dated November 26, 1997, between
ClimaChem, Inc., the Guarantors signatory thereto,
and Bank One, NA.
4.2 Registration Rights Agreement, dated November 26,
1997, between ClimaChem, Inc., the Guarantors
signatory thereto, and Wasserstein Perella
Securities, Inc.
99.1 Press release, dated November 26, 1997.
-2-
SIGNATURES
___________
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: December 5, 1997.
LSB INDUSTRIES, INC.
By: /s/ Tony M. Shelby
________________________
Tony M. Shelby
Senior Vice President
-3-
MBEN:\K-M\LSB\8K\8K112697.EDG
CLIMACHEM, INC.,
Issuer,
and
THE GUARANTORS NAMED HEREIN
and
BANK ONE, NA
Trustee
INDENTURE
Dated as of November 26, 1997
$105,000,000
10 3/4% Senior Notes due 2007
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
_______ ________
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5). . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) 7.8;
. . . . . . . . . . . . . . . . . . . . . . . . 7.10;
. . . . . . . . . . . . . . . . . . . . . . . . 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a). . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a). . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
313(a). . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1). . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2). . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 7.6;
. . . . . . . . . . . . . . . . . . . . . . . . 12.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a). . . . . . . . . . . . . . . . . . . . . . . . 4.7;
. . . . . . . . . . . . . . . . . . . . . . . . 4.6
(b) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . 2.2;
. . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . N.A
(d) . . . . . . . . . . . . . . . . . . . . . . . . . N.A
(e) . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a). . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 7.5;
. . . . . . . . . . . . . . . . . . . . . . . . 7.6;
. . . . . . . . . . . . . . . . . . . . . . . . 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
i
(d) . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . 6.11;
. . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
316(a)(last sentence) . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . 6.12
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) 6.12;
. . . . . . . . . . . . . . . . . . . . . . . . 6.8
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . 6.3
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . 6.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a). . . . . . . . . . . . . . . . . . . . . . . . 12.1
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be a part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE I ____
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions . . . . . . . . . . . . . .1
Section 1.2 Incorporation by Reference of TIA . . 19
Section 1.3 Rules of Construction . . . . . . . . 19
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating . . . . . . . . . . . 20
Section 2.2 Execution and Authentication. . . . . 23
Section 2.3 Registrar and Paying Agent. . . . . . 24
Section 2.4 Paying Agent to Hold Assets in Trust. 24
Section 2.5 Securityholder Lists. . . . . . . . . 25
Section 2.6 Transfer and Exchange . . . . . . . . 25
Section 2.7 Replacement Securities. . . . . . . . 33
Section 2.8 Outstanding Securities. . . . . . . . 33
Section 2.9 Treasury Securities . . . . . . . . . 34
Section 2.10 Temporary Securities. . . . . . . . . 34
Section 2.11 Cancellation. . . . . . . . . . . . . 34
Section 2.12 Defaulted Interest. . . . . . . . . . 34
Section 2.13 CUSIP Numbers . . . . . . . . . . . . 35
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption . . . . . . . . . 35
Section 3.2 Notices to Trustee. . . . . . . . . . 35
Section 3.3 Selection of Securities to Be
Redeemed. . . . . . . . . . . . . . . 36
Section 3.4 Notice of Redemption. . . . . . . . . 36
Section 3.5 Effect of Notice of Redemption. . . . 37
Section 3.6 Deposit of Redemption Price . . . . . 38
Section 3.7 Securities Redeemed in Part . . . . . 38
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities . . . . . . . . 38
iii
Section 4.2 Maintenance of Office or Agency . . . 39
Section 4.3 Limitation on Restricted Payments . . 39
Section 4.4 Corporate Existence . . . . . . . . . 40
Section 4.5 Payment of Taxes and Other Claims . . 40
Section 4.6 Compliance Certificate; Notice of
Default. . . . . . . . . . . . . . . 41
Section 4.7 Reports . . . . . . . . . . . . . . . 41
Section 4.8 Waiver of Stay, Extension or Usury
Laws . . . . . . . . . . . . . . . . 42
Section 4.9 Limitation on Transactions with
Affiliates . . . . . . . . . . . . . 42
Section 4.10 Limitation on Incurrence of Addi-
tional Indebtedness and Disqualified
Capital Stock . . . . . . . . . . . . 42
Section 4.11 Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries . . . . . . . . . . . . 43
Section 4.12 Limitation on Liens Securing
Indebtedness . . . . . . . . . . . . 44
Section 4.13 Limitation on Sale of Assets and
Subsidiary Stock. . . . . . . . . . . 44
Section 4.14 Limitation on Lines of Business . . . 48
Section 4.15 Limitation on Status as Investment
Company. . . . . .. . . . . . . . . . 48
Section 4.16 Future Subsidiary Guarantors. . . . . 48
Section 4.17 Payments for Consent. . . . . . . . . 48
Section 4.18 Limitation on Sale and Leaseback
Transactions. . . . . . . . . . . . . 49
Section 4.19 LSB Note. . . . . . . . . . . . . . . 49
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 Limitation on Merger, Sale or
Consolidation. . . . . . . . . . . . . 49
Section 5.2 Successor Corporation Substituted . . 50
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default . . . . . . . . . . 50
Section 6.2 Acceleration of Maturity Date;
Rescission and Annulment . . . . . . 52
Section 6.3 Collection of Indebtedness and Suits
for Enforcement by Trustee. . . . . . 53
Section 6.4 Trustee May File Proofs of Claim. . . 54
Section 6.5 Trustee May Enforce Claims Without
Possession of Securities . . . . . . 55
Section 6.6 Priorities. . . . . . . . . . . . . . 55
Section 6.7 Limitation on Suits . . . . . . . . . 55
Section 6.8 Unconditional Right of Holders to
Receive Principal, Premium and
Interest. . . . . . . . . . . . . . . 56
Section 6.9 Rights and Remedies Cumulative. . . . 57
Section 6.10 Delay or Omission Not Waiver. . . . . 57
Section 6.11 Control by Holders. . . . . . . . . . 57
iv
Section 6.12 Waiver of Past Default. . . . . . . . 57
Section 6.13 Undertaking for Costs . . . . . . . . 58
Section 6.14 Restoration of Rights and Remedies. . 58
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee . . . . . . . . . . 59
Section 7.2 Rights of Trustee . . . . . . . . . . 60
Section 7.3 Individual Rights of Trustee. . . . . 61
Section 7.4 Trustee's Disclaimer. . . . . . . . . 61
Section 7.5 Notice of Default . . . . . . . . . . 61
Section 7.6 Reports by Trustee to Holders . . . . 62
Section 7.7 Compensation and Indemnity. . . . . . 62
Section 7.8 Replacement of Trustee. . . . . . . . 63
Section 7.9 Successor Trustee by Merger, Etc. . . 64
Section 7.10 Eligibility; Disqualification . . . . 64
Section 7.11 Preferential Collection of Claims
Against Issuer . . . . . . . . . . . 64
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or
Covenant Defeasance. . . . . . . . . 65
Section 8.2 Legal Defeasance and Discharge . . . 65
Section 8.3 Covenant Defeasance. . . . . . . . . 65
Section 8.4 Conditions to Legal or Covenant
Defeasance . . . . . . . . . . . . . 66
Section 8.5 Deposited Cash and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions . . . 67
Section 8.6 Repayment to Issuer. . . . . . . . . 68
Section 8.7 Reinstatement. . . . . . . . . . . . 68
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplemental Indentures Without
Consent of Holders . . . . . . . . . 69
Section 9.2 Amendments, Supplemental Indentures
and Waivers with Consent of
Holders. . . . . . . . . . . . . . . 69
Section 9.3 Compliance with TIA. . . . . . . . . 71
Section 9.4 Revocation and Effect of Consents. . 71
Section 9.5 Notation on or Exchange of
Securities . . . . . . . . . . . . . 72
Section 9.6 Trustee to Sign Amendments, Etc.. . . 72
v
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
Section 10.1 Repurchase of Securities at Optionf
of the Holder upon Change of
Control. . . . . . . . . . . . . . . 72
ARTICLE XI
GUARANTEES
Section 11.1 Guarantee . . . . . . . . . . . . . . 75
Section 11.2 Execution and Delivery of Guarantee . 76
Section 11.3 Certain Bankruptcy Events . . . . . . 77
Section 11.4 Release of Guarantors . . . . . . . . 77
Section 11.5 Future Guarantors . . . . . . . . . . 78
ARTICLE XII
MISCELLANEOUS
Section 12.1 TIA Controls. . . . . . . . . . . . . 78
Section 12.2 Notices . . . . . . . . . . . . . . . 78
Section 12.3 Communications by Holders with Other
Holders . . . . . . . . . . . . . . . 79
Section 12.4 Certificate and Opinion as to
Conditions Preceden . . . . . . . . . 79
Section 12.5 Statements Required in Certificate
or Opinion. . . . . . . . . . . . . . 80
Section 12.6 Rules by Trustee, Paying Agent,
Registrar . . . . . . . . . . . . . . 80
Section 12.7 Legal Holidays. . . . . . . . . . . . 80
Section 12.8 Governing Law . . . . . . . . . . . . 80
Section 12.9 No Adverse Interpretation of Other
Agreements. . . . . . . . . . . . . . 81
Section 12.10 No Recourse Against Others. . . . . . 81
Section 12.11 Successors. . . . . . . . . . . . . . 81
Section 12.12 Duplicate Originals . . . . . . . . . 82
Section 12.13 Severability. . . . . . . . . . . . . 82
Section 12.14 Table of Contents, Headings, Etc. . . 82
vi
INDENTURE, dated as of November 26, 1997, among
ClimaChem, Inc., an Oklahoma corporation (the "Issuer"), the
Guarantors referred to below and Bank One, NA, a national banking
corporation, Trustee.
Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders
of the Issuer's 10 3/4% Senior Notes due 2007:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Acceleration Notice" shall have the meaning specified in
Section 6.2.
"Acquired Indebtedness" means Indebtedness or Disqualified
Capital Stock of any Person existing at the time such Person
becomes a Subsidiary of the Issuer, including by designation, or
is merged or consolidated into or with the Issuer or one of its
Subsidiaries.
"Acquisition" means the purchase or other acquisition of any
Person or substantially all the assets of any Person by any other
Person, whether by purchase, merger, consolidation, or other
transfer, and whether or not for consideration.
"Affiliate" means any Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Issuer. For purposes of this definition, the
term "control" means the power to direct the management and
policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting
securities, by contract, or otherwise, provided that, with
respect to ownership interest in the Issuer and its Subsidiaries
a Beneficial Owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers
or trustees, as applicable, shall for such purposes be deemed to
constitute control.
"Affiliate Transaction" shall have the meaning specified in
Section 4.9.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Member" means any member of, or participant in, the
Depository.
"Applicable Procedures" shall have the meaning specified in
Section 2.6(c)(2).
"Asset Sale" shall have the meaning specified in Section
4.13.
"Asset Sale Offer" shall have the meaning specified in
Section 4.13.
"Asset Sale Offer Amount" shall have the meaning specified
in Section 4.13.
"Asset Sale Offer Price" shall have the meaning specified in
Section 4.13.
"Attributable Value" means, as to any particular lease under
which any Person is at the time liable other than a Capitalized
Lease Obligation, and at any date as of which the amount thereof
is to be determined, the total net amount of rent required to be
paid by such Person under such lease during the remaining term
thereof, including any period for which such lease has been, or
may, at the option of the lessor, be extended, discounted from
the last date of such term to the date of determination at a rate
per annum equal to the discount rate which would be applicable to
a Capitalized Lease Obligation with a like term in accordance
with GAAP. The net amount of rent required to be paid under any
lease for any such period shall be the aggregate amount of rent
payable by the lessee with respect to such period after excluding
amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar
charges. "Attributable Value" means, as to a Capitalized Lease
Obligation under which any Person is at the time liable and at
any date as of which the amount thereof is to be determined, the
discounted present value of the rental obligations of such
Person, as lessee, required to be capitalized on the balance
sheet of such Person in conformity with GAAP.
"Average Life" means, as of the date of determination, with
respect to any security or instrument, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years
from the date of determination to the date or dates of each
successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective
principal (or redemption) payment by (ii) the sum of all such
principal (or redemption) payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Beneficial Owner" or "beneficial owner" has the meaning
attributed to it in Rules l3d-3 and l3d-5 under the Exchange Act
(as in effect on the Issue Date), whether or not applicable,
except that a "Person" shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only
after the passage of time.
"Board of Directors" means, with respect to any person, the
Board of Directors of such person or any committee of the Board
of Directors of such person authorized, with respect to any
particular matter, to exercise the power of the Board of
Directors of such person.
"Board Resolution" means, with respect to any person, a duly
adopted resolution of the Board of Directors of such person.
2
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions in New York, New York are authorized or obligated by
law or executive order to close.
"Capital Stock" means, with respect to any corporation, any
and all shares, interests, rights to purchase (other than
convertible or exchangeable Indebtedness that is not itself
otherwise capital stock), warrants, options, participations or
other equivalents of or interests (however designated) in stock
issued by that corporation.
"Capitalized Lease Obligation" means, as applied to any
Person, any lease of any property (whether real, personal or
mixed) of which the discounted present value of the rental
obligations of such Person, as lessee, in conformity with GAAP,
is required to be capitalized on the balance sheet of such
Person.
"Cash" or "cash" means such coin or currency of the United
States of America as at the time of payment shall be legal tender
for the payment of public or private debts.
"Cash Equivalent" means (i) securities issued or directly
and fully guaranteed or insured by the United States of America
or any agency or instrumentality thereof (provided that the full
faith and credit of the United States of America is pledged in
support thereof) or (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having
capital and surplus in excess of $500 million and (iii)
commercial paper issued by others rated at least A-1 or the
equivalent thereof by Standard & Poor's Corporation or at least
P-1 or the equivalent thereof by Moody's Investors Service, Inc.,
and in the case of each of (i), (ii), and (iii) maturing within
one year after the date of acquisition.
"CEDEL" means Cedel Bank, Societe Anonyme (or any successor
securities clearing agency).
"Change of Control" means (i) any merger or consolidation of
any of the Issuer or LSB with or into any Person or any sale,
transfer or other conveyance, whether direct or indirect, of all
or substantially all of the assets of either of the Issuer or
LSB, on a consolidated basis, in one transaction or a series of
related transactions, if, immediately after giving effect to such
transaction(s), any "Person" or "group" (as such terms are used
for purposes of Sections 13(d) and 14(d) of the Exchange Act,
whether or not applicable) (other than an Excluded Person) is or
becomes the "beneficial owner," directly or indirectly, of more
than 50% of the total voting power in the aggregate normally
entitled to vote in the election of directors, managers, or
trustees, as applicable, of the transferee(s) or surviving entity
or entities, (ii) any "Person" or "group" (as such terms are used
for purposes of Sections 13(d) and 14(d) of the Exchange Act,
whether or not applicable) (other than an Excluded Person) is or
becomes the "beneficial owner," directly or indirectly, of more
than 50% of the total voting power in the aggregate of all
classes of Capital Stock of either of the Issuer or LSB then
outstanding normally entitled to vote in elections of directors,
3
or (iii) during any period of 12 consecutive months after the
Issue Date, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of LSB (together with
any new directors whose election by such Board or whose
nomination for election by the shareholders of LSB was approved
by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose
election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of
Directors of LSB then in office.
"Change of Control Offer" shall have the meaning specified
in Section 10.1.
"Change of Control Period" shall have the meaning specified
in Section 10.1.
"Change of Control Purchase Date" shall have the meaning
specified in Section 10.1.
"Change of Control Purchase Price" shall have the meaning
specified in Section 10.1.
"Consolidated Cash Flow" means, with respect to any Person,
for any period, the Consolidated Net Income of such Person for
such period adjusted to add thereto (to the extent deducted in
determining Consolidated Net Income), without duplication, the
sum of (i) consolidated income tax expense, (ii) consolidated
depreciation and amortization expense, provided that consolidated
depreciation and amortization of a Subsidiary that is a less than
Wholly Owned Subsidiary shall only be added to the extent of the
equity interest of the Issuer in such Subsidiary, (iii) other
non-cash charges of the Issuer and its Subsidiaries reducing
4
Consolidated Net Income for such period, (iv) Consolidated Fixed
Charges and (v) any premium or penalty paid by the Issuer or any
of its Subsidiaries to prepay indebtedness as described in "Use
of Proceeds."
"Consolidated Coverage Ratio" of any Person on any date of
determination (the "Transaction Date") means the ratio, on a pro
forma basis, of (a) the aggregate amount of Consolidated Cash
Flow of such Person attributable to continuing operations and
businesses (exclusive of amounts attributable to operations and
businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges
of such Person (exclusive of amounts attributable to operations
and businesses permanently discontinued or disposed of, but only
to the extent that the obligations giving rise to such
Consolidated Fixed Charges would no longer be obligations
contributing to such Person's Consolidated Fixed Charges
subsequent to the Transaction Date) during the Reference Period;
provided, that for purposes of such calculation, (i) Acquisitions
which occurred during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction Date shall be
assumed to have occurred on the first day of the Reference
Period, (ii) transactions giving rise to the need to calculate
the Consolidated Coverage Ratio shall be assumed to have occurred
on the first day of the Reference Period, (iii) the incurrence of
any Indebtedness or issuance of any Disqualified Capital Stock
during the Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date (and the application of
the proceeds therefrom to the extent used to refinance or retire
other Indebtedness) shall be assumed to have occurred on the
first day of such Reference Period, and (iv) the Consolidated
Fixed Charges of such Person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock
bearing a floating interest (or dividend) rate shall be computed
on a pro forma basis as if the average rate in effect from the
beginning of the Reference Period to the Transaction Date had
been the applicable rate for the entire period, unless such
Person or any of its Subsidiaries is a party to an Interest Swap
or Hedging Obligation (which shall remain in effect for the 12-
month period immediately following the Transaction Date) that has
the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower)
shall be used.
"Consolidated Fixed Charges" of any Person means, for any
period, the aggregate amount (without duplication and determined
in each case in accordance with GAAP) of (a) interest expensed or
capitalized, paid, accrued, or scheduled to be paid or accrued
(including, in accordance with the following sentence, interest
attributable to Capitalized Lease Obligations) of such Person and
its Consolidated Subsidiaries during such period, including (i)
original issue discount and non-cash interest payments or
accruals on any Indebtedness, (ii) the interest portion of all
deferred payment obligations, and (iii) all commissions,
discounts and other fees owed with respect to bankers'
acceptances and letters of credit financings and currency and
Interest Swap and Hedging Obligations, in each case to the extent
attributable to such period, and (b) the amount of dividends
accrued or payable (or guaranteed) by such Person or any of its
Consolidated Subsidiaries in respect of preferred stock (other
than by Subsidiaries of such Person to such Person or such
Person's Wholly Owned Subsidiaries). For purposes of this
definition, interest on a Capitalized Lease Obligation shall be
deemed to accrue at an interest rate reasonably determined in
good faith by the Issuer to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person
for any period, the net income (or loss) of such Person and its
Consolidated Subsidiaries (determined on a consolidated basis in
accordance with GAAP) for such period, adjusted to exclude (only
to the extent included in computing such net income (or loss) and
without duplication): (a) all gains (but not losses) which are
either extraordinary (as determined in accordance with GAAP) or
are either unusual or nonrecurring (including any gain from the
sale or other disposition of assets outside the ordinary course
of business or from the issuance or sale of any capital stock),
(b) the net income, if positive, of any Person, other than a
Wholly Owned Consolidated Subsidiary, in which such Person or any
of its Consolidated Subsidiaries has an interest, except to the
extent of the amount of any dividends or distributions actually
paid in cash to such Person or a Wholly Owned Consolidated
Subsidiary of such Person during such period, but in any case not
in excess of such Person's pro rata share of such Person's net
income for such period, (c) the net income or loss of any Person
acquired in a pooling of interests transaction for any period
prior to the date of such acquisition, (d) the net income, if
positive, of any of such Person's Consolidated Subsidiaries to
the extent that the declaration or payment of dividends or
similar distributions is not at the time permitted by operation
of the terms of its charter or bylaws or any other agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Consolidated
Subsidiary.
5
"Consolidated Net Worth" of any Person at any date means the
aggregate consolidated stockholders' equity of such Person (plus
amounts of equity attributable to preferred stock) and its
Consolidated Subsidiaries, as would be shown on the consolidated
balance sheet of such Person prepared in accordance with GAAP,
adjusted to exclude, to the extent included in calculating such
equity, (a) the amount of any such stockholders' equity
attributable to Disqualified Capital Stock or treasury stock of
such Person and its Consolidated Subsidiaries, (b) all upward
revaluations and other write-ups in the book value of any asset
of such Person or a Consolidated Subsidiary of such Person
subsequent to the Issue Date, and (c) all investments in
Subsidiaries that are not Consolidated Subsidiaries and in
Persons that are not Subsidiaries.
"Consolidated Subsidiary" means, for any Person, each
Subsidiary of such Person (whether now existing or hereafter
created or acquired) the financial statements of which are
consolidated for financial statement reporting purposes with the
financial statements of such Person in accordance with GAAP.
"Credit Agreement" means each of (i) the credit agreement
dated November 21, 1997 by certain of the Company's subsidiaries
and BankAmerica Business Credit, Inc., and (ii) the credit
agreement, dated December 19, 1996, as amended, between TES and
Bank of New Zealand, Australia, including, in each case, any
related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, as such credit
agreement and/or related documents may be amended, restated,
supplemented, renewed, replaced or otherwise modified from time
to time whether or not with the same agent, trustee,
representative lenders or holders, and, subject to the proviso to
the next succeeding sentence, irrespective of any changes in the
terms and conditions thereof. The credit agreement described
under clause (i) of this definition may be secured by accounts
receivable, inventory, proprietary rights, general intangibles,
books and records and the proceeds thereof and under clause (ii)
of this definition may be secured by all the assets of TES.
Without limiting the generality of the foregoing, the term
"Credit Agreement" shall include agreements in respect of
Interest Swap and Hedging Obligations with lenders party to the
Credit Agreement and shall also include any amendment, amendment
and restatement, renewal, extension, restructuring, supplement or
modification to any Credit Agreement and all refundings,
refinancings and replacements of any Credit Agreement, including
any agreement (i) extending the maturity of any Indebtedness
incurred thereunder or contemplated thereby, (ii) adding or
deleting borrowers or guarantors thereunder, so long as borrowers
and issuers include one or more of the Issuer and its
Subsidiaries and their respective successors and assigns, (iii)
increasing the amount of Indebtedness incurred thereunder or
available to be borrowed thereunder, provided that on the date
such Indebtedness is incurred it would not be prohibited by
paragraph (b) of the definition "Permitted Indebtedness," or (iv)
otherwise altering the terms and conditions thereof in a manner
not prohibited by the terms hereof.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
6
"Debt Incurrence Ratio" shall have the meaning specified in Section
4.10.
"Default" means any event, occurrence or condition that is
or with the passage of time or the giving of notice or both would
be an Event of Default.
"Depository" means, with respect to the Securities issuable
or issued in whole or in part in global form, the person
specified in Section 2.3 as the Depository with respect to the
Securities, until a successor shall have been appointed and
become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include
such successor.
"Depository Securities Certification" has the meaning set
forth in Section 2.1.
"Disqualified Capital Stock" means (a) except as set forth
in (b), with respect to any Person, any Equity Interest of such
Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon
the happening of an event or the passage of time would be,
required to be redeemed or repurchased (including at the option
of the holder thereof) by such Person or any of its Subsidiaries,
in whole or in part, on or prior to the Stated Maturity of the
Notes and (b) with respect to any Subsidiary of such Person
(including with respect to any Subsidiary of the Issuer), any
Equity Interest other than any common equity with no preference,
privileges, or redemption or repayment provisions.
"Equity Interest" of any Person means any shares, interests,
participations or other equivalents (however designated) in such
Person's equity, and shall in any event include any Capital Stock
issued by, or partnership or membership interests in, such
Person.
"Euroclear" means Chemical Bank, as operator of the
Euroclear System.
"Event of Default" shall have the meaning specified in
Section 6.1.
"Event of Loss" means, with respect to any property or
asset, any (i) loss, destruction or damage of such property or
asset or (ii) any condemnation, seizure or taking, by exercise of
the power of eminent domain or otherwise, of such property or
asset, or confiscation or requisition of the use of such property
or asset.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
"Exchange Offer" means the offer by the Issuer and the
Guarantors to exchange the Series B Notes and Guarantees thereof
for the Original Notes and Guarantees thereof made pursuant to
the Registration Rights Agreement.
"Excluded Person" means any of (i) Jack E. Golsen, his
immediate family or a trust or similar entity existing for his
7
benefit or for the benefit of his immediate family or any Person
controlled directly or indirectly by him or his immediate family
or (ii) with respect to the Issuer, LSB.
"Exempted Affiliate Transaction" means (a) customary
employee compensation arrangements approved by a majority of
disinterested (as to such transactions) members of the Board of
Directors of the Issuer, (b) dividends or distributions permitted
under Section 4.3 and payable, in form and amount, on a pro rata
basis to all holders of Common Stock of the Issuer, (c)
transactions solely between the Issuer and any of its
Subsidiaries or solely among Subsidiaries of the Issuer, (d) any
payments to LSB pursuant to the Management Agreement, the
Services Agreement and the Tax Sharing Agreement, each as in
effect on the date hereof, (e) any purchase of goods or services
from Affiliates who are in turn purchasing such goods or services
on an arm's length basis from unaffiliated third parties and
reselling them to the Issuer and any of its Subsidiaries at their
actual cost and (f) any transactions as in effect on the Issue
Date as described in the Offering Memorandum under the caption
"Certain Relationship and Related Transactions IEC Lease,"
" Guaranty of Loans," " Revolving Credit Facility" and
" Affiliate Loans."
"GAAP" means United States generally accepted accounting
principles set forth in the Opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant
segment of the accounting profession in the United States as in
effect on the Issue Date.
"Global Security" means, as the context may require, any or
all of the Temporary Regulation S Global Security, the Permanent
Regulation S Global Security and the Restricted Global Security.
"Guarantee" shall have the meaning provided in Section 11.1.
"Guarantors" means The Environmental Group, Inc.,
International Environmental Corporation, Climate Master, Inc.,
CHP Corporation, KOAX Corp., APR Corporation, Climate Mate, Inc.,
The Environmental Group International Limited, LSB Chemical
Corp., El Dorado Chemical Company, Slurry Explosive Corporation,
Universal Tech Corporation, Total Energy Systems Limited, Total
Energy Systems (NZ) Ltd., T.E.S. Mining Services Pty. Ltd.,
Northwest Financial Corporation, DSN Corporation and any future
newly created, acquired or designated Subsidiary of the Issuer.
"Holder" or "Securityholder" means the person in whose name
a Security is registered on the Registrar's books.
"incur" shall have the meaning specified in Section 4.10.
"Incurrence Date" shall have the meaning specified in
Section 4.10.
8
"Indebtedness" of any Person means, without duplication, (a)
all liabilities and obligations, contingent or otherwise, of such
any Person, (i) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), (ii) evidenced by bonds,
notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property
or services, except trade payables incurred in the ordinary
course of its business, (iv) evidenced by bankers' acceptances or
similar instruments issued or accepted by banks, (v) relating to
any Capitalized Lease Obligation, or (vi) evidenced by a letter
of credit or a reimbursement obligation of such Person with
respect to any letter of credit; (b) all net obligations of such
Person under Interest Swap and Hedging Obligations; (c) all
liabilities and obligations of others of the kind described in
the preceding clause (a) or (b) that such Person has guaranteed
or that is otherwise its legal liability or which are secured by
any assets or property of such Person; and (d) any and all
deferrals, renewals, extensions, refinancing and refundings
(whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the
preceding clauses (a), (b) or (c), or this clause (d), whether or
not between or among the same parties; and (e) all Disqualified
Capital Stock of such Person (measured at the greater of its
voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends). For purposes hereof, the "maximum
fixed repurchase price" of any Disqualified Capital Stock which
does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Capital Stock as
if such Disqualified Capital Stock were purchased on any date on
which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by,
the fair market value of such Disqualified Capital Stock, such
fair market value to be determined in good faith by the board of
directors of the issuer (or managing general partner of the
issuer) of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Initial Purchaser" means Wasserstein Perella Securities,
Inc.
"Interest Payment Date" means the stated due date of an
installment of interest on the Securities.
"Interest Swap and Hedging Obligation" means any obligation
of any Person pursuant to any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement,
interest rate exchange agreement, currency exchange agreement or
any other agreement or arrangement designed to protect against
fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or
indirectly, such Person is entitled to receive from time to time
periodic payments calculated by applying either a fixed or
floating rate of interest on a stated notional amount in exchange
for periodic payments made by such Person calculated by applying
a fixed or floating rate of interest on the same notional amount.
9
"Investment" by any Person in any other Person means
(without duplication) (a) the acquisition (whether by purchase,
merger, consolidation or otherwise) by such Person (whether for
cash, property, services, securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants,
of such other Person; (b) the making by such Person of any
deposit with, or advance, loan or other extension of credit to,
such other Person (including the purchase of property from
another Person subject to an understanding or agreement,
contingent or otherwise, to resell such property to such other
Person) or any commitment to make any such advance, loan or
extension (but excluding accounts receivable or deposits arising
in the ordinary course of business); (c) other than guarantees of
Indebtedness of the Issuer or any Guarantor to the extent
permitted by Section 4.10 hereof, the entering into by such
Person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of
such other Person; (d) the making of any capital contribution by
such Person to such other Person; and (e) the designation by the
Board of Directors of the Issuer of any person to be an
Unrestricted Subsidiary. The Issuer shall be deemed to make an
Investment in an amount equal to the fair market value of the net
assets of any subsidiary (or, if none of the Issuer or its
Subsidiaries has theretofore made an Investment in such
subsidiary, in an amount equal to the Investments being made), at
the time that such subsidiary is designated an Unrestricted
Subsidiary, and any property transferred to an Unrestricted
Subsidiary from the Issuer or a Subsidiary shall be deemed an
Investment valued at its fair market value at the time of such
transfer, provided, however, if in any such case such fair
market value exceeds $2 million, such determination of fair
market value shall be based upon an opinion or appraisal by an
accounting, appraisal or investment banking firm of national
standing.
"Issue Date" means the date of first issuance of the Notes
under the Indenture.
"Issuer" means each party named as such in this Indenture
until a successor replaces it pursuant to the Indenture and
thereafter means such successor.
"Legal Holiday" shall have the meaning provided in Section
12.7.
"Lien" means any mortgage, charge, pledge, lien (statutory
or otherwise), privilege, security interest, hypothecation or
other encumbrance upon or with respect to any property of any
kind, real or personal, movable or immovable, now owned or
hereafter acquired.
"Liquidated Damages" shall have the meaning specified in the
Registration Rights Agreement.
"LSB" means LSB Industries, Inc., a Delaware corporation.
"Maturity Date," when used with respect to any Security,
means the date on which the principal of such Security becomes
10
due and payable as therein or herein provided, whether at Stated
Maturity, a Change of Control Purchase Date, a purchase date with
respect to an Asset Sale Offer or by declaration of acceleration,
call for redemption or otherwise.
"Net Cash Proceeds" means the aggregate amount of Cash or
Cash Equivalents received by the Issuer in the case of a sale of
Qualified Capital Stock and by the Issuer and its Subsidiaries in
respect of an Asset Sale plus, in the case of an issuance of
Qualified Capital Stock upon any exercise, exchange or conversion
of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Issuer that were issued
for cash on or after the Issue Date, the amount of cash
originally received by the Issuer upon the issuance of such
securities (including options, warrants, rights and convertible
or exchangeable debt) less, in each case, the sum of all
payments, fees, commissions and expenses (including, without
limitation, the fees and expenses of legal counsel and investment
banking fees and expenses) incurred in connection with such Asset
Sale or sale of Qualified Capital Stock, and, in the case of an
Asset Sale only, less the amount (estimated reasonably and in
good faith by the Issuer) of income, franchise, sales and other
applicable taxes required to be paid by the Issuer or any of its
respective Subsidiaries in connection with such Asset Sale.
"Notes" See "Securities".
"Offering Memorandum" means the Offering Memorandum of the
Issuer dated November 21, 1997 with respect to the Securities.
"Officer" means, with respect to the Issuer, the Chairman of
the Board, the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Treasurer, the
Controller, or the Secretary or Assistant Secretary.
