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TEMPUR-PEDIC, INC.
TEMPUR PRODUCTION USA, INC.
$150,000,000
10 1/4% SENIOR SUBORDINATED NOTES DUE 2010
------------------------------
INDENTURE
Dated as of August 15, 2003
------------------------------
Wells Fargo Bank Minnesota,
National Association,
as Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE..................1
Section 1.01. Definitions.................................................1
Section 1.02. Other Definitions..........................................21
Section 1.03. Incorporation by Reference of Trust
Indenture Act..............................................22
Section 1.04. Rules of Construction......................................22
ARTICLE 2. THE NOTES..................................................23
Section 2.01. Form and Dating............................................23
Section 2.02. Execution and Authentication...............................24
Section 2.03. Registrar and Paying Agent.................................24
Section 2.04. Paying Agent to Hold Money in Trust........................25
Section 2.05. Holder Lists...............................................25
Section 2.06. Transfer and Exchange......................................25
Section 2.07. Replacement Notes..........................................35
Section 2.08. Outstanding Notes..........................................35
Section 2.09. Treasury Notes.............................................36
Section 2.10. Temporary Notes............................................36
Section 2.11. Cancellation...............................................36
Section 2.12. Payment of Interest; Defaulted Interest....................36
Section 2.13. CUSIP or ISIN Numbers......................................36
Section 2.14. Additional Interest........................................37
Section 2.15. Issuance of Additional Notes...............................37
Section 2.16. Record Date................................................37
ARTICLE 3. REDEMPTION AND PREPAYMENT..................................38
Section 3.01. Notices to Trustee.........................................38
Section 3.02. Selection of Notes to Be Redeemed..........................38
Section 3.03. Notice of Redemption.......................................38
Section 3.04. Effect of Notice of Redemption.............................39
Section 3.05. Deposit of Redemption Price................................39
Section 3.06. Notes Redeemed in Part.....................................39
Section 3.07. Optional Redemption........................................39
Section 3.08. Mandatory Redemption.......................................40
Section 3.09. Offer To Purchase..........................................40
ARTICLE 4. COVENANTS..................................................42
Section 4.01. Payment of Notes...........................................42
i
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 4.02. Maintenance of Office or Agency............................43
Section 4.03. Reports....................................................43
Section 4.04. Compliance Certificate.....................................44
Section 4.05. Taxes......................................................44
Section 4.06. Stay, Extension and Usury Laws.............................44
Section 4.07. Corporate Existence........................................45
Section 4.08. Payments for Consent.......................................45
Section 4.09. Incurrence of Additional Debt and
Issuance of Preferred Stock................................45
Section 4.10. Restricted Payments........................................48
Section 4.11. Liens .....................................................50
Section 4.12. Asset Sales ...............................................51
Section 4.13. Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries.............52
Section 4.14. Affiliate Transactions.....................................53
Section 4.15. Issuance or Sale of Capital Stock of
Restricted Subsidiaries....................................54
Section 4.16. Designation of Restricted and Unrestricted
Subsidiaries...............................................55
Section 4.17. Repurchase at the Option of Holders Upon a
Change of Control..........................................55
Section 4.18. Additional Subsidiary Guarantees...........................56
Section 4.19. Business Activities........................................56
Section 4.20. No Senior Subordinated Debt................................56
Section 4.21. Additional Subsidiary Guarantees...........................56
Section 4.22. Sale and Leaseback Transactions............................56
ARTICLE 5. SUCCESSORS.................................................57
Section 5.01. Merger, Consolidation and Sale of Assets...................57
Section 5.02. Successor Corporation Substituted..........................58
ARTICLE 6. DEFAULTS AND REMEDIES......................................58
Section 6.01. Events of Default..........................................58
Section 6.02. Acceleration...............................................59
Section 6.03. Other Remedies.............................................60
Section 6.04. Waiver of Defaults.........................................60
Section 6.05. Control by Majority........................................61
Section 6.06. Limitation on Suits........................................61
Section 6.07. Rights of Holders to Receive Payment.......................61
Section 6.08. Collection Suit by Trustee.................................61
Section 6.09. Trustee May File Proofs of Claim...........................62
ii
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 6.10. Priorities.................................................62
Section 6.11. Undertaking for Costs......................................62
ARTICLE 7. TRUSTEE....................................................63
Section 7.01. Duties of Trustee..........................................63
Section 7.02. Rights of Trustee..........................................63
Section 7.03. Individual Rights of Trustee...............................64
Section 7.04. Trustee's Disclaimer.......................................64
Section 7.05. Notice of Defaults.........................................65
Section 7.06. Reports by Trustee to Holders..............................65
Section 7.07. Compensation and Indemnity.................................65
Section 7.08. Replacement of Trustee.....................................66
Section 7.09. Successor Trustee by Merger, etc. .........................67
Section 7.10. Eligibility; Disqualification..............................67
Section 7.11. Preferential Collection of Claims
Against Companies..........................................67
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE...................67
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance.................................................67
Section 8.02. Legal Defeasance and Discharge.............................67
Section 8.03. Covenant Defeasance........................................68
Section 8.04. Conditions to Legal or Covenant Defeasance.................68
Section 8.05. Deposited Cash and U.S. Government Securities to be
Held in Trust; Other Miscellaneous Provisions..............69
Section 8.06. Repayment to Companies.....................................69
Section 8.07. Reinstatement..............................................70
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER...........................70
Section 9.01. Without Consent of Holders of Notes........................70
Section 9.02. With Consent of Holders of Notes...........................71
Section 9.03. Compliance with Trust Indenture Act........................72
Section 9.04. Revocation and Effect of Consents..........................72
Section 9.05. Notation on or Exchange of Notes...........................72
Section 9.06. Trustee to Sign Amendments, etc. ..........................73
ARTICLE 10. GUARANTEES.................................................73
Section 10.01.Guarantee..................................................73
Section 10.02.Limitation on Guarantor Liability..........................75
Section 10.03.Execution and Delivery of Guarantee........................75
Section 10.04.Guarantors May Consolidate, etc., on
Certain Terms..............................................76
iii
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 10.05.Releases Following Merger, Consolidation or
Sale of Assets, etc. ......................................76
ARTICLE 11. SATISFACTION AND DISCHARGE.................................77
Section 11.01.Satisfaction and Discharge.................................77
Section 11.02.Deposited Cash and U.S. Government Securities to be
Held in Trust; Other Miscellaneous Provisions..............77
Section 11.03.Repayment to Companies.....................................78
ARTICLE 12. SUBORDINATION..............................................78
Section 12.01.Agreement to Subordinate...................................78
Section 12.02.Liquidation; Dissolution; Bankruptcy.......................78
Section 12.03.Default on Designated Senior Debt..........................79
Section 12.04.Acceleration of Notes......................................79
Section 12.05.When Distribution Must Be Paid Over........................79
Section 12.06.Notice by the Companies....................................80
Section 12.07.Subrogation................................................80
Section 12.08.Relative Rights............................................80
Section 12.09.Subordination May Not Be Impaired by the
Companies..................................................80
Section 12.10.Distribution or Notice to Representative...................81
Section 12.11.Rights of Trustee and Paying Agent.........................81
Section 12.12.Authorization to Effect Subordination......................81
Section 12.13.Trust Moneys Not Subordinated..............................82
Section 12.14.Payment and Distribution...................................82
Section 12.15.No Claims .................................................82
Section 12.16.Acknowledgement of Holders.................................82
ARTICLE 13. MISCELLANEOUS..............................................82
Section 13.01.Trust Indenture Act Controls...............................82
Section 13.02.Notices ...................................................83
Section 13.03.Communication by Holders of Notes with Other
Holders of Notes ..........................................84
Section 13.04.Certificate and Opinion as to Conditions
Precedent..................................................84
Section 13.05.Statements Required in Certificate or Opinion..............84
Section 13.06.Rules by Trustee and Agents................................84
Section 13.07.No Personal Liability of Directors, Officers,
Employees and Stockholders.................................84
Section 13.08.Governing Law..............................................85
Section 13.09.No Adverse Interpretation of Other Agreements..............85
Section 13.10.Successors.................................................85
Section 13.11.Severability ..............................................85
iv
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 13.12.Counterpart Originals......................................85
Section 13.13.Table of Contents, Headings, etc. .........................85
Section 13.14.Qualification of this Indenture............................85
v
<PAGE>
CROSS-REFERENCE TABLE
TIA Section Indenture
Reference Section
310(a)(1).................................................. 7.10
(a)(2)..................................................... 7.10
(a)(3)..................................................... N.A.