"Officers' Certificate" means, with respect to the Issuer or
any Guarantor, a certificate signed by two Officers of both of
the Issuer or such Guarantor and otherwise complying with the
requirements of Sections 12.4 and 12.5.
"Opinion of Counsel" means a written opinion from legal
counsel to the Issuer complying with the requirements of Sections
12.4 and 12.5. Unless otherwise required by this Indenture, the
counsel may be in-house counsel to the Issuer.
"Original Notes" means the 10 3/4% Senior Notes due 2007, in
substantially the form set forth on the Form of Note set forth as
Exhibit A hereto, as amended and supplemented from time to time
in accordance with the terms hereof, that are issued pursuant to
this Indenture.
"Other Securities" has the meaning set forth in Section 2.1.
"Owner Securities Certification" has the meaning set forth
in Section 2.1.
"Paying Agent" shall have the meaning specified in Section
2.3.
11
"Permanent Regulation S Global Security" has the meaning set
forth in Section 2.1.
"Permitted Indebtedness" means any of the following:
(a) the Issuer and the Guarantors may incur Indebtedness
evidenced by the Notes and represented by the Indenture up to the
amounts specified therein as of the date thereof;
(b) the Issuer and the Guarantors may incur Indebtedness
pursuant to the Credit Agreement (including any Indebtedness
issued to refinance, refund or replace such Indebtedness)
provided that the aggregate principal amount of such Indebtedness
outstanding at any time does not exceed the greater of (i) $50
million (less, with respect to this clause (i) only, the amount
of any such Indebtedness retired with the Net Cash Proceeds from
any Asset Sale or assumed by a transferee in an Asset Sale) or
(ii) the sum of 85% of accounts receivable that are not more than
90 days past due and 60% of inventories, determined in accordance
with GAAP, plus, in each case, accrued interest and such
additional amounts as may be deemed to be outstanding in the form
of Interest Swap and Hedging Obligations with lenders party to
the Credit Agreement or affiliates of such lenders;
(c) the Issuer and the Guarantors, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or
Disqualified Capital Stock, as applicable, described in clause
(a) of this definition, incurred under the Debt Incurrence Ratio
test contained in Section 4.10 or which is outstanding on the
Issue Date so long as such Refinancing Indebtedness is secured
only by the assets that secured the Indebtedness so refinanced;
(d) the Issuer and the Guarantors may incur Indebtedness
representing Capitalized Lease Obligations in an aggregate amount
incurred on or after the Issue Date and outstanding at any one
time (including any Indebtedness issued to refinance, replace, or
refund such Indebtedness) of up to $5 million, provided that this
clause (d) shall not limit the ability of the Issuer to refinance
outstanding Indebtedness pursuant to clause (c);
(e) the Issuer and the Guarantors may incur other
Indebtedness not otherwise permitted pursuant to this definition
in an aggregate amount outstanding at any one time (including any
Indebtedness issued to refinance, replace, or refund such
Indebtedness) of up to $10 million;
(f) the Issuer and the Guarantors may incur Purchase Money
Indebtedness (including any Indebtedness issued to refinance,
replace or refund such Indebtedness), provided, that (i) the
aggregate amount of such Indebtedness incurred on or after the
Issue Date and outstanding at any one time pursuant to this
paragraph (f) shall not exceed $2.5 million, and (ii) in each
case, such Indebtedness shall not constitute more than 100% of
the cost (determined in accordance with GAAP) to the Issuer or
such Guarantor, as applicable, of the property so purchased or
leased, provided that this clause (f) shall not limit the ability
of the Issuer to refinance outstanding Indebtedness pursuant to
clause (c);
12
(g) the Issuer and the Guarantors may incur Indebtedness
solely in respect of performance, surety or appeal bonds, workers
compensation claims, payment obligations in connection with self
insurance and other similar requirements (to the extent that such
incurrence does not result in the incurrence of any obligation to
repay any obligation relating to borrowed money of others), all
in the ordinary course of business in accordance with customary
industry practices, in amounts and for the purposes customary in
the Issuer's industry;
(h) the Issuer may incur Indebtedness to any Wholly Owned
Subsidiary, and any Wholly Owned Subsidiary may incur
Indebtedness to any other Wholly Owned Subsidiary or to the
Issuer; provided that, in the case of Indebtedness of the Issuer,
such obligations shall be unsecured and the date of any event
that causes such Subsidiary to no longer be a Wholly Owned
Subsidiary shall be an Incurrence Date;
(i) the Issuer and its Subsidiaries may incur Indebtedness
arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds in the ordinary course of
business (provided, however, that such Indebtedness is
extinguished within five business days of notification of
incurrence) or from endorsement of instruments for deposit in the
ordinary course of business; and
(j) the Issuer and its Subsidiaries may suffer to exist
Indebtedness outstanding on the Issue Date.
"Permitted Investment" means (a) Investments in any of the Notes;
(b) Investments in Cash Equivalents; (c) Investments in
intercompany notes to the extent permitted under clause (h) of
the definition of "Permitted Indebtedness"; (d) any Investment in
a Person in a Related Business, which, after such Investment,
becomes a Subsidiary of the Issuer and a Guarantor of the Notes;
(e) Investments in the form of a contribution of all or
substantially all the assets or Equity Interests of TES to a
joint venture in which the Issuer or its Subsidiaries own no less
than 50% of the economic and voting interests; and (f) other
Investments not to exceed $2 million.
"Permitted Lien" means (a) Liens created in connection with the
incurrence of Indebtedness under the Credit Agreement, as
described in the definition "Credit Agreement", regardless of
whether such Indebtedness is incurred under clause (b) of the
definition "Permitted Indebtedness" or the Debt Incurrence Ratio,
and Liens incurred in connection with the incurrence of
Indebtedness under Capitalized Lease Obligations and Purchase
Money Indebtedness, to the extent otherwise permitted by clause
(d) or (f), whichever is applicable, of the definition "Permitted
Indebtedness"; (b) Liens existing on the Issue Date; (c) Liens
imposed by governmental authorities for taxes, assessments or
other charges not yet subject to penalty or which are being
contested in good faith and by appropriate proceedings, if
adequate reserves with respect thereto are maintained on the
books of the Issuer in accordance with GAAP; (d) statutory liens
of carriers, warehousemen, mechanics, materialmen, landlords,
repairmen or other like Liens arising by operation of law in the
ordinary course of business provided that (i) the underlying
obligations are not overdue for a period of more than 30 days, or
(ii) such Liens are being contested in good faith and by
13
appropriate proceedings and adequate reserves with respect
thereto are maintained on the books of the Issuer in accordance
with GAAP; (e) Liens securing the performance of bids, trade
contracts (other than borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business; (f) easements, rights-of-way, zoning, similar
restrictions and other similar encumbrances or title defects
which, singly or in the aggregate, do not in any case materially
detract from the value of the property subject thereto (as such
property is used by the Issuer or any of its Subsidiaries) or
interfere with the ordinary conduct of the business of the Issuer
or any of its Subsidiaries; (g) Liens arising by operation of law
in connection with judgments, only to the extent, for an amount
and for a period not resulting in an Event of Default with
respect thereto; (h) pledges or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security
legislation; (i) Liens securing the Notes; (j) Liens securing
Indebtedness of a Person existing at the time such Person becomes
a Subsidiary or is merged with or into the Issuer or a Subsidiary
or Liens securing Indebtedness incurred in connection with an
Acquisition, provided that such Liens were in existence prior to
the date of such acquisition, merger or consolidation, were not
incurred in anticipation thereof, and do not extend to any assets
other than those acquired; (k) leases or subleases granted to
other Persons in the ordinary course of business not materially
interfering with the conduct of the business of the Issuer or any
of its Subsidiaries or materially detracting from the value of
the relative assets of the Issuer or any Subsidiary; (l) Liens
arising from precautionary Uniform Commercial Code financing
statement filings regarding operating leases entered into by the
Issuer or any of its Subsidiaries in the ordinary course of
business; and (m) Liens securing Refinancing Indebtedness
incurred to refinance any Indebtedness that was previously so
secured in a manner no more adverse to the Holders of the Notes
than the terms of the Liens securing such refinanced Indebtedness
provided that the Indebtedness secured is not increased and the
Lien is not extended to any additional assets or property.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government
(including any agency or political subdivision thereof).
"principal" of any Indebtedness (including the Securities) means
the principal of such Indebtedness plus any applicable premium,
if any, on such Indebtedness.
"Property" or "property" means any right or interest in or to
property or assets of any kind whatsoever, whether real, personal
or mixed and whether tangible, intangible, contingent, indirect
or direct.
"Public Equity Offering" means an underwritten offering of
Common Stock of the Issuer for cash pursuant to an effective
registration statement under the Securities Act.
"Purchase Money Indebtedness" means any Indebtedness of such
Person to any seller or other Person incurred to finance the
acquisition (including in the case of a Capitalized Lease
14
Obligation, the lease) of any real or personal tangible property
which, in the reasonable good faith judgment of the Board of
Directors of the Issuer, is directly related to a Related
Business of the Issuer and which is incurred substantially
concurrently with such acquisition and is secured only by the
assets so financed.
"Qualified Capital Stock" means any Capital Stock of the Issuer
that is not Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or
Indebtedness of the Issuer issued on or after the Issue Date with
the Net Cash Proceeds received by the Issuer from the
substantially concurrent sale of Qualified Capital Stock or any
exchange of Qualified Capital Stock for any Capital Stock or
Indebtedness of the Issuer issued on or after the Issue Date.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to
Article III of this Indenture and Paragraph 5 in the form of
Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the redemption price for such redemption set
forth in Paragraph 5 in the form of Security, which shall include
in each case accrued and unpaid interest with respect to such
Security to the applicable Redemption Date.
"Reference Period" with regard to any Person means the four full
fiscal quarters of such Person for which financial information in
respect thereof is available ended on or immediately preceding
any date upon which any determination is to be made pursuant to
the terms of the Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified
Capital Stock (a) issued in exchange for, or the proceeds from
the issuance and sale of which are used substantially
concurrently to repay, redeem, defease, refund, refinance,
replace, discharge or otherwise retire for value, in whole or in
part, or (b) constituting an amendment, modification or
supplement to, or a deferral or renewal of ((a) and (b) above
are, collectively, a "Refinancing"), any Indebtedness or
Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to
exceed (after deduction of (i) reasonable and customary fees and
expenses incurred in connection with the Refinancing and (ii) any
premium or penalty for prepayment provided for in the instrument
governing the Indebtedness so refinanced or reasonably determined
by the Board of Directors of the Issuer as necessary to
accomplish such Refinancing by means of a tender offer or
privately negotiated transaction) the lesser of (i) the principal
amount or, in the case of Disqualified Capital Stock, liquidation
15
preference, of the Indebtedness or Disqualified Capital Stock so
Refinanced and (ii) if such Indebtedness being Refinanced was
issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of
such Refinancing; provided, that (A) such Refinancing
Indebtedness of any Subsidiary of the Issuer shall only be used
to refinance outstanding Indebtedness or Disqualified Capital
Stock of such Subsidiary, (B) such Refinancing Indebtedness shall
(x) not have an Average Life shorter than the Indebtedness or
Disqualified Capital Stock to be so refinanced at the time of
such Refinancing and (y) in all respects, be no less subordinated
or junior, if applicable, to the rights of Holders of the Notes
than was the Indebtedness or Disqualified Capital Stock to be
refinanced and (C) such Refinancing Indebtedness shall have a
final stated maturity or redemption date, as applicable, no
earlier than the final stated maturity or redemption date, as
applicable, of the Indebtedness or Disqualified Capital Stock to
be so refinanced.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Issuer, the Guarantors and the Initial
Purchaser, dated as of the Issue Date.
"Regulation S" means Regulation S under the Securities Act
(or any successor provision), as it may be amended from time to
time.
"Related Business" means the business conducted (or proposed to
be conducted) by the Issuer and its Subsidiaries as of the Issue
Date and any and all businesses that in the good faith judgment
of the Board of Directors of the Issuer are materially related
businesses.
"Restricted Global Security" has the meaning set forth in
Section 2.1.
"Restricted Payment" means, with respect to any Person, (a)
the declaration or payment of any dividend or other distribution
in respect of Equity Interests of such Person or any parent or
Subsidiary of such Person, (b) any payment on account of the
purchase, redemption or other acquisition or retirement for value
of Equity Interests of such Person or any Subsidiary or parent of
such Person, (c) other than with the proceeds from the
substantially concurrent sale of, or in exchange for, Refinancing
Indebtedness, any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment
of the terms of or any defeasance of, any Subordinated
Indebtedness, directly or indirectly, by such Person or a parent
or Subsidiary of such Person prior to the scheduled maturity, any
scheduled repayment of principal, or scheduled sinking fund
payment, as the case may be, of such Indebtedness and (d) any
Investment by such Person, other than a Permitted Investment;
provided, however, that the term "Restricted Payment" does not
include (i) any dividend, distribution or other payment on or
with respect to Equity Interests of an issuer to the extent
payable solely in shares of Qualified Capital Stock of such
issuer; or (ii) any dividend, distribution or other payment to
the Issuer, or to any of its Wholly Owned Subsidiaries, by the
Issuer or any of its Subsidiaries.
16
"Restricted Period" has the meaning set forth in Section
2.1.
"Restricted Securities" means the Restricted Global
Security, Other Securities and any successor Security, other than
(i) any Security issued upon a transfer or exchange for which a
certificate substantially in the form set forth in (a) Annex D is
required to be provided and is provided pursuant to Section
2.6(c)(3), (b) Annex E is required to be provided and is provided
pursuant to Section 2.6(c)(4) or (c) Annex G-2 is required to be
provided and is provided pursuant to Section 2.6(c)(6), (ii) any
Series B Note and (iii) any Security issued in exchange for or in
lieu of any Security specified in clause (i) or (ii) or any
Security issued in exchange therefor or in lieu thereof.
"Rule 144" means Rule 144 under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Rule 144A" means the Rule 144A under the Securities Act (or
any successor provision), as it may be amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities" or "Notes" means, prior to the Exchange Offer, the
Original Notes, and after the Exchange Offer, the Original Notes
(if any) and the Series B Notes, in each case as amended or
modified from time to time in accordance with the terms hereof,
issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with
respect to the Securities in global form, or any successor entity
thereto.
"Securityholder" See "Holder".
"Series B Notes" means the Series B 10 3/4% Senior Notes due
2007, in substantially the form set forth on the Form of Note set
forth as Exhibit A hereto, to be issued pursuant to this
Indenture in connection with the Exchange Offer.
"Stated Maturity," when used with respect to any Note, means
December 1, 2007.
"Subordinated Indebtedness" means Indebtedness of the Issuer or a
Guarantor that is subordinated in right of payment to the Notes
or such Guarantee, as applicable, in any respect or has a stated
maturity on or after the Stated Maturity.
"Subsidiary," with respect to any Person, means (i) a corporation
a majority of whose Equity Interests with voting power, under
ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by such Person, by such Person and
one or more Subsidiaries of such Person or by one or more
Subsidiaries of such Person, (ii) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of
such Person, or such Person and one or more Subsidiaries of such
Person, directly or indirectly, at the date of determination
thereof has at least majority ownership interest, or (iii) a
partnership in which such Person or a Subsidiary of such Person
is, at the time, a general partner. Notwithstanding the
foregoing, an Unrestricted Subsidiary shall not be a Subsidiary
of the Issuer or of any Subsidiary of the Issuer. Unless the
context requires otherwise, Subsidiary means each direct and
indirect Subsidiary of the Issuer.
17
"TES" means Total Energy Systems Limited, a company formed
under the laws of Australia.
"Temporary Regulation S Global Security" has the meaning set
forth in Section 2.1.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of the execution of this
Indenture, except as permitted in Section 9.3.
"Transferee Securities Certification" has the meaning set
forth in Section 2.6(c)(2).
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions
of this Indenture and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group) of the Trustee including any
vice president, assistant vice president, assistant secretary or
any other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by the persons
who at that time shall be such officers, and also means, with
respect to a particular corporate trust matter, any other officer
of the corporate trust department (or any successor group) of the
Trustee to whom such trust matter is referred because of his
knowledge of and familiarity with the particular subject.
"Unrestricted Subsidiary" means any subsidiary of the Issuer
that does not own any Capital Stock of, or own or hold any Lien
on any property of, the Issuer or any other Subsidiary of the
Issuer and that shall be designated an Unrestricted Subsidiary by
the Board of Directors of the Issuer; provided that (i) such
subsidiary shall not engage, to any substantial extent, in any
line or lines of business activity other than a Related Business,
(ii) neither immediately prior thereto nor after giving pro forma
effect to such designation would there exist a Default or Event
of Default and (iii) immediately after giving pro forma effect
thereto, the Issuer could incur at least $1.00 of Indebtedness
pursuant to the Debt Incurrence Ratio contained in Section 4.10.
The Board of Directors of the Issuer may designate any
Unrestricted Subsidiary to be a Subsidiary, provided, that (i) no
Default or Event of Default is existing or will occur as a
consequence thereof and (ii) immediately after giving effect to
such designation, on a pro forma basis, the Issuer could incur at
least $1.00 of Indebtedness pursuant to the Debt Incurrence Ratio
contained in Section 4.10. Each such designation shall be
18
evidenced by filing with the Trustee a certified copy of the
resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the
foregoing conditions.
"U.S. Government Obligations" means direct non-callable
obligations of, or noncallable obligations guaranteed by, the
United States of America for the payment of which obligation or
guarantee the full faith and credit of the United States of
America is pledged.
"Wholly Owned Subsidiary" means a Subsidiary all the Equity
Interests of which are owned by the Issuer or one or more wholly
owned Subsidiaries of the Issuer.
Section 1.2 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA,
such provision is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Issuer and
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or
defined by SEC rule and not otherwise defined herein have the
meanings assigned to them thereby.
Section 1.3 Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise
defined has the meaning assigned to it in accordance
with GAAP;
19
(iii) "or" is not exclusive;
(iv) words in the singular include the
plural, and words in the plural include the singular;
(v) provisions apply to successive events
and transactions;
(vi) "herein," "hereof" and other words of
similar import refer to this Indenture as a whole and
not to any particular Article, Section or other
subdivision; and
(vii) references to Sections or Articles
means reference to such Section or Article in this
Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating.
The Securities and the Trustee's certificate of authentication,
in respect thereof, shall be substantially in the form of Exhibit
A hereto which Exhibit is part of this Indenture. The Securities
may have notations, legends or endorsements required by law,
stock exchange rule or usage. The Issuer shall approve the form
of the Securities and any notation, legend or endorsement on
them. Any such notations, legends or endorsements not contained
in the form of Security attached as Exhibit A hereto shall be
delivered in writing to the Trustee. Each Security shall be
dated the date of its authentication.
The terms and provisions contained in the form of Securities
shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Issuer and the
Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound
thereby.
In certain cases described elsewhere herein, the legends set
forth in the first three paragraphs of Exhibit A may be omitted
from Securities issued hereunder.
Securities offered and sold in their initial distribution in
reliance on Regulation S shall be initially issued in the form of
temporary Global Securities in fully registered form without
interest coupons, substantially in the form of Security set forth
in Exhibit A, with such applicable legends as are provided for
therein. Such temporary Global Securities shall be registered in
the name of the Depository or its nominee and deposited with the
Trustee, at its corporate trust office, as Securities Custodian
for the Depository, duly executed by the Issuer and authenticated
20
by the Trustee as hereinafter provided, for credit by the
Depository to the respective accounts of the beneficial owners of
the Securities represented thereby (or such other accounts as
they may direct), provided that upon such deposit all such
Securities shall be credited to or through accounts maintained at
the Depository by or on behalf of Euroclear or CEDEL. Until such
time as the Restricted Period (as defined below) shall have
expired, such temporary Global Securities, together with their
successor Securities which are Global Securities other than the
Restricted Global Security, shall be referred to herein as a
"Temporary Regulation S Global Security". After such time as the
Restricted Period shall have expired and the certifications
referred to below in the next succeeding paragraph shall have
been provided, interests in such Temporary Regulation S Global
Securities shall be exchanged for interests in like Global
Securities, referred to herein collectively as the "Permanent
Regulation S Global Security", substantially in the form of
Security set forth in Exhibit A, with such applicable legends as
are provided for therein. Such Permanent Regulation S Global
Securities shall be registered in the name of the Depository or
its nominee and deposited with the Trustee, at its corporate
trust office, as Securities Custodian for the Depository, duly
executed by the Issuer and authenticated by the Trustee as
hereinafter provided, for credit to the respective accounts of
the beneficial owners of the Securities represented thereby (or
such other accounts as they may direct). The aggregate principal
amount of the Temporary Regulation S Global Security or the
Permanent Regulation S Global Security may be increased or
decreased from time to time by adjustments made on the records of
the Trustee, as custodian for the Depository, as hereinafter
provided. As used herein, the term "Restricted Period" means the
period of 40 days commencing on the day after the latest of (a)
the day on which the Securities are first offered to persons
other than distributors (as defined in Regulation S) in reliance
on Regulation S and (b) the Issue Date.
Interests in a Temporary Regulation S Global Security may be
exchanged for interests in a Permanent Regulation S Global
Security only after (a) the expiration of the Restricted Period,
(b) delivery by a beneficial owner of an interest therein to
Euroclear or CEDEL of a written certification (an "Owner
Securities Certification") substantially in the form of Annex A
hereto, and (c) upon delivery by Euroclear or CEDEL to the
Trustee of a written certification (a "Depository Securities
Certification") substantially in the form attached hereto as
Annex B. Upon satisfaction of such conditions, the Trustee will
exchange the portion of the Temporary Regulation S Global
Security covered by such certification for interests in a
Permanent Regulation S Global Security. The delivery by such
Holder of a beneficial interest in such Temporary Regulation S
Global Security of such certification shall constitute an
irrevocable instruction by such holder to Euroclear or CEDEL, as
the case may be, to exchange such Holder's beneficial interest in
the Temporary Regulation S Global Security for a beneficial
interest in the Permanent Regulation S Global Security upon the
expiration of the Restricted Period in accordance with the next
succeeding paragraph.
Upon:
(i) the expiration of the Restricted Period;
21
(ii) receipt by Euroclear or CEDEL, as the case may
be, of Owner Securities Certifications described in the
preceding paragraph;
(iii) receipt by the Depository of:
(1) written instructions given in
accordance with the Applicable Procedures from an Agent
Member directing the Depository to credit or cause to
be credited to a specified Agent Member's account a
beneficial interest in a Permanent Regulation S Global
Security in a principal amount equal to that of the
beneficial interest in a corresponding Temporary
Regulation S Global Security for which the necessary
certifications have been delivered; and
(2) a written order given in
accordance with the Applicable Procedures containing
information regarding the account of the Agent Member,
and the Euroclear or CEDEL account for which such Agent
Member's account is held, to be credited with, and the
account of the Agent Member to be debited for, such
beneficial interest; and
(iv) receipt by the Trustee of notification from the
Depository of the transactions described in (iii) above and
from Euroclear or CEDEL, as the case may be, of Depository
Securities Certifications,
the Trustee, as Registrar, shall instruct the Depository to
reduce the principal amount of such Temporary Regulation S Global
Security and to increase the principal amount of such Permanent
Regulation S Global Security, by the principal amount of the
beneficial interest in such Temporary Regulation S Global
Security to be so transferred, and to credit or cause to be
credited to the account of the person specified in such
instructions a beneficial interest in such Permanent Regulation S
Global Security having a principal amount equal to the amount by
which the principal amount of such Temporary Regulation S Global
Security was reduced upon such transfer.
Securities offered and sold in their initial distribution in
reliance on Rule 144A and to institutional "accredited investors"
as defined in Rule 501(a) (1), (2), (3) or (7) under the
Securities Act shall be issued in the form of one or more Global
Securities (collectively, and, together with their successor
Securities, the "Restricted Global Security") in fully registered
form without interest coupons, substantially in the form of
Security set forth in Exhibit A, with such applicable legends as
are provided for in Exhibit A, except as otherwise permitted
herein. Such Restricted Global Security shall be registered in
the name of the Depository or its nominee and deposited with the
Trustee, at its corporate trust office, as Securities Custodian
for the Depository, duly executed by the Issuer and authenticated
by the Trustee as hereinafter provided, for credit by the
Depository to the respective accounts of beneficial owners of the
Securities represented thereby (or such other accounts as they
may direct). The aggregate principal amount of the Restricted
Global Security may be increased or decreased from time to time
22
by adjustments made on the records of the Trustee, as custodian
for the Depository, in connection with a corresponding decrease
or increase in the aggregate principal amount of the Temporary
Regulation S Global Security or the Permanent Regulation S Global
Security, as hereinafter provided.
Securities offered and sold in their initial distribution
other than in reliance on Regulation S or Rule 144A and to
institutional "accredited investors" as defined in Rule 501(a)
(1), (2), (3) or (7) under the Securities Act (collectively,
"Other Securities") shall not be issued in the form of a Global
Security or in any other form intended to facilitate book-entry
trading in the beneficial interests of such Securities.
Section 2.2 Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one
Officer shall attest to, the Securities for the Issuer by manual
or facsimile signature.
If an Officer whose signature is on a Security was an Officer at
the time of such execution but no longer holds that office at the
time the Trustee authenticates the Security, the Security shall
be valid nevertheless and the Issuer shall nevertheless be bound
by the terms of the Securities and this Indenture.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on
the Security, but such signature shall be conclusive evidence
that the Security has been authenticated pursuant to the terms of
this Indenture.
The Trustee shall authenticate the Original Notes for
original issue in the aggregate principal amount of up to
$105,000,000 and shall authenticate Series B Notes for original
issue in the aggregate principal amount of up to $105,000,000, in
each case upon a written order of the Issuer in the form of an
Officers' Certificate; provided that such Series B Notes shall be
issuable only upon the valid surrender for cancellation of
Original Notes of a like aggregate principal amount in accordance
with the Registration Rights Agreement. The Officers'
Certificate shall specify the amount of Securities to be
authenticated and the date on which the Securities are to be
authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $105,000,000, except as
provided in Section 2.7. Upon the written order of the Issuer in
the form of an Officers' Certificate, the Trustee shall
authenticate Securities in substitution of Securities originally
issued to reflect any name change of the Issuer.
The Trustee may appoint an authenticating agent acceptable to the
Issuer to authenticate Securities. Unless otherwise provided in
the appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Issuer, any Affiliate of
the Issuer or any of its respective Subsidiaries.
23
Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple
thereof.
Section 2.3 Registrar and Paying Agent.
The Issuer shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be
presented for registration of transfer or for exchange
("Registrar") and an office or agency in the Borough of
Manhattan, The City of New York where Securities may be presented
for payment ("Paying Agent") and an office or agency where
notices and demands to or upon the Issuer in respect of the
Securities may be served. The Issuer may act as Registrar or
Paying Agent, except that, for the purposes of Articles III,
VIII, X and Section 4.13 neither the Issuer nor any Affiliate
thereof shall act as Paying Agent. The Registrar shall keep a
register of the Securities and of their transfer and exchange.
The Issuer may have one or more co-Registrars and one or more
additional Paying Agents. The term "Paying Agent" includes any
additional Paying Agent. The Issuer hereby initially appoints
the Trustee as Registrar and Paying Agent, and the Trustee hereby
initially agrees so to act.
The Issuer shall enter into an appropriate written agency
agreement with any Agent not a party to this Indenture, which
agreement shall implement the provisions of this Indenture that
relate to such Agent. The Issuer shall promptly notify the
Trustee in writing of the name and address of any such Agent. If
the Issuer fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
The Issuer initially appoints The Depository Trust Company
("DTC") to act as Depository with respect to the Global
Securities.
The Issuer initially appoints the Trustee to act as
Securities Custodian with respect to the Global Securities.
Section 2.4 Paying Agent to Hold Assets in Trust.
The Issuer shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in
trust for the benefit of Holders or the Trustee all assets held
by the Paying Agent for the payment of principal of, or interest
(and Liquidated Damages, if any) on, the Securities (whether such
assets have been distributed to it by the Issuer or any other
obligor on the Securities), and shall notify the Trustee in
writing of any Default by the Issuer (or any other obligor on the
Securities) in making any such payment. If either the Issuer or
any Subsidiary thereof acts as Paying Agent, it shall segregate
such assets and hold them as a separate trust fund for the
benefit of the Holders or the Trustee. The Issuer at any time
may require a Paying Agent to distribute all assets held by it to
the Trustee and account for any assets disbursed and the Trustee
may at any time during the continuance of any payment Default,
upon written request to a Paying Agent, require such Paying Agent
to distribute all assets held by it to the Trustee and to account
for any assets distributed. Upon distribution to the Trustee of
24
all assets that shall have been delivered by the Issuer to the
Paying Agent, the Paying Agent (if other than the Issuer) shall
have no further liability for such assets.
Section 2.5 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Holders. If the Trustee is not the
Registrar, the Issuer shall furnish to the Trustee on or before
the third Business Day preceding each Interest Payment Date and
at such other times as the Trustee may request in writing a list
in such form and as of such date as the Trustee reasonably may
require of the names and addresses of Holders.
Section 2.6 Transfer and Exchange.
(a) Global Securities. The provisions of clauses (1)
through (7) below shall apply only to Global Securities:
(1) Each Global Security authenticated
under this Indenture shall be registered in the name of
the Depository or a nominee thereof and delivered to
the Depository or a nominee thereof or custodian
therefor, and each such Global Security shall
constitute a single Security for all purposes of this
Indenture.
(2) Notwithstanding any other provision
in this Indenture, no Global Security may be exchanged
in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may
be registered, in the name of any Person other than the
Depository or a nominee thereof unless (A) the
Depository (i) has notified the Issuer that it is
unwilling or unable to continue as Depository for such
Global Security and the Issuer thereupon fails to
appoint a successor Depository within 90 days or (ii)
has ceased to be a clearing agency registered under the
Exchange Act, (B) the Issuer, at its option, notifies
the Trustee in writing that it elects to cause the
issuance of the Securities in definitive registered
certificated form, (C) there shall have occurred and be
continuing a Default or an Event of Default with
respect to the Securities evidenced by such Global
Security, or (D) pursuant to the following sentence.
Beneficial interests in a Global Security may, subject
to the restrictions on the transferability of the
Securities, be exchanged for certificated Securities
upon request but only upon at least 20 days' prior
written notice given to the Trustee by or on behalf of
the Depository (in accordance with the Depository's
customary procedures) and will bear the applicable
legends set forth in Exhibit A, provided that no
certificated Securities may be issued in exchange for a
Temporary Regulation S Global Security.
25
(3) If any Global Security is to be
exchanged for other Securities or cancelled in whole,
it shall be surrendered by or on behalf of the
Depository or its nominee to the Trustee, as Registrar,
for exchange or cancellation as provided in this
Article II. If any Global Security is to be exchanged
for other Securities or cancelled in part, or if
another Security is to be exchanged in whole or in part
for a beneficial interest in any Global Security, such
Global Security shall be so surrendered for exchange or
cancellation as provided in this Article II or, if the
Trustee is acting as Securities Custodian for the
Depository or its nominee (or is party to a similar
arrangement) with respect to such Global Security, the
principal amount thereof shall be reduced or increased
by an amount equal to the portion thereof to be so
exchanged or cancelled, or the principal amount of such
other Security to be so exchanged for a beneficial
interest therein, as the case may be, in each case by
means of an appropriate adjustment made on the records
of the Trustee, whereupon the Trustee, in accordance
with the Applicable Procedures, shall instruct the
Depository or its authorized representatives to make a
corresponding adjustment to its records (including by
crediting or debiting any Agent Member's account as
necessary to reflect any transfer or exchange of a
beneficial interest pursuant to Section 2.6(c)). Upon
any such surrender or adjustment of a Global Security,
the Trustee shall, subject to Section 2.6(a)(2) and as
otherwise provided in this Article II, authenticate and
deliver any Securities issuable in exchange for such
Global Security (or any portion thereof) to or upon the
order of, and registered in such names as may be
directed by, the Depository or its authorized
representative. Upon the request of the Trustee in
connection with the occurrence of any of the events
specified in the preceding paragraph, the Issuer shall
promptly make available to the Trustee a reasonable
supply of Securities that are not in the form of Global
Securities. The Trustee shall be entitled to rely upon
any order, direction or request of the Depository or
its authorized representative which is given or made
pursuant to this Article II if such order, direction or
request is given or made in accordance with the
Applicable Procedures.