(a)(4)..................................................... N.A.
(a)(5)..................................................... 7.10
(b)........................................................ 7.08, 7.10
(c)........................................................ N.A.
311(a)..................................................... 7.11
(b)........................................................ 7.11
(c)........................................................ N.A.
312(a)..................................................... 2.05
(b)........................................................ 13.03
(c)........................................................ 13.03
313(a)..................................................... 7.06
(b)(1)..................................................... N.A.
(b)(2)..................................................... 7.06, 7.07
(c)........................................................ 7.06, 12.02
(d)........................................................ 7.06
314(a)..................................................... 4.03, 4.04, 13.02
(b)........................................................ N.A.
(c)(1)..................................................... 13.04
(c)(2)..................................................... 13.04
(c)(3)..................................................... N.A.
(d)........................................................ N.A.
(e)........................................................ 13.05
315(a)..................................................... 7.01
(b)........................................................ 7.05, 13.02
(c)........................................................ 7.01
(d)........................................................ 7.01
(e)........................................................ 6.11
316(a) (last sentence)..................................... 2.09
(a)(1)(A).................................................. 6.05
(a)(1)(B).................................................. 6.04
(a)(2)..................................................... N.A.
(b)........................................................ 6.07
317(a)(1).................................................. 6.08
(a)(2)..................................................... 6.09
(b)........................................................ 2.04
318(a)..................................................... 13.01
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
<PAGE>
This INDENTURE, dated as of August 15, 2003, is by and among
Tempur-Pedic, Inc., a Kentucky corporation, and Tempur Production USA, Inc. a
Virginia corporation (each a "Company," and together the "Companies"), each
Guarantor listed on the signature pages hereto, and Wells Fargo Bank Minnesota,
National Association, as trustee (the "Trustee").
Each Company, each Guarantor and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 10 1/4% Senior Subordinated Notes due 2010 (the "Notes") issued under this
Indenture:
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
Section 1.01. Definitions
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
"144A Global Note" means a Global Note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with and registered in the name of the Depositary or its nominee issued in a
denomination equal to the outstanding principal amount of the Notes sold for
initial resale in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person:
(a) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(b) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Additional Interest" has the meaning set forth in a Registration
Rights Agreement relating to amounts to be paid in the event the Companies fail
to satisfy certain conditions set forth therein. For all purposes of this
Indenture, the term "interest" shall include Additional Interest if any, with
respect to the Notes.
"Additional Notes" means any Notes (other than Initial Notes, Exchange
Notes and Notes issued under Sections 2.06, 2.07, 2.10 and 3.06 hereof) issued
under this Indenture in accordance with Sections 2.02, 2.15 and 4.09 hereof, as
part of the same series as the Initial Notes or as an additional series.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.
"Agent" means any Registrar, co-registrar, Paying Agent or additional
paying agent.
"Applicable Procedures" means, with respect to any transfer,
redemption or exchange of or for beneficial interests in any Global Note, the
rules and procedures of the Depositary, Euroclear and Clearstream that apply to
such transfer, redemption or exchange.
<PAGE>
"Asset Acquisition" means:
(a) an Investment by TWI, the Companies or any of their respective
Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or
consolidated with TWI or any of its Restricted Subsidiaries but only if
such Person's primary business is a Permitted Business; or
(b) an acquisition by TWI, the Companies or any of their respective
Restricted Subsidiaries of the property and assets of any Person other than
TWI, the Companies or any of their respective Restricted Subsidiaries that
constitute all or substantially all of a division, operating unit or line
of business of such Person but only if the property and assets acquired are
a Permitted Business.
"Asset Disposition" means the sale or other disposition by TWI, the
Companies or any of their respective Restricted Subsidiaries other than to TWI,
the Companies or another Restricted Subsidiary of all or substantially all of
the Capital Stock of any Restricted Subsidiary, or all or substantially all of
the assets that constitute a division, operating unit or line of business of
TWI, the Companies or any of their respective Restricted Subsidiaries.
"Asset Sale" means:
(a) the sale, lease, conveyance or other disposition of any assets or
rights; provided that the sale, conveyance or other disposition of all or
substantially all of the assets of TWI or the Companies and their
respective Restricted Subsidiaries taken as a whole will be governed by
Section 4.17 hereof and/or Section 5.01 hereof and not by Section 4.12
hereof; and
(b) the issuance and sale of Equity Interests in any Restricted
Subsidiaries of TWI.
Notwithstanding the preceding, the following items will not be deemed to be
Asset Sales:
(a) any single transaction or series of related transactions that
involves assets having a fair market value of less than $2.0 million;
(b) a sale, lease, conveyance or other disposition of assets between
or among TWI, the Companies and their respective Restricted Subsidiaries;
(c) an issuance of Equity Interests by a Restricted Subsidiary of TWI
to the Companies, TWI or to another Restricted Subsidiary of TWI;
(d) a Restricted Payment or Permitted Investment that is permitted by
Section 4.10 hereof;
(e) a sale, lease, transfer, conveyance or other disposition of
inventory or accounts receivable in the ordinary course of business;
(f) the sale or other disposition of cash or Cash Equivalents in the
ordinary course of business;
(g) any sale of Equity Interests in or Indebtedness of or other
securities of an Unrestricted Subsidiary;
(h) sales of property or equipment that has become worn out, obsolete
or damaged or otherwise unsuitable for use in connection with the business
of TWI, the Companies or any of their respective Restricted Subsidiaries;
2
<PAGE>
(i) the license of patents, trademarks, copyrights and know-how to
third persons in the ordinary course of business;
(j) a Restricted Payment that is permitted by Section 4.10 hereof or
any Permitted Investment; and
(k) a Permitted Asset Swap.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors, or the law of any other jurisdiction
relating to bankruptcy, insolvency, winding up, liquidation, reorganization or
relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" have a corresponding meaning.
"Board of Directors" means:
(a) with respect to a corporation, the board of directors of the
corporation;
(b) with respect to a partnership, the Board of Directors of the
general partner of the partnership; and
(c) with respect to any other Person, the board or committee of such
Person serving a similar function.
"Board Resolution" of a Person means a copy of a resolution certified
by the secretary or an assistant secretary (or individual performing comparable
duties) of the applicable Person to have been duly adopted by the Board of
Directors of such Person and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Borrowing Base" means, as of any date, an amount equal to:
(a) 85% of the face amount of all accounts receivable owned by the
Foreign Restricted Subsidiaries as of the end of the most recent fiscal
quarter preceding such date that were not more than 90 days past due; plus
(b) 60% of the book value of all inventory owned by the Foreign
Restricted Subsidiaries as of the end of the most recent fiscal quarter
preceding such date.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.
3
<PAGE>
"Capital Stock" means:
(a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(d) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means:
(a) United States dollars;
(b) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality of the United
States government (provided that the full faith and credit of the United
States is pledged in support of those securities) having maturities of not
more than six months from the date of acquisition;
(c) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any lender party to the Credit Agreement or
with any domestic commercial bank having capital and surplus in excess of
$500.0 million and a Thomson Bank Watch Rating of "B" or better;
(d) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (b) and (c)
above entered into with any financial institution meeting the
qualifications specified in clause (c) above;
(e) commercial paper having the highest rating obtainable from
Moody's or Standard & Poor's Rating Services and in each case maturing
within six months after the date of acquisition;
(f) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (a) through (e) of this
definition; and
(g) in the case of any Foreign Restricted Subsidiary:
(i) direct obligations of the sovereign nation (or agency
thereof) in which such Foreign Restricted Subsidiary is organized and
is conducting business or obligations fully and unconditionally
guaranteed by such sovereign nation (or any agency thereof); and
(ii) investments of the type and maturity described in clause (a)
through (e) above of foreign obligors, which investments or obligors
have ratings described in such clauses or equivalent ratings from
comparable foreign rating agencies.
"Change of Control" means the occurrence of any of the following:
(a) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the
properties or assets of (x) TWI and its Restricted Subsidiaries, taken as a
whole, or (y) the Companies and their Restricted Subsidiaries, taken as
whole, in either case to any "person" or
4
<PAGE>
"group" (as those terms are used in Section 13(d)(3) of the Exchange Act)
other than one or more Principals and/or its or their respective Affiliates
or Related Parties;
(b) the adoption of a plan relating to the liquidation or dissolution
of TWI or the Companies, provided that if the adoption of such plan is
required to be approved by TWI's stockholders, a Change of Control will
only occur upon the adoption of such plan by TWI's stockholders;
(c) the consummation of any transaction (including, without
limitation, any merger or consolidation) (i) prior to the consummation of a
Qualified IPO, the result of which is that (A) any "person" or "group" (as
defined above), other than one or more of the Principals and/or its or
their respective Affiliates or Related Parties, becomes the Beneficial
Owner, directly or indirectly, of more than 35% of the Voting Stock of TWI,
measured by voting power rather than number of shares and (B) the
Principals and their Affiliates and Related Parties cease to be the
Beneficial Owners, directly or indirectly, of at least 35% of the Voting
Stock of TWI, measured by voting power rather than number of shares, or
(ii) following the consummation of a Qualified IPO, the result of which is
that any "person" (as defined above), other than the Principals or their
Affiliates or Related Parties, becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of TWI, measured by voting
power rather than number of shares;
(d) the first day on which a majority of the members of the Board of
Directors of TWI are not Continuing Directors;
(e) TWI consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, TWI, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of
TWI or such other Person is converted into or exchanged for cash,
securities or other property, other than any such transaction where the
Voting Stock of TWI outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified
Stock) of the surviving or transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving or transferee
Person (immediately after giving effect to such issuance); or
(f) the Companies shall cease to be direct or indirect Wholly Owned
Subsidiaries of the First Tier Parent Guarantor, the First Tier Parent
Guarantor shall cease to be a Wholly Owned Subsidiary of Tempur World, Inc,
or Tempur World, Inc. shall cease to be a Wholly Owned Subsidiary of TWI,
except that Tempur World, Inc. or the First Tier Parent Guarantor may be
merged with or into TWI.
"Clearstream" means Clearstream Banking S.A. and any successor
thereto.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Company" means either Tempur-Pedic, Inc., a Kentucky corporation, or
Tempur Production USA, Inc., a Virginia corporation, and any successor thereto.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Bank maturing in 2007 that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities maturing in 2007.
"Comparable Treasury Price" means, with respect to any redemption
date:
(a) the average of the bid and ask prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on
the third business day
5
<PAGE>
preceding such redemption date, as set forth in the most recently published
statistical release designated "H.15(519)" (or any successor release)
published by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities;" or
(b) if such release (or any successor release) is not published or
does not contain such prices on such business day, the average of the
Reference Treasury Dealer Quotations for such redemption date.
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus:
(a) an amount equal to any extraordinary loss plus any net loss
realized by such Person or any of its Subsidiaries in connection with a
sale or other disposition of assets or the extinguishment of any
Indebtedness of such Person or any of its Subsidiaries, to the extent such
losses were deducted in computing such Consolidated Net Income; plus
(b) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net Income;
plus
(c) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net of the effect of all payments made or received pursuant
to Hedging Obligations), to the extent that any such expense was deducted
in computing such Consolidated Net Income; plus
(d) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses (excluding
any such non-cash expense to the extent that it represents an accrual of or
reserve for cash expenses in any future period) of such Person and its
Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; minus
(e) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of
business,
in each case, on a consolidated basis and determined in accordance with
GAAP.
"Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that:
(a) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting will be included only to the extent of the amount of dividends
or distributions paid in cash to the specified Person or a Restricted
Subsidiary of the Person;
(b) the Net Income of any Restricted Subsidiary will be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental
6
<PAGE>
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders; and
(c) the cumulative effect of a change in accounting principles will
be excluded.
"Consolidated Net Tangible Assets" means as to any Person, as of any
date of determination, the sum of the amounts that would appear on a
consolidated balance sheet of such Person and any of its consolidated Restricted
Subsidiaries as the total assets (less accumulated depreciation and
amortization, allowances for doubtful receivables, other applicable reserves and
other properly deductible items) of such Person and its Restricted Subsidiaries,
after giving effect to purchase accounting, and after deducting therefrom
consolidated current liabilities and, to the extent otherwise included, the
amounts of (without duplication):
(a) the excess of cost over fair market value of assets or businesses
acquired;
(b) any revaluation or other write-up in book value of assets
subsequent to the last day of the fiscal quarter of the Companies
immediately preceding the date of issuance of the Notes as a result of a
change in the method of valuation in accordance with GAAP;
(c) unamortized debt discount and expenses and other unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade
names, copyrights licenses, organization or developmental expenses and
other tangible items;
(d) minority interests in consolidated subsidiaries held by Persons
other than any Parent Guarantor, the Companies or any of their respective
Restricted Subsidiaries;
(e) treasury stock;
(f) cash or securities set aside and held in a sinking or other
analogous fund established for the purpose of redemption or other
retirement of Capital Stock to the extent such obligation is not reflected
in consolidated current liabilities; and
(g) Investments in and assets of Unrestricted Subsidiaries.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the referent Person who:
(a) was a member of such Board of Directors on the date of this
Indenture; or
(b) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 hereof, or such other address as to which the
Trustee may give notice to the Companies.
"Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of November 1, 2002 by and among TWI and Tempur World, Inc.,
Tempur World Holdings, S.L., Tempur-Pedic, Inc., Tempur Production USA, Inc.,
Tempur World Holding Company ApS and Dan-Foam ApS as Borrowers, the other Credit
Parties signatory thereto, as Credit Parties, the Lenders signatory thereto from
time to time, Nordea Bank Danmark, as European Loan Agent, and General Electric
Capital Corporation, as Administrative Agent, providing for up to $170,000,000
of term loan borrowings and revolving credit borrowings, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, restated,
refunded, replaced or refinanced from time to time, whether by the same or any
other lender or group of lenders (including pursuant to Indebtedness issued
pursuant to an indenture).
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"Credit Facilities" means one or more debt facilities (including,
without limitation, the Credit Agreement) or commercial paper facilities, in
each case with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, bank guaranties or
bankers' acceptances, in each case, as amended, restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time and any
agreement, instrument or document governing Indebtedness under such debt
facilities, including any agreement, instrument or facility governing
Indebtedness incurred to refinance, in whole or in part, the borrowings and
commitments then outstanding or permitted to be outstanding under any Credit
Facility or any successor Credit Facility, whether by the same or any other
lender or group of lenders (including pursuant to Indebtedness issued pursuant
to an indenture).
"Currency Exchange Protection Agreement" means, for any Person, any
foreign exchange contract, currency swap agreement, currency option, forward
contract or other similar agreement or arrangement, in each case, including any
guarantee and collateral documents referred to therein designed to protect such
Person against fluctuations in currency exchange rates.
"Custodian" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03(c) hereof
as Custodian with respect to the Notes, and any and all successors thereto
appointed as custodian hereunder and having become such pursuant to the
applicable provisions of this Indenture.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 or 2.10 hereof, in
substantially the form of Exhibit A hereto except that such Note shall not bear
the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03(b) hereof
as the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provisions of this Indenture.
"Designated Senior Debt" means (i) any Indebtedness outstanding from
time to time under the Credit Agreement and (ii) any other Senior Debt permitted
to be incurred under this Indenture the principal amount of which is $25.0
million or more and that has been designated by TWI as "Designated Senior Debt;"
provided, however, that only an agent or representative of Designated Senior
Debt from time to time outstanding under the Credit Facilities may issue a
Payment Blockage Notice.
"Distribution Compliance Period" means the 40-day distribution
compliance period as defined in Regulation S.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the Notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require the
issuer of such Capital Stock to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale will not constitute
Disqualified Stock if the terms of such Capital Stock provide that neither TWI
nor the Companies nor their respective Restricted Subsidiaries may repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.10 hereof.
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"Domestic Subsidiary" means any Restricted Subsidiary of TWI that was
formed under the laws of the United States or any state of the United States or
the District of Columbia.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any private or public sale of common stock of
TWI.
"Euroclear" means Euroclear Bank, S.A./N.V., as operator of the
Euroclear systems, and any successor thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means notes issued in exchange for the Initial Notes
or any Additional Notes pursuant to a Registration Rights Agreement.
"Exchange Offer" has the meaning set forth in a Registration Rights
Agreement relating to an exchange of Notes registered under the Securities Act
for Notes not so registered.
"Exchange Offer Registration Statement" has the meaning set forth in a
Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of any Parent Guarantor,
the Companies and their respective Subsidiaries (other than Indebtedness under
the Credit Agreement) in existence on the Issue Date, until such amounts are
repaid.
"First Tier Parent Guarantor" means Tempur World Holdings, Inc. and
any successor thereto.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
and its Restricted Subsidiaries for such period to the Fixed Charges of such
Person and its Restricted Subsidiaries for such period. In the event that the
specified Person or any of its Restricted Subsidiaries incurs, assumes,
guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated
giving pro forma effect to such incurrence, assumption, guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
(a) acquisitions that have been made by the specified Person or any
of its Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to
the Calculation Date will be given pro forma effect (calculated in
accordance with Regulation S-X) as if they had occurred on the first day of
the four-quarter reference period;
(b) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, will be excluded;
(c) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, will be excluded, but only to the extent
that the obligations giving rise to such Fixed Charges will
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not be obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date; and
(d) if any Indebtedness bears a floating rate of interest and is
being given pro forma effect, the interest expense on such Indebtedness
shall be calculated as if the interest rate in effect for such floating
rate of interest on the date of determination had been a fixed rate of
interest for the entire period (taking into account any Interest Rate
Agreement applicable to such Indebtedness if such Interest Rate Agreement
has a remaining term in excess of twelve months).
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(a) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued,
including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
and net of the effect of all payments made or received pursuant to Hedging
Obligations; plus
(b) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(c) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured
by a Lien on assets of such Person or one of its Restricted Subsidiaries,
whether or not such Guarantee or Lien is called upon; plus
(d) the product of (a) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred stock of such Person
(other than preferred stock of the Parent Guarantors or the Companies that
is not Disqualified Stock) or any of its Restricted Subsidiaries, other
than dividends on Equity Interests payable solely in Equity Interests
(other than Disqualified Stock) of the issuer of such preferred stock or
payable to the Companies, TWI or any of their respective Restricted
Subsidiaries, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP.
"Foreign Restricted Subsidiary" means any Restricted Subsidiary that
is not a Domestic Subsidiary.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issue Date.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Global Note" means any global Note in the form of Exhibit A hereto
issued in accordance with Article 2 hereof.
"guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any
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Indebtedness. The capitalized term, "Guarantee" shall refer only to the
guarantees of the Notes provided by the Guarantors.
"Guarantors" means each of the Parent Guarantors and the Subsidiary
Guarantors, collectively.
"Hedging Obligations" of any Person means any obligation or liability,
direct of indirect, contingent or otherwise, of such Person in respect of any
Interest Rate Agreement, Currency Exchange Protection Agreement or any other
similar agreement or arrangement.
"Holder" means a Person in whose name a Note is registered in the
Security Register.
"IAI Global Note" means a Global Note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with and registered in the name of the Depositary or its nominee issued in a
denomination equal to the outstanding principal amount of the Notes sold to
Institutional Accredited Investors, if any, to the extent required by the
Applicable Procedures.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(a) in respect of borrowed money;
(b) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(c) in respect of banker's acceptances;
(d) representing Capital Lease Obligations;
(e) representing the balance deferred and unpaid of the purchase
price of any property, except any such balance that constitutes an accrued
expense or trade payable; or
(f) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the guarantee
by the specified Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date will be:
(i) the accreted value of the Indebtedness, in the case of any
Indebtedness issued with original issue discount; and
(ii) the principal amount of the Indebtedness, together with any
interest on the Indebtedness that is more than 30 days past due, in
the case of any other Indebtedness.
"Indenture" means this instrument, as originally executed or as it may
from time to time be supplemented or amended in accordance with Article 9
hereof.
"Independent Investment Bank" means an investment banking firm of
national standing or any third party appraiser that is determined by a majority
of the independent directors of TWI to be competent to issue a valuation with
respect to the matters for it is proposed to be engaged; provided that such firm
or appraiser is not an Affiliate of TWI.