(4) Every Security authenticated and
delivered upon registration of transfer of, or in
exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Article II,
Article X, Section 3.7, 4.13 or 9.5 or otherwise, shall
be authenticated and delivered in the form of, and
shall be, a Global Security, unless such Security is
registered in the name of a Person other than the
Depository or a nominee thereof.
(5) None of the Issuer, the Trustee,
any agent of the Trustee, any Paying Agent or the
Registrar will have any responsibility or liability for
any aspect of the Depository's records (or the records
of the participant of such Depository) relating to or
payments made on account of beneficial ownership
26
interests of a Global Security or for maintaining,
supervising or reviewing any records of the Depository
relating to such beneficial ownership interests.
(6) The registered Holder may grant
proxies and otherwise authorize any Person, including
Agent Members and Persons who may hold interests in
Agent Members, to take any action that such Holder is
entitled to take under this Indenture.
(7) Neither Agent Members nor any other
Person on whose behalf Agent Members may act shall have
any rights under this Indenture with respect to any
Global Security held on their behalf by the Depository
or under the Global Security, and the Depository may be
treated by the Issuer, the Trustee and any agent of the
Issuer or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall
prevent the Issuer, the Trustee or any agent of the
Issuer or the Trustee from giving effect to any written
certification, proxy or other authorization furnished
by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary
practices governing the exercise of the rights of a
Holder of any Security. With respect to any Global
Security deposited with the Trustee as custodian for
the Depository for credit to their respective accounts
(or to such other accounts as they may direct) at
Euroclear or CEDEL, the provisions of the "Operating
Procedures of the Euroclear System" and the "Terms and
Conditions Governing Use of Euroclear", and the
"Management Regulations" and "Instructions to
Participants" of CEDEL, respectively, shall be
applicable to such Global Security.
(b) Registration of Transfer and Exchange and Legends.
Upon surrender for registration of transfer of any Security at an
office or agency of the Issuer designated pursuant to Section 2.3
for such purpose in accordance with the terms hereof, the Issuer
shall, subject to the other provisions of this Section 2.6,
execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new
Securities of any authorized denominations and of a like tenor
and aggregate principal amount and bearing the applicable legends
set forth in Exhibit A.
Subject to Section 2.6(c), at the option of the Holder,
Securities may be exchanged for other Securities of any
authorized denominations and of a like tenor and aggregate
principal amount and bearing the applicable legends set forth in
the form of the Securities, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities
are so surrendered for exchange, the Issuer shall execute, and
the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
27
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the
Issuer, evidencing the same debt, and same benefits under this
Indenture, as the Securities surrendered upon such registration
of transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall be duly endorsed, or be
accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Registrar duly executed, by
the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to the Holder for any
registration of transfer or exchange of Securities, but the
Issuer may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Section 2.2, 2.10, 3.5, 4.13,
9.5 or 10.1.
The Issuer shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at
the opening of business 15 days before the day of the mailing of
a notice of redemption of Securities selected for redemption
under Article III and ending at the close of business on the day
of such mailing, or (ii) to register the transfer of or exchange
any Security so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in
part.
All Original Notes initially issued hereunder shall, upon
issuance, bear the legend specified in Exhibit A to be applied to
such a Security and such required legend shall not be removed
unless the Issuer shall have delivered to the Trustee (and the
Registrar, if other than the Trustee) an order in the form of an
Officers' Certificate which states that the Note may be issued
without such legend thereon. If such legend required for an
Original Note has been removed from a Security as provided above,
no other Security issued in exchange for all or any part of such
Security shall bear such legend, unless the Issuer has reasonable
cause to believe that such other Security is a "restricted
security" within the meaning of Rule 144 of the Securities Act
and instructs the Trustee to cause a legend to appear thereon.
(c) Certain Transfers and Exchanges. Upon presentation for
transfer or exchange of any Security at the office of the
Trustee, as Registrar, located in the Borough of Manhattan, The
City of New York, accompanied by a written instrument of transfer
or exchange in the form approved by the Issuer, executed by the
registered Holder, in person or by such Holder's attorney
hereunto duly authorized in writing, and upon compliance with
this Section 2.6, such Security shall be transferred upon the
Security register, and a new Security shall be authenticated and
issued in the name of the transferee. Notwithstanding any
provision to the contrary herein or in the Securities, transfers
of a Global Security, in whole or in part, and transfers of
interests therein of the kind described in this Section 2.6(c),
shall only be made in accordance with this Section 2.6(c).
Transfers and exchanges subject to this Section 2.6(c) shall also
be subject to the other provisions of this Indenture that are not
inconsistent with this Section 2.6(c).
28
(1) General. A Global Security may not
be transferred, in whole or in part, to any Person
other than the Depository or a nominee thereof, and no
such transfer to any such other Person may be
registered; provided, however, that this clause (1)
shall not prohibit any transfer of a Security that is
issued in exchange for a Global Security but is not
itself a Global Security. No transfer of a Security to
any Person shall be effective under this Indenture or
the Securities unless and until such Security has been
registered in the name of such Person. Nothing in this
clause (1) shall prohibit or render ineffective any
transfer of a beneficial interest in a Global Security
effected in accordance with the other provisions of
this Section 2.6(c).
(2) Temporary Regulation S Global
Security. If the holder of a beneficial interest in a
Temporary Regulation S Global Security wishes at any
time to transfer such interest to a Person who wishes
to take delivery thereof in the form of a beneficial
interest in such Temporary Regulation S Global
Security, such transfer may be effected, subject to the
rules and procedures of the Depository, Euroclear and
CEDEL, in each case to the extent applicable and as in
effect from time to time (the "Applicable Procedures"),
only in accordance with this clause (2). Upon delivery
(A) by a beneficial owner of an interest in a Temporary
Regulation S Global Security to Euroclear or CEDEL, as
the case may be, of an Owner Securities Certification,
(B) by the transferee of such beneficial interest in
the Temporary Regulation S Global Security to Euroclear
or CEDEL, as the case may be, of a written
certification (a "Transferee Securities Certification")
substantially in the form of Annex C hereto and (C) by
Euroclear or CEDEL, as the case may be, to the Trustee,
as Registrar, of a Depository Securities Certification,
the Trustee may direct either Euroclear or CEDEL, as
the case may be, to reflect on its records the transfer
of a beneficial interest in the Temporary Regulation S
Global Security from the beneficial owner providing the
Owner Securities Certification to the Person providing
the Transferee Securities Certification.
(3) Restricted Global Security to
Temporary Regulation S Global Security. If the holder
of a beneficial interest in the Restricted Global
Security wishes at any time to transfer such interest
to a Person who wishes to take delivery thereof in the
form of a beneficial interest in the Temporary
Regulation S Global Security, such transfer may be
effected, subject to the Applicable Procedures, only in
accordance with the provisions of this clause (3) and
clause (10) below. Upon receipt by the Trustee, as
Registrar, of (A) written instructions given by or on
behalf of the Depository in accordance with the
Applicable Procedures directing the Trustee to credit
or cause to be credited to a specified Agent Member's
account a beneficial interest in the Temporary
Regulation S Global Security in a specified principal
amount and to cause to be debited from another
specified Agent Member's account a beneficial interest
in the Restricted Global Security in an equal principal
amount and (B) a certificate in substantially the form
29
set forth in Annex D signed by or on behalf of the
holder of such beneficial interest in the Restricted
Global Security, the Trustee, as Registrar, shall,
subject to clause (10) below, reduce the principal
amount of the Restricted Global Security, and increase
the principal amount of the Temporary Regulation S
Global Security by such specified principal amount as
provided in Section 2.6(a)(3).
(4) Restricted Global Security to
Permanent Regulation S Global Security. If the holder
of a beneficial interest in the Restricted Global
Security wishes at any time to transfer such interest
to a Person who wishes to take delivery thereof in the
form of a beneficial interest in the Permanent
Regulation S Global Security, such transfer may be
effected, subject to the Applicable Procedures, only in
accordance with this clause (4). Upon receipt by the
Trustee, as Registrar, of (A) written instructions
given by or on behalf of the Depository in accordance
with the Applicable Procedures directing the Trustee to
credit or cause to be credited to a specified Agent
Member's account a beneficial interest in the Permanent
Regulation S Global Security in a specified principal
amount and to cause to be debited from another
specified Agent Member's account a beneficial interest
in the Restricted Global Security in an equal principal
amount and (B) a certificate in substantially the form
set forth in Annex E signed by or on behalf of the
holder of such beneficial interest in the Restricted
Global Security, the Trustee, as Registrar, shall
reduce the principal amount of a Restricted Global
Security, and increase the principal amount of the
Permanent Regulation S Global Security by such
specified principal amount as provided in Section
2.6(a)(3).
(5) Temporary Regulation S Global
Security or Permanent Regulation S Global Security to
Restricted Global Security. If the holder of a
beneficial interest in the Temporary Regulation S
Global Security or the Permanent Regulation S Global
Security at any time, wishes to transfer such interest
to a Person who wishes to take delivery thereof in the
form of a beneficial interest in the Restricted Global
Security, such transfer may be effected, subject to the
Applicable Procedures, only in accordance with this
clause (5) and clause (10) below; provided that with
respect to any transfer of a beneficial interest in a
Temporary Regulation S Global Security, the transferor
and Euroclear or CEDEL, as the case may be, must have
previously delivered an Owner Securities Certification
and a Depository Securities Certification respectively,
with respect to such beneficial interest. Upon receipt
by the Trustee, as Registrar, of (A) written
instructions given by or on behalf of the Depository
in accordance with the Applicable Procedures directing
the Trustee to credit or cause to be credited to a
specified Agent Member's account a beneficial interest
in the Restricted Global Security in a specified
principal amount and to cause to be debited from
another specified Agent Member's account a beneficial
interest in the Temporary Regulation S Global Security
or the Permanent Regulation S Global Security, as the
30
case may be, in an equal principal amount and (B) a
certificate in substantially the form set forth in
Annex F signed by or on behalf of the holder of such
beneficial interest in the Temporary Regulation S
Global Security or the Permanent Regulation S Global
Security, as the case may be, the Trustee, as
Registrar, shall, subject to clause (10) below, reduce
the principal amount of such Temporary Regulation S
Global Security or Permanent Regulation S Global
Security, as the case may be, and increase the
principal amount of the Restricted Global Security by
such specified principal amount as provided in Section
2.6(a)(3).
(6) Non-Global Restricted Security to
Global Security. If the holder of a Restricted
Security (other than a Global Security) wishes at any
time to transfer all or any portion of such Security to
a Person who wishes to take delivery thereof in the
form of a beneficial interest in the Restricted Global
Security, the Temporary Regulation S Global Security or
the Permanent Regulation S Global Security, such
transfer may be effected, subject to the Applicable
Procedures, only in accordance with this clause (6) and
clause (10) below. Upon receipt by the Trustee, as
Registrar, of (A) such Security and written
instructions given by or on behalf of such Holder as
provided in Section 2.6(b) directing the Trustee to
credit or cause to be credited to a specified Agent
Member's account a beneficial interest in the
Restricted Global Security, the Temporary Regulation S
Global Security or the Permanent Regulation S Global
Security, as the case may be, in a specified principal
amount equal to the principal amount of the Restricted
Security (or portion thereof) to be so transferred, and
(B) an appropriately completed certificate
substantially in the form set forth in Annex G-1
hereto, if the specified account is to be credited with
a beneficial interest in the Restricted Global
Security, or Annex G-2 hereto, if the specified account
is to be credited with a beneficial interest in the
Temporary Regulation S Global Security or the Permanent
Regulation S Global Security, signed by or on behalf of
such Holder, then the Trustee, as Registrar, shall,
subject to clause (10) below, cancel such Restricted
(and issue a new Security in respect of any
untransferred portion thereof) as provided in Section
2.6(b) and increase the principal amount of the
Restricted Global Security, Temporary Regulation S
Global Security or Permanent Regulation S Global
Security, as the case may be, by the specified
principal amount as provided in Section 2.6(a)(3).
(7) Non-Global Permanent Regulation S
Security to Restricted Global Security or Permanent
Regulation S Global Security. If the Holder of a
Permanent Regulation S Security (other than a Global
Security) wishes at any time to transfer all or any
portion of such Security to a Person who wishes to take
delivery thereof in the form of a beneficial interest
in the Restricted Global Security or the Permanent
Regulation S Global Security, as the case may be, such
transfer may be effected only in accordance with this
clause (7) and subject to the Applicable Procedures.
31
Upon receipt by the Trustee, as Registrar, of (A) such
Security and instructions given by or on behalf of such
Holder as provided in Section 2.6(b) directing the
Trustee to credit or cause to be credited to a
specified Agent Member's account a beneficial interest
in the Restricted Global Security or the Permanent
Regulation S Global Security, as the case may be, in a
principal amount equal to the principal amount of the
Security (or portion thereof) to be so transferred, and
(B)(i) with respect to a transfer which is to be
delivered in the form of a beneficial interest in the
Restricted Global Security, a certificate in
substantially the form set forth in Annex H-1, signed
by or on behalf of such Holder, and (ii) with respect
to a transfer which is to be delivered in the form of a
beneficial interest in the Permanent Regulation S
Global Security, a certificate in substantially the
form set forth in Annex H-2, signed by or on behalf of
such Holder, then the Trustee, as Registrar, shall,
subject to clause (9) below, cancel such Security (and
issue a new Security in respect of any untransferred
portion thereof) as provided in Section 2.6 (b) and
increase the principal amount of the Restricted Global
Security, or the Permanent Regulation S Global
Security, as the case may be, by the specified
principal as provided in Section 2.6(a)(3).
(8) Restricted Global Security to
Restricted Global Security. If the holder of a
beneficial interest in the Restricted Global Security
representing Notes originally sold to institutional
"accredited investors" wishes at any time to transfer
such interest to a Person who wishes to take delivery
thereof in the form of a beneficial interest in the
Restricted Global Security representing Notes
originally sold to qualified institutional buyers under
Rule 144A or vice versa, such transfer may be effected,
subject to the Applicable Procedures, only in
accordance with the provisions of this clause (8).
Upon receipt by the Trustee, as Registrar, of (A)
written instructions given by or on behalf of the
Depository in accordance with the Applicable Procedures
directing the Trustee to credit or cause to be credited
to a specified Agent Member's account a beneficial
interest in such Restricted Global Security in a
specified principal amount and to cause to be debited
from another specified Agent Member's account a
beneficial interest in the other Restricted Global
Security in an equal principal amount and (B) a
certificate in substantially the form set forth in
Annex I signed by or on behalf of the holder of such
transferred beneficial interest in the Restricted
Global Security, the Trustee, as Registrar, shall
reduce the principal amount of such Restricted Global
Security, and increase the principal amount of the
other Restricted Global Security by such specified
principal amount as provided in Section 2.6(a)(3).
(9) Other Exchanges. Securities that
are not Global Securities may be exchanged (on
transfer or otherwise) for Securities that are not
Global Securities or for beneficial interests in a
32
Global Security (if any is then outstanding) only in
accordance with such procedures, which shall be
substantially consistent with the provisions of clauses
(1) through (8) above (including the certification
requirements intended to insure that transfers of
beneficial interests in a Global Security comply with
Rule 144A, Rule 144 or Regulation S, or are to
institutional "accredited investors" as defined in Rule
501(a) (1), (2), (3) or (7) under the Securities Act,
as the case may be) and any Applicable Procedures, as
may be from time to time adopted by the Issuer and the
Trustee.
(10) Interests in Temporary Regulation
S Global Security to be Held Through Euroclear or
CEDEL. Until the later of the expiration of the
Restricted Period and the provision of the Owner
Securities Certification and the Depository Securities
Certification, beneficial interests in any Temporary
Regulation S Global Security may be held only in or
through accounts maintained at the Depository by
Euroclear or CEDEL (or by Agent Members acting for the
account thereof).
Section 2.7 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims and submits an affidavit or other
evidence, satisfactory to the Trustee, to the Trustee to the
effect that the Security has been lost, destroyed or wrongfully
taken, the Issuer shall issue and the Trustee shall authenticate
a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Issuer, such Holder must provide
an indemnity bond or other indemnity, sufficient in the judgment
of both the Issuer and the Trustee, to protect the Issuer, the
Trustee or any Agent from any loss which any of them may suffer
if a Security is replaced. The Issuer may charge such Holder for
its reasonable, out-of-pocket expenses in replacing a Security.
Every replacement Security is an additional obligation of
the Issuer.
Section 2.8 Outstanding Securities.
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee except those cancelled by
it, those delivered to it for cancellation, those reductions in
the interest in a Global Security effected by the Trustee
hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because
the Issuer or an Affiliate of the Issuer holds the Security,
except as provided in Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be
outstanding unless the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser. A
mutilated Security ceases to be outstanding upon surrender of
such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent
(other than the Issuer or an Affiliate of the Issuer) holds cash
sufficient to pay all of the principal and interest (and
Liquidated Damages, if any) due on the Securities payable on that
33
date and payment of the Securities called for redemption is not
otherwise prohibited, then on and after that date such Securities
cease to be outstanding and interest on them ceases to accrue.
Section 2.9 Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment,
supplement, waiver or consent, Securities owned by the Issuer,
any Guarantor and Affiliates of the Issuer or of any Guarantor
shall be disregarded, except that, for the purposes of
determining whether the Trustee shall be protected in relying on
any such direction, amendment, supplement, waiver or consent,
only Securities that a Trust Officer of the Trustee actually
knows are so owned shall be disregarded.
Section 2.10 Temporary Securities.
Until definitive Securities are ready for delivery, the Issuer
may prepare, the Guarantors shall endorse and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have
variations that the Issuer reasonably and in good faith considers
appropriate for temporary Securities. Without unreasonable
delay, the Issuer shall prepare, the Guarantors shall endorse and
the Trustee shall authenticate definitive Securities in exchange
for temporary Securities. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and
delivered hereunder.
Section 2.11 Cancellation.
The Issuer at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward
to the Trustee any Securities surrendered to them for transfer,
exchange or payment. The Trustee, or at the direction of the
Trustee, the Registrar or the Paying Agent (other than the Issuer
or an Affiliate of the Issuer), and no one else, shall cancel
and, at the written direction of the Issuer, shall dispose of all
Securities surrendered for transfer, exchange, payment or
cancellation in accordance with its customary procedures.
Subject to Section 2.7, the Issuer may not issue new Securities
to replace Securities it has paid or delivered to the Trustee for
cancellation. No Securities shall be authenticated in lieu of or
in exchange for any Securities cancelled as provided in this
Section 2.11, except as expressly permitted in the form of
Securities and as permitted by this Indenture.
Section 2.12 Defaulted Interest.
If the Issuer defaults in a payment of interest (and Liquidated
Damages, if any) on the Securities, the Issuer shall pay the
defaulted interest (and Liquidated Damages, if any), plus (to the
extent lawful) interest on the defaulted interest (and Liquidated
Damages, if any), to the persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day next
34
preceding the date fixed by the Issuer for the payment of
defaulted interest, whether or not such day is a Business Day,
unless the Trustee fixes another record date. At least 15 days
before the subsequent special record date, the Issuer shall mail
to each Holder with a copy to the Trustee a notice that states
the subsequent special record date, the payment date and the
amount of defaulted interest (and Liquidated Damages, if any),
and interest payable on such defaulted interest (and Liquidated
Damages), if any, to be paid. The Issuer may also pay defaulted
interest in any other lawful manner.
Section 2.13 CUSIP Numbers.
The Issuer in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on
the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
The Issuer will promptly notify the Trustee of any change in the
CUSIP numbers.
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption.
Redemption of Securities shall be made only in accordance with
this Article III. At its election, the Issuer may redeem the
Securities in whole or in part, at any time or from time to time
on or after December 1, 2002, at the Redemption Prices specified
under the caption "Redemption," in the Form of Note attached as
Exhibit A hereto, plus accrued but unpaid interest (and
Liquidated Damages, if any) to the Redemption Date. Except as
provided in this paragraph and Paragraph 5 of the Securities, the
Securities may not otherwise be redeemed at the option of the
Issuer.
Until December 1, 2000, upon a Public Equity Offering of
common stock of the Issuer for cash, up to $35 million aggregate
principal amount of the Securities may be redeemed at the option
of the Issuer within 120 days of such Public Equity Offering, on
not less than 30 days, but not more than 60 days, notice to each
Holder of the Securities to be redeemed, with cash from the Net
Cash Proceeds of such Public Equity Offering, at 110.75% of
principal (subject to the right of Holders of record on a Record
Date to receive interest due on an Interest Payment Date that is
on or prior to such Redemption Date) together with accrued and
unpaid interest and Liquidated Damages, if any, to the date of
redemption; provided, however, that immediately following such
redemption not less than $65 million aggregate principal amount
of the Securities are outstanding.
35
Section 3.2 Notices to Trustee.
If the Issuer elects to redeem Securities pursuant to this
Article III, the Issuer shall notify the Trustee in writing of
the date on which the Notes are to be redeemed ("Redemption
Date") and the principal amount of Securities to be redeemed and
whether the Issuer wants the Trustee to give notice of redemption
to the Holders in the name of and at the expense of the Issuer.
If the Issuer elects to reduce the principal amount of Securities
to be redeemed pursuant to Paragraph 5 of the Securities by
crediting against any such redemption Securities it has not
previously delivered to the Trustee for cancellation, it shall so
notify the Trustee of the amount of the reduction and deliver
such Securities with such notice.
The Issuer shall give each notice to the Trustee provided
for in this Section 3.2 at least 45 days before the Redemption
Date.
Section 3.3 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed
pursuant to Paragraph 5 thereof, the Trustee shall select from
among such Securities to be redeemed pro rata, by lot or by such
other method as the Trustee shall determine to be fair and
appropriate and in such manner as complies with any applicable
legal and stock exchange requirements.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall
promptly notify the Issuer in writing of the Securities selected
for redemption and, in the case of any Security selected for
partial redemption, the principal amount thereof to be redeemed.
Securities in denominations of $1,000 may be redeemed only in
whole. The Trustee may select for redemption portions (equal to
$1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000.
Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for
redemption.
Section 3.4 Notice of Redemption.
At least 30 days but not more than 60 days before a
Redemption Date, the Issuer shall mail a notice of redemption by
first class mail, postage prepaid, to each Holder whose
Securities are to be redeemed. At the Issuer's request, the
Trustee shall give the notice of redemption in the Issuer's name
and at the Issuer's expense. Each notice for redemption shall
identify the Securities to be redeemed and shall state:
36
(1) the Redemption Date;
(2) the Redemption Price, including the
amount of accrued but unpaid interest (and Liquidated
Damages, if any) to be paid upon such redemption;
(3) the name, address and telephone
number of the Paying Agent;
(4) that Securities called for
redemption must be surrendered to the Paying Agent at
the address specified in such notice to collect the
Redemption Price;
(5) that, unless the Issuer defaults in
its obligation to deposit cash with the Paying Agent in
accordance with Section 3.6 hereof, interest on
Securities called for redemption ceases to accrue on
and after the Redemption Date and the only remaining
right of the Holders of such Securities is to receive
payment of the Redemption Price, including accrued but
unpaid interest (and Liquidated Damages, if any), upon
surrender to the Paying Agent of the Securities called
for redemption and to be redeemed;
(6) if any Security is being redeemed
in part, the portion of the principal amount, equal to
$1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption
Date, and upon surrender of such Security, a new
Security or Securities in aggregate principal amount
equal to the unredeemed portion thereof will be issued;
(7) if less than all the Securities are
to be redeemed, the identification of the particular
Securities (or portion thereof) to be redeemed, as well
as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of
Securities to be outstanding after such partial
redemption;
(8) the CUSIP number of the Securities
to be redeemed; and
(9) that the notice is being sent
pursuant to this Section 3.4 and pursuant to the
optional redemption provisions of Paragraph 5 of the
Securities.
37
Section 3.5 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with
Section 3.4, Securities called for redemption become due and
payable on the Redemption Date and at the Redemption Price,
including accrued but unpaid interest (and Liquidated Damages, if
any). Upon surrender to the Trustee or Paying Agent, such
Securities called for redemption shall be paid at the Redemption
Price, including interest (and Liquidated Damages, if any), if
any, accrued to and unpaid on the Redemption Date; provided that
if the Redemption Date is after a regular Record Date and on or
prior to the Interest Payment Date, the accrued interest (and
Liquidated Damages, if any) shall be payable to the Holder of the
redeemed Securities registered on the relevant Record Date; and
provided, further, that if a Redemption Date is a Legal Holiday,
payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to
such succeeding Business Day.
Section 3.6 Deposit of Redemption Price.
On or before the Redemption Date, the Issuer shall deposit with
the Paying Agent (other than the Issuer or an Affiliate of the
Issuer) cash sufficient to pay the Redemption Price of, including
accrued but unpaid interest (and Liquidated Damages, if any) on,
all Securities to be redeemed on such Redemption Date (other than
Securities or portions thereof called for redemption on that date
that have been delivered by the Issuer to the Trustee for
cancellation). The Paying Agent shall promptly return to the
Issuer any cash so deposited which is not required for that
purpose upon the written request of the Issuer.
If the Issuer complies with the preceding paragraph and the
other provisions of this Article III and payment of the
Securities called for redemption is not otherwise prohibited,
interest on the Securities to be redeemed will cease to accrue on
the applicable Redemption Date, whether or not such Securities
are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the
manner provided in the Securities shall not be so paid upon
surrender for redemption because of the failure of the Issuer to
comply with the preceding paragraph and the other provisions of
this Article III, interest shall continue to accrue and be paid
from the Redemption Date until such payment is made on the unpaid
principal, and, to the extent lawful, on any interest not paid on
such unpaid principal, in each case at the rate and in the manner
provided in Section 4.1 hereof and the Securities.
Section 3.7 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part,
the Issuer shall execute and the Trustee shall authenticate and
deliver to the Holder, without service charge, a new Security or
Securities equal in principal amount to the unredeemed portion of
the Security surrendered.
38
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities.
The Issuer shall pay the principal of and interest (and
Liquidated Damages, if any) on the Securities on the dates and in
the manner provided in the Securities and this Indenture. An
installment of principal of or interest (and Liquidated Damages,
if any) on the Securities shall be considered paid on the date it
is due if the Trustee or Paying Agent (other than the Issuer or
an Affiliate of the Issuer) holds for the benefit of the Holders,
on or before 10:00 a.m. New York City time on that date, cash
deposited and designated for and sufficient to pay the
installment.
The Issuer shall pay interest on overdue principal and on
overdue installments of interest (and Liquidated Damages, if any)
at the rate specified in the Securities compounded semi-annually,
to the extent lawful.
Section 4.2 Maintenance of Office or Agency.
The Issuer and the Guarantors shall maintain in the Borough
of Manhattan, The City of New York, an office or agency where
Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Issuer and
the Guarantors in respect of the Securities and this Indenture
may be served. The Issuer and the Guarantors shall give prompt
written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the
Issuer and the Guarantors shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the address of the Trustee
set forth in Section 12.2.
The Issuer and the Guarantors may also from time to time
designate one or more other offices or agencies where the
Securities may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall
in any manner relieve the Issuer and the Guarantors of their
obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes. The Issuer
and the Guarantors shall give prompt written notice to the
Trustee of any such designation or rescission and of any change
in the location of any such other office or agency. The Issuer
and the Guarantors hereby initially designate the corporate trust
office of the Trustee as such office.
Section 4.3 Limitation on Restricted Payments.
The Issuer and the Guarantors will not, and will not permit
any of their Subsidiaries to, directly or indirectly, make any
39
Restricted Payment if, after giving effect to such Restricted
Payment on a pro forma basis, (1) a Default or an Event of
Default shall have occurred and be continuing, (2) the Issuer is
not permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt Incurrence Ratio contained in Section 4.10
or (3) the aggregate amount of all Restricted Payments made by
the Issuer and its Subsidiaries, including after giving effect to
such proposed Restricted Payment, from and after the Issue Date,
would exceed the sum of (a) 50% of the aggregate Consolidated Net
Income of the Issuer and its Consolidated Subsidiaries for the
period (taken as one accounting period), commencing on the first
day of the first full fiscal quarter commencing after the Issue
Date, to and including the last day of the fiscal quarter ended
immediately prior to the date of each such calculation (or, in
the event Consolidated Net Income for such period is a deficit,
then minus 100% of such deficit), plus (b) the aggregate Net Cash
Proceeds received by the Issuer from the sale of its Qualified
Capital Stock (other than (i) to a Subsidiary of the Issuer and
(ii) to the extent applied in connection with a Qualified
Exchange) after the Issue Date.
The immediately preceding paragraph, however, will not
prohibit (x) payments to LSB pursuant to the Management
Agreement, the Services Agreement and the Tax Sharing Agreement,
each as in effect on the Issue Date, (y) a Qualified Exchange or
(z) the payment of any dividend on Qualified Capital Stock within
60 days after the date of its declaration if such dividend could
have been made on the date of such declaration in compliance with
the foregoing provisions. The full amount of any Restricted
Payment made pursuant to clause (z) (but not pursuant to clauses
(x) and (y)) of the immediately preceding sentence, however, will
be deducted in the calculation of the aggregate amount of
Restricted Payments available to be made referred to in clause
(3) of the immediately preceding paragraph.
Section 4.4 Corporate Existence.
The Issuer and the Guarantors shall do or cause to be done
all things necessary to preserve and keep in full force and
effect their corporate existence and the corporate or other
existence of each of their Subsidiaries in accordance with the
respective organizational documents of each of them and the
rights (charter and statutory) and corporate franchises of the
Issuer and the Guarantors and each of their Subsidiaries;
provided, however, that neither the Issuer nor any of the
Guarantors shall be required to preserve, with respect to itself,
any right or franchise, and with respect to any of their
Subsidiaries, any such existence, right or franchise, if (a) the
Board of Directors of the Issuer shall determine reasonably and
in good faith that the preservation thereof is no longer
desirable in the conduct of the business of the Issuer and (b)
the loss thereof is not disadvantageous in any material respect
to the Holders.
Section 4.5 Payment of Taxes and Other Claims.
The Issuer and the Guarantors shall, and shall cause each of
their Subsidiaries to, pay or discharge or cause to be paid or
discharged, (i) all taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and
additions to taxes) levied or imposed upon the Issuer, any
Guarantor or any of their Subsidiaries or properties and assets
40
of the Issuer, any Guarantor or any of their Subsidiaries and
(ii) all lawful claims, whether for labor, materials, supplies,
services or anything else, which have become due and payable and
which by law have or may become a Lien upon the property and
assets of the Issuer, any Guarantor or any of their Subsidiaries;
provided, however, that neither the Issuer nor any Guarantor
shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which disputed amounts
adequate reserves have been established in accordance with GAAP.
Section 4.6 Compliance Certificate; Notice of Default.
(a) The Issuer shall deliver to the Trustee within 120 days
after the end of its fiscal year an Officers' Certificate, one of
the signers of which shall be the principal executive, financial
or accounting officer of the Issuer, complying (whether or not
required) with Section 314(a)(4) of the TIA and stating that a
review of its activities and the activities of its Subsidiaries
during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining
whether the Issuer has kept, observed, performed and fulfilled
its obligations (without regard to notice requirements or grace
periods) under this Indenture and further stating, as to each
such Officer signing such certificate, whether or not the signer
knows of any failure by the Issuer, any Guarantor or any
Subsidiary of the Issuer or any Guarantor to comply with any
conditions or covenants in this Indenture and, if such signer
does know of such a failure to comply, the certificate shall
describe such failure with particularity. The Officers'
Certificate shall also notify the Trustee should the relevant
fiscal year end on any date other than the current fiscal year
end date.
(b) So long as not contrary to the then current
recommendation of the American Institute of Certified Public
Accountants, the Issuer shall deliver to the Trustee within 120
days after the end of its fiscal year a written report of a firm
of independent certified public accountants with an established
national reputation stating that in conducting its audit for such
fiscal year, nothing has come to its attention that caused it to
believe that the Issuer or any Subsidiary of the Issuer were not
in compliance with the provisions set forth in Section 4.3, 4.10
or 4.13 or Article X of this Indenture.
(c) The Issuer shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware
of any Default or Event of Default under this Indenture, an
Officers' Certificate specifying such Default or Event of Default
and what action the Issuer is taking or proposes to take with
respect thereto. The Trustee shall not be deemed to have
knowledge of a Default or an Event of Default unless one of its
Trust Officers receives notice of the Default giving rise thereto
from the Issuer or any of the Holders.
41
Section 4.7 Reports.