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"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Initial Notes" means $150,000,000 aggregate principal amount of Notes
issued under this Indenture on the Issue Date.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Interest Payment Dates" shall have the meaning set forth in paragraph
1 of any Note in the form of Exhibit A hereto issued in accordance with Article
2 hereof.
"Interest Rate Agreement" means, for any Person, any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement or arrangement, in each case, including any guarantee
and collateral documents referred to therein designed to protect such Person
against fluctuations in interest rates.
"Investments" means, with respect to any Person, all direct or
indirect investments by such Person in other Persons (including Affiliates) in
the forms of loans (including guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If TWI, the
Companies or any of their respective Restricted Subsidiaries sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of TWI,
the Companies or such Restricted Subsidiary, such that, after giving effect to
any such sale or disposition, such Person is no longer a Subsidiary of TWI, the
Companies or any of their Restricted Subsidiaries, TWI will be deemed to have
made an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such Subsidiary not sold or disposed of
in an amount determined as provided in the final paragraph of Section 4.10
hereof. The acquisition by TWI, the Companies or any of their respective
Restricted Subsidiaries of a Person that holds an Investment in a third Person
will be deemed to be an Investment by TWI in such third Person in an amount
equal to the fair market value of the Investment held by the acquired Person in
such third Person in an amount determined as provided in the final paragraph of
Section 4.10 hereof.
"Issue Date" means the date on which notes are initially issued under
this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the city in which the Corporate Trust
Office of the Trustee is located or any other place of payment on the Notes are
authorized by law, regulation or executive order to remain closed.
"Letter of Transmittal" means the letter of transmittal, or its
electronic equivalent in accordance with the Applicable Procedures, to be
prepared by the Companies and sent to all Holders of the Initial Notes or any
Additional Notes for use by such Holders in connection with an Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Moody's" means Moody's Investors Service, Inc. or any successor to
the rating agency business of Moody's Investors Service, Inc.
"Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
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(a) any gain (or loss), together with any related provision for taxes
on such gain (or loss), realized in connection with: (i) any sale or other
disposition of assets; or (ii) the disposition of any securities by such
Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries; and
(b) any extraordinary gain (or loss), together with any related
provision for taxes on such extraordinary gain (or loss).
"Net Proceeds" means the aggregate cash proceeds received by TWI, the
Companies or any of their respective Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received in any Asset Sale, but
only as and when received), net of the direct costs relating to such Asset Sale,
including, without limitation, legal, accounting and investment banking fees,
and sales commissions, recording fees, title transfer fees, costs of preparation
of assets for sale, and any relocation expenses incurred as a result of the
Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case,
after taking into account any available tax credits or deductions and any tax
sharing arrangements, and amounts required to be applied to the repayment of
Indebtedness, other than Senior Debt, secured by a Lien on the asset or assets
that were the subject of such Asset Sale, all distributions and other payments
required to be made to minority interest holders in Restricted Subsidiaries or
joint ventures as a result of the Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"Non-recourse Debt" means Indebtedness:
(a) as to which none of TWI, the Companies or any of their respective
Restricted Subsidiaries (i) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute
Indebtedness), (ii) is directly or indirectly liable as a guarantor or
otherwise, or (iii) constitutes the lender;
(b) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time of both any holder of
any other Indebtedness (other than the Notes) of TWI, the Companies or any
of their respective Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and
(c) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of TWI, the Companies or
any of their respective Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the offering memorandum, dated August 8,
2003 relating to the Notes.
"Officer" means the Chief Executive Officer, the President, the Chief
Financial Officer, any Executive Vice President or the Treasurer of either of
the Companies.
"Officers' Certificate" means a certificate, in form and substance
reasonably satisfactory to the Trustee, signed by two Officers of the Companies,
at least one of whom shall be the principal executive officer or principal
financial officer of the Companies, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion, in form and substance
reasonably satisfactory to the Trustee, from legal counsel who is acceptable to
the Trustee and which meets the requirements of Section 13.05 hereof. The
counsel may be an employee of or counsel to the Companies or the Trustee.
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"Parent Guarantors" means TWI Holdings, Inc., Tempur World, Inc. and
Tempur World Holdings, Inc., collectively, and their respective successors and
assigns.
"Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively, and, with respect to DTC, shall include Euroclear and
Clearstream.
"Permitted Asset Swap" means sales, transfers or other dispositions of
assets, including all of the outstanding Capital Stock of a Restricted
Subsidiary (other than the Companies), for consideration at least equal to the
fair market value of the assets sold or disposed of, but only if the
consideration received consists of Capital Stock of a Person that becomes a
Restricted Subsidiary engaged in, or property or assets (other than cash, except
to the extent used as a bona fide means of equalizing the value of the property
or assets involved in the swap transaction) of a nature or type or that are used
in, a business having property or assets of a nature or type, or engaged in a
business similar or related to the nature or type of the property and assets of,
or business of, the Restricted Subsidiaries of TWI, including the Companies,
existing on the date of such sale or other disposition.
"Permitted Business" means the lines of business conducted by the
Companies and the Foreign Restricted Subsidiaries of TWI on the Issue Date and
businesses reasonably related thereto.
"Permitted Investments" means:
(a) any Investment in TWI, the Companies or any Guarantor;
(b) any Investment by the Parent Guarantors, the Companies or a
Subsidiary Guarantor in a Foreign Restricted Subsidiary of TWI; provided
that for so long as any of the Notes are outstanding, the aggregate amount
of all Investments made pursuant to this clause (b) shall not exceed the
greater of (i) 20% of the Consolidated Net Tangible Assets of TWI as of the
last day of the most recently ended fiscal quarter for which internal
financial statements are available and (ii) $20.0 million.
(c) any Investment in Cash Equivalents;
(d) any Investment by TWI, the Companies or any of their respective
Restricted Subsidiaries in a Person, if as a result of such Investment:
(i) such Person becomes a Restricted Subsidiary of the Person
making such Investment; or
(ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys all or substantially all of its assets
to, or is liquidated into, TWI, any Company or any of their Restricted
Subsidiaries; provided that in no event shall any Subsidiary Guarantor
be merged with or into, or transfer or convey all or substantially all
its assets, or be liquidated into a Foreign Restricted Subsidiary in
reliance on this clause (d)(ii);
(e) any Investment by any Foreign Restricted Subsidiary in any other
Foreign Restricted Subsidiary;
(f) any Investment funded with cash proceeds from an indemnity claim
under the merger agreement relating to the acquisition of Tempur World,
Inc. in the Foreign Restricted Subsidiary (either directly or through one
or more capital contributions) that incurred the obligation or liability
with respect to which such indemnity payment is being made;
(g) any capital contribution by the First Tier Parent Guarantor to
one or more of its Foreign Restricted Subsidiaries, so long as the proceeds
are applied within two weeks after the
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date of such capital contribution to repay intercompany payables owed by a
Foreign Restricted Subsidiary to the Companies or a Guarantor;
(h) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.12 hereof;
(i) any acquisition of assets or Investment solely in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of TWI or
the Companies or made with the proceeds of a substantially concurrent sale
of such Equity Interests (other than Disqualified Stock) made for such
purpose;
(j) any Investments received in compromise of obligations of such
Persons incurred in the ordinary course of trade creditors or customers
that were incurred in the ordinary course of business, including pursuant
to any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of any trade creditor or customer;
(k) Hedging Obligations;
(l) guarantees that constitute Permitted Indebtedness;
(m) advances, loans or extensions of credit to suppliers in the
ordinary course of business by any Parent Guarantor or any Restricted
Subsidiary; and
(n) other Investments in any Person having an aggregate fair market
value (measured on the date each such investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (n) that are at the time
outstanding, not to exceed $20.0 million.