Whether or not the Issuer is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the
Issuer shall deliver to the Trustee and to each Holder on the
date it is or would have been (if it were subject to such
reporting obligations) required to furnish such with the
Commission, subject to any extension as allowed under the
Exchange Act, and to each prospective Holder who so requests,
annual and quarterly financial statements substantially
equivalent to financial statements that would have been included
in reports filed with the Commission, if the Issuer were subject
to the requirements of Section 13 or 15(d) of the Exchange Act,
including, in each case, a management's discussion and analysis
of financial condition and results of operations and, with
respect to annual information only, a report thereon by the
Issuer's certified independent public accountants. In addition,
the Issuer will file such reports with the Commission, whether or
not the Issuer is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, provided the Commission
will accept such filings.
Section 4.8 Waiver of Stay, Extension or Usury Laws.
The Issuer and each Guarantor covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law or other
law wherever enacted which would prohibit or forgive the Issuer
or any Guarantor from paying all or any portion of the principal
of or interest (and Liquidated Damages, if any) on the Securities
as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that they may
lawfully do so) the Issuer and each Guarantor hereby expressly
waives all benefit or advantage of any such law insofar as such
law applies to the Securities, and covenants that it shall not
hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
Section 4.9 Limitation on Transactions with Affiliates.
Neither the Issuer nor any of its Subsidiaries will be
permitted on or after the Issue Date to enter into or suffer to
exist any contract, agreement, arrangement or transaction with
any Affiliate (an "Affiliate Transaction"), or any series of
related Affiliate Transactions, (other than Exempted Affiliate
Transactions) (i) unless it is determined that the terms of such
Affiliate Transaction are fair and reasonable to the Issuer, and
no less favorable to the Issuer than could have been obtained in
an arm's length transaction with a non-Affiliate, and (ii) if
involving consideration to either party in excess of $2.5
million, unless such Affiliate Transaction(s) is evidenced by an
Officers' Certificate addressed and delivered to the Trustee
certifying that such Affiliate Transaction (or Transactions) has
been approved by a majority of the members of the Board of
Directors that are disinterested in such transaction and (iii) if
involving consideration to either party in excess of $5 million,
unless in addition the Issuer, prior to the consummation thereof,
obtains a written favorable opinion as to the fairness of such
42
transaction to the Issuer from a financial point of view from an
accounting, appraisal or investment banking firm of national
reputation. A member of the Board of Directors of the Issuer
that is a non-employee director of LSB will be deemed
disinterested for purposes of this covenant. For purposes of
compliance with clauses (ii) and (iii) above, total consideration
for a series of related Affiliate Transactions involving
purchases or sales entered into in the ordinary course of
business will only include purchases or sales made in the last
twelve months ended on the date of the most recent purchase.
Section 4.10 Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock.
The Issuer and the Guarantors will not, and will not permit
any of their Subsidiaries to, directly or indirectly, issue,
assume, guaranty, incur, become directly or indirectly liable
with respect to (including as a result of an Acquisition), or
otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an
"incurrence"), any Indebtedness or any Disqualified Capital Stock
(including Acquired Indebtedness) other than Permitted
Indebtedness. Notwithstanding the foregoing, if (i) no Default or
Event of Default shall have occurred and be continuing at the
time of, or would occur after giving effect on a pro forma basis
to, such incurrence of Indebtedness or Disqualified Capital Stock
and (ii) on the date of such incurrence (the "Incurrence Date"),
the Consolidated Coverage Ratio of the Issuer for the Reference
Period immediately preceding the Incurrence Date, after giving
effect on a pro forma basis to such incurrence of such
Indebtedness or Disqualified Capital Stock and, to the extent set
forth in the definition of Consolidated Coverage Ratio, the use
of proceeds thereof, would be at least 2.0 to l, or, for an
Incurrence Date after January 1, 2000, at least 2.25 to 1(each, a
"Debt Incurrence Ratio"), then the Issuer may incur such
Indebtedness or Disqualified Capital Stock and the Guarantors may
incur such Indebtedness.
Indebtedness or Disqualified Capital Stock of any Person
which is outstanding at the time such Person becomes a Subsidiary
of the Issuer (including upon designation of any subsidiary or
other Person as a Subsidiary) or is merged with or into or
consolidated with the Issuer or a Subsidiary of the Issuer shall
be deemed to have been incurred at the time such person becomes
such a Subsidiary of the Issuer or is merged with or into or
consolidated with the Issuer or a Subsidiary of the Issuer, as
applicable.
Section 4.11 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Issuer and the Guarantors will not, and will not permit any
of their Subsidiaries to, directly or indirectly, create, assume
or suffer to exist any consensual restriction on the ability of
any Subsidiary of the Issuer to pay dividends or make other
distributions to or on behalf of, or to pay any obligation to or
on behalf of, or otherwise to transfer assets or property to or
on behalf of, or make or pay loans or advances to or on behalf
of, the Issuer or any Subsidiary of the Issuer, except (a)
43
restrictions imposed by the Notes or the Indenture, (b)
restrictions imposed by applicable law, (c) existing restrictions
on the Issue Date under the Loan & Security Agreement (Rail Tank
Cars) dated as of September 25, 1995, as amended through the
Issue Date, the Loan & Security Agreement (DSN Plan) dated as of
October 31, 1994, as amended through the Issue Date and the Loan
& Security Agreement (Mixed Acid Plant) dated April 5, 1995, as
amended through the Issue Date, each between DSN Corporation and
the CIT Group/Equipment Financing, Inc. and the credit agreement,
dated December 19, 1996, as amended through the Issue Date,
between TES and the Bank of New Zealand, (d) restrictions under
any Acquired Indebtedness not incurred in violation of the
Indenture or any agreement relating to any property, asset, or
business acquired by the Issuer or any of its Subsidiaries, which
restrictions in each case existed at the time of acquisition,
were not put in place in connection with or in anticipation of
such acquisition and are not applicable to any Person, other than
the Person acquired, or to any property, asset or business, other
than the property, assets and business so acquired, (e) any such
restriction or requirement imposed by Indebtedness incurred under
paragraph (b) of the definition of "Permitted
Indebtedness" provided such restriction or requirement is no more
restrictive than that imposed by the Credit Agreement as of the
Issue Date, (f) restrictions with respect solely to a Subsidiary
of the Issuer imposed pursuant to a binding agreement which has
been entered into for the sale or disposition of all or
substantially all of the Equity Interests or assets of such
Subsidiary, provided such restrictions apply solely to the Equity
Interests or assets of such Subsidiary which are being sold, and
(g) in connection with and pursuant to permitted Refinancings,
replacements of restrictions imposed pursuant to clauses (a), (c)
or (d) of this paragraph that are not more restrictive than those
being replaced and do not apply to any other Person or assets
than those that would have been covered by the restrictions in
the Indebtedness so refinanced. Notwithstanding the foregoing,
neither (a) customary provisions restricting subletting or
assignment of any lease entered into in the ordinary course of
business, consistent with industry practice, nor (b) Liens
permitted under the terms of the Indenture shall in and of
themselves be considered a restriction on the ability of the
applicable Subsidiary to transfer such agreement or assets, as
the case may be.
Section 4.12 Limitation on Liens Securing Indebtedness.
The Issuer and the Guarantors will not, and will not permit
any of their Subsidiaries to, create, incur, assume or suffer to
exist any Lien of any kind, other than Permitted Liens, upon any
of their respective assets now owned or acquired on or after the
date of the Indenture or upon any income or profits therefrom
(any such Lien, the "Initial Lien"), unless the Issuer provides,
and causes its Subsidiaries to provide, concurrently therewith,
that the Notes are equally and ratably so secured, provided that,
if such Indebtedness is Subordinated Indebtedness, the Initial
Lien securing such Subordinated Indebtedness shall be subordinate
and junior to the Lien securing the Notes with the same relative
priority as such Subordinated Indebtedness shall have with
respect to the Notes. Any such Lien thereby created in favor of
the Notes will be automatically and unconditionally released and
discharged upon the release and discharge of the Initial Lien to
which it relates.
44
Section 4.13 Limitation on Sale of Assets and Subsidiary
Stock.
The Issuer and the Guarantors will not, and will not permit
any of their Subsidiaries to convey, sell, transfer, assign or
otherwise dispose of, directly or indirectly, any of its
property, business or assets, including by merger or
consolidation (in the case of a Guarantor or a Subsidiary of the
Issuer), and including any sale or other transfer or issuance of
any Equity Interests of any Subsidiary of the Issuer, whether by
the Issuer or a Subsidiary or through the issuance, sale or
transfer of Equity Interests by a Subsidiary of the Issuer, and
including any sale and leaseback transaction, in a single
transaction or through a series of related transactions (any of
the foregoing, an "Asset Sale"), unless (l)(a) within 270 days
after the date of such Asset Sale, the Net Cash Proceeds
therefrom (the "Asset Sale Offer Amount") are applied to the
optional redemption of the Notes in accordance with the terms
hereof or to the repurchase of the Notes pursuant to an
irrevocable, unconditional cash offer (the "Asset Sale Offer") to
repurchase Notes at a purchase price of 100% of principal amount
(the "Asset Sale Offer Price") together with accrued and unpaid
interest and Liquidated Damages, if any, to the date of payment,
made within 240 days of such Asset Sale or (b) within 240 days
following such Asset Sale, the Asset Sale Offer Amount is (i)
invested (or committed, pursuant to a binding commitment subject
only to reasonable, customary closing conditions, to be invested,
and in fact is so invested, within an additional 90 days) in
assets and property (other than notes, bonds, obligation and
securities, except in connection with the acquisition of a Wholly
Owned Subsidiary) which in the good faith reasonable judgment of
the Board will immediately constitute or be a part of a Related
Business of the Issuer or such Subsidiary (if it continues to be
a Subsidiary) immediately following such transaction or (ii) used
to reduce Indebtedness permitted pursuant to paragraph (b) of the
definition "Permitted Indebtedness," (2) at least 85% of the
total consideration received for such Asset Sale or series of
related Asset Sales consists of Cash or Cash Equivalents, (3) no
Default or Event of Default shall have occurred and be continuing
at the time of, or would occur after giving effect, on a pro
forma basis, to, such Asset Sale, and (4) the Board of Directors
of the Issuer determines in good faith that the Issuer or such
Subsidiary, as applicable, receives fair market value for such
Asset Sale.
An acquisition of Notes pursuant to an Asset Sale Offer may
be deferred until the accumulated Net Cash Proceeds from Asset
Sales not applied to the uses set forth in (l) above (the "Excess
Proceeds") exceeds $5 million and that each Asset Sale Offer
shall remain open for 20 Business Days following its commencement
(the "Asset Sale Offer Period"). Upon expiration of the Asset
Sale Offer Period, the Issuer shall apply the Asset Sale Offer
Amount plus an amount equal to accrued and unpaid interest and
Liquidated Damages, if any, to the purchase of all Notes properly
tendered (on a pro rata basis if the Asset Sale Offer Amount is
insufficient to purchase all Notes so tendered) at the Asset Sale
Offer Price (together with accrued interest). To the extent that
the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Asset Sale Offer Amount, the Issuer may
use any remaining Net Cash Proceeds for general corporate
purposes as otherwise permitted by this Indenture and following
each Asset Sale Offer the Excess Proceeds amount shall be reset
to zero. For purposes of (2) above, total consideration received
means the total consideration received for such Asset Sales minus
45
the amount of (a) Indebtedness which is not Subordinated
Indebtedness assumed by a transferee which assumption permanently
reduces the amount of Indebtedness outstanding on the Issue Date
or permitted pursuant to paragraph (d), (e) or (f) of the
definition "Permitted Indebtedness" and (b) property that within
30 days of such Asset Sale is converted into Cash or Cash
Equivalents).
Notwithstanding the foregoing provisions of the prior two
paragraphs:
(i) the Issuer and its Subsidiaries may, in
the ordinary course of business, convey, sell,
transfer, assign or otherwise dispose of inventory
acquired and held for resale in the ordinary course of
business;
(ii) the Issuer and its Subsidiaries may
convey, sell, transfer, assign or otherwise dispose of
accounts receivable and notes receivable consistent
with past practice for face value;
(iii) the Issuer and its Subsidiaries may
convey, sell, transfer, assign or otherwise dispose of
assets pursuant to and in accordance with Article V;
(iv) the Issuer and its Subsidiaries may
sell or dispose of damaged, worn out or other obsolete
property in the ordinary course of business so long as
such property is no longer necessary for the proper
conduct of the business of the Issuer or such
Subsidiary, as applicable;
(v) the Issuer and its Subsidiaries may
convey, sell, transfer, assign or otherwise dispose of
assets to the Issuer or any of its wholly owned
Guarantors;
(vi) the Issuer and its Subsidiaries may
grant Liens not prohibited by this Indenture; and
(vii) the Issuer and its Subsidiaries may
convey, sell, transfer, assign or otherwise dispose of
assets having a value of $1 million or less in a single
transaction or a series of related transactions.
All Net Cash Proceeds from an Event of Loss shall be invested in
the business of the Issuer, used for prepayment of Indebtedness,
or used to repurchase Notes, all within the period and as
otherwise provided above in clause (1) (a) or (1) (b) of the
first paragraph of this section.
In addition to the foregoing, the Issuer will not, and will
not permit any Subsidiary to, directly or indirectly make any
Asset Sale of any of the Equity Interests of any Subsidiary
except (i) pursuant to an Asset Sale of all the Equity Interests
46
of such Subsidiary or (ii) pursuant to an Asset Sale of shares of
common stock of TES with no preferences or special rights or
privileges and with no redemption or prepayment privileges,
provided that after such sale the Issuer or its Subsidiaries own
at least 50% of the voting and economic interest of the Capital
Stock of TES.
Notwithstanding the foregoing provisions, the Issuer or TES
may contribute all or substantially all the assets or Equity
Interests of TES to a joint venture in which the Issuer or its
Subsidiaries own no less than 50% of the voting and economic
interests.Notice of an Asset Sale Offer shall be sent, on or
prior to the commencement of the Asset Sale Offer, by first-class
mail, by the Issuer to each Holder at its registered address,
with a copy to the Trustee. The Asset Sale Offer shall remain
open for at least 20 Business Days following its commencement.
The notice to the Holders shall contain all information,
instructions and materials required by applicable law or
otherwise material to such Holders' decision to tender Securities
pursuant to the Asset Sale Offer. The notice, which (to the
extent consistent with this Indenture) shall govern the terms of
an Asset Sale Offer, shall state:
(1) that the Asset Sale Offer is being
made pursuant to such notice and this Section 4.13;
(2) the Asset Sale Offer Amount, the
Asset Sale Offer Price (including the amount of accrued
but unpaid interest (and Liquidated Damages, if any)),
and the date of purchase;
(3) that any Security or portion
thereof not tendered or accepted for payment will
continue to accrue interest if interest is then
accruing;
(4) that, unless the Issuer defaults in
depositing cash with the Paying Agent (which may not
for purposes of this Section 4.13, notwithstanding
anything in this Indenture to the contrary, be the
Issuer or any Affiliate of the Issuer) in accordance
with the last paragraph of this clause, any Security,
or portion thereof, accepted for payment pursuant to
the Asset Sale Offer shall cease to accrue interest
after the Asset Sale Purchase Date;
(5) that Holders electing to have a
Security, or portion thereof, purchased pursuant to an
Asset Sale Offer will be required to surrender their
Security, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Security
completed, to the Paying Agent (which may not for
purposes of this Section 4.13, notwithstanding any
other provision of this Indenture, be the Issuer or any
Affiliate of the Issuer) at the address specified in
the notice;
(6) that Holders will be entitled to
withdraw their elections, in whole or in part, if the
Paying Agent receives, prior to the expiration of the
47
Asset Sale Offer, a facsimile transmission or letter
setting forth the name of the Holder, the principal
amount of the Securities the Holder is withdrawing and
a statement containing a facsimile signature and
stating that such Holder is withdrawing his election to
have such principal amount of Securities purchased;
(7) that if Securities in a principal
amount in excess of the principal amount of Securities
to be acquired pursuant to the Asset Sale Offer are
tendered and not withdrawn, the Issuer shall purchase
Securities on a pro rata basis (with such adjustments
as may be deemed appropriate by the Issuer so that only
Securities in denominations of $1,000 or integral
multiples of $1,000 shall be acquired);
(8) that Holders whose Securities were
purchased only in part will be issued new Securities
equal in principal amount to the unpurchased portion of
the Securities surrendered; and
(9) the circumstances and relevant
facts regarding such Asset Sale.
The Issuer agrees that any Asset Sale Offer will be made in
compliance with all applicable laws, rules and regulations,
including, if applicable, Regulation 14E under the Exchange Act
and the rules thereunder and all other applicable Federal and
state securities laws. To the extent that the provisions of any
securities laws or regulations conflict with the terms hereof,
the Issuer shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations hereunder or the Notes by virtue thereof.
On or before the date of purchase of Securities pursuant to an
Asset Sale Offer, the Issuer shall (i) accept for payment
Securities or portions thereof properly tendered pursuant to the
Asset Sale Offer (on a pro rata basis if required pursuant to
paragraph (7) above), (ii) deposit with the Paying Agent cash
sufficient to pay the Asset Sale Offer Price for all Securities
or portions thereof so accepted and (iii) deliver to the Trustee
Securities so accepted together with an Officers' Certificate
setting forth the Securities or portions thereof being purchased
by the Issuer. The Paying Agent shall promptly mail or deliver
to Holders of Securities so accepted payment in an amount equal
to the Asset Sale Offer Price for such Securities, and the
Trustee shall promptly authenticate and mail or deliver to such
Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities
not so accepted shall be promptly mailed or delivered by the
Issuer to the Holder thereof.
Section 4.14 Limitation on Lines of Business.
Neither the Issuer nor any of its Subsidiaries shall directly or
indirectly engage to any substantial extent in any line or lines
of business activity other than that which, in the reasonable
good faith judgment of the Board of Directors of the Issuer, is a
Related Business.
48
Section 4.15 Limitation on Status as Investment Company.
None of the Issuer or any of its Subsidiaries shall become
required to be registered as an "investment company" (as that
term is defined in the Investment Company Act of 1940, as
amended), or otherwise become subject to regulation under the
Investment Company Act.
Section 4.16 Future Subsidiary Guarantors.
All present Subsidiaries (except for El Dorado Nitrogen Company)
and future Subsidiaries of the Issuer jointly and severally will
guaranty irrevocably and unconditionally all principal, premium,
if any, and interest and Liquidated Damages, if any, on the Notes
on a senior basis in accordance with Article XI hereof.
Section 4.17 Payments for Consent.
Neither the Issuer nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any holder of any Notes for
or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture, the Notes or the
Guarantees unless such consideration is offered to be paid or
agreed to be paid to all holders of the Notes who so consent,
waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or
agreement, which solicitation documents must be mailed to all
Holders of the Notes a reasonable amount of time prior to the
expiration of such solicitation.
Section 4.18 Limitation on Sale and Leaseback Transactions.
The Issuer will not, and will not permit any Subsidiary to,
directly or indirectly, enter into any sale and leaseback
transaction unless (a) immediately after giving pro forma effect
to such sale and leaseback transaction (the Attributable Value of
such sale and leaseback transaction being deemed to be
Indebtedness of the Issuer, if not otherwise treated so pursuant
to the definition of Indebtedness), the Issuer could incur at
least $1.00 of additional Indebtedness pursuant to the Debt
Incurrence Ratio set forth in Section 4.10 and (b) such sale and
leaseback transaction complies with Section 4.13.
Section 4.19 LSB Note. On the Issue Date, the Issuer will
enter into a Note in form of Exhibit C.
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ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 Limitation on Merger, Sale or Consolidation.
The Issuer will not, directly or indirectly, consolidate with or
merge with or into another Person or sell, lease, convey or
transfer all or substantially all of its assets (computed on a
consolidated basis), whether in a single transaction or a series
of related transactions, to another Person or group of affiliated
Persons or adopt a Plan of Liquidation, unless (i) either (a) the
Issuer is the continuing entity or (b) the resulting, surviving
or transferee entity or, in the case of a Plan of Liquidation,
the entity which receives the greatest value from such Plan of
Liquidation is a corporation organized under the laws of the
United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the
obligations of the Issuer in connection with the Notes and the
Indenture; (ii) no Default or Event of Default shall exist or
shall occur immediately after giving effect on a pro forma basis
to such transaction; (iii) immediately after giving effect to
such transaction on a pro forma basis, the Consolidated Net Worth
of the resulting, surviving or transferee entity or, in the case
of a Plan of Liquidation, the entity which receives the greatest
value from such Plan of Liquidation is at least equal to the
Consolidated Net Worth of the Issuer immediately prior to such
transaction; and (iv) immediately after giving effect to such
transaction on a pro forma basis, the resulting, surviving or
transferee entity or, in the case of a Plan of Liquidation, the
entity which receives the greatest value from such Plan of
Liquidation would immediately thereafter be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Debt
Incurrence Ratio set forth in Section 4.10.
On or prior to the consummation of the proposed transaction,
the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, conveyance, transfer,
lease or disposition and such supplemental indenture executed in
connection therewith complies with this Indenture. The Trustee
shall be entitled to conclusively rely upon such Officers'
Certificate and Opinion of Counsel.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of all or substantially all of the
properties and assets of one or more Subsidiaries, the Issuer's
interest in which constitutes all or substantially all of the
properties and assets of the Issuer shall be deemed to be the
transfer of all or substantially all of the properties and assets
of the Issuer.
Section 5.2 Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Issuer or consummation of
a Plan of Liquidation in accordance with the foregoing, the
successor corporation formed by such consolidation or into which
the Issuer is merged or to which such transfer is made or, in the
case of a Plan of Liquidation, the entity which receives the
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greatest value from such Plan of Liquidation shall succeed to,
and be substituted for, and may exercise every right and power
of, the Issuer, under the Indenture with the same effect as if
such successor corporation had been named therein as the Issuer,
and the Issuer shall be released from the obligations under the
Notes and the Indenture except with respect to any obligations
that arise from, or are related to, such transaction.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default
and whether it shall be caused voluntarily or involuntarily or
effected, without limitation, by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) the failure by the Issuer to pay
any installment of interest or Liquidated Damages on
the Securities as and when the same becomes due and
payable and the continuance of any such failure for 30
days;
(2) the failure by the Issuer to pay
all or any part of the principal, or premium, if any,
on the Securities when and as the same becomes due and
payable at maturity, redemption, by acceleration or
otherwise, including, without limitation, payment of
the Change of Control Purchase Price or the Asset Sale
Offer Price, or otherwise;
(3) the failure by the Issuer or any
Subsidiary to observe or perform any other covenant or
agreement contained in the Notes or the Indenture and
the continuance of such failure for a period of 30 days
after written notice is given to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders
of at least 25% in aggregate principal amount of the
Notes outstanding;
(4) a decree, judgment, or order by a
court of competent jurisdiction shall have been entered
adjudicating the Issuer or any Subsidiary as bankrupt
or insolvent, or approving as properly filed a petition
seeking reorganization of the Issuer or any Subsidiary
under any bankruptcy or similar law, and such decree or
order shall have continued undischarged and unstayed
for a period of 60 consecutive days; or a decree or
order of a court of competent jurisdiction, judgment
appointing a receiver, liquidator, trustee, or assignee
in bankruptcy or insolvency for the Issuer, any
Subsidiary, or any substantial part of the property of
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any such person, or for the winding up or liquidation
of the affairs of any such person, shall have been
entered, and such decree, judgment, or order shall have
remained in force undischarged and unstayed for a
period of 60 days;
(5) the Issuer or any Subsidiary shall
institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a
petition or answer or consent seeking reorganization
under any bankruptcy or similar law or similar statute,
or shall consent to the filing of any such petition, or
shall consent to the appointment of a Custodian,
receiver, liquidator, trustee, or assignee in
bankruptcy or insolvency of it or any substantial part
of its assets or property, or shall make a general
assignment for the benefit of creditors, or shall admit
in writing its inability to pay its debts as they
become due;
(6) a default in Indebtedness of the
Issuer or any Subsidiary with an aggregate principal
amount in excess of $5 million at any one time (a)
resulting from the failure to pay any principal or
interest or (b) as a result of which the maturity of
such Indebtedness has been accelerated prior to its
stated maturity; and
(7) final unsatisfied judgments not
covered by insurance aggregating in excess of
$5 million, at any one time rendered against the Issuer
or any of its Subsidiaries and such judgment is not
stayed, bonded or discharged within 60 days.
Section 6.2 Acceleration of Maturity Date; Rescission and
Annulment.
If an Event of Default occurs and is continuing (other than
an Event of Default specified in clauses (4) and (5) of Section
6.1, relating to the Issuer or any Subsidiary) then in every such
case, unless the principal of all of the Securities shall have
already become due and payable, either the Trustee or the Holders
of 25% in aggregate principal amount of the Securities then
outstanding, by notice in writing to the Issuer (and to the
Trustee if given by Holders) (an "Acceleration Notice"), may
declare all principal and premium, if any, determined as set
forth below, and accrued and unpaid interest and Liquidated
Damages, if any, thereon to be due and payable immediately. If
an Event of Default specified in clauses (4) and (5) above
relating to the Issuer or any Subsidiary occurs, all principal
and premium, if any, and accrued interest and Liquidated Damages,
if any, thereon will be immediately due and payable on all
outstanding Securities without any declaration or other act on
the part of Trustee or the Holders.
In the case of any Event of Default occurring by reason of
any willful action (or inaction) taken (or not taken) by or on
behalf of the Issuer with the intention of avoiding payment of
the premium that the Issuer would have had to pay if the Issuer
then had elected to redeem the Notes pursuant to the optional
redemption provisions of the Indenture, an equivalent premium
shall also become and be immediately due and payable to the
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extent permitted by law upon the acceleration of the Notes. If
an Event of Default occurs prior to December 1, 2002 by reason of
any willful action (or inaction) taken (or not taken) by or on
behalf of the Issuer with the principal intention of avoiding the
prohibition on redemption of the Notes prior to December 1, 2002,
then the premium below (expressed as a percentage principal
amount) for each of the years beginning on December 1, shall also
become immediately due and payable to the extent permitted by law
upon the acceleration of the Notes.
Year Percentage
1997 114.335%
1998 112.543%
1999 110.751%
2000 108.959%
2001 107.167%
The Trustee shall have no obligation to undertake any
investigation of or make any determination of, or assert, willful
action or inaction by the Issuer.
At any time after such a declaration of acceleration being made
and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter provided in this
Article VI, the Holders of a majority in aggregate principal
amount of then outstanding Securities, by written notice to the
Issuer and the Trustee, may rescind, on behalf of all Holders,
any such declaration of acceleration if:
(1) the Issuer has paid or deposited
with the Trustee a sum sufficient to pay
(A) all overdue interest (and
Liquidated Damages, if any) on all
Securities,
(B) the principal of (and
premium, if any, applicable to) any
Securities which would become due otherwise
than by such declaration of acceleration, and
interest thereon at the rate borne by the
Securities,
(C) to the extent that
payment of such interest is lawful, interest
upon overdue interest (and Liquidated
Damages, if any) at the rate borne by the
Securities,
(D) all sums paid or advanced
by the Trustee hereunder and the
compensation, expenses, disbursements and
advances of the Trustee, its agents and
counsel, and
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(2) all Events of Default, other than
the non-payment of amounts which have become due solely
by such declaration of acceleration, have been cured or
waived as provided in Section 6.12.
Notwithstanding the previous sentence of this Section 6.2,
no waiver shall be effective for any Event of Default or event
which with notice or lapse of time or both would be an Event of
Default with respect to any covenant or provision which cannot be
modified or amended (i) without the consent of the Holder of each
outstanding Security, unless all such affected Holders agree, in
writing, to waive such Event of Default or other event or (ii)
without the consent of Holders of a supermajority in aggregate
principal amount of then outstanding Securities, unless such
Holders agree in writing, to waive such Event of Default or other
event. No such waiver shall cure or waive any subsequent default
or impair any right consequent thereon.
Section 6.3 Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Issuer covenants that if an Event of Default in payment
of principal, premium, or interest (and Liquidated Damages, if
any) specified in Section 6.1(1) or (2) occurs and is continuing,
the Issuer shall, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then
due and payable on such Securities for principal, premium (if
any) and interest (and Liquidated Damages, if any), and, to the
extent that payment of such interest shall be legally
enforceable, interest on any overdue principal (and premium, if
any) and on any overdue interest (and Liquidated Damages, if
any), at the rate borne by the Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the
reasonable costs and expenses of collection, including
compensation to, and expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Issuer fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express
trust in favor of the Holders, may institute a judicial
proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may
enforce the same against the Issuer or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the
Issuer or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights
and the rights of the Holders by such appropriate judicial
proceedings as the Trustee shall deem most effective to protect
and enforce any such rights, whether for the specific enforcement
of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other
proper remedy.
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Section 6.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Issuer
or any other obligor upon the Securities or the property of the
Issuer or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall
then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made
any demand on the Issuer for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise to take any and all actions under
the TIA, including
(i) to file and prove a claim for the whole
amount of principal (and premium, if any) and interest
(and Liquidated Damages, if any) owing and unpaid in
respect of the Securities and to file such other papers
or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent
and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or
other property payable or deliverable on any such
claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment, or
composition affecting the Securities or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 6.5 Trustee May Enforce Claims Without Possession
of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or the production thereof
in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as
trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of
compensation to, and expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment
has been recovered.
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Section 6.6 Priorities.
Any money collected by the Trustee pursuant to this Article VI
shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such
money on account of principal, premium (if any) or interest (and
Liquidated Damages, if any), upon presentation of the Securities
and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7;
SECOND: To the Holders in payment of the amounts then due and
unpaid for principal of, premium (if any) and interest (and
Liquidated Damages, if any) on, the Securities in respect of
which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to
the amounts due and payable on such Securities for principal,
premium (if any) and interest (and Liquidated Damages, if any),
respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
Section 6.7 Limitation on Suits.
No Holder of any Security shall have any right to order or direct
the Trustee to institute any proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(A) such Holder has
previously given written notice to the
Trustee of a continuing Event of Default;
(B) the Holders of not less
than 25% in principal amount of then
outstanding Securities shall have made
written request to the Trustee to institute
proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(C) such Holder or Holders
have offered to the Trustee reasonable
security or indemnity against the costs,
expenses and liabilities to be incurred or
reasonably probable to be incurred in
compliance with such request;
(D) the Trustee for 60 days
after its receipt of such notice, request and
offer of indemnity has failed to institute
any such proceeding; and
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(E) no direction inconsistent
with such written request has been given to
the Trustee during such 60-day period by the
Holders of a majority in principal amount of
the outstanding Securities;
it being understood and intended that no one or more Holders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other Holders, or to obtain or to
seek to obtain priority or preference over any other Holders or
to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all the
Holders.
Section 6.8 Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision of this Indenture, the Holder
of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and
premium (if any) and interest (and Liquidated Damages, if any)
on, such Security on the Maturity Dates or Interest Payment
Dates, as applicable, of such payments as expressed in such
Security (in the case of redemption, the Redemption Price on the
Redemption Date; in the case of a Change of Control, the Change
of Control Purchase Price, on the Change of Control Purchase
Date; and in the case of an Asset Sale, the Asset Sale Offer
Price on the relevant purchase date); and to institute suit for
the enforcement of any such payment, and such rights shall not be
impaired without the consent of such Holder.
Section 6.9 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in
Section 2.7, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any
Security to exercise any right or remedy arising upon any Event
of Default shall impair the exercise of any such right or remedy
or constitute a waiver of any such Event of Default. Every right
and remedy given by this Article VI or by law to the Trustee or
to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.
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Section 6.11 Control by Holders.
The Holder or Holders of a majority in aggregate principal amount
of then outstanding Securities shall have the right to direct the
time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power
conferred upon the Trustee, provided that
(1) such direction shall not be in
conflict with any rule of law or with this Indenture,
(2) the Trustee shall not determine
that the action so directed would be unjustly
prejudicial to the Holders not taking part in such
direction, and
(3) the Trustee may take any other
action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.12 Waiver of Past Default.
Subject to Section 6.8, the Holder or Holders of not less than a
majority in aggregate principal amount of the outstanding
Securities may, by written notice to the Trustee on behalf of all
Holders, prior to the declaration of the maturity of the
Securities, waive any past default hereunder and its
consequences, except a default
(A) in the payment of the
principal of, premium, if any, or interest
(and Liquidated Damages, if any) on, any
Security as specified in clauses (1) and (2)
of Section 6.1,
(B) in respect of a covenant
or provision hereof which, under Article IX,
cannot be modified or amended without the
consent of the Holder of each outstanding
Security affected, or
(C) in respect of a covenant
or provision hereof which, under Article IX,
cannot be modified or amended without the
consent of Holders of a supermajority in
aggregate principal amount of the then
outstanding Securities, in which case such
waiver shall require the consent of such
Holders.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other default or impair the
exercise of any right arising therefrom.