"Permitted Junior Securities" means:
(a) Equity Interests in any Company or any Guarantor; or
(b) debt securities that are subordinated to all Senior Debt and any
debt securities issued in exchange for Senior Debt to substantially the
same extent as, or to a greater extent than, the Notes and the Guarantees
are subordinated to Senior Debt under this Indenture.
"Permitted Liens" means:
(a) Liens on assets (including Capital Stock) of TWI, the Companies
and their respective Subsidiaries securing Senior Debt or Indebtedness
under Credit Facilities that was permitted by the terms of this Indenture
to be incurred;
(b) Liens in favor of TWI or the Companies or any Guarantor;
(c) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with TWI, the Companies or any their
respective Restricted Subsidiaries; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation and do
not extend to any assets other than those of the Person merged into or
consolidated with TWI, the Companies or any of their respective Restricted
Subsidiaries;
(d) Liens on property existing at the time of acquisition of the
property by TWI, the Companies or any their respective Restricted
Subsidiaries, provided that such Liens were in existence prior to the
contemplation of such acquisition;
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(e) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(f) pledges or deposits of money securing statutory obligations under
workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA);
(g) pledges or deposits of money securing bids, tenders, contracts
(other than contracts for the payment of money) or leases to which TWI, the
Companies or any of their Restricted Subsidiaries is a party as lessee,
made in the ordinary course of business;
(h) inchoate and unperfected workers', mechanics' or similar Liens
arising in the ordinary course of business, so long as such Liens attach
only to equipment, fixtures and/or real estate;
(i) carriers', warehousemen's, suppliers' or other similar possessory
Liens arising in the ordinary course of business and securing past due
liabilities in an outstanding aggregate amount not in excess of $50,000 at
any time, so long as such Liens attach only to inventory;
(j) any attachment or judgment Lien in respect of a judgment being
contested by the Companies and not constituting an Event of Default;
(k) zoning restrictions, easements, licenses, or other restrictions
on the use of any real property or other minor irregularities in title
(including leasehold title) thereto, so long as the same do not materially
impair the use, value or marketability of such real property;
(l) Liens arising from precautionary UCC-1 financing statement
filings regarding operating leases entered into by TWI, the Companies or
any of their Restricted Subsidiaries in the ordinary course of business;
(m) Liens arising from subleases or leases entered into the ordinary
course of business by TWI, the Companies or their respective Restricted
Subsidiaries as lessor with respect to excess or unused real property owned
or leased by TWI, the Companies or their respective Restricted
Subsidiaries;
(n) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (d) of the second paragraph of Section
4.09 hereof covering only the assets acquired with such Indebtedness;
(o) Liens existing on the Issue Date;
(p) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as is required in
conformity with GAAP has been made therefor; and
(q) Liens incurred in the ordinary course of business TWI, the
Companies or any their respective Restricted Subsidiaries with respect to
obligations that do not exceed $15.0 million at any one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of TWI,
the Companies or any of their respective Restricted Subsidiaries issued in
exchange for, or the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund other Indebtedness (other than intercompany
Indebtedness) of TWI, the Companies or any of their respective Restricted
Subsidiaries; provided that:
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(a) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness extended, refinanced,
renewed, replaced, defeased or refunded (plus all accrued interest on the
Indebtedness and the amount of all expenses and premiums incurred in
connection therewith);
(b) in the case of Indebtedness other than Senior Debt, such
Permitted Refinancing Indebtedness has a final maturity date the same as or
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(c) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of
payment to, the Notes on terms at least as favorable to the Holders as
those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and
(d) such Indebtedness is incurred either by TWI or by the Companies
or a Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same Debt as that evidenced by such
particular Note; and any Note authenticated and delivered under Section 2.07 in
lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same
Debt as the lost, destroyed or stolen Note.
"Principals" means each of TA Associates, Inc. and Friedman Fleischer
& Lowe, LLC and their respective Affiliates.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) hereof to be placed on all Notes issued under this Indenture except
as otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified IPO" means a bona fide, firm commitment underwritten public
offering of the common stock of TWI Holdings Inc. (or any other indirect
ultimate Parent Guarantor) pursuant to an effective registration statement under
the Securities Act generating gross proceeds to such issuer in an amount equal
to at least $75.0 million (based upon the price to the public in the public
offering).
"Reference Treasury Dealer" means Lehman Brothers Inc. or any other
investment banking firm of national reputation and their respective successors;
provided, however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), TWI
will substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and ask prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such redemption date.
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"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the Companies, the Guarantors,
Lehman Brothers Inc., UBS Securities LLC and Credit Suisse First Boston LLC as
such agreement may be amended, modified or supplemented from time to time and,
with respect to any Additional Notes, one or more registration rights agreements
between the Companies and the other parties thereto, as such agreement(s) may be
amended, modified or supplemented from time to time, relating to rights given by
the Companies to the purchasers of Additional Notes to register such Additional
Notes, or exchange such Additional Notes for registered notes, under the
Securities Act.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the applicable date specified as a "Record Date" on the face of any
Note in the form of Exhibit A hereto issued in accordance with Article 2 hereof.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Permanent Regulation S Global Note
or Temporary Regulation S Global Note.
"Regulation S Permanent Global Note" means a permanent Global Note in
the form of Exhibit A hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with and registered in the name of the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Regulation S Temporary Global Note upon expiration of
the Distribution Compliance Period.
"Regulation S Temporary Global Note" means a temporary Global Note in
the form of Exhibit A hereto bearing the Global Note Legend, the Private
Placement Legend and Regulation S Temporary Global Note Legend and deposited
with and registered in the name of the Depository or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Regulation S Temporary Global Note Legend" means the legend set forth
in Section 2.06(g)(iii) hereof to be placed on all Temporary Regulation S Global
Notes issued under this Indenture except as otherwise permitted by the
provisions of this Indenture.
"Related Party" means:
(a) any controlling equityholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any Principal; or
(b) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 80% or more controlling interest of which consist of any one or
more Principals and/or such other Persons referred to in the immediately
preceding clause (a).
"Representative" means the Trustee, agent or representative expressly
authorized to act in such capacity, if any, for an issue of Senior Debt.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Office of the Trustee (or any successor
group of the Trustee) with direct responsibility for the administration of this
Indenture and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means one or more Definitive Notes
bearing the Private Placement Legend.
"Restricted Global Notes" means 144A Global Notes, IAI Global Notes
and Regulation S Global Notes.
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"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"S&P" means Standard & Poor's Ratings Services, a division of McGraw
Hill, Inc., or any successor to the rating agency business thereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means:
(a) all Indebtedness of the Guarantors or the Companies outstanding
from time to time under Credit Facilities and all Hedging Obligations with
respect thereto;
(b) any other Indebtedness of TWI, the Companies or any Subsidiary
Guarantor to the extent permitted to be incurred under this Indenture,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of payment to
the Notes or any Guarantee thereof; and
(c) all Obligations with respect to the items listed in the preceding
clauses (a) and (b).