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Section 6.13 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken, suffered
or omitted to be taken by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees and expenses, against
any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 6.13 shall not apply
to any suit instituted by the Issuer, to any suit instituted by
the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in aggregate
principal amount of the outstanding Securities, or to any suit
instituted by any Holder for enforcement of the payment of
principal of, or premium (if any) or interest (and Liquidated
Damages, if any) on, any Security on or after the Maturity Date
of such Security.
Section 6.14 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or
has been determined adversely to the Trustee or to such Holder,
then and in every case, subject to any determination in such
proceeding, the Issuer, the Guarantors, the Trustee and the
Holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies
of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein
expressed.
Section 7.1 Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of a Default or an Event
of Default:
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(1) The Trustee need perform only those
duties as are specifically set forth in this Indenture
and no others, and no covenants or obligations shall be
implied in or read into this Indenture which are
adverse to the Trustee.
(2) In the absence of bad faith on its
part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the
opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case
of any such certificates or opinions which by any
provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own grossly negligent action, its own grossly negligent failure
to act, or its own willful misconduct, except that:
(i) This subsection does not limit the
effect of subsection (b) of this Section 7.1.
(ii) The Trustee shall not be liable for any
error of judgment made in good faith by a Trust
Officer, unless it is proved that the Trustee was
grossly negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with
respect to any action it takes or omits to take in good
faith in accordance with a direction received by it
pursuant to Section 6.12.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or to take or omit to take any action under this
Indenture or at the request, order or direction of the Holders or
in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to subsections (a), (b), (c)
and (d) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any
assets received by it except as the Trustee may agree in writing
with the Issuer. Assets held in trust by the Trustee need not be
segregated from other assets except to the extent required by
law.
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Section 7.2 Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may conclusively rely on any document
believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact
or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel of its selection and may require an
Officers' Certificate or an Opinion of Counsel, which shall
conform to Sections 12.4 and 12.5. The Trustee shall not be
liable for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of
any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized
or within its rights or powers.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, notice, request,
direction, consent, order, bond, debenture, or other paper or
document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it
may see fit.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Holders, pursuant to
the provisions of this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein
or thereby.
(g) Except with respect to Section 4.1, the Trustee shall
have no duty to inquire as to the performance of the Issuer's
covenants in Article IV hereof. In addition, the Trustee shall
not be deemed to have knowledge of any Default or Event of
Default except (i) any Event of Default occurring pursuant to
Sections 6.1(1), 6.1(2) and 4.1, or (ii) any Default or Event of
Default of which the Trustee shall have received written
notification or obtained actual knowledge.
Section 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with
the Issuer, any Guarantor, any of their respective Subsidiaries,
or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and
7.11.
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Section 7.4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities and it shall not be
accountable for the Issuer's use of the proceeds from the
Securities, and it shall not be responsible for any statement in
the Securities (other than the Trustee's certificate of
authentication) or for the use or application of any funds
received by a Paying Agent other than the Trustee.
Section 7.5 Notice of Default.
If a Default or an Event of Default occurs and is continuing
and if it is actually known to the Trustee, the Trustee shall
mail to each Securityholder notice of the uncured Default or
Event of Default within 90 days after such Default or Event of
Default occurs. Except in the case of a Default or an Event of
Default in payment of principal (or premium, if any) of, or
interest (and Liquidated Damages, if any) on, any Security
(including the payment of the Change of Control Purchase Price on
the Change of Control Purchase Date, the Redemption Price on the
Redemption Date, and the Asset Sale Offer Price on the relevant
purchase date), the Trustee may withhold the notice if and so
long as the board of directors, the executive committee or a
trust committee of directors and/or a Trust Officer of the
Trustee in good faith determines that withholding the notice is
in the interest of the Securityholders.
Section 7.6 Reports by Trustee to Holders.
If required by law, within 60 days after each January 31
beginning with the January 31 following the date of this
Indenture, the Trustee shall mail to each Securityholder a brief
report dated as of such January 31 that complies with TIA Section
313(a). If required by law, the Trustee also shall comply with
TIA Sections 313(b) and 313(c).
The Issuer shall promptly notify the Trustee in writing if
the Securities become listed on any stock exchange or automatic
quotation system.
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Issuer and filed with the
SEC and each stock exchange, if any, on which the Securities are
listed.
Section 7.7 Compensation and Indemnity.
The Issuer shall pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Issuer and
the Trustee for its services. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an
express trust. The Issuer shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances
incurred or made by it. Such expenses shall include the
reasonable compensation, disbursements, fees and expenses of the
Trustee's agents, accountants, experts and counsel.
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The Issuer shall indemnify the Trustee (in its capacity as
Trustee, Registrar and Paying Agent) and each of its officers,
directors, attorneys-in-fact and agents for, and hold it harmless
against, any claims, loss, damage, demand, fee, expense
(including but not limited to reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel),
loss or liability incurred by them without negligence or bad
faith on their part, arising out of or in connection with the
acceptance or administration of this trust and their rights or
duties hereunder including the reasonable costs and expenses of
defending themselves against any claim or liability in connection
with the exercise or performance of any of their powers or duties
hereunder. The Trustee shall notify the Issuer promptly of any
claim asserted against the Trustee for which it may seek
indemnity. The Issuer shall defend the claim with counsel
satisfactory to the Trustee and the Trustee shall provide
reasonable cooperation at the Issuer's expense in the defense.
The Trustee may have separate counsel and the Issuer shall pay
the reasonable fees and expenses of such counsel; provided, that
the Issuer will not be required to pay such fees and expenses if
it assumes the Trustee's defense (with the Trustee's reasonable
consent) and there is no conflict of interest between the Issuer
and the Trustee in connection with such defense. The Issuer need
not pay for any settlement made without its written consent. The
Issuer need not reimburse any expense or indemnify against any
loss or liability to the extent incurred by the Trustee through
its gross negligence, bad faith or willful misconduct, subject to
the exceptions contained in Section 7.1(c) hereof.
To secure the Issuer's payment obligations in this Section
7.7, the Trustee shall have a lien prior to the Securities on all
assets held or collected by the Trustee, in its capacity as
Trustee, except assets held in trust to pay principal and
premium, if any, of or interest (and Liquidated Damages, if any)
on particular Securities.
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.1(4) or (5) occurs,
the expenses and the compensation for the services are intended
to constitute expenses of administration under any Bankruptcy
Law.
The Issuer's obligations under this Section 7.7 and any lien
arising hereunder shall survive the resignation or removal of the
Trustee, the discharge of the Issuer's obligations pursuant to
Article VIII of this Indenture and any rejection or termination
of this Indenture under any Bankruptcy Law.
Section 7.8 Replacement of Trustee.
The Trustee may resign by so notifying the Issuer in
writing. The Holder or Holders of a majority in principal amount
of the outstanding Securities may remove the Trustee by so
notifying the Issuer and the Trustee in writing and may appoint a
successor trustee with the Issuer's consent. The Issuer may
remove the Trustee if:
(1) the Trustee fails to comply with
Section 7.10;
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(2) the Trustee is adjudged bankrupt or
insolvent;
(3) a receiver, Custodian, or other
public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of
acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Issuer shall promptly
appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holder or Holders of a majority in
principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Issuer.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer.
Immediately after that and provided that all sums owing to the
Trustee provided for in Section 7.7 have been paid, the retiring
Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.7,
the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A
successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee,
the Issuer or the Holder or Holders of at least 10% in principal
amount of the outstanding Securities may petition any court of
competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
Notwithstanding replacement of the Trustee pursuant to
this Section 7.8, the Issuer's obligations under Section 7.7
shall continue for the benefit of the retiring Trustee.
Section 7.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the resulting, surviving or
transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee.
Section 7.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of
TIA Section 310(a)(1) and TIA Section 310(a)(5). The Trustee shall have a
combined capital and surplus of at least $25,000,000 as set forth
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in its most recent published annual report of condition. The
Trustee shall comply with TIA Section 310(b).
Section 7.11 Preferential Collection of Claims Against
Issuer.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or Covenant
Defeasance.
The Issuer may, at its option at any time, elect to have Section
8.2 or Section 8.3 applied to all outstanding Securities upon
compliance with the conditions set forth below in this Article
VIII.
Section 8.2 Legal Defeasance and Discharge.
Upon the Issuer's exercise under Section 8.1 of the option
applicable to this Section 8.2, the Issuer and the Guarantors
shall be deemed to have been discharged from their respective
obligations with respect to all outstanding Securities on the
date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, such Legal Defeasance
means that the Issuer shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding
Securities, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 and the other Sections of
this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Securities and
this Indenture (and the Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments acknowledging the
same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Securities to receive payments in respect
of the principal of, premium, if any, and interest (and
Liquidated Damages, if any) on such Securities when such payments
are due from the trust funds, (b) the Issuer's obligations with
respect to such Securities concerning issuing temporary Notes,
registration of Notes, mutilated, lost or stolen Notes and the
maintenance of an office or agency for payment and money for
security payments held in trust, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Issuer's
obligations in connection therewith and (d) this Article VIII.
Subject to compliance with this Article VIII, the Issuer may
exercise its option under this Section 8.2 notwithstanding the
prior exercise of their option under Section 8.3 with respect to
the Securities.
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Section 8.3 Covenant Defeasance.
Upon the Issuer's exercise under Section 8.1 of the option
applicable to this Section 8.3, the Issuer shall be released from
its obligations under the covenants contained in Sections 4.3,
4.6, 4.7, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16 and 4.18,
Article V and Article X with respect to the outstanding
Securities on and after the date the conditions set forth below
are satisfied (hereinafter, "Covenant Defeasance"), and the
Securities shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act
of Holders (and the consequences of any thereof) in connection
with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to the
outstanding Securities, the Issuer need not comply with and shall
have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly,
by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other
provision herein or in any other document, but, except as
specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby. In addition, upon the
Issuer's exercise under Section 8.1 of the option applicable to
this Section 8.3, Sections 6.1(3), 6.1(6) and 6.1(7) shall not
constitute Events of Default.
Section 8.4 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of
either Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Issuer shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10 who shall agree to comply with
the provisions of this Article VIII applicable to it) as trust
funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of such Securities, and such Holders
must have a valid, perfected, exclusive security interest in such
trust (i) cash in an amount, or (ii) U.S. Government Obligations
which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, cash in an
amount, or (iii) a combination thereof, in such amounts, as in
each case will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay
and discharge the principal of, premium, if any, and interest
(and Liquidated Damages, if any) on the outstanding Securities on
the stated maturity or on the applicable redemption date, as the
case may be, of such principal or installment of principal,
premium, if any, or interest (and Liquidated Damages, if any);
provided that the Trustee shall have been irrevocably instructed
to apply such cash and the proceeds of such U.S. Government
Obligations to said payments with respect to the Securities;
(b) In the case of an election under Section 8.2, the
Issuer shall have delivered to the Trustee an Opinion of Counsel
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in the United States reasonably satisfactory to the Trustee
confirming that (i) the Issuer has received from, or there has
been published by, the Internal Revenue Service a ruling or (ii)
since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of the
outstanding Securities will not recognize income, gain or loss
for Federal income tax purposes as a result of such Legal
Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.3, the
Issuer shall have delivered to the Trustee an Opinion of Counsel
in the United States to the effect that the Holders of the
outstanding Securities will not recognize income, gain or loss
for Federal income tax purposes as a result of such Covenant
Defeasance and will be subject to Federal income tax in the same
amount, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of
such deposit or, in so far as Section 6.1(4) or 6.1(5) is
concerned, at any time in the period ending on the 91st day after
the date of such deposit;
(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default
under, this Indenture or any other material agreement or
instrument to which the Issuer or any Subsidiary is a party or by
which the Issuer or any Subsidiary is bound;
(f) In the case of an election under either Section 8.2 or
8.3, the Issuer shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Issuer pursuant
to its election under Section 8.2 or 8.3 was not made by the
Issuer with the intent of preferring the Holders over other
creditors of the Issuer or with the intent of defeating,
hindering, delaying or defrauding creditors of the Issuer or
others;
(g) The Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel in the United
States, each stating that the conditions precedent provided for,
in the case of the Officers' Certificate, in subsections (a)
through (f) of this Section 8.4 and, in the case of the Opinion
of Counsel, subsections (a) (with respect to the validity and
perfection of the security interest), (b), (c) and (e) of this
Section 8.4 have been complied with as contemplated by this
Section 8.4.
Section 8.5 Deposited Cash and U.S. Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.6, all cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this
Section 8.5, the "Trustee") pursuant to Section 8.4 in respect of
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the outstanding Securities shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Securities
and this Indenture, to the payment, either directly or through
any Paying Agent as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in
respect of principal, premium, if any, and interest (and
Liquidated Damages, if any), but such money need not be
segregated from other funds except to the extent required by law.
The Issuer shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 8.4 or the
principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of
the Holders of outstanding Securities.
Section 8.6 Repayment to Issuer.
Anything in this Article VIII to the contrary notwithstanding,
the Trustee shall deliver or pay to the Issuer from time to time
upon the request of the Issuer any cash or U.S. Government
Obligations held by it as provided in Section 8.4 which, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereto
delivered to the Trustee (which may be the opinion delivered
under Section 8.4(a)), are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Issuer, in trust for the payment of the principal of,
premium, if any, or interest (and Liquidated Damages, if any) on
any Security and remaining unclaimed for two years after such
principal, and premium, if any, or interest (and Liquidated
Damages, if any) has become due and payable shall be paid to the
Issuer on its request; and the Holder of such Security shall
thereafter look only to the Issuer for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Issuer cause to be
published once, in The New York Times and The Wall Street Journal
(national edition), notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less
than 30 days from the date of such notification or publication,
any unclaimed balance of such money then remaining will be repaid
to the Issuer.
Section 8.7 Reinstatement.
If the Trustee or Paying Agent is unable to apply any cash or
U.S. Government Obligations in accordance with Section 8.2 or
8.3, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Issuer's
obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant
to Section 8.2 or 8.3 until such time as the Trustee or Paying
Agent is permitted to apply such money in accordance with Section
8.2 and 8.3, as the case may be; provided, however, that, if the
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Issuer makes any payment of principal of, premium, if any, or
interest (and Liquidated Damages, if any) on any Security
following the reinstatement of its obligations, the Issuer shall
be subrogated to the rights of the Holders of such Securities to
receive such payment from the Cash held by the Trustee or Paying
Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holder, the Issuer or any Guarantor,
when authorized by Board Resolutions, and the Trustee, at any
time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any
of the following purposes:
(1) to cure any ambiguity, defect, or
inconsistency, or to make any other provisions with
respect to matters or questions arising under this
Indenture which shall not be inconsistent with the
provisions of this Indenture, provided such action
pursuant to this clause (1) shall not adversely affect
the interests of any Holder in any respect;
(2) to add to the covenants of the
Issuer for the benefit of the Holders, or to surrender
any right or power herein conferred upon the Issuer or
to make any other change that does not adversely affect
the rights of any Holder; provided, that the Issuer has
delivered to the Trustee an Opinion of Counsel stating
that such change does not adversely affect the rights
of any Holder;
(3) to provide for additional
Guarantors of the Securities;
(4) to evidence the succession of
another person to the Issuer, and the assumption by any
such successor of the obligations of such Issuer,
herein and in the Securities in accordance with Article
V; or
(5) to comply with the TIA.
Section 9.2 Amendments, Supplemental Indentures and Waivers
with Consent of Holders.
Subject to Section 6.8 and the last sentence of this paragraph,
with the consent of the Holders of not less than a majority in
aggregate principal amount of then outstanding Securities, by
written act of said Holders delivered to the Issuer and the
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Trustee, the Issuer and any Guarantor, when authorized by Board
Resolutions, and the Trustee may amend or supplement this
Indenture or the Securities or enter into an indenture or
indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or the Securities or of modifying in
any manner the rights of the Holders under this Indenture or the
Securities. Subject to Section 6.8 and the last sentence of this
paragraph, the Holder or Holders of a majority, in principal
amount of then outstanding Securities may waive compliance by the
Issuer or any Guarantor with any provision of this Indenture or
the Securities. Notwithstanding the foregoing provisions of this
Section 9.2, without the consent of at least 66-2/3% of the
aggregate principal amount of outstanding Securities, no such
amendment, supplemental indenture or waiver shall change any
provision of Section 10.1 or Section 4.13, and except as
otherwise specifically provided herein, and without the consent
of each Holder affected thereby, no such amendment, supplemental
indenture or waiver shall:
(1) reduce the percentage of principal
amount of Securities whose Holders must consent to an
amendment, supplement or waiver of any provision of
this Indenture or the Securities;
(2) reduce the rate or extend the time
for payment of interest (and Liquidated Damages, if
any) on any Security;
(3) reduce the principal amount of any
Security, or reduce the Change of Control Purchase
Price or the Asset Sale Offer Price;
(4) change the Stated Maturity of any
Security;
(5) alter the redemption provisions of
Article III in a manner adverse to any Holder;
(6) make any changes in the provisions
concerning waivers of Defaults or Events of Default by
Holders of the Securities (except to increase any
percentage of Securities required to consent to a
waiver or to provide that certain other provisions of
the Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Security
affected thereby) or the rights of Holders to recover
the principal or premium of, interest (and Liquidated
Damages, if any) on, or redemption payment with respect
to, any Security;
(7) make any changes in Section 6.8,
6.12 or this third sentence of this Section 9.2; or
(8) make the principal of, or the
interest (and Liquidated Damages, if any) on, any
Security payable with anything or at anywhere other
than as provided for in this Indenture and the
Securities as in effect on the date hereof; or
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(9) make the Securities or Guarantees
subordinated in right of payment to any extent or under
any circumstances to any other indebtedness.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Issuer shall mail to the Holders affected
thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Issuer to mail such notice, or any
defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
In connection with any amendment, supplement or waiver under
this Article IX, the Issuer may, but shall not be obligated to,
offer to any Holder who consents to such amendment, supplement
or waiver, or to all Holders, consideration for such Holder's
consent to such amendment, supplement or waiver.
Section 9.3 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder
and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may
revoke the consent as to his Security or portion of his Security
by written notice to the Issuer or the person designated by the
Issuer as the person to whom consents should be sent if such
revocation is received by the Issuer or such person before the
date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of
Securities have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver.
The Issuer may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to
any amendment, supplement or waiver, which record date shall be
the date so fixed by the Issuer notwithstanding the provisions of
the TIA. If a record date is fixed, then notwithstanding the
last sentence of the immediately preceding paragraph, those
persons who were Holders at such record date, and only those
persons (or their duly designated proxies), shall be entitled to
revoke any consent previously given, whether or not such persons
continue to be Holders after such record date. No such consent
shall be valid or effective for more than 90 days after such
record date.
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After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change
described in any of clauses (1) through (9) of Section 9.2, in
which case, the amendment, supplement or waiver shall bind only
each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security;
provided, that any such waiver shall not impair or affect the
right of any Holder to receive payment of principal and premium
of and interest (and Liquidated Damages, if any) on a Security,
on or after the respective dates set for such amounts to become
due and payable expressed in such Security, or to bring suit for
the enforcement of any such payment on or after such respective
dates.
Section 9.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee or require the Holder to put an
appropriate notation on the Security. The Trustee may place an
appropriate notation on the Security about the changed terms and
return it to the Holder. Alternatively, if the Issuer or the
Trustee so determines, the Issuer in exchange for the Security
shall issue, the Guarantors shall endorse and the Trustee shall
authenticate a new Security that reflects the changed terms. Any
failure to make the appropriate notation or to issue a new
Security shall not affect the validity of such amendment,
supplement or waiver.
Section 9.6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX, provided, that the
Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own
rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive, and shall be fully protected in
relying upon, an Officers' Certificate and Opinion of Counsel
stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article IX is authorized or permitted
by this Indenture.
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
Section 10.1 Repurchase of Securities at Option of the
Holder upon Change of Control.
(a) In the event that a Change of Control occurs, each
Holder of Securities shall have the right, at such Holder's
option, subject to the terms and conditions of this Indenture, to
require the Issuer to repurchase all or any part of such Holder's
Notes (provided, that the principal amount of such Notes at
maturity must be $1,000 or an integral multiple thereof) on the
date that is no later than 35 Business Days after the occurrence
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of such Change of Control (the "Change of Control Purchase
Date"), at a cash price equal to 101% of the principal amount
thereof (the "Change of Control Purchase Price"), plus accrued
but unpaid interest (and Liquidated Damages), if any, to the
Change of Control Purchase Date.
(b) In the event that, pursuant to this Section 10.1, the
Issuer shall be required to commence an offer to purchase Notes
(a "Change of Control Offer"), the Issuer shall follow the
procedures set forth in this Section 10.1 as follows:
(1) the Change of Control Offer shall
commence within 10 Business Days following the Change
of Control;
(2) the Change of Control Offer shall
remain open for at least 20 Business Days following its
commencement (the "Change of Control Period");
(3) upon expiration of a Change of
Control Period, the Issuer shall purchase all of the
tendered Securities at the Change of Control Purchase
Price, plus accrued and unpaid interest (and Liquidated
Damages, if any);
(4) if the Change of Control Purchase
Date is on or after an interest payment record date and
on or before the related interest payment date, any
accrued interest (and Liquidated Damages, if any) will
be paid to the Person in whose name a Security is
registered at the close of business on such record
date, and no additional interest will be payable to
Securityholders who tender Securities pursuant to the
Change of Control Offer;
(5) the Issuer shall provide the
Trustee with notice of the Change of Control Offer at
least 5 Business Days before the commencement of any
Change of Control Offer; and
(6) on or before the commencement of
any Change of Control Offer, the Issuer or the Trustee
(upon the request and at the expense of the Issuer)
shall send, by first-class mail, a notice to each of
the Securityholders, which (to the extent consistent
with this Indenture) shall govern the terms of the
Change of Control Offer and shall state:
(i) that the Change of Control Offer is
being made pursuant to this Section 10.1 and that
all Securities, or portions thereof, tendered will
be accepted for payment;
73
(ii) the Change of Control Purchase
Price (including the amount of accrued but unpaid
interest (and Liquidated Damages, if any)) and the
Change of Control Purchase Date;
(iii) that any Security, or portion
thereof, not tendered or accepted for payment will
continue to accrue interest;
(iv) that, unless the Issuer defaults
in depositing cash with the Paying Agent in
accordance with the last paragraph of this
subsection (b), or such payment is prevented for
any reason, any Security, or portion thereof,
accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after
the Change of Control Purchase Date;
(v) that Holders electing to have a
Security, or portion thereof, purchased pursuant
to a Change of Control Offer will be required to
surrender the Security, with the form entitled
"Option of Holder to Elect Purchase" on the
reverse of the Security completed, to the Paying
Agent (which may not for purposes of this Section
10.1, notwithstanding anything in this Indenture
to the contrary, be the Issuer or any Affiliate of
the Issuer) at the address specified in the notice
prior to the expiration of the Change of Control
Offer;
(vi) that Holders will be entitled to
withdraw their election, in whole or in part, if
the Paying Agent receives, prior to the expiration
of the Change of Control Offer, a facsimile
transmission or letter setting forth the name of
the Holder, the principal amount of the Securities
the Holder is withdrawing and a statement
containing are original or facsimile signature and
stating that such Holder is withdrawing his
election to have such principal amount of
Securities purchased; and
(vii) a brief description of the events
resulting in such Change of Control.
Any Change of Control Offer will be made in compliance with all
applicable laws, rules and regulations, including, if applicable,
Regulation 14E under the Exchange Act and the rules thereunder
and all other applicable Federal and state securities laws. To
the extent that the provisions of any securities laws or
regulations conflict with the terms hereof, the Issuer shall
comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations hereunder or
the Notes by virtue thereof.
On or before the Change of Control Purchase Date, the Issuer
will (i) accept for payment Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with
the Paying Agent cash sufficient to pay the Change of Control
74
Purchase Price (together with accrued and unpaid interest and
Liquidated Damages, if any) of all Notes so tendered and (iii)
deliver to the Trustee Notes so accepted together with an Officers'
Certificate listing the Notes or portions thereof being purchased
by the Issuer. The Paying Agent promptly will pay the Holders of
Notes so accepted an amount equal to the Change of Control Purchase
Price (together with accrued and unpaid interest and Liquidated
Damages, if any), and the Trustee promptly will authenticate and
deliver to such Holders a new Note equal in principal amount to any
unpurchased portion of the Note surrendered. Any Notes not so
accepted will be delivered promptly by the Issuer to the Holder thereof.
The Issuer publicly will announce the results of the Change of
Control Offer on or as soon as practicable after the Change of
Control Purchase Date.
ARTICLE XI
GUARANTEES
Section 11.1 Guarantee.
(a) In consideration of good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, each
of the Guarantors hereby irrevocably and unconditionally
guarantee, jointly and severally, on a senior basis (the
"Guarantee") to each Holder of a Security authenticated and
delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of
this Indenture, the Securities or the obligations of the Issuer
under this Indenture or the Securities, that: (w) the principal
and premium (if any) of and interest (and Liquidated Damages, if
any) on the Securities will be paid in full when due, whether at
the maturity or interest payment date, by acceleration, call for
redemption, upon a Change of Control Offer, an Asset Sale Offer
or otherwise; (x) all other obligations of the Issuer to the
Holders or the Trustee under this Indenture or the Securities
will be promptly paid in full or performed, all in accordance
with the terms of this Indenture and the Securities; and (y) in
case of any extension of time of payment or renewal of any
Securities or any of such other obligations, they will be paid in
full when due or performed in accordance with the terms of the
extension or renewal, whether at maturity, by acceleration, call
for redemption, upon a Change of Control Offer, an Asset Sale
Offer or otherwise. Failing payment when due of any amount so
guaranteed for whatever reason, each Guarantor shall be obligated
to pay the same before failure so to pay becomes an Event of
Default.
(b) Each Guarantor hereby agrees that its obligations with
regard to this Guarantee shall be unconditional, irrespective of
the validity, regularity or enforceability of the Securities or
this Indenture, the absence of any action to enforce the same,
the recovery of any judgment against the Issuer, any action to
enforce the same or any other circumstances that might otherwise
constitute a legal or equitable discharge or defense of a
guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuer, any right to require a
proceeding first against the Issuer or right to require the prior
disposition of the assets of the Issuer to meet its obligations,
75
protest, notice and all demands whatsoever and covenants that
this Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities and
this Indenture.
(c) If any Holder or the Trustee is required by any court
or otherwise to return to either the Issuer or any Guarantor, or
any Custodian, Trustee, or similar official acting in relation to
either the Issuer or such Guarantor, any amount paid by either
the Issuer or such Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor agrees that
it will not be entitled to any right of subrogation in relation
to the Holders in respect of any obligations guaranteed hereby
until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between such Guarantor, on the
one hand, and the Holders and the Trustee, on the other hand, (i)
the maturity of the obligations guaranteed hereby may be
accelerated as provided in Section 6.2 for the purposes of this
Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration as to the Issuer of the
obligations guaranteed hereby, and (ii) in the event of any
declaration of acceleration of those obligations as provided in
Section 6.2, those obligations (whether or not due and payable)
will forthwith become due and payable by each of the Guarantors
for the purpose of this Guarantee.
(d) Each Guarantor and by its acceptance of a Security
issued hereunder each Holder hereby confirms that it is the
intention of all such parties that the guarantee by such
Guarantor set forth in Section 11.1(a) not constitute a
fraudulent transfer or conveyance for purpose of any Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such
Guarantor hereby irrevocably agree (to the extent permitted by
law) that the obligations of such Guarantor under its guarantee
set forth in Section 11.1(a) shall be limited to the maximum
amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to the following
paragraph of this Section 11.1(d), result in the obligations of
such Guarantor under such guarantee not constituting such a
fraudulent transfer or conveyance.
Each Guarantor that makes any payment or distribution under
Section 11.1(a) shall be entitled to a contribution from each
other Guarantor equal to its pro rata amount of such payment or
distribution so long as the exercise of such right does not
impair the rights of the Holders under the Guarantees. For
purposes of the foregoing, the "pro rata amount" of any Guarantor
means the percentage of the net assets of all Guarantors held by
such Guarantor, determined in accordance with GAAP.
Section 11.2 Execution and Delivery of Guarantee.
To evidence its Guarantee set forth in Section 11.1, each
Guarantor agrees that a notation of such Guarantee substantially
in the form annexed hereto as Exhibit B shall be endorsed on each
Security authenticated and delivered by the Trustee and that this
76
Indenture shall be executed on behalf of such Guarantor by an
Officer (or if an officer is not available, by a board member or
director) by manual or facsimile signature.
Each Guarantor agrees that its Guarantee set forth in Section
11.1 shall remain in full force and effect and apply to all the
Securities notwithstanding any failure to endorse on each
Security a notation of such Guarantee.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security on
which a Guarantee is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of each Guarantor.
Section 11.3 Certain Bankruptcy Events.
Each Guarantor hereby covenants and agrees (to the extent
permitted by law) that in the event of the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the
Issuer, such Guarantor shall not file (or join in any filing of),
or otherwise seek to participate in the filing of, any motion or
request seeking to stay or to prohibit (even temporarily)
execution on the Guarantee and hereby waives and agrees not to
take the benefit of any such stay of execution, whether under
Section 362 or 105 of the United States Bankruptcy Code or
otherwise.
Section 11.4 Release of Guarantors.
No Guarantor shall consolidate or merge with or into (whether or
not such Guarantor is the surviving Person) another Person unless
(i) subject to the provisions of the following paragraph, the
Person formed by or surviving any such consolidation or merger
(if other than such Guarantor) assumes all the obligations of
such Guarantor pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee, pursuant to which such
Person shall unconditionally guarantee, on a senior basis, all of
such Guarantor's obligations under such Guarantor's guarantee and
the Indenture on the terms set forth in the Indenture; and (ii)
immediately before and immediately after giving effect to such
transaction on a pro forma basis, no Default or Event of Default
shall have occurred or be continuing.
Notwithstanding the foregoing, upon the sale or disposition
(whether by merger, stock purchase, asset sale or otherwise) of a
Guarantor or all or substantially all of its assets to an entity
which is not a Guarantor, which transaction is otherwise in
compliance with the Indenture (including, without limitation, the
provisions of Section 4.13), such Guarantor will be deemed
released from its obligations under its Guarantee of the Notes;
provided, however, that any such termination shall occur only to
the extent that all obligations of such Guarantor under all of
its guarantees of, and under all of its pledges of assets or
77
other security interests which secure, any Indebtedness of the
Issuer or any other Subsidiary shall also terminate upon such
release, sale or transfer.
Section 11.5 Future Guarantors.
Upon the acquisition by the Issuer or any Guarantor of the
Capital Stock of any person, if, as a result of such acquisition,
such person becomes a Subsidiary, the Issuer or Guarantor, as the
case may be, shall cause such Subsidiary to, and such Subsidiary
shall fully and unconditionally guarantee on a senior basis the
obligations of the Issuer with respect to payment and performance
of the Securities and the other obligations of the Issuer under
this Indenture to the same extent that such obligations are
guaranteed by the other Guarantors pursuant to Section 11.1; and
the Issuer or such Guarantor, as the case may be, shall cause
such Subsidiary to, and such Subsidiary shall execute and deliver
to the Trustee a supplemental indenture making such Subsidiary a
party to this Indenture.
ARTICLE XII
MISCELLANEOUS
Section 12.1 TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of the TIA, the
imposed duties, upon qualification of this Indenture under the
TIA, shall control.
Section 12.2 Notices.
Any notices or other communications to the Issuer, the Guarantors
or the Trustee required or permitted hereunder shall be in
writing, and shall be sufficiently given if made by hand
delivery, by telecopier or registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
if to the Issuer or the Guarantors:
ClimaChem, Inc.