Notwithstanding anything to the contrary in the preceding sentence,
Senior Debt will not include:
(i) any liability for federal, state, local or other taxes owed
or owing by TWI, the Companies or their respective Restricted
Subsidiaries;
(ii) any Indebtedness owed by a Person to any Subsidiary or
other Affiliate of such Person other than senior subordinated notes in
an amount not to exceed $35.0 million issued or guaranteed by the
Guarantors or the Companies pursuant to that certain Subordinated Note
Purchase Agreement, dated as of November 1, 2002;
(iii) any trade payables; or
(iv) the portion of any Indebtedness that is incurred in
violation of this Indenture.
"Shelf Registration Statement" means the registration statement
relating to the registration of the Notes under Rule 415 of the Securities Act,
as may be set forth in a Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Issue Date.
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"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Obligations" means, with respect to any Person, any
Indebtedness of such Person, whether outstanding on the Issue Date or thereafter
incurred, that is subordinate or junior in right of payment to the Notes or a
Guarantee, as applicable, pursuant to a written agreement to such effect.
"Subsidiary" means, with respect to any specified Person:
(a) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees of the corporation, association
or other business entity is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person (or a combination thereof); and
(b) any partnership (i) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(ii) the only general partners of which are that Person or one or more
Subsidiaries of that Person (or any combination thereof).
"Subsidiary Guarantee" means the Guarantee of the Notes by each of the
Subsidiary Guarantors pursuant to Article 10 hereof and in the form of the
Guarantee endorsed on the form of Note attached as Exhibit A hereto and any
additional Guarantee of the Notes to be executed by any Subsidiary of the
Companies pursuant to Section 4.21 hereof.
"Subsidiary Guarantors" means, collectively, all Subsidiaries that
execute a Subsidiary Guarantee in accordance with the provisions of this
Indenture and their respective successors and assigns; each such Subsidiary
being a "Subsidiary Guarantor."
"Surviving Person" means the surviving Person formed by a merger,
consolidation or amalgamation and, for purposes of Section 5.01 hereof, a Person
to whom all or substantially all of the properties or assets of the Companies or
any Guarantor is sold, assigned, transferred, conveyed or otherwise disposed of.
"TIA" means the Trust Indenture Act of 1939, as amended, and the rules
and regulations thereunder.
"Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the yield to maturity of the Comparable Treasury Issue,
compounded semi-annually, assuming a price for such Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"TWI" means TWI Holdings Inc. and any successor thereto.
"Unrestricted Definitive Notes" means one or more Definitive Notes
that do not and are not required to bear the Private Placement Legend.
"Unrestricted Global Notes" means one or more Global Notes that do not
and are not required to bear the Private Placement Legend and are deposited with
and registered in the name of the Depositary or its nominee.
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"Unrestricted Subsidiary" means any Subsidiary of TWI (other than the
Companies), or any successor to any of them, that is designated by the Board of
Directors of TWI as an Unrestricted Subsidiary pursuant to a Board Resolution in
accordance with Section 4.16 hereof.
"U.S. Government Securities" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Wholly Owned Subsidiary" means, as to any Person, a Subsidiary of
such Person of which 100% of the Voting Stock is owned beneficially by the
referent Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(a) the sum of the products obtained by multiplying (i) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect of the Indebtedness, by (ii) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of
such payment; by
(b) the then outstanding principal amount of such Indebtedness.
Section 1.02. Other Definitions
-----------------
Defined in
Term Section
---- ----------
"Acceleration Notice"........................................6.02
"Affiliate Transaction"......................................4.14
"Asset Sale Offer"...........................................4.12
"Authentication Order".......................................2.02
"Benefited Party"...........................................10.01
"Change of Control Offer"....................................4.17
"Change of Control Purchase Price"...........................4.17
"Covenant Defeasance"........................................8.03
"defeasance trust"...........................................8.04
"DTC"........................................................2.03
"Event of Default"...........................................6.01
"Excess Proceeds"............................................4.12
"Legal Defeasance"...........................................8.02
"losses".....................................................7.07
"Management Equity Repurchases"..............................4.10
"Offer Amount"...............................................3.09
"Offer Period"...............................................3.09
"Offer to Purchase"..........................................3.09
"Paying Agent"...............................................2.03
"Payment Blockage Notice"...................................12.03
"Payment Default"............................................6.01
"Permitted Debt".............................................4.09
"Proceeding"................................................12.02
"Purchase Date...............................................3.09
"Purchase Price..............................................3.09
"Registrar"..................................................2.03
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"Restricted Payments"........................................4.10
"Security Register"..........................................2.03
"seller".....................................................4.12
Section 1.03. Incorporation by Reference of Trust Indenture Act.
(a) Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
(b) The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes and the Guarantees;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Companies and any successor obligor
upon the Notes.
(c) All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA and not otherwise defined herein have the meanings so assigned to them.
Section 1.04. Rules of Construction.
---------------------
(a) Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined herein has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the
plural include the singular;
(v) all references in this instrument to "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections and
subdivisions of this Indenture as originally executed;
(vi) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
(vii) "including" means "including without limitation;"
(viii) provisions apply to successive events and transactions;
and
(ix) references to sections of or rules under the Securities
Act, the Exchange Act or the TIA shall be deemed to include substitute,
replacement or successor sections or rules adopted by the Commission from time
to time thereunder.
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ARTICLE 2.
THE NOTES
---------
Section 2.01. Form and Dating.
---------------
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form included in Exhibit A hereto,
which is hereby incorporated in and expressly made part of this Indenture. The
Notes may have notations, legends or endorsements required by law, exchange rule
or usage in addition to those set forth on Exhibit A. Each Note shall be dated
the date of its authentication. The Notes shall be in denominations of $1,000
and integral multiples thereof. The terms and provisions contained in the Notes
shall constitute a part of this Indenture and the Companies, the Guarantors and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby. To the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
(b) Form of Notes. Notes shall be issued initially in global form and
shall be substantially in the form of Exhibit A attached hereto (including the
Global Note Legend thereon and the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Each Global Note shall represent such aggregate
principal amount of the outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions
and transfers of interests therein. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its New York office, as custodian for
the Depositary, and registered in the name of the Depositary or the nominee of
the Depositary for the accounts of designated agents holding on behalf of
Euroclear or Clearstream, duly executed by the Companies and authenticated by
the Trustee as hereinafter provided. The Distribution Compliance Period shall be
terminated upon the receipt by the Trustee of (i) a written certificate from the
Depositary, together with copies of certificates from Euroclear and Clearstream
certifying that they have received certification of non-United States beneficial
ownership of 100% of the aggregate principal amount of the Regulation S
Temporary Global Note (except to the extent of any beneficial owners thereof who
acquired an interest therein during the Distribution Compliance Period pursuant
to another exemption from registration under the Securities Act and who will
take delivery of a beneficial ownership interest in a Global Note, bearing a
Private Placement Legend, all as contemplated by Section 2.06(b) hereof), and
(ii) an Officers' Certificate from the Companies. Following the termination of
the Distribution Compliance Period, beneficial interests in the Regulation S
Temporary Global Note shall be exchanged for beneficial interests in the
Regulation S Permanent Global Note pursuant to the Applicable Procedures.
Simultaneously with the authentication of the Regulation S Permanent Global
Note, the Trustee shall cancel the Regulation S Temporary Global Note. The
aggregate principal amount of the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee, as the case may be, in connection with transfers of interests as
hereinafter provided.
(d) Book-Entry Provisions. This Section 2.01(d) shall apply only to
Global Notes deposited with the Trustee, as custodian for the Depositary.
Participants and Indirect Participants shall have no rights under this Indenture
or any Global Note with respect to any Global Note held on their behalf by the
Depositary or by the Trustee as custodian for the Depositary, and the Depositary
shall be treated by the Companies, the Trustee and any agent of the Companies or
the Trustee as the absolute owner of such Global Note for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Companies, the Trustee or any agent of the Companies or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
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the Depositary or impair, as between the Depositary and its Participants or
Indirect Participants, the Applicable Procedures or the operation of customary
practices of the Depositary governing the exercise of the rights of a holder of
a beneficial interest in any Global Note.
(e) Euroclear and Clearstream Procedures Applicable. The provisions
of the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of
Clearstream" and "Customer Handbook" of Clearstream, or any successor
publications, shall be applicable to transfers of beneficial interests in Global
Notes that are held by Participants through Euroclear or Clearstream.
(f) Certificated Securities. The Companies shall exchange Global
Notes for Definitive Notes if: (i) at any time the Depositary notifies the
Companies that (x) it is unwilling or unable to continue to act as Depositary
for the Global Notes or (y) it has ceased to be a clearing agency registered
under the Exchange Act, and, in either case, the Companies shall not have
appointed a successor Depositary within 120 days after the date of such notice
of ineligibility, (ii) the Companies, at their option, determine that the Global
Notes shall be exchanged for Definitive Notes and deliver a written notice to
such effect to the Trustee or (iii) upon written request of a Holder or the
Trustee if a Default or Event of Default shall have occurred and be continuing.
Upon the occurrence of any of the events set forth in clauses (i),
(ii) or (iii) above, the Companies shall execute, and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate and deliver, Definitive Notes, in authorized denominations, in an
aggregate principal amount equal to the principal amount of the Global Notes in
exchange for such Global Notes.
Upon the exchange of a Global Note for Definitive Notes, such Global
Note shall be cancelled by the Trustee or an agent of the Companies or the
Trustee. Definitive Notes issued in exchange for a Global Note pursuant to this
Section 2.01 shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its Participants
or its Applicable Procedures, shall instruct the Trustee or an agent of the
Companies or the Trustee in writing. The Trustee or such agent shall deliver
such Definitive Notes to or as directed by the Persons in whose names such
Definitive Notes are so registered or to the Depositary.
Section 2.02. Execution and Authentication.
----------------------------
(a) One Officer shall execute the Notes on behalf of the Companies by
manual or facsimile signature.
(b) If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated by the Trustee, the Note shall
nevertheless be valid.
(c) A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
(d) The Trustee shall, upon a written order of the Companies signed
by an Officer of each of the Companies (an "Authentication Order"), authenticate
Notes for issuance.
(e) The Trustee may appoint an authenticating agent acceptable to the
Companies to authenticate Notes. Unless otherwise provided in such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent shall have the same rights
as the Trustee to deal with Holders, the Companies or an Affiliate of the
Companies.
Section 2.03. Registrar and Paying Agent.
--------------------------
(a) The Companies shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register (the "Security Register") of the Notes and of
their
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transfer and exchange. The Companies may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
The Companies may change any Paying Agent or Registrar without notice to any
Holder. The Companies shall notify the Trustee in writing of the name and
address of any Agent not a party to this Indenture. If the Companies fail to
appoint or maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such. The Companies or any of their Subsidiaries may act as Paying
Agent or Registrar.
(b) The Companies initially appoint The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
(c) The Companies initially appoint the Trustee to act as Registrar
and Paying Agent and to act as Custodian with respect to the Global Notes, and
the Trustee hereby agrees so to initially act.
Section 2.04. Paying Agent to Hold Money in Trust.
-----------------------------------
The Companies shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and shall notify the
Trustee of any default by the Companies in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all funds
held by it relating to the Notes to the Trustee. The Companies at any time may
require a Paying Agent to pay all funds held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Companies or a
Subsidiary) shall have no further liability for such funds. If the Companies or
a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all funds held by it as Paying Agent.
Upon any Event of Default under Sections 6.01(i) and (j) hereof relating to the
Companies, the Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Companies shall furnish or cause to be furnished to
the Trustee at least seven Business Days before each Interest Payment Date and
at such other times as the Trustee may request in writing, a list in such form
and as of such date or such shorter time as the Trustee may allow, as the
Trustee may reasonably require of the names and addresses of the Holders and the
Companies shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
---------------------
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or
2.10 hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.06(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.06(b), (c) or (f)
hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either clause (i) or (ii) below, as applicable, as well as one
or more of the other following clauses, as applicable:
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(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend and any Applicable
Procedures; provided, however, that prior to the expiration of the
Distribution Compliance Period, transfers of beneficial interests in the
Regulation S Temporary Global Note may not be made to a U.S. Person or for
the account or benefit of a U.S. Person (other than a distributor (as
defined in Rule 902(d) of the Securities Act)). Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note. Except as may be required by the Applicable Procedures, no written
orders or instructions shall be required to be delivered to the Registrar
to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above, the
transferor of such beneficial interest shall deliver to the Registrar
either (A)(1) a written order from a Participant or an Indirect Participant
given to the Depositary in accordance with the Applicable Procedures
directing the Depositary to credit or cause to be credited a beneficial
interest in another Global Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given in
accordance with the Applicable Procedures containing information regarding
the Participant account to be credited with such increase or (B)(1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information regarding
the Person in whose name such Definitive Note shall be registered to effect
the transfer or exchange referred to in (B)(1) above; provided that in no
event shall Definitive Notes be issued upon the transfer or exchange of
beneficial interests in the Regulation S Temporary Global Note prior to (x)
the expiration of the Distribution Compliance Period and (y) the receipt by
the Registrar of any certificates required pursuant to Rule
903(a)(3)(ii)(B) under the Securities Act. Upon consummation of an Exchange
Offer by the Companies in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in
the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture and the Notes or otherwise applicable
under the Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests in a Restricted Global
Note to Another Restricted Global Note. A beneficial interest in any
Restricted Global Note may be transferred to a Person who takes delivery
thereof in the form of a beneficial interest in another Restricted Global
Note if the transfer complies with the requirements of Section 2.06(b)(ii)
above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or
the Regulation S Permanent Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications and certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
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(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in an Unrestricted Global
Note. A beneficial interest in any Restricted Global Note may be exchanged
by any holder thereof for a beneficial interest in an Unrestricted Global
Note or transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the
Companies;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a broker-dealer pursuant
to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such
beneficial interest for a beneficial interest in an
Unrestricted Global Note, a certificate from such holder
in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder
in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this clause (D), if
the Registrar and the Companies so request or if the
Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect
that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with
the Securities Act.
If any such transfer is effected pursuant to clause (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the
Companies shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
clause (B) or (D) above.
(v) Transfer or Exchange of Beneficial Interests in
Unrestricted Global Notes for Beneficial Interests in Restricted Global
Notes Prohibited. Beneficial interests in an Unrestricted Global Note may
not be exchanged for, or transferred to Persons who take delivery thereof
in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof
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in the form of a Restricted Definitive Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if |