P.O. Box 754
16 South Pennsylvania Avenue
Oklahoma City, Oklahoma 73101
Attention: Jack E. Golsen
Telephone: (405) 235-4546
Telecopy: (405) 235-5067
78
if to the Trustee:
Bank One, NA
100 E. Broad Street
Columbus, Ohio 43215
Attention: Corporate Trust Administration
Telephone: 1-800-346-5153
Telecopy: 1-614-248-5195
The Issuer, the Guarantors or the Trustee by notice to each other
party may designate additional or different addresses as shall be
furnished in writing by such party. Any notice or communication
to the Issuer, the Guarantors or the Trustee shall be deemed to
have been given or made as of the date so delivered, if
personally delivered; when receipt is acknowledged, if
telecopied; and 5 Business Days after mailing if sent by
registered or certified mail, postage prepaid (except that a
notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first class mail or other equivalent means at
his address as it appears on the registration books of the
Registrar and shall be sufficiently given to him if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to
other Securityholders. If a notice or communication is mailed in
the manner provided above, it is duly given, whether or not the
addressee receives it.
Section 12.3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this
Indenture or the Securities. The Issuer, the Guarantors, the
Trustee, the Registrar and any other person shall have the
protection of TIA Section 312(c).
Section 12.4 Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Issuer to the Trustee to
take any action under this Indenture, the Issuer shall furnish to
the Trustee:
(1) an Officers' Certificate (in form
and substance reasonably satisfactory to the Trustee)
stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been
complied with; and
79
(2) an Opinion of Counsel (in form and
substance reasonably satisfactory to the Trustee)
stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Section 12.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall
include:
(1) a statement that the person making
such certificate or opinion has read such covenant or
condition;
(2) a brief statement as to the nature
and scope of the examination or investigation upon
which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of
such person, he has made such examination or
investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not,
in the opinion of each such person, such condition or
covenant has been complied with; provided, however,
that with respect to matters of fact an Opinion of
Counsel may rely on an Officers' Certificate or
certificates of public officials.
Section 12.6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may
make reasonable rules for its functions.
Section 12.7 Legal Holidays.
A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking
institutions in New York, New York are not required to be open.
If a payment date is a Legal Holiday in New York, New York,
payment may be made at such place on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 12.8 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
80
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. THE ISSUER AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE
ISSUER AND EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY
JURY AND ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT
OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE ISSUER OR EACH GUARANTOR IN ANY
OTHER JURISDICTION.
Section 12.9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of any of the Issuer, the Guarantors or
any of their Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 12.10 No Recourse Against Others.
No direct or indirect stockholder, director, officer, employee,
as such, past, present or future of the Issuer, the Guarantors or
any successor entity shall have any personal liability for any
obligations of the Issuer or the Guarantors under the Securities
or this Indenture by reason of such Person's status as such
stockholder, director, officer or employee, except to the extent
such Person is the Issuer or a Guarantor. Each Securityholder by
accepting a Security waives and releases all such liability.
Such waiver and release are part of the consideration for the
issuance of the Securities.
Section 12.11 Successors.
All agreements of the Issuer and the Guarantors in this Indenture
and the Securities shall bind their successors. All agreements
of the Trustee in this Indenture shall bind its successor.
81
Section 12.12 Duplicate Originals.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original,
but all of them together shall represent the same agreement.
Section 12.13 Severability.
In case any one or more of the provisions in this Indenture or in
the Securities shall be held invalid, illegal or unenforceable,
in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and
of the remaining provisions shall not in any way be affected or
impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 12.14 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
82
SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed as of the date first written above.
CLIMACHEM, INC.
By:______________________________
Name: Tony M. Shelby
Title: Vice President
BANK ONE, NA,
as Trustee
By:_______________________________
Name: Jon A. Beacham
Title: Authorized Signer
THE GUARANTORS:
International Environmental
Corporation
Climate Master, Inc.
CHP Corporation
KOAX Corporation
APR Corporation
LSB Chemical Corp.
Slurry Explosive Corporation
Universal Tech Corporation
Total Energy Systems Limited
Northwest Financial Corporation
DSN Corporation
By:______________________________
Name: Tony M. Shelby
Title: Vice President
83
Climate Mate, Inc.
The Environmental Group
International
Limited
By:________________________
Name: David R. Goss
Total Energy Systems (NZ) Ltd.
T.E.S. Mining Services Pty.
Ltd.
El Dorado Chemical Company
By:__________________________
Name: James L. Wewers
The Environmental Group, Inc.
By:___________________________
Name: Barry H. Golsen
84
EXHIBIT A
[FORM OF NOTE]
CLIMACHEM, INC.
10 3/4% SENIOR NOTES
DUE 2007
Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be
transferred except as a whole by the Depository to a nominee of
the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a
nominee of such successor Depository. Unless this certificate is
presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC"), to the
Issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or
such other entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.1
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY MAY NOT BE
OFFERED OR SOLD TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY PERSON EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), (B) IT IS
AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) UNDER THE SECURITIES
ACT) WHO IS AN INSTITUTION (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY OUTSIDE
THE UNTIED STATES IN COMPLIANCE WITH REGULATION
S UNDER THE SECURITIES ACT, (2) AGREES THAT IT
________________
1 This paragraph should only be added if the Security is a
Global Security.
A-1
WILL NOT PRIOR TO THE DATE WHICH IS TWO YEARS
AFTER THE LATER OF THE DATE OF ORIGINAL ISSUANCE
OF THIS NOTE AND THE LAST DATE ON WHICH THE
ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE
OWNER OF THIS NOTE (THE "RESALE RESTRICTION
TERMINATION DATE") OFFER, SELL OR OTHERWISE
TRANSFER THIS NOTE, EXCEPT (A) TO THE ISSUER,
(B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER
IN COMPLIANCE WITH THE REALE PROVISIONS OF RULE
144A UNDER THE SECURITIES ACT, (C) TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
WRITTEN CERTIFICATION CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), (D) PURSUANT TO THE RESALE LIMITATIONS
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
(F) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS
OF REGULATION S UNDER THE SECURITIES ACT OR (G)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (BASED, IN THE CASE OF CLAUSES (C), (D), (F)
AND (G) ABOVE, UPON AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE ISSUER IF THE
ISSUER SO REQUESTS), SUBJECT IN EACH OF THE
FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT
THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY
OF SUCH ACCOUNT BE AT ALL TIMES WITHIN ITS
CONTROL AND TO COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS
AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
A-2
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THE FOREGOING RESTRICTIONS ON RESALE WILL NOT
APPLY SUBSEQUENT TO THE RESALE RESTRICTION
TERMINATION DATE.
THIS SECURITY IS A TEMPORARY REGULATION S GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE
REFERRED TO HEREINAFTER. EXCEPT IN THE
CIRCUMSTANCES DESCRIBED IN SECTION 2.6(c) OF THE
INDENTURE, INTERESTS IN THIS TEMPORARY
REGULATION S GLOBAL SECURITY MAY NOT BE OFFERED
OR SOLD TO A U.S. PERSON OR FOR THE ACCOUNT OR
BENEFIT OF A U.S. PERSON PRIOR TO THE EXPIRATION
OF THE RESTRICTED PERIOD (AS DEFINED IN THE
INDENTURE), AND NO TRANSFER OR EXCHANGE OF AN
INTEREST IN THIS TEMPORARY REGULATION S GLOBAL
SECURITY MAY BE MADE FOR AN INTEREST IN A
RESTRICTED GLOBAL SECURITY OR IN A PERMANENT
REGULATION S GLOBAL SECURITY AND NO PAYMENT OF
INTEREST OR PRINCIPAL ON AN INTEREST IN THIS
TEMPORARY REGULATION S GLOBAL NOTE MAY BE MADE
UNTIL AFTER THE LATER OF THE DATE OF EXPIRATION
OF THE RESTRICTED PERIOD AND THE DATE ON WHICH
THE OWNER SECURITIES CERTIFICATION AND THE
DEPOSITORY SECURITIES CERTIFICATION RELATING TO
SUCH INTEREST HAVE BEEN PROVIDED IN ACCORDANCE
WITH THE TERMS OF THE INDENTURE, TO THE EFFECT
THAT THE BENEFICIAL OWNER OR OWNERS OF SUCH
INTEREST ARE NOT U.S. PERSONS. 2
______________________
2 This paragraph should only be added if the Security is a
Temporary Regulation S Security.
A-3
CUSIP NO.______
No. $
ClimaChem, Inc., an Oklahoma corporation (the "Issuer"), which
term includes any successor corporation under the Indenture
hereinafter referred to) for value received, hereby promises to
pay to _____, or registered assigns, the principal sum of _____
Dollars, on December 1, 2007.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Reference is made to the further provisions of this Security on
the reverse side, which will, for all purposes, have the same
effect as if set forth at this place.
A-4
IN WITNESS WHEREOF, the Issuer has caused
this Instrument to be duly executed under its corporate seal.
CLIMACHEM, INC.
By:________________________
Name: Jack E. Golsen
Title: President
Attest:_________________________
A-5
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
Dated: ____________, 1997
Bank One, NA, as Trustee
By:_______________________
Authorized Signatory
A-6
CLIMACHEM, INC.
10 3/4% SENIOR NOTES
DUE 2007
1. Interest.
ClimaChem, Inc., an Oklahoma corporation (the "Issuer"), promises
to pay interest on the principal amount of this Security at a
rate of 10 3/4% per annum. To the extent it is lawful, the
Issuer promises to pay interest on any interest payment due but
unpaid on such principal amount at a rate of 10 3/4% per annum
compounded semi-annually.
The Issuer will pay interest semi-annually on December 1 and
June 1 of each year (each, an "Interest Payment Date"), commencing
June 1, 1998. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities
pursuant to the Indenture or, if no interest has been paid, from
November 26, 1997. Interest will be computed on the basis of a
360-day year consisting of twelve 30-day months.
2. Method of Payment.
The Issuer shall pay interest (and Liquidated Damages, if any) on
the Securities (except defaulted interest) to the persons who are
the registered Holders at the close of business on the Record
Date immediately preceding the Interest Payment Date. Holders
must surrender Securities to a Paying Agent to collect principal
payments. Except as provided below, the Issuer shall pay
principal and interest (and Liquidated Damages, if any) in such
coin or currency of the United States of America as at the time
of payment shall be legal tender for payment of public and
private debts ("Cash"). The Securities will be payable as to
principal, premium and interest (and Liquidated Damages, if any)
at the office or agency of the Issuer maintained for such purpose
within the City and State of New York or, at the option of the
Issuer, payment of principal, premium and interest (and
Liquidated Damages, if any) may be made by check mailed to the
Holders at their addresses set forth in the register of Holders,
provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest
(and Liquidated Damages, if any) and premium on all Global
Securities and all other Securities the Holders of which shall
have provided written wire transfer instructions to the Issuer
and the Paying Agent.
3. Paying Agent and Registrar.
Initially, Bank One, NA (the "Trustee") will act as Paying Agent
and Registrar. The Issuer may change any Paying Agent, Registrar
or Co-registrar without notice to the Holders. The Issuer or any
of its Subsidiaries may, subject to certain exceptions, act as
Paying Agent, Registrar or Co-registrar.
A-7
4. Indenture.
The Issuer issued the Securities under an Indenture, dated
November 26, 1997 (the "Indenture"), among the Issuer, the
Guarantors named therein and the Trustee. Capitalized terms
herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act, as in effect on the date of
the Indenture. The Securities are subject to all such terms, and
Holders of Securities are referred to the Indenture and said Act
for a statement of them. The Securities are senior obligations
of the Issuer limited in aggregate principal amount to
$105,000,000.
5. Redemption.
Except as provided in this Paragraph 5, the Issuer shall not have
the right to redeem any Securities. The Securities are
redeemable in whole or from time to time in part at any time on
or after December 1, 2002, at the option of the Issuer, at the
Redemption Price (expressed as a percentage of principal amount)
set forth below, if redeemed during the 12-month period
commencing December 1 of each of the years indicated below, in
each case (subject to the right of Holders of record on the
Record Date to receive interest and Liquidated Damages due on an
Interest Payment Date that is on or prior to such Redemption
Date), plus any accrued but unpaid interest (and Liquidated
Damages, if any) to the Redemption Date.
Year Redemption Price
2002 . . . . . . . . . . . . . . . . . .105.375%
2003 . . . . . . . . . . . . . . . . . .103.583%
2004 . . . . . . . . . . . . . . . . . .101.792%
2005 and thereafter. . . . . . . . . . .100.000%
Until December 1, 2000, upon a Public Equity Offering of common
stock of the Issuer for cash, up to $35 million aggregate
principal amount of the Notes may be redeemed at the option of
the Issuer within 120 days of such Public Equity Offering, on not
less than 30 days, but not more than 60 days, notice to each
Holder of the Notes to be redeemed, with cash from the Net Cash
Proceeds of such Public Equity Offering, at 110.75% of principal
(subject to the right of Holders of record on a Record Date to
receive interest and Liquidated Damages due on an Interest
Payment Date that is on or prior to such Redemption Date)
together with accrued and unpaid interest and Liquidated Damages,
if any, to the date of redemption; provided, however, that
immediately following such redemption not less than $65 million
aggregate principal amount of the Notes are outstanding.
Any redemption of the Notes shall comply with Article III of the
Indenture.
A-8
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail at least
30 days but not more than 60 days before the Redemption Date to
each Holder of Securities to be redeemed at his registered
address. Securities in denominations larger than $1,000 may be
redeemed in part.
Except as set forth in the Indenture, from and after any
Redemption Date, if monies for the redemption of the
Securities called for redemption shall have been deposited with
the Paying Agent on such Redemption Date, the Securities called
for redemption will cease to bear interest and the only right of
the Holders of such Securities will be to receive payment of the
Redemption Price, plus any accrued but unpaid interest (and
Liquidated Damages, if any) to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A
Holder may register the transfer of, or exchange Securities in
accordance with, the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for
redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner
of it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee and the Paying Agent(s) will
pay the money back to the Issuer at its written request. After
that, all liability of the Trustee and such Paying Agent(s) with
respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Issuer at any time deposits into an irrevocable trust with
the Trustee Cash or U.S. Government Obligations sufficient to pay
the principal of and interest (and Liquidated Damages, if any) on
the Securities to redemption or maturity and comply with the
other provisions of the Indenture relating thereto, the Issuer
will be discharged from certain provisions of the Indenture and
the Securities (including the financial covenants, but excluding
its obligation to pay the principal of and interest (and
Liquidated Damages, if any) on the Securities).
A-9
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the written consent of the
Holders of a majority in aggregate principal amount of the
Securities then outstanding, and any existing Default or Event of
Default or compliance with any provision may be waived with the
consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or
consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Securities to, among other
things, cure any ambiguity, defect or inconsistency, comply with
the TIA or make any other change that does not adversely affect
the rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Issuer and its Subsidiaries to, among other things, incur
additional Indebtedness and Disqualified Capital Stock, make
payments in respect of its Capital Stock, enter into transactions
with Affiliates, incur Liens, merge or consolidate with any other
person and sell, lease, transfer or otherwise dispose of
substantially all of its properties or assets. The limitations
are subject to a number of important qualifications and
exceptions. The Issuer must annually report to the Trustee on
compliance with such limitations.
13. Change of Control.
In the event there shall occur any Change of Control, each Holder
of Securities shall have the right, at such Holder's option but
subject to the limitations and conditions set forth in the
Indenture, to require the Issuer to purchase on the Change of
Control Purchase Date in the manner specified in the Indenture,
all or any part (in integral multiples of $1,000) of such
Holder's Securities at a cash price equal to 101% of the
principal amount thereof, together with accrued and unpaid
interest (and Liquidated Damages, if any) to and including the
Change of Control Purchase Date.
14. Certain Asset Sales.
The Indenture imposes certain limitations on the ability of the
Issuer to sell assets. In the event the proceeds from a
permitted Asset Sale exceed certain amounts, as specified in the
Indenture, the Issuer generally will be required either to
reinvest the proceeds of such Asset Sale in its business, use
such proceeds to retire debt, or to make an asset sale offer to
purchase a certain amount of each Holder's Securities at 100% of
the principal amount thereof, plus accrued and unpaid interest
(and Liquidated Damages, if any) to the purchase date, as more
fully set forth in the Indenture.
A-10
15. Successors.
When a successor assumes all the obligations of its predecessor
under the Securities and the Indenture, the predecessor will be
released from those obligations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in aggregate principal amount of
Securities then outstanding may declare all the Securities to be
due and payable immediately in the manner and with the effect
provided in the Indenture. Holders of Securities may not enforce
the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to
certain limitations, Holders of a majority in aggregate principal
amount of the Securities then outstanding may direct the Trustee
in its exercise of any trust or power.
17. Trustee Dealings with Issuer.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform
services for the Issuer or its Affiliates, and may otherwise deal
with the Issuer or its Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No direct or indirect stockholder, director, officer or employee,
as such, past, present or future of the Issuer, the Guarantors or
any successor entity shall have any personal liability in respect
of the obligations of the Issuer or the Guarantors under the
Securities or the Indenture by reason of his status as such
stockholder, director, officer or employee, except to the extent
such person is the Issuer or a Guarantor. Each Holder of a
Security by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration
for the issuance of the Securities.
19. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on
the other side of this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants
with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
A-11
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuer will cause
CUSIP numbers to be printed on the Securities as a convenience to
the Holders of the Securities. No representation is made as to
the accuracy of such numbers as printed on the Securities and
reliance may be placed only on the other identification numbers
printed hereon.
22. Governing Law.
The Indenture and the Securities shall be governed by and
construed in accordance with the internal laws of the State of
New York.
A-12
[FORM OF ASSIGNMENT]
I or we assign this Security to
_________________________________________________________
_________________________________________________________
_________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of
assignee
_________________
and irrevocably appoint ___________ agent to transfer this
Security on the books of the Issuer. The agent may substitute
another to act for him.
Dated: __________ Signed:______________________________________
(Sign exactly as your name appears on
the other side of this Security)
Signature guarantee:_________________________
A-13
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Issuer pursuant to Section 4.13 or Article X of the Indenture,
check the appropriate box:
( ) Section 4.13
( ) Article X
If you want to elect to have only part of this Security purchased
by the Issuer pursuant to the Indenture, state the principal
amount you want to have purchased: $________
Date: ________________ Signature:__________________________________
(Sign exactly as your name appears on
the other side of this Security)
Signature guarantee:_________________________
A-14
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES 3
The following exchanges of a part of this Global Security for
definitive Securities have been made:
Amount of Amount of
decrease in Principal increase in Principal
Amount of this Amount of this
Date of Global Global
Exchange Security Security
__________________________________________________________________
Principal Amount of
this Global Signature of auth
Security following authorized signatory
such decrease (or of Trustee or Securities
increase) Custodian
_____________________________________________________
_______________
3 This schedule should only be added if the Security is a Global
Security.
A-15
EXHIBIT B
FORM OF GUARANTEE
For value received, ________________, a _______________
corporation, hereby irrevocably, unconditionally guarantees on a
senior basis to the Holder of the Security upon which this
Guarantee is endorsed the due and punctual payment, as set forth
in the Indenture pursuant to which such Security and this
Guarantee were issued, of the principal of, premium (if any) and
interest (and Liquidated Damages, if any) on such Security when
and as the same shall become due and payable for any reason
according to the terms of such Security and Article XI of the
Indenture. The Guarantee of the Security upon which this
Guarantee is endorsed will not become effective until the Trustee
signs the certificate of authentication on such Security.
By:___________________________
B-1
EXHIBIT C
FORM OF PROMISSORY NOTE
Oklahoma City, Oklahoma
$10,000,000 November 26, 1997
For Value Received, the undersigned LSB Industries, Inc.
(the "Borrower") promises to pay to the order of ClimaChem, Inc.
(the "Lender") at the Lender's office at 16 South Pennsylvania
Avenue, Oklahoma City, Oklahoma, the principal sum of Ten Million
Dollars in a single installment on December 1, 2007.
The Borrower promises to pay interest on the balance of
principal remaining from time to time unpaid hereon at the rates
and times set forth in this Note.
Section 1. Interest.
Section 1.1. Interest Rates. (a) Subject to all of
the terms and conditions of this Section 1, the principal
indebtedness evidenced by this Note shall bear interest a rate
per annum of 10 3/4%; provided that if the Borrower shall fail to
pay when due the outstanding principal indebtedness then due
hereunder (whether by lapse of time, acceleration or otherwise),
such principal indebtedness shall bear interest, whether before
or after judgment, until payment in full thereof at the rate per
annum of 10 3/4%. Interest shall be due and payable on June 1 and
December 1, commencing June 1, 1998.
Section 1.2. Computation of Interest. All interest
on this Note shall be computed on the basis of a year of 360 days
comprised of twelve thirty day months.
Section 2. Payments; Prepayments.
Section 2.1. Place and Application of Payments. All
payments of principal, interest and all other amounts payable
hereunder shall be paid to the Lender at its principal office in
Oklahoma City, Oklahoma. All such payments shall be made in
lawful money of the United States of America, in immediately
available funds at the place of payment, without setoff or
counterclaim. Unless the Borrower otherwise directs, principal
payments made prior to any Event of Default hereunder, shall be
applied, first, to interest and second, to the payment of
principal. No amount paid or prepaid on this Note may be
borrowed again.
Section 2.2. Voluntary Prepayments. The Borrower
shall have the option of prepaying without premium or penalty and
in whole or in part any portion of this Note, such prepayment to
be made by the payment of the principal amount to be prepaid and
accrued and unpaid interest thereon to the date of prepayment.
C-1
Section 2.3. Mandatory Repayment. Except as provided
below, the Borrower will not, and will not permit any of its
subsidiaries (other than Lender and its subsidiaries) to, convey,
sell, transfer, assign or otherwise dispose of, directly or
indirectly, any of its assets for cash, and including any sale or
other transfer of outstanding equity interests of any subsidiary
of the Borrower (other than Lender and its subsidiaries) for
cash, whether by the Borrower or a subsidiary (other than Lender
and its subsidiaries), in a single transaction or through a
series of related transactions (any of the foregoing, an "Asset
Sale"), unless within 30 days after the receipt of Net Cash
Proceeds (as defined below) of such Asset Sale, 50% of such Net
Cash Proceeds are applied to the prepayment of the Notes without
premium or penalty, plus accrued and unpaid interest on the
principal amount paid to the date of prepayment.
Notwithstanding the foregoing provisions of the prior
paragraph, the provisions of the prior paragraph shall not apply
to the following:
(i) the conveyance, sale, transfer,
assignment or other disposition of inventory acquired and held
for resale in the ordinary course of business;
(ii) the conveyance, sale, transfer,
assignment or other disposition of accounts receivable;
(iii) the sale or disposition of damaged,
worn out or other obsolete property;
(iv) the conveyance, sale, transfer,
assignment or other disposition of assets to the Borrower or any
of its subsidiaries (other than the Lender and its subsidiaries);
(v) the conveyance, sale, transfer,
assignment or other disposition of assets having a value of
$500,000 or less in a single transaction or a series of related
transactions.
"Net Cash Proceeds" means the aggregate amount of cash
received by the Borrower and its subsidiaries (other than the
Lender and its subsidiaries) in respect of an Asset Sale, less
(i) the sum of all payments, fees, commissions and expenses
(including, without limitation, the fees and expenses of legal
counsel and investment banking fees and expenses) incurred in
connection with such Asset Sale, (ii) the amount (estimated
reasonably and in good faith by the Borrower) of income,
franchise, sales and other applicable taxes required to be paid
by the Borrower or any of its respective subsidiaries (other than
the Lender and its subsidiaries) in connection with such Asset
Sale, (iii) the amount of cash resulting from an Asset Sale in a
foreign jurisdiction that is prohibited by law from being
transferred to the United States or exchanged for U.S. dollars
and (iv) the amount used to prepay other senior indebtedness of
the Borrower or a subsidiary which requires such prepayment in
accordance with its terms.
C-2
Section 3. Events of Default and Remedies.
Section 3.1. Events of Default. Any one or more of the
following shall constitute an "Event of Default" hereunder: (a)
non-payment when due of any principal of or interest on this Note
and the continuance of any such failure for 30 days; (b) the
institution by or against the Borrower of any bankruptcy or
similar proceeding for the relief of debtors or the appointment
of any receiver for any such party or any of his/her property and
such act remains unstayed for a period of 90 consecutive days;
and (c) the making of the Borrower of an assignment for the
benefit of creditors.
Section 3.2. Acceleration. When any Event of Default has
occurred and is continuing, the Lender may, by notice to the
Borrower, declare the principal of and interest on this Note to
be due and payable and upon such declaration this Note, including
both principal and interest, and all other amounts due under this
Note shall be and become immediately due and payable without
further demand, presentment, protest or notice of any kind. Also
in any such event, the Lender shall have the right to exercise
any other action, right, power or remedy permitted by law.
Section 4. Miscellaneous.
Section 4.1. No Waiver of Rights. No delay or failure on
the part of the Lender or on the part of the holder or holders of
this Note in the exercise of any power or right shall operate as
a waiver thereof or as an acquiescence in any Event of Default,
nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof, or the exercise
of any other power or right, and the rights and remedies
hereunder of the Lender and of the holder or holders of this Note
are cumulative to, and not exclusive of, any rights or remedies
which any of them would otherwise have.
Section 4.2. Amendments. No amendment, modification or
waiver of any provision of this Note, nor consent to any
departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Lender, provided, however, that the Lender may not take any such
action and such action shall not be effective without the consent
of a majority aggregate principal amount of the Lender's 10 %
Senior Notes due 2007 then outstanding.
Section 4.3. Holidays. If any payment hereunder becomes
due and payable on a day which is not a business day, the due
date of such payment shall be extended to the next succeeding
business day on which date such payment shall be due and payable.
In the case of any payment of principal falling due on a day
which is not business day, interest on such principal amount
shall not continue to accrue during such extension.
C-3
Section 4.4. Notices. All notices and communications
provided for herein shall be in writing, except as otherwise
specifically provided for hereinabove, and shall be deemed to
have been given or made when served personally or when deposited
in the United States mail addressed if to the Borrower at 16
South Pennsylvania Avenue, Oklahoma City, Oklahoma 73107, or if
to the Lender at 16 South Pennsylvania Avenue, Oklahoma City,
Oklahoma 73107, or at such other address as shall be designated
by any party thereto in a written notice given to each party
pursuant to this Section 4.4.
Section 4.5. Severability of Provisions. Any provision of
this Note which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition on enforceability without
invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
Section 4.6. Binding Nature; Governing Law; Waivers. This
Note shall be binding upon the Borrower and upon its successors
and assigns, and shall inure to the benefit of the Lender and the
benefit of its successors and assigns, including any subsequent
holder of this Note. This Note shall be governed and construed
in accordance with the internal laws of the State of Oklahoma
without regard to principles of conflicts of laws. The Borrower
hereby waives presentment for payment and demand.
Borrower:
LSB Industries, Inc.
By:___________________________
Jack E. Golsen
Its: Chairman of the Board, Chief
Executive Officer and President
C-4
ANNEX A
[FORM OF CERTIFICATION TO BE GIVEN BY HOLDERS OF
BENEFICIAL INTEREST IN A TEMPORARY
REGULATION S GLOBAL SECURITY
TO EUROCLEAR OR CEDEL]
OWNER SECURITIES CERTIFICATION
CLIMACHEM, INC.
10 3/4% Senior Notes due 2007
CUSIP No. _____
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and Bank One, as Trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the
Indenture.
This is to certify that, as of the date hereof, $________
of the above-captioned Securities (the "Securities") are
beneficially owned by non-U.S. person(s). As used in this
paragraph, the term "U.S. person" has the meaning given to it by
Regulation S under the Securities Act of 1933, as amended.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification
relating to the Securities held by you for our account in
accordance with your operating procedures if any applicable
statement herein is not correct on such date, and in the absence of
any such notification it may be assumed that this certification
applies as of such date.
ANNEX A-1
We understand that this certificate is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceedings. This
certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchaser.
Dated:_______________, ____
By:_______________________________________
As, or as agent for, the beneficial
owner(s) of the Securities to which
this certificate relates.
ANNEX A-2
ANNEX B
[FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR
CEDEL BANK, SOCIETE ANONYME]
DEPOSITORY SECURITIES CERTIFICATION
CLIMACHEM, INC.
10 3/4% Senior Notes due 2007
CUSIP No. _____
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and as Trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
This is to certify that, with respect to U.S.$__________
principal amount of the above-captioned Securities (the
"Securities"), except as set forth below, we have received in
writing, by tested telex or by electronic transmission, from member
organizations appearing in our records as persons being entitled to
a portion of the principal amount of the Securities (our "Member
Organizations"), certifications with respect to such portion,
substantially to the effect set forth in the Indenture. 1
We further certify (i) that we are not making available
herewith for exchange (or, if relevant, exercise of any rights or
collection of any interest) any portion of the Temporary Regulation
S Global Security (as defined in the Indenture) excepted in such
certifications and (ii) that as of the date hereof we have not
received any notification from any of our Member Organizations to
the effect that the statements made by such Member Organizations
with respect to any portion of the part submitted herewith for
exchange (or, if relevant, exercise of any rights or collection of
any interest) are no longer true and cannot be relied upon as of
the date hereof.
We understand that this certification is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
__________________
1 Unless Morgan Guaranty Trust Company of New York, London Branch
is otherwise informed by the Agent, the long form certificate set
out in the Operating Procedures will be deemed to meet the
requirements of this sentence.
ANNEX B-1
commenced or threatened in connection with which this certification
is or would be relevant, we irrevocably authorize you to produce
this certification to any interested party in such proceedings.
This certificate and the statements contained herein are
made for your benefit and the benefit of the Issuer and the Initial
Purchaser.
Dated: _______________, ____
Yours faithfully,
[CHEMICAL BANK, as operator of
the Euroclear System]
or
[CEDEL BANK, SOCIETE ANONYME]
By______________________________
ANNEX B-2
ANNEX C
[FORM OF CERTIFICATION TO BE GIVEN BY
TRANSFEREE OF BENEFICIAL INTEREST IN A
TEMPORARY REGULATION S GLOBAL SECURITY]
TRANSFEREE SECURITIES CERTIFICATION
CLIMACHEM, INC.
10 3/4% Senior Notes due 2007
CUSIP No. _____
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and ClimaChem as Trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the
Indenture.
For purposes of acquiring a beneficial interest in the
Temporary Regulation S Global Security, the undersigned certifies
that it is not a U.S. Person as defined by Regulation S under the
Securities Act of 1933, as amended.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification
relating to the Securities held by you in which we intend to
acquire a beneficial interest in accordance with your operating
procedures if any applicable statement herein is not correct on
such date, and in the absence of any such notification it may be
assumed that this certification applies as of such date.
We understand that this certificate is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchaser.
Dated:_______________, ____
By:_______________________________________
As, or as agent for, the beneficial
acquiror of the Securities to which
this certificate relates.
ANNEX C-1
ANNEX D
FORM OF CERTIFICATION FOR TRANSFER OR
EXCHANGE OF RESTRICTED GLOBAL SECURITY
TO TEMPORARY REGULATION S GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.6(c)(3) of the Indenture)
Bank One, NA
Re: ClimaChem, Inc. 10 3/4% Notes due 2007 (the
"Securities")
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and Bank One, NA, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to U.S.$________ aggregate principal
amount of Securities which are held in the form of the Restricted
Global Security (CUSIP No. ________) with the Depository in the
name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest in
the Securities to a Person who will take delivery thereof in the
form of an equal aggregate principal amount of Securities evidenced
by the Temporary Regulation S Global Security (CUSIP No. ________)
to be held with the Depository in the name of [Euroclear] [Cedel
Bank, societe anonyme].
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that such transfer
has been effected in accordance with the transfer restrictions set
forth in the Securities and pursuant to and in accordance with
Regulation S under the Securities Act of 1933, as amended (the
"Securities Act"), and accordingly the Transferor does hereby
certify that:
(1) the offer of the Securities was not made to a person
in the United States;
[(2) at the time the buy order was originated, the
transferee was outside the United States or the Transferor and
any person acting on its behalf reasonably believed that the
transferee was outside the United States;] 1
_________________
1 Insert one of these two provisions, which come from the
definition of "offshore transaction" in Regulation S.
ANNEX D-1
[(2) the transaction was executed in, on or through the
facilities of a designated offshore securities market and
neither the Transferor nor any person acting on our behalf
knows that the transaction was pre-arranged with a buyer in
the United States;] 1
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial
interest being transferred as described above is to be held
with the Depository in the name of [Euroclear] [Cedel Bank,
societe anonyme].
We understand that this certificate is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchaser.
Dated: _______________
[Insert Name of Transferor]
By:_____________________________
Name:
Title:
cc: ClimaChem, Inc.
ANNEX D-2
ANNEX E
FORM OF CERTIFICATION FOR TRANSFER OR EXCHANGE OF
RESTRICTED GLOBAL SECURITY TO
PERMANENT REGULATION S GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.6(c)(4) of the Indenture)
Bank One, NA
Re: ClimaChem, Inc. 10 3/4% Senior Notes due 2007 (the
"Securities")
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and Bank One, NA, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to U.S.$________ aggregate principal
amount of Securities which are held in the form of the Restricted
Global Security (CUSIP No. ________) with the Depository in the
name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest in
the Securities to a Person who will take delivery thereof in the
form of an equal aggregate principal amount of Securities evidenced
by the Permanent Regulation S Global Security (CUSIP No. ________).
In connection with such request, and in respect of such
Securities, the Transferor does hereby certify that such transfer
has been effected in accordance with the transfer restrictions set
forth in the Securities and,
(1) with respect to transfers made in reliance on Regulation S
under the Securities Act of 1933, as amended (the "Securities
Act"), the Transferor does hereby certify that:
(A) the offer of the Securities was not made to a person
in the United States;
[(B) at the time the buy order was originated, the
transferee was outside the United States or the Transferor and
any person acting on its behalf reasonably believed that the
transferee was outside the United States;] 1
________________
1 Insert one of these two provisions, which come from the definition
of "offshore transactions" in Regulation S.
ANNEX E-1
[(B) the transaction was executed in, on or through the
facilities of a designated offshore securities market and
neither the Transferor nor any person acting on our behalf
knows that the transaction was pre-arranged with a buyer in
the United States;] 1
(C) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable; and
(D) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
(2) with respect to transfers made in reliance on Rule 144 under
the Securities Act, the Transferor does hereby certify that the
Securities are being transferred in a transaction permitted by Rule
144 under the Securities Act.
We understand that this certificate is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchaser.
Dated: _______________
[Insert Name of Transferor]
By:_____________________________
Name:
Title:
cc: ClimaChem, Inc.
ANNEX E-2
ANNEX F
FORM OF CERTIFICATION FOR TRANSFER OR EXCHANGE OF
TEMPORARY REGULATION S GLOBAL SECURITY
OR PERMANENT REGULATION S GLOBAL SECURITY TO
RESTRICTED GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.6(c)(5) of the Indenture)
Bank One, NA
Re: ClimaChem, Inc. 10 3/4% Senior Notes due 2007 (the
"Securities")
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and Bank One, NA, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to U.S.$________ aggregate principal
amount of Securities which are evidenced by a [Temporary Regulation
S Global Security (CUSIP No. ______)] [Permanent Regulation S
Global Security (CUSIP No. ______)] and held with the Depository
through [Euroclear] [Cedel] (Common Code ________) in the name of
[insert name of transferor] (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in Securities to
a person that will take delivery thereof in the form of an equal
principal amount of Securities evidenced by a Restricted Global
Security of the same series and of like tenor as the Securities
(CUSIP No. ________).
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that either (i) such
transfer is being effected pursuant to and in accordance with Rule
144A under the Securities Act and, accordingly, the Transferor does
hereby further certify that the Securities are being transferred to
a person that the Transferor reasonably believes is purchasing the
Securities for its own account, or for one or more accounts with
respect to which such person exercises sole investment discretion,
and such person and each such account is a "qualified institutional
buyer" within the meaning of Rule 144A, in each case in a
transaction meeting the requirements of Rule 144A and in accordance
with any applicable securities laws of any State of the United
States or (ii) such transfer is being made to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act, for its own account or one or
more other institutional "accredited investors," that furnishes to
you (a) a written certification containing certain representations
and agreements relating to the restrictions on transfer of such
Security (the form of which is to be provided by you) and (b) an
ANNEX F-1
opinion of counsel reasonably satisfactory to the Issuer if the
Transfer is of a Temporary Regulation S Global Security or if the
Issuer so requests, in each case in accordance with an applicable
securities law of any State of the United States.
This certificate and the statements contained herein are
made for your benefit and the benefit of the Issuer and the Initial
Purchaser.
Dated: _______________
[Insert Name of Transferor]
By:_____________________________
Name:
Title:
cc: ClimaChem, Inc.
ANNEX F-2
ANNEX G-1
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL RESTRICTED SECURITY TO
RESTRICTED GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.6(c)(6) of the Indenture)
Bank One, NA
Re: ClimaChem, Inc. 10 3/4% Senior Notes due 2007
(the "Securities")
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and Bank One, NA, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $________ principal amount of
Restricted Securities held in definitive form (CUSIP No. _____) by
[insert name of transferor] (the "Transferor"). The Transferor has
requested an exchange or transfer of such Securities.
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that (i) such
Securities are owned by the Transferor and are being exchanged
without transfer or (ii) such transfer has been effected pursuant
to and in accordance with Rule 144A or Rule 144 under the United
States Securities Act of 1933, as amended (the "Securities Act") or
to an institutional "accredited investor" under Rule 501(a)(1),
(2), (3) or (7) under the Securities Act and accordingly the
Transferor does hereby further certify that:
(1) if the transfer has been effected pursuant to Rule
144A:
(A) the Securities are being transferred to a
person that the Transferor reasonably believes is
purchasing the Securities for its own account, or for one
or more accounts with respect to which such Person
exercises sole investment discretion;
(B) such Person and each such account is a
"qualified institutional buyer" within the meaning of
Rule 144A and the Securities have been transferred in a
transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any
State of the United States.
(2) if the transfer is to an institutional "accredited
investor," such transfer is being made to an
institutional "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act,
ANNEX G-1-1
for its own account or one or more other institutional
"accredited investors," that furnishes to you (a) a
written certification containing certain representations
and agreements relating to the restrictions on transfer
of such Security (the form of which is to be provided by
you) and (b) an opinion of counsel reasonably
satisfactory to the Issuer if the Issuer so requests, in
each case in accordance with any applicable securities
law of any State of the United States.
(3) if the transfer has been effected pursuant to Rule
144:
(A) more than two years has elapsed since the date
of the closing of the initial placement of the Securities
pursuant to the Purchase Agreement; and
(B) the Securities have been transferred in a
transaction permitted by Rule 144 and made in accordance
with any applicable securities laws of any state of the
United States.
We understand that this certificate is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchaser.
Dated: _______________, ____
[Insert Name of Transferor]
By:_____________________________
Name:
Title:
cc: ClimaChem, Inc.
ANNEX G-1-2
ANNEX G-2
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL RESTRICTED SECURITY TO
PERMANENT REGULATION S GLOBAL SECURITY
OR TEMPORARY REGULATION S GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.6(c)(6) of the Indenture)
Bank One, NA
Re: ClimaChem, Inc. 10 3/4% Senior Notes due 2007 (the
"Securities")
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and Bank One, NA, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $________ principal amount of
Restricted Securities held in definitive form (CUSIP No. _____) by
[insert name of transferor] (the "Transferor"). The Transferor has
requested an exchange or transfer of such Securities.
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that (i) such
Securities are owned by the Transferor and are being exchanged
without transfer or (ii) such transfer has been effected pursuant
to and in accordance with (a) Rule 903 or Rule 904 under the
Securities Act of 1933, as amended (the "Act"), or (b) Rule 144
under the Act, and accordingly the Transferor does hereby further
certify that:
(1) if the transfer has been effected pursuant to Rule
903 or Rule 904:
(A) the offer of the Securities was not made to a
person in the United States;
(B) either;
(i) at the time the buy order was originated,
the transferee was outside the United States or the
Transferor and any person acting on its behalf
reasonably believed that the transferee was outside
the United States, or
(ii) the transaction was executed in, on or
through the facilities of a designated offshore
securities market and neither the Transferor nor
any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the
United States;
ANNEX G-2-1
(C) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or
904(b) of Regulation S, as applicable;
(D) the transaction is not part of a plan or scheme
to evade the registration requirements of the Act; and
(E) if such transfer is to occur during the
Restricted Period, upon completion of the transaction,
the beneficial interest being transferred as described
above was held with the Depository through [Euroclear]
[CEDEL]; or
(2) if the transfer has been effected pursuant to Rule
144:
(A) more than two years has elapsed since the date
of the closing of the initial placement of the Securities
pursuant to the Purchase Agreement; and
(B) the Securities have been transferred in a
transaction permitted by Rule 144 and made in accordance
with any applicable securities laws of any state of the
United States.
We understand that this certificate is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchaser.
Dated: _______________, ____
[Insert Name of Transferor]
By:_____________________________
Name:
Title:
cc: ClimaChem, Inc.
ANNEX G-2-2
ANNEX H-1
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL PERMANENT REGULATION S
SECURITY TO RESTRICTED GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.6(c)(7) of the Indenture)
Bank One, NA
Re: ClimaChem, Inc. 10 3/4% Senior Notes due 2007 (the
"Securities")
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and Bank One, NA, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $________ principal amount of
Restricted Securities held in definitive form (CUSIP No. _____) by
[insert name of transferor] (the "Transferor"). The Transferor has
requested an exchange or transfer of such Securities.
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that such Securities
are owned by the Transferor and are being exchanged without
transfer or either (i) such transfer is being effected pursuant to
and in accordance with Rule 144A under the Securities Act and,
accordingly, the Transferor does hereby further certify that the
Securities are being transferred to a person that the Transferor
reasonably believes is purchasing the Securities for its own
account, or for one or more accounts with respect to which such
person exercises sole investment discretion, and such person and
each such account is a "qualified institutional buyer" within the
meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A and in accordance with any applicable
securities laws of any state of the United States or (ii) such
transfer is being made to an institutional "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, for its own account or one or more other
institutional "accredited investors," that furnishes to you (a) a
written certification containing certain representations and
agreements relating to the restrictions on transfer of such
Security (the form of which is to be provided by you) and (b) an
opinion of counsel reasonably satisfactory to the Issuer if the
Issuer so requests, in each case in accordance with any applicable
securities law of any State of the United States.
We understand that this certificate is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceeding. This
ANNEX H-1-1
certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchaser.
Dated: _______________, ____
[Insert Name of Transferor]
By:_____________________________
Name:
Title:
cc: ClimaChem, Inc.
ANNEX H-1-2
ANNEX H-2
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL PERMANENT REGULATION S
SECURITY TO PERMANENT REGULATION S GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.6(c)(7) of the Indenture)
Bank One, NA
Re: ClimaChem, Inc. 10 3/4% Senior Notes due 2007 (the
"Securities")
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and Bank One, NA, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $________ principal amount of
Restricted Securities held in definitive form (CUSIP No. _____) by
[insert name of transferor] (the "Transferor"). The Transferor has
requested an exchange or transfer of such Securities.
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that (i) such
Securities are owned by the Transferor and are being exchanged
without transfer or (ii) such transfer has been effected pursuant
to and in accordance with (a) Rule 903 or Rule 904 under the
Securities Act of 1933, as amended (the "Act"), or (b) Rule 144
under the Act, and accordingly the Transferor does hereby further
certify that:
(1) if the transfer has been effected pursuant to Rule
903 or Rule 904:
(A) the offer of the Securities was not made to a
person in the United States;
(B) either;
(i) at the time the buy order was originated,
the transferee was outside the United States or the
Transferor and any person acting on its behalf
reasonably believed that the transferee was outside
the United States, or
(ii) the transaction was executed in, on or
through the facilities of a designated offshore
securities market and neither the Transferor nor
any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the
United States;
ANNEX H-2-1
(C) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or
904(b) of Regulation S, as applicable;
(D) the transaction is not part of a plan or scheme
to evade the registration requirements of the Act; and
(E) if such transfer is to occur during the
Restricted Period, upon completion of the transaction,
the beneficial interest being transferred as described
above was held with the Depository through [Euroclear]
[CEDEL]; or
(2) if the transfer has been effected pursuant to Rule
144:
(A) more than two years has elapsed since the date
of the closing of the initial placement of the Securities
pursuant to the Purchase Agreement; and
(B) the Securities have been transferred in a
transaction permitted by Rule 144 and made in accordance
with any applicable securities laws of any state of the
United States.
We understand that this certificate is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchaser.
Dated: _______________, ____
[Insert Name of Transferor]
By:_____________________________
Name:
Title:
cc: ClimaChem, Inc.
ANNEX H-2-2
ANNEX I
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF RESTRICTED GLOBAL SECURITY
TO RESTRICTED GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.6(c)(8) of the Indenture)
Bank One, NA
Re: ClimaChem, Inc. 10 3/4% Senior Notes due 2007 (the
"Securities")
Reference is hereby made to the Indenture, dated as of
November 26, 1997 (the "Indenture"), between ClimaChem, Inc., as
Issuer, and Bank One, NA, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $________ principal amount of
Restricted Securities held in definitive form (CUSIP No. _____) by
[insert name of transferor] (the "Transferor"). The Transferor has
requested an exchange or transfer of such Securities.
In connection with such request and in respect of such
Securities, the Transferor does hereby certify that such Securities
are owned by the Transferor and are being exchanged without
transfer or either (i) such transfer is being effected pursuant to
and in accordance with Rule 144A under the Securities Act and,
accordingly, the Transferor does hereby further certify that the
Securities are being transferred to a person that the Transferor
reasonably believes is purchasing the Securities for its own
account, or for one or more accounts with respect to which such
person exercises sole investment discretion, and such person and
each such account is a "qualified institutional buyer" within the
meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A and in accordance with any applicable
securities laws of any state of the United States or (ii) such
transfer is being made to an institutional "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, for its own account or one or more other
institutional "accredited investors," that furnishes to you (a) a
written certification containing certain representations and
agreements relating to the restrictions on transfer of such
Security (the form of which is to be provided by you) and (b) an
opinion of counsel reasonably satisfactory to the Issuer if the
Issuer so requests, in each case in accordance with any applicable
securities law of any State of the United States.
We understand that this certificate is required in
connection with certain securities laws of the United States. In
connection therewith, if administrative or legal proceedings are
commenced or threatened in connection with which this certificate
is or would be relevant, we irrevocably authorize you to produce
this certificate to any interested party in such proceeding. This
ANNEX I-1
certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchaser.
Dated: _______________, ____
[Insert Name of Transferor]
By:_____________________________
Name:
Title:
cc: ClimaChem, Inc.
ANNEX I-2
CLIMACHEM, INC.
$105,000,000 10 % Senior Notes due 2007
REGISTRATION RIGHTS AGREEMENT
November 26, 1997
Wasserstein Perella Securities, Inc.
31 W. 52nd Street
New York, New York 10019
Ladies and Gentlemen:
CLIMACHEM, INC., an Oklahoma corporation (the
"Company"), is issuing and selling to Wasserstein Perella
Securities, Inc. (the "Initial Purchaser"), upon the
terms set forth in a Purchase Agreement, dated as of
November 21, 1997 (the "Purchase Agreement"),
$100,000,000 aggregate principal amount of its 10 %
Senior Notes due 2007, Series A, including the guarantees
endorsed thereon (the "Notes"). As an inducement to the
Initial Purchaser to enter into the Purchase Agreement,
the Company and the guarantors (the "Guarantors") named
in the Purchase Agreement agree with the Initial Purchas-
er, for the benefit of the holders of the Securities
(defined below) (including, without limitation, the
Initial Purchaser), as follows:
1. Definitions
Capitalized terms used herein without defini-
tion shall have their respective meanings set forth in
the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:
Advice: See Section 6(s).
Agreement: This Registration Rights Agreement.
Applicable Period: See Section 2(f).
Business Days: Any day other than (i) Saturday
or Sunday, or (ii) a day on which banking institutions in
the State of New York are authorized or obligated by law
or executive order to be closed.
Closing Date: November 26, 1997.
Effectiveness Date: The 150th day following
the Closing Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(a).
Exchange Act: The Securities Exchange Act of
1934, as amended, and the rules and regulations of the
SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
Exchange Offer Registration Statement: See
Section 2(a).
Exchange Securities: 10 % Senior Notes due
2007, Series B, of the Company, including like guarantees
endorsed thereon, identical in all respects to the Notes,
except for references to series and restrictive legends.
Filing Date: The 60th day following the
Closing Date.
Holder: Each holder of Registrable Securities.
2
Indenture: The Indenture, dated the date
hereof, between the Company and Bank One, NA, as trustee,
pursuant to which the Notes are being issued, as amended
or supplemented from time to time, in accordance with the
terms thereof.
Initial Shelf Registration: See Section 3(a).
Liquidated Damages Amount: See Section 4(a).
Losses: See Section 8(a).
NASD: The National Association of Securities
Dealers, Inc.
Participating Broker-Dealer: See Section 2(f).
Person: An individual, trustee, corporation,
limited liability company, partnership, joint stock
company, joint venture, trust, unincorporated
organization or government or any agency or political
subdivision thereof, union, business association, firm or
other entity.
Private Exchange: See Section 2(g).
Private Exchange Securities: See Section 2(g).
Prospectus: The prospectus included in any
Registration Statement (including, without limitation, a
prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registra-
tion statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of
the offering of any portion of the Securities covered by
such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospec-
tus.
Registrable Securities: (i) Notes, (ii)
Private Exchange Securities and (iii) Exchange Securities
received in the Exchange Offer that may not be sold
without restriction under federal or state securities
law.
3
Registration Statement: Any registration
statement of the Company that covers any of the Securi-
ties pursuant to the provisions of this Agreement, in-
cluding the Prospectus, amendments and supplements to
such registration statement, including post-effective
amendments, all exhibits, and all material incorporated
by reference or deemed to be incorporated by reference in
such registration statement.
Rule 144: Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or any
similar rule (other than Rule 144A) or regulation
hereafter adopted by the SEC.
Rule 144A: Rule 144A under the Securities Act,
as such Rule may be amended from time to time, or any
similar rule (other than Rule 144) or regulation
hereafter adopted by the SEC.
Rule 415: Rule 415 under the Securities Act,
as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The Notes, the Private Exchange
Securities and the Exchange Securities, collectively.
Securities Act: The Securities Act of 1933, as
amended, and the rules and regulations of the SEC promul-
gated thereunder.
Shelf Notice: See Section 2(i).
Shelf Registration: The Initial Shelf Regis-
tration and any Subsequent Shelf Registration.
Special Counsel: Counsel chosen by the holders
of a majority in aggregate principal amount of Securi-
ties.
Subsequent Shelf Registration: See Section
3(b).
TIA: The Trust Indenture Act of 1939, as
amended.
4
Trustee: The trustee under the Indenture and,
if any, the trustee under any indenture governing the
Exchange Securities or the Private Exchange Securities.
Underwritten Registration or Underwritten
Offering: A registration in which securities of the
Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
(a) The Company and the Guarantors shall (i)
prepare and file with the SEC promptly after the date
hereof, but in no event later than the Filing Date, a
registration statement (the "Exchange Offer Registration
Statement") on an appropriate form under the Securities
Act with respect to a proposed offer (the "Exchange
Offer") to the Holders to issue and deliver to such
Holders, in exchange for the Notes, a like aggregate
principal amount of Exchange Securities, (ii) use their
best efforts to cause the Exchange Offer Registration
Statement to become effective as promptly as practicable
after the filing thereof, but in no event later than the
Effectiveness Date, (iii) keep the Exchange Offer Regis-
tration Statement effective until the consummation of the
Exchange Offer pursuant to its terms, and (iv) unless the
Exchange Offer would not be permitted by a policy of the
SEC, commence the Exchange Offer and use their best
efforts to issue, on or prior to 30 business days after
the date on which the Exchange Offer Registration State-
ment is declared effective, Exchange Securities in ex-
change for all Notes tendered prior thereto in the
Exchange Offer. The Exchange Offer shall not be subject to
any conditions, other than that the Exchange Offer does
not violate applicable law or any applicable interpreta-
tion of the Staff of the SEC.
(b) The Exchange Securities shall be issued
under, and entitled to the benefits of, the Indenture or
a trust indenture that is identical to the Indenture
(other than such changes as are necessary to comply with
any requirements of the SEC to effect or maintain the
qualification thereof under the TIA).
(c) In connection with the Exchange Offer, the
Company and the Guarantors shall:
5
(i) mail to each Holder a copy of the
Prospectus forming part of the Exchange Offer Registra-
tion Statement, together with an appropriate letter of
transmittal that is an exhibit thereto and related
documents;
(ii) keep the Exchange Offer open for not
less than 30 days after the date notice thereof is mailed
to the Holders (or longer if required by applicable law);
(iii) utilize the services of a
depository for the Exchange Offer with an address in the
Borough of Manhattan, The City of New York;
(iv) permit Holders to withdraw tendered
Notes at any time prior to the close of business, New
York time, on the last Business Day on which the Exchange
Offer shall remain open; and
(v) otherwise comply with all laws appli-
cable to the Exchange Offer.
(d) As soon as practicable after the close of
the Exchange Offer, the Company and the Guarantors shall:
(i) accept for exchange all Notes validly
tendered and not validly withdrawn pursuant to the Ex-
change Offer;
(ii) deliver to the Trustee for cancella-
tion all Notes so accepted for exchange; and
(iii) cause the Trustee promptly to
authenticate and deliver to each Holder of Notes,
Exchange Securities equal in aggregate principal amount
to the Notes of such Holder so accepted for exchange.
(e) Interest on each Exchange Security and
Private Exchange Security will accrue from the last
interest payment date on which interest was paid on the
Notes surrendered in exchange therefor or, if no interest
has been paid on the Notes, from the date of original
issue of the Notes. Each Exchange Security and Private
Exchange Security shall bear interest at the rate set
forth thereon; provided that interest with respect to the
6
period prior to the issuance thereof shall accrue at the
rate or rates borne by the Notes from time to time during
such period.
(f) The Company and the Guarantors shall
include within the Prospectus contained in the Exchange
Offer Registration Statement a section entitled "Plan of
Distribution," containing a summary statement of the
positions taken or policies made by the Staff of the SEC
with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of Exchange Securities
received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"). Such "Plan of
Distribution" section shall also allow the use of the
Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including
(without limitation) all Participating Brokers-Dealers,
and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange
Securities. The Company shall use its best efforts to
keep the Exchange Offer Registration Statement effective
and to amend and supplement the Prospectus to be lawfully
delivered by all Persons subject to the prospectus
delivery requirement of the Securities Act for such
period of time as such Persons must comply with such
requirements in order to resell the Exchange Securities;
provided that such period shall not exceed 180 days after
consummation of the Exchange Offer (as such period may be
extended pursuant to the last paragraph of Section 6
hereof (the "Applicable Period")).
(g) If, prior to consummation of the Exchange
Offer, the Initial Purchaser holds any Notes acquired by
it and having the status as an unsold allotment in the
initial distribution, the Company shall, upon the request
of the Initial Purchaser, simultaneously with the
delivery of the Exchange Securities in the Initial Ex-
change Offer, issue (pursuant to the same indenture as
the Exchange Securities) and deliver to the Initial
Purchaser, in exchange for the Securities held by the
Initial Purchaser (the "Private Exchange"), a like
principal amount of debt securities of the Company that
are identical to the Exchange Securities (the "Private
Exchange Securities"). The Private Exchange Securities
shall bear the same CUSIP number as the Exchange
Securities.
7
(h) The Company may require each Holder
participating in the Exchange Offer to represent to the
Company that at the time of the consummation of the
Exchange Offer (i) any Exchange Securities received by
such Holder in the Exchange Offer will be acquired in the
ordinary course of its business, (ii) such Holder will
have no arrangement or understanding with any Person to
participate in the distribution of the Exchange
Securities within the meaning of the Securities Act or
resale of the Exchange Securities in violation of the
Securities Act and (iii) if such Holder is not a broker-
dealer, that it is not engaged in and does not intend to
engage in, the distribution of the Exchange Securities,
(iv) if such Holder is a broker-dealer that will receive
Exchange Securities for its own account in exchange for
Notes that were acquired as a result of market-making or
other trading activities, that it will deliver a prospec-
tus, as required by law, in connection with any resale of
such Exchange Securities, and (v) if such Holder is an
affiliate, that it will comply with the registration and
prospectus delivery requirements of the Securities Act
applicable to it.
(i) If (i) prior to the consummation of the
Exchange Offer, either the Company or the Holders of a
majority in aggregate principal amount of Registrable
Securities determines in its or their reasonable
judgment that (A) the Exchange Securities would not,
upon receipt, be tradeable by the Holders thereof
without restriction under the Securities Act and the
Exchange Act and without material restrictions under
applicable Blue Sky or state securities laws, or (B) the
interests of the Holders under this Agreement, taken as
a whole, would be materially adversely affected by the
consummation of the Exchange Offer, (ii) applicable
interpretations of the Staff of the SEC would not permit
the consummation of the Exchange Offer prior to the
Effectiveness Date, (iii) subsequent to the consummation
of the Private Exchange but within one year of the
Closing Date, the Initial Purchaser so requests, (iv)
the Exchange Offer is not consummated within 180 days of
the Closing Date for any reason or (v) in the case of
any Holder not permitted to participate in the Exchange
Offer or of any Holder participating in the Exchange
Offer that receives Exchange Securities that may not be
sold without restriction under state and federal
securities laws (other than due solely to the status of
such Holder as an affiliate of the Company within the
meaning of the Securities Act) and, in either case
contemplated by this clause (v), such Holder notifies
the Company within six months of consummation of the
8
Exchange Offer, then the Company shall promptly deliver
to the Holders (or in the case of any occurrence of the
event described in clause (v) hereof, to any such
Holder) and the Trustee notice thereof (the "Shelf No-
tice") and shall as promptly as possible thereafter file
an Initial Shelf Registration pursuant to Section 3.
3. Shelf Registration
If a Shelf Notice is required to be delivered
pursuant to Section 2(i)(i), (ii), (iii) or (iv), then
this Section 3 shall apply to all Registrable Securi-
ties. Otherwise, upon consummation of the Exchange
Offer in accordance with Section 2, the provisions of
this section shall apply solely with respect to (i)
Notes held by any Holder thereof not permitted to
participate in the Exchange Offer and (ii) Exchange
Securities that are not freely tradeable as contemplated
by Section 2(i)(v) hereof.
(a) Initial Shelf Registration. The Company
and the Guarantors shall prepare and file with the SEC a
Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of
the Registrable Securities (the "Initial Shelf
Registration"). If the Company and the Guarantors have
not yet filed an Exchange Offer, the Company and the
Guarantors shall file with the SEC the Initial Shelf
Registration on or prior to the Filing Date. Otherwise,
the Company and the Guarantors shall use their best
efforts to file the Initial Shelf Registration within 20
days of the delivery of the Shelf Notice or as promptly
as possible following the request of the Initial
Purchaser. The Initial Shelf Registration shall be on
Form S-1 or another appropriate form permitting regis-
tration of such Registrable Securities for resale by
such holders in the manner or manners designated by them
(including, without limitation, one or more underwritten
offerings). The Company and the Guarantors shall (i)
not permit any securities other than the Registrable
Securities to be included in any Shelf Registration, and
(ii) use their best efforts to cause the Initial Shelf
Registration to be declared effective under the Securi-
ties Act as promptly as practicable after the filing
thereof and to keep the Initial Shelf Registration
continuously effective under the Securities Act until
the date that is 24 months from the Effectiveness Date
(subject to extension pursuant to the last paragraph of
Section 6 hereof) (the "Effectiveness Period"), or such
shorter period ending when (i) all Registrable
9
Securities covered by the Initial Shelf Registration
have been sold or (ii) a Subsequent Shelf Registration
covering all of the Registrable Securities has been
declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If any
Shelf Registration ceases to be effective for any reason
at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered
thereunder), the Company and the Guarantors shall use
their best efforts to obtain the prompt withdrawal of
any order suspending the effectiveness thereof, and in
any event shall within 30 days of such cessation of
effectiveness amend the Shelf Registration in a manner
reasonably expected to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to
Rule 415 covering all of the Registrable Securities (a
"Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Company and the Guarantors
shall use their best efforts to cause the Subsequent
Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such
Subsequent Shelf Registration continuously effective for
a period equal to the number of days in the Effec-
tiveness Period less the aggregate number of days during
which the Initial Shelf Registration, and any Subsequent
Shelf Registration, was previously effective.
4. Liquidated Damages.
(a) The Company and the Guarantors acknowl-
edge and agree that the holders of Registrable Securi-
ties will suffer damages, and that it would not be
feasible to ascertain the extent of such damages with
precision, if the Company and the Guarantors fail to
fulfill their obligations hereunder. Accordingly, in
the event of such failure, the Company and the
Guarantors jointly and severally agree to pay liquidated
damages to each Holder under the circumstances and to
the extent set forth below:
(i) if neither the Exchange Offer Registra-
tion Statement nor the Initial Shelf Registration has
been filed with the SEC on or prior to the Filing Date;
or
10
(ii) if neither the Exchange Offer
Registration Statement nor the Initial Shelf Registra-
tion is declared effective by the SEC on or prior to the
Effectiveness Date; or
(iii) if the Company has not exchanged
Exchange Securities for all Notes validly tendered in
accordance with the terms of the Exchange Offer within
30 business days after the date on which an Exchange
Offer Registration Statement is declared effective by
the SEC; or
(iv) if a Shelf Registration is filed and
declared effective by the SEC but thereafter ceases to
be effective without being succeeded within 30 days by a
Subsequent Shelf Registration filed and declared effec-
tive;
(each of the foregoing a "Registration Default," and the
date on which the Registration Default occurs being
referred to herein as an "Event Date").
Upon the occurrence of any Registration
Default, the Company shall pay, or cause to be paid (and
the Guarantors hereby guarantee the payment of), in
addition to amounts otherwise due under the Indenture
and the Registrable Securities, as liquidated damages,
and not as a penalty, to each holder of a Registrable
Security, an additional amount (the "Liquidated Damages
Amount") equal to one-half of one percent (0.5%) per
annum of the principal amount of the Registrable
Securities held by such Holder during the first 90-day
period immediately following such Event Date, increasing
by an additional one-half of one percent (0.5%) per
annum of the principal amount of such Registrable
Securities during each subsequent 90-day period up to a
maximum Liquidated Damages Amount equal to two percent
(2.0%) per annum of the principal amount of the
Registrable Securities; provided that such liquidated
damages will, in each case, cease to accrue (subject to
the occurrence of another Registration Default) on the
date on which all Registration Defaults have been cured.
A Registration Default under clause (i) above shall be
cured on the date that either the Exchange Offer Regis-
tration Statement or the Initial Shelf Registration is
filed with the SEC; a Registration Default under clause
(ii) above shall be cured on the date that either the
Exchange Offer Registration Statement or the Initial
Shelf Registration is declared effective by the SEC; a
11
Registration Default under clause (iii) above shall be
cured on the earlier of the date (A) the Exchange Offer
is consummated with respect to all Notes validly ten-
dered or (B) an Initial Shelf Registration is declared
effective; and a Registration Default under clause (iv)
above shall be cured on the earlier of (A) the date on
which the applicable Shelf Registration is no longer
subject to an order suspending the effectiveness thereof
or proceedings relating thereto or (B) a new Subsequent
Shelf Registration is declared effective.
(b) The Company shall notify the Trustee
within five Business Days after each Event Date. The
Company shall pay the liquidated damages due on the
Registrable Securities by depositing with the Trustee,
in trust, for the benefit of the Holders thereof, by
12:00 noon, New York City time, on or before the appli-
cable semi-annual interest payment date for the Regis-
trable Securities, immediately available funds in sums
sufficient to pay the liquidated damages then due. The
Liquidated Damages Amount due shall be payable on each
interest payment date to the record holder of Registra-
ble Securities entitled to receive the interest payment
to be made on such date as set forth in the Indenture.
5. Hold-Back Agreements
The Company and the Guarantors agree (i)
without the prior written consent of the Holders of a
majority of the aggregate principal amount of the then
outstanding Securities, not to effect any public or pri-
vate sale or distribution (including a sale pursuant to
Regulation D under the Securities Act) of any securities
(other than the Securities) the same as or substantially
similar to those covered by a Registration Statement
filed pursuant to Section 2 or 3 hereof, or any
securities convertible into or exchangeable or exercis-
able for such securities, during the 10 days prior to,
and during the 90-day period beginning on, (A) the
effective date of any Registration Statement filed
pursuant to Sections 2 and 3 hereof unless the Holders
of a majority in aggregate principal amount of
Registrable Securities to be included in such Registra-
tion Statement consent or (B) the commencement of an
underwritten public distribution of Registrable Securi-
ties, where the managing underwriter so requests; and
(ii) to cause each holder of such securities (other than
the Securities) that are the same as or substantially
12
similar to Registrable Securities issued at any time
after the date of this Agreement (other than securities
purchased in a registered public offering) to agree not
to effect any public sale or distribution of any such
securities during such periods, including a sale
pursuant to Rule 144 or Rule 144A.
6. Registration Procedures
In connection with the registration of any
Securities pursuant to Sections 2 or 3 hereof, each of
the Company and the Guarantors shall effect such
registrations pursuant to the terms of this Agreement to
permit the sale of such Securities in accordance with
the intended method or methods of disposition thereof,
and pursuant thereto the Company and the Guarantors
shall:
(a) Prepare and file with the SEC, as soon as
practicable after the date hereof but in any event on or
prior to the Filing Date, a Registration Statement or
Registration Statements as prescribed by Section 2 or 3,
and use its best efforts to cause each such Registration
Statement to become effective and remain effective as
provided herein; provided, that, if (i) such filing is
pursuant to Section 3 or (ii) a Prospectus contained in
an Exchange Offer Registration Statement filed pursuant
to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Securities during the Applicable
Period, before filing any Registration Statement or Pro-
spectus or any amendments or supplements thereto, the
Company and the Guarantors shall, if requested, furnish
to and afford the Holders of the Registrable Securities
covered by such Registration Statement, their Special
Counsel, each Participating Broker-Dealer, the managing
underwriters, if any, and their counsel a reasonable
opportunity to review and make available for inspection
by such Persons copies of all such documents (including
copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed,
such financial and other information and books and re-
cords of the Company and the Guarantors, and cause the
officers, directors and employees of the Company and the
Guarantors, Company counsel and independent certified
public accountants of the Company, to respond to such
inquiries, as shall be necessary, in the opinion of
respective counsel to such Holders, Participating
Broker-Dealer and underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act.
13
The Company may require each Holder to agree to keep
confidential any non-public information relating to the
Company received by such Holder and not disclose such
information (other than to an Affiliate or prospective
purchaser who agrees to respect the confidentiality
provisions of this Section 6(a)) until such information
has been made generally available to the public unless
the release of such information is required by law or
necessary to respond to inquiries of regulatory authori-
ties (including the National Association of Insurance
Commissioners, or similar organizations or their
successors). Neither the Company nor the Guarantors
shall file any Registration Statement or Prospectus or
any amendments or supplements thereto in respect of
which the Holders must be afforded an opportunity to
review prior to the filing of such document, if the
Holders of a majority in aggregate principal amount of
the Registrable Securities covered by such Registration
Statement, their Special Counsel, any Participating
Broker-Dealer or the managing underwriters, if any, or
their counsel shall reasonably object.
(b) Provide an indenture trustee for the
Registrable Securities or the Exchange Securities, as
the case may be, and cause the Indenture (or other
indenture relating to the Registrable Securities) to be
qualified under the TIA not later than the effective
date of the first Registration Statement; and in connec-
tion therewith, to effect such changes to such indenture
as may be required for such indenture to be so qualified
in accordance with the terms of the TIA; and execute,
and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such
changes, and all other forms and documents required to
be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(c) Prepare and file with the SEC such amend-
ments and post-effective amendments to the Registration
Statement as may be necessary to keep such Registration
Statement continuously effective for the time periods
required hereby; cause the related Prospectus to be
supplemented by any Prospectus supplement required by
applicable law, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in
force) under the Securities Act; and comply in all
material respects with the provisions of the Securities
Act and the Exchange Act applicable thereto with respect
to the disposition of all securities covered by such
Registration Statement, as so amended, or in such
14
Prospectus, as so supplemented, in accordance with the
intended methods of distribution set forth in such
Registration Statement or Prospectus as so amended.
(d) Furnish to such selling Holders and
Participating Broker-Dealers who so request (i) upon the
Company's receipt, a copy of the order of the SEC de-
claring such Registration Statement and any post-effec-
tive amendment thereto effective and (ii) such
reasonable number of copies of such Registration State-
ment and of each amendment and supplement thereto (in
each case including any documents incorporated therein
by reference and all exhibits), (iii) such reasonable
number of copies of the Prospectus included in such
Registration Statement (including each preliminary Pro-
spectus), and such reasonable number of copies of the
final Prospectus as filed by the Company pursuant to
Rule 424(b) under the Securities Act, in conformity with
the requirements of the Securities Act, and (iv) such
other documents (including any amendments required to be
filed pursuant to clause (c) of this Section), as any
such Person may reasonably request. The Company and the
Guarantors hereby consent to the use of the Prospectus
by each of the selling Holders of Registrable Securities
or each such Participating Broker-Dealer, as the case
may be, and the underwriters or agents, if any, and
dealers (if any), in connection with the offering and
sale of the Registrable Securities covered by, or the
sale by Participating Broker-Dealers of the Exchange
Securities pursuant to, such Prospectus and any amend-
ment thereto.
(e) If (A) a Shelf Registration is filed
pursuant to Section 3 or (B) a Prospectus contained in
an Exchange Offer Registration Statement filed pursuant
to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Securities during the Applicable
Period, notify the selling Holders of Registrable
Securities, their Special Counsel, each Participating
Broker-Dealer and the managing underwriters, if any,
promptly (but in any event within two Business Days),
and confirm such notice in writing, (i) when a Prospec-
tus has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same
has become effective under the Securities Act, (ii) of
the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any
order preventing or suspending the use of any Prospectus
15
or the initiation of any proceedings for that purpose,
(iii) if, at any time when a Prospectus is required by
the Securities Act to be delivered in connection with
sales of the Registrable Securities, the representations
and warranties of the Company or any of the Guarantors
contained in any agreement (including any underwriting
agreement) contemplated by Section 6(n) below cease to
be true and correct in any material respect, (iv) of the
receipt by the Company or any of the Guarantors of any
notification with respect to the suspension of the
qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securi-
ties or the Exchange Securities to be sold by any
Participating Broker-Dealer for offer or sale in any
jurisdiction, or the contemplation, initiation or
threatening of any proceeding for such purpose, (v) of
the happening of any event that makes any statement made
in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or
that requires the making of any changes in such
Registration Statement, Prospectus or documents so that
it will not contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary to make the statements
therein, in light of the circumstances under which they
were made, not misleading, and (vi) of the Company's
reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.
(f) Use its reasonable efforts to register or
qualify, and, if applicable, to cooperate with the
selling Holders of Registrable Securities, the
underwriters, if any, and their respective counsel in
connection with the registration or qualification (or
exemption from such registration or qualification) of,
Securities to be included in a Registration Statement
for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any
selling Holder, Participating Broker-Dealer or the
managing underwriters reasonably request in writing;
and, if Securities are offered other than through an
Underwritten Offering, the Company shall cause its
counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed
pursuant to this Section 6(f) at the expense of the
Company; keep each such registration or qualification
(or exemption therefrom) effective during the period
such Registration Statement is required to be kept
effective; and do any and all other acts or things
necessary or advisable to enable the disposition in such
jurisdictions of the Securities covered by the
16
applicable Registration Statement, provided, however,
that none of the Company or the Guarantors shall be
required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) to
take action that would subject it to general service of
process in any jurisdiction where it is not so subject
or (iii) subject it to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not
then subject.
(g) Use its reasonable efforts to prevent the
issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or
suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any
of the Securities for sale in any jurisdiction, and, if
any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest
possible time.
(h) If (A) a Shelf Registration is filed
pursuant to Section 3 or (B) a Prospectus contained in
an Exchange Offer Registration Statement filed pursuant
to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Securities during the Applicable
Period, and if requested by the managing underwriters,
if any, or the Holders of a majority in aggregate
principal amount of the Registrable Securities, (i)
promptly incorporate in a Prospectus or post-effective
amendment such information as the managing underwriters,
if any, or such Holders reasonably request to be
included therein required to comply with any applicable
law and (ii) make all required filings of such Pro-
spectus or such post-effective amendment as soon as
practicable after the Company has received notification
of such matters required by Applicable Law to be
incorporated in such Prospectus or post-effective
amendment.
(i) If (A) a Shelf Registration is filed
pursuant to Section 3 or (B) a Prospectus contained in
an Exchange Offer Registration Statement filed pursuant
to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Securities during the Applicable
Period, cooperate with the selling Holders and the
managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates
shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust
17
Company ("DTC"); and enable such Registrable Securities
to be in such denominations and registered in such names
as the managing underwriters, if any, or Holders may
reasonably request.
(j) If (i) a Shelf Registration is filed
pursuant to Section 3 or (ii) a Prospectus contained in
an Exchange Offer Registration Statement filed pursuant
to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Securities during the Applicable
Period, upon the occurrence of any event contemplated by
paragraph 6(e)(v) or 6(e)(vi) above, as promptly as
practicable prepare a supplement or post-effective
amendment to the Registration Statement or a supplement
to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter
delivered to the purchasers of the Registrable
Securities being sold thereunder or to the purchasers of
the Exchange Securities to whom such Prospectus will be
delivered by a Participating Broker-Dealer, such
Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they
were made, not misleading.
(k) Use its reasonable efforts to cause the
Securities covered by a Registration Statement to be
rated with the appropriate rating agencies, if appro-
priate, if so requested by the Holders of a majority in
aggregate principal amount of Securities covered by such
Registration Statement or the managing underwriters, if
any.
(l) Prior to the effective date of the first
Registration Statement relating to the Securities, (i)
provide the applicable trustee with printed certificates
for the Securities in a form eligible for deposit with
DTC and (ii) provide a CUSIP number for each of the
Securities.
(m) Use its reasonable efforts to cause all
Securities covered by such Registration Statement to be
listed on each securities exchange, if any, on which
similar debt securities issued by the Company are then
listed.
18
(n) If a Shelf Registration is filed pursuant
to Section 3, enter into such agreements (including an
underwriting agreement in form, scope and substance as
is customary in Underwritten Offerings) and take all
such other actions in connection therewith (including
those reasonably requested by the managing underwriters,
if any, or the Holders of a majority in aggregate
principal amount of the Registrable Securities being
sold) in order to expedite or facilitate the regis-
tration or the disposition of such Registrable
Securities, and in such connection, whether or not an
underwriting agreement is entered into and whether or
not the registration is an Underwritten Registration,
(i) make such representations and warranties to the
Holders and the underwriters, if any, with respect to
the business of the Company and its subsidiaries, and
the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters
in Underwritten Offerings, and confirm the same if and
when reasonably requested; (ii) obtain an opinion of
counsel to the Company (which counsel and opinion (in
form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and
the Holders of a majority in principal amount of the
Registrable Securities being sold), addressed to each
selling Holder and each of the underwriters, if any,
covering the matters customarily covered in opinions
requested in Underwritten Offerings; (iii) obtain "cold
comfort" letters and updates thereof (which letters and
updates (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters)
from the independent certified public accountants of the
Company (and, if necessary, any other independent certi-
fied public accountants of any subsidiary of the Company
or of any business acquired by the Company for which
financial statements and financial data are, or are
required to be, included in the Registration Statement),
addressed to each of the underwriters and each selling
Holder, such letters to be in customary form and
covering matters of the type customarily covered in
"cold comfort" letters in connection with Underwritten
Offerings and such other matters as reasonably requested
by underwriters; and (iv) deliver such documents and
certificates as may be reasonably requested by the
Holders of a majority in principal amount of the Regis-
trable Securities being sold and the managing under-
writers, if any, to evidence the continued validity of
the representations and warranties of the Company and
its subsidiaries made pursuant to clause (i) above and
to evidence compliance with any conditions contained in
19
the underwriting agreement or other similar agreement
entered into by the Company.
(o) Comply with all applicable rules and
regulations of the SEC and make generally available to
its security holders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated
under the Securities Act) no later than 45 days after
the end of any 12-month period (or 90 days after the end
of any 12-month period if such period is a fiscal year)
(i) commencing on the first day of the fiscal quarter
following each fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement,
which statements shall cover said 12-month periods.
(p) Upon consummation of an Exchange Offer or
Private Exchange, obtain an opinion of counsel to the
Company (in form, scope and substance reasonably satis-
factory to the Initial Purchaser), addressed to all
Holders participating in the Exchange Offer or Private
Exchange, as the case may be, to the effect that (i) the
Company and the Guarantors have duly authorized,
executed and delivered the Exchange Securities or the
Private Exchange Securities, as the case may be, and the
Indenture and (ii) the Exchange Securities or the
Private Exchange Securities, as the case may be, and the
Indenture constitute legal, valid and binding obliga-
tions of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance
with their respective terms, except as such enforcement
may be subject to (x) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies
generally and (y) general principles of equity (regard-
less of whether such enforcement is sought in a proceed-
ing in equity or at law).
(q) If an Exchange Offer or Private Exchange
is to be consummated, upon delivery of the Registrable
Securities by such Holders to the Company (or to such
other Person as directed by the Company) in exchange for
the Exchange Securities or the Private Exchange Securi-
ties, as the case may be, the Company shall mark, or
caused to be marked, on such Registrable Securities that
20
such Registrable Securities are being cancelled in ex-
change for the Exchange Securities or the Private Ex-
change Securities, as the case may be; in no event shall
such Registrable Securities be marked as paid or other-
wise satisfied.
(r) Cooperate with each seller of Registrable
Securities covered by any Registration Statement and
each underwriter, if any, participating in the disposi-
tion of such Registrable Securities and their respective
counsel in connection with any filings required to be
made with the NASD.
(s) Use its best efforts to take all other
steps necessary to effect the registration of the Regis-
trable Securities covered by a Registration Statement
contemplated hereby.
The Company may require each seller of Regis-
trable Securities or Participating Broker-Dealer as to
which any registration is being effected to furnish to
the Company such information regarding such seller or
Participating Broker-Dealer and the distribution of such
Registrable Securities or Exchange Securities as the
Company may, from time to time, reasonably request in
writing. The Company may exclude from such registration
the Registrable Securities of any seller or Exchange
Securities of any Participating Broker-Dealer who unrea-
sonably fails to furnish such information.
Each Holder and each Participating Broker-
Dealer agrees by acquisition of such Registrable
Securities or Exchange Securities of any Participating
Broker-Dealer that, upon receipt of written notice from
the Company of the happening of any event of the kind
described in Section 6(e)(ii), 6(e)(iv), 6(e)(v) or
6(e)(vi), such Holder will forthwith discontinue
disposition (in the jurisdictions specified in a notice
of a 6(e)(iv) event, and elsewhere in a notice of a
6(e)(ii), 6(e)(v) or 6(e)(vi) event) of such Securities
covered by such Registration Statement or Prospectus
until such Holder's receipt of the copies of the supple-
mented or amended Prospectus contemplated by Section
6(j), or until it is advised in writing (the "Advice")
by the Company that offers or sales in a particular
jurisdiction may be resumed or that the use of the
applicable Prospectus may be resumed, as the case may
be, and has received copies of any amendments or
supplements thereto. If the Company shall give such
21
notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of
days during such periods from and including the date of
the giving of such notice to and including the date when
each seller of such Securities covered by such
Registration Statement shall have received (x) the
copies of the supplemented or amended Prospectus contem-
plated by Section 6(j) or (y) the Advice.
7. Registration Expenses
Subject to the terms of this Agreement, all
fees and expenses incident to the performance of or
compliance with this Agreement by the Company and the
Guarantors shall be borne by the Company and the
Guarantors whether or not the Exchange Offer or a Shelf
Registration is filed or becomes effective, including,
without limitation:
(i) all registration and filing
fees (including, without limitation, (A) fees with
respect to filings required to be made with the
NASD and (B) fees and expenses of compliance with
state securities or Blue Sky laws (including,
without limitation, reasonable fees and disburse-
ments of counsel in connection with Blue Sky
qualifications of the Registrable Securities or Ex-
change Securities and determination of the eligi-
bility of the Registrable Securities or Exchange
Securities for investment under the laws of such
jurisdictions (x) where the Holders are located, in
the case of the Exchange Securities, or (y) as pro-
vided in Section 6(f), in the case of Registrable
Securities or Exchange Securities to be sold by a
Participating Broker-Dealer during the Applicable
Period);
(ii) printing expenses (including,
without limitation, expenses of printing certifi-
cates for Registrable Securities or Exchange
Securities in a form eligible for deposit with DTC
and of printing Prospectuses if the printing of
Prospectuses is requested by the managing under-
writers, if any, or, in respect of Registrable
Securities or Exchange Securities to be sold by a
Participating Broker-Dealer during the Applicable
Period, by the Holders of a majority in aggregate
principal amount of the Registrable Securities
included in any Registration Statement or of such
Exchange Securities, as the case may be);
22
(iii) messenger, telephone,
duplication, word processing and delivery expenses
incurred by the Company in the performance of its
obligations hereunder;
(iv) fees and disbursements of
counsel for the Company;
(v) fees and disbursements of all
independent certified public accountants referred
to in Section 6(n)(iii) (including, without
limitation, the expenses of any special audit and
"cold comfort" letters required by or incident to
such performance);
(vi) fees and expenses of any
"qualified independent underwriter" or other
independent appraiser participating in an offering
pursuant to the rules and regulation of the NASD,
but only where the Company determines the need for
such a "qualified independent underwriter" arises
due to a relationship with the Company;
(vii) Securities Act liability
insurance, if the Company so desires such
insurance;
(viii) fees and expenses of all
other Persons retained by the Company; internal
expenses of the Company (including, without
limitation, all salaries and expenses of officers
and employees of the Company performing legal or
accounting duties); and the expense of any annual
audit; and
(ix) rating agency fees and the
fees and expenses incurred in connection with the
listing of the Securities to be registered on any
securities exchange.
8. Indemnification
(a) Indemnification by the Company. The
Company and the Guarantors, jointly and severally,
shall, without limitation as to time, indemnify and hold
harmless each Holder and each Participating Broker-
Dealer selling Exchange Securities during the Applicable
Period, each Person who controls each such Holder (with-
in the meaning of Section 15 of the Securities Act or
23
Section 20(a) of the Exchange Act) and the officers,
directors, partners, employees, representatives and
agents of each such Holder, Participating Broker-Dealer
and controlling person, to the fullest extent lawful,
from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation,
reasonable costs of preparation and reasonable
attorneys' fees) and expenses (including, without
limitation, reasonable costs and expenses incurred in
connection with investigating, preparing, pursuing or
defending against any of the foregoing) (collectively,
"Losses"), as incurred, directly or indirectly caused
by, related to, based upon, arising out of or in
connection with any untrue or alleged untrue statement
of a material fact contained in any Registration State-
ment, Prospectus or form of prospectus, or in any amend-
ment or supplement thereto, or in any preliminary
prospectus, or any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading, except insofar as such Losses are based upon
information relating to such Holder or Participating
Broker-Dealer and furnished in writing to the Company
(or reviewed and approved in writing) by such Holder or
Participating Broker-Dealer expressly for use therein;
provided, however, that none of the Company or the
Guarantors shall be liable to any indemnified party to
the extent that any such Losses arise solely out of an
untrue statement or alleged untrue statement or omission
or alleged omission made in any preliminary prospectus
if (i) such indemnified party or related Holder of a
Registrable Security failed to send or deliver a copy of
the Prospectus with or prior to the delivery of written
confirmation of the sale by such indemnified party or
the related Holder of a Registrable Security to the
person asserting the claim from which such Losses arise,
(ii) the Prospectus would have corrected such untrue
statement or alleged untrue statement or omission or
alleged omission, and (iii) the Company and the
Guarantors have complied with their obligations under
Section 6(e) hereof. The Company and the Guarantors
shall also indemnify underwriters, their officers,
directors, agents and employees and each Person who
controls such Persons (within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange
Act) to the same extent as provided above with respect
to the indemnification of the Holders or the Partici-
pating Broker-Dealer.
24
(b) Indemnification by Holder of Registrable
Securities. In connection with any Registration State-
ment, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus in
which a Holder in which a Holder is participating, such
Holder shall furnish to the Company in writing such
information as the Company reasonably requests for use
in connection with any Registration Statement,
Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus and
shall, without limitation as to time, indemnify and hold
harmless the Company and the Guarantors, their direc-
tors, officers, agents and employees, each Person, if
any, who controls the Company and the Guarantors (within
the meaning of Section 15 of the Securities Act and
Section 20(a) of the Exchange Act), and the directors,
officers, agents or employees of such controlling per-
sons, to the fullest extent lawful, from and against all
Losses arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in
any Registration Statement, Prospectus or form of
prospectus or in any amendment or supplement thereto or
in any preliminary prospectus, or any omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading to the
extent, but only to the extent, that such untrue state-
ment or alleged untrue statement of a material fact or
omission or alleged omission of a material fact is con-
tained in any information so furnished in writing by
such Holder to the Company expressly for use therein.
In no event shall the liability of any selling Holder be
greater in amount than the dollar amount of the proceeds
(net of payment of all expenses) received by such Holder
upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
(c) Conduct of Indemnification Proceedings.
If any proceeding shall be brought or asserted against
any Person entitled to indemnity hereunder (an
"indemnified party"), such indemnified party shall
promptly notify the party or parties from which such
indemnity is sought (the "indemnifying parties") in
writing; provided, that the failure to so notify the
indemnifying parties shall not relieve the indemnifying
parties from any obligation or liability except to the
extent (but only to the extent) that it shall be finally
determined by a court of competent jurisdiction (which
25
determination is not subject to appeal) that the
indemnifying parties have been prejudiced materially by
such failure.
The indemnifying party shall have the right,
exercisable by giving written notice to an indemnified
party, within 20 business days after receipt of written
notice from such indemnified party of such proceeding,
to assume, at its expense, the defense of any such
proceeding, provided, that an indemnified party shall
have the right to employ separate counsel in any such
proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless:
(1) the indemnifying party has agreed to pay such fees
and expenses; or (2) the indemnifying party shall have
failed promptly to assume the defense of such proceeding
or employ counsel; or (3) the named parties to any such
proceeding (including any impleaded parties) include
both such indemnified party and the indemnifying party
or any of its affiliates or controlling persons, and
such indemnified party shall have been advised by
counsel that representation of such indemnified party
and any indemnifying party by the same counsel would be
inappropriate under applicable standards of professional
conduct due to actual or potential differing interest
between them (in which case, if such indemnified party
notifies the indemnifying parties in writing that it
elects to employ separate counsel at the expense of the
indemnifying parties, the indemnifying parties shall not
have the right to assume the defense thereof and the
reasonable fees and expenses of such counsel shall be at
the expense of the indemnifying party; it being under-
stood, however, that, the indemnifying party shall not,
in connection with any one such proceeding or separate
but substantially similar or related proceedings in the
same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time
for such indemnified party).
No indemnifying party shall be liable for any
settlement of any such proceeding effected without its
written consent, but if settled with its written
consent, or if there be a final judgment for the
plaintiff in any such proceeding, each indemnifying
party jointly and severally agrees, subject to the
exceptions and limitations set forth above, to indemnify
and hold harmless each indemnified party from and
against any and all Losses by reason of such settlement
or judgment. The indemnifying party shall not consent
26
to the entry of any judgment or enter into any
settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to
each indemnified party of a release, in form and
substance reasonably satisfactory to the indemnified
party, from all liability in respect of such proceeding
for which such indemnified party would be entitled to
indemnification hereunder (whether or not any indem-
nified party is a party thereto).
(d) Contribution. If the indemnification
provided for in this Section 8 is unavailable to an
indemnified party or is insufficient to hold such
indemnified party harmless for any Losses in respect of
which this Section 8 would otherwise apply by its terms
(other than by reason of exceptions provided in this
Section 8), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have
a joint and several obligation to contribute to the
amount paid or payable by such indemnified party as a
result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with
the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable
considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the
other hand, shall be determined by reference to, among
other things, whether any untrue or alleged untrue
statement of a material fact or omission or alleged
omission to state a material fact relates to information
supplied by such indemnifying party or indemnified
party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or
prevent any such statement or omission. The amount paid
or payable by an indemnified party as a result of any
Losses shall be deemed to include any legal or other
fees or expenses incurred by such party in connection
with any Proceeding, to the extent such party would have
been indemnified for such fees or expenses if the
indemnification provided for in Section 8(a) or 8(b) was
available to such party.
The parties hereto agree that it would not be
just and equitable if contribution pursuant to this
Section 8(d) were determined by pro rata allocation or
by any other method of allocation that does not take
account of the equitable considerations referred to in
the immediately preceding paragraph. Notwithstanding the
provisions of this Section 8(d), an indemnifying party
27
that is a selling Holder shall not be required to
contribute, in the aggregate, any amount in excess of
such Holder's Maximum Contribution Amount. A selling
Holder's "Maximum Contribution Amount" shall equal the
excess of (i) the aggregate proceeds received by such
Holder pursuant to the sale of such Registrable Securi-
ties over (ii) the aggregate amount of damages that such
Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent
misrepresentation.
The indemnity and contribution agreements
contained in this Section 8 are in addition to any
liability that the indemnifying parties may have to the
indemnified parties.
9. Rule 144 and Rule 144A
Each of the Company and the Guarantors
covenants that it shall (a) file the reports required to
be filed by it (if so required) under the Securities Act
and the Exchange Act in a timely manner and, if at any
time any such Person is not required to file such
reports, it will, upon the request of any Holder, make
publicly available other information necessary to permit
sales pursuant to Rule 144 and Rule 144A and (b) take
such further action as any Holder may reasonably
request, all to the extent required from time to time to
enable such Holder to sell Registrable Securities
without registration under the Securities Act pursuant
to the exemptions provided by Rule 144 and Rule 144A.
Upon the request of any Holder, the Company and the
Guarantors shall deliver to such holder a written state-
ment as to whether they have complied with such informa-
tion and requirements.
10. Underwritten Registrations
If any of the Registrable Securities covered
by any Shelf Registration are to be sold in an
Underwritten Offering, the investment banker or invest-
ment bankers and manager or managers that will manage
the offering will be selected by the Holders of a
majority in aggregate principal amount of such
Registrable Securities included in such offering.
28
No holder of Registrable Securities may
participate in any Underwritten Registration hereunder
unless such holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, underwriting
agreements and other documents reasonably required under
the terms of such underwriting arrangements.
11. Miscellaneous
(a) Remedies. In the event of a breach by
the Company or any of the Guarantors of any of their
respective obligations under this Agreement, each
Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture or, in the case
of the Initial Purchaser, in the Purchase Agreement, or
granted by law, including recovery of damages, will be
entitled to specific performance of its rights under
this Agreement. The Company and the Guarantors agree
that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further
agree that, in the event of any action for specific
performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company
has not entered into, as of the date hereof, and shall
not enter into, after the date of this Agreement, any
agreement with respect to any of its securities that is
inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions
of this Agreement, including the provisions of this sen-
tence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained
the written consent of Holders of at least a majority of
the then outstanding aggregate principal amount of
Registrable Securities; provided, that Sections 4, 6(a)
and 8 shall not be amended, modified or supplemented,
and waivers or consents to departures from this proviso
may not be given, unless the Company has obtained the
written consent of each Holder. Notwithstanding the
29
foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates
exclusively to the rights of Holders whose securities
are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect the rights
of other Holders may be given by Holders of at least a
majority in aggregate principal amount of the
Registrable Securities being sold by such Holders
pursuant to such Registration Statement, provided that
the provisions of this sentence may not be amended,
modified or supplemented except in accordance with the
provisions of the immediately preceding sentence.
(d) Notices. All notices and other
communications (including, without limitation, any
notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by
hand-delivery, certified first-class mail, return
receipt requested, next-day air courier or facsimile:
(i) if to a Holder, at the most
current address given by such holder to the Company
in accordance with the provisions of this Section
11(d), which address initially is, with respect to
each holder, the address of such holder maintained
by the Registrar under the Indenture, with a copy
to Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York 10022, telecopy
number (212) 735-3000, Attention: Matthew J.
Mallow; and
(ii) if to the Company or the
Guarantors, initially ClimaChem, Inc., P.O. Box
754, 16 South Pennsylvania Avenue, Oklahoma City,
Oklahoma 73101, telecopy number (405) 235-5067,
Attention: Tony M. Shelby, with a copy to Conner &
Winters, One Leadership Square, Suite 1700, 211
North Robinson, Oklahoma City, Oklahoma 73102,
Attention: Irwin H. Steinhorn, and thereafter at
such other address, notice of which is given in
accordance with the provisions of this Section
11(d).
All such notices and communications shall be
deemed to have been duly given: when delivered by hand,
if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; one
business day after being timely delivered to a next-day
30
air courier; and when receipt is acknowledged by the
addressee, if telecopied.
Copies of all such notices, demands or other
communications shall be concurrently delivered by the
Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement
shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties,
including, without limitation and without the need for
an express assignment, subsequent Holders.
(f) Counterparts. This Agreement may be
executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the
same agreement.
(g) Headings. The headings in this Agreement
are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE COMPANY AND THE GUAR-
ANTORS HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MAN-
HATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SIT-
TING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK
IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE
AFORESAID COURTS. EACH OF THE COMPANY AND THE GUAR-
ANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY
AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT
31
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH
OF THE COMPANY AND THE GUARANTORS IRREVOCABLY CONSENT,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTI-
FIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS SAID
ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMIT-
TED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY OR THE GUARANTORS IN ANY
OTHER JURISDICTION.
(i) Severability. If any term, provision,
covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no
way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or
substantially the same result as that contemplated by
such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(j) Entire Agreement. This Agreement is in-
tended by the parties as a final expression of their
agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding
of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth
or referred to herein, with respect to the registration
rights granted by the Company in respect of securities
sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
32
(k) Attorneys' Fees. In any proceeding
brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a
defense, the prevailing party, as determined by the
courts, shall be entitled to recover reasonable
attorneys' fees in addition to its costs and expenses
and any other available remedy.
(l) Securities Held by the Company or its
Affiliates. Whenever the consent or approval of Holders
of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the
Company or its affiliates (as such term is defined in
Rule 405 under the Securities Act) (other than Holders
deemed to be such affiliates solely by reason of their
holdings of such Registrable Securities) shall not be
counted in determining whether such consent or approval
was given by the holders of such required percentage.
33
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.
CLIMACHEM, INC.
By:_______________________
Name: Tony M. Shelby
Title: Vice President
34
THE GUARANTORS:
International Environmental
Corporation
Climate Master, Inc.
CHP Corporation
KOAX Corporation
APR Corporation
LSB Chemical Corp.
Slurry Explosive Corporation
Universal Tech Corporation
Total Energy Systems Limited
Northwest Financial Corporation
DSN Corporation
By:____________________________
Name: Tony M. Shelby
Title: Vice President
Climate Mate, Inc.
The Environmental Group
International
Limited
By:_____________________________
Name: David R. Goss
Total Energy Systems (NZ) Ltd.
T.E.S. Mining Services Pty. Ltd.
El Dorado Chemical Company
By:_____________________________
Name: James L. Wewers
35
The Environmental Group, Inc.
By:________________________________
Name: Barry H. Golsen
ACCEPTED AND AGREED TO:
WASSERSTEIN PERELLA SECURITIES, INC.
By:_________________________________
Name: James C. Kingsbery
Title: Chief Financial Officer
36
LSB Industries, Inc. Announces Completion of
$105,000,000 Offering of Senior Notes by Subsidiary
OKLAHOMA CITY, Nov. 26 /PRNewswire/ LSB Industries, Inc.
(NYSE: LSB) ("LSB") announced today that its wholly owned
subsidiary, ClimaChem, Inc. ("ClimaChem"), completed the
$105,000,000 offering of its Senior Notes due 2007 (the "Notes").
The Notes were not registered under the Securities Act of
1933, as amended (the "Act"), and may not be offered or sold in the
United States absent registration or pursuant to an applicable
exemption from the registration requirements of the Act. The Notes
were sold only to qualified institutional buyers in reliance on
Rule 144A under the Act.
The net proceeds from this offering were used to repay certain
term loans, reduce the outstanding amounts under various revolving
credit facilities, fund a loan to LSB of $10 million and the
balance for ClimaChem's general corporate purposes.
ClimaChem owns LSB's Chemical Business, which is engaged in
the manufacture and sale of chemical products for the mining,
agricultural and industrial markets, and LSB's Climate Control
Business, which is engaged in the manufacture and sale of a broad
range of hydronic fan coils and water source heat pumps as well as
other air conditioning products for commercial and residential
applications. LSB is a diversified manufacturing, marketing and
engineering company with worldwide operations. LSB's common Stock
and Series 2 Preferred Stock are listed for trading on the New York
Stock Exchange.
Source LSB Industries, Inc.
-01- 11/26/97
/CONTACT: Tony M. Shelby, Chief Financial Officer of LSB
Industries, Inc., 405-235-4546; or Leslie A. Schupak, ext. 205, or
Joe Mansi, ext. 207, both of KCSA, 212-682-6300, for LSB
Industries, Inc./
(LSB)
-0-