SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from__________________ to _______________
Commission file number 1-11178
REVLON, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3662955
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 MADISON AVENUE, NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-527-4000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
- --
As of September 30, 1998, 19,986,521 shares of Class A Common Stock and
31,250,000 shares of Class B Common Stock were outstanding. 11,250,000 shares
of Class A Common Stock and all the shares of Class B Common Stock were held by
REV Holdings Inc., an indirect wholly owned subsidiary of Mafco Holdings Inc.
Total Pages - 18
REVLON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
SEPTEMBER 30, DECEMBER 31,
ASSETS 1998 1997
---------- ----------
(Unaudited)
Current assets:
Cash and cash equivalents .............................................. $ 35.6 $ 37.4
Trade receivables, less allowances of $26.7
and $25.9, respectively ........................................... 479.1 492.5
Inventories ............................................................ 309.7 260.7
Prepaid expenses and other ............................................. 96.3 94.4
---------- ----------
Total current assets .............................................. 920.7 885.0
Property, plant and equipment, net ........................................... 369.3 364.0
Other assets ................................................................. 164.5 142.7
Intangible assets, net ....................................................... 376.9 319.2
Net assets of discontinued operations ........................................ 30.3 45.1
---------- ----------
Total assets ...................................................... $ 1,861.7 $ 1,756.0
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Short-term borrowings - third parties .................................. $ 45.6 $ 42.7
Current portion of long-term debt - third parties ...................... 5.2 5.5
Accounts payable ....................................................... 186.8 178.8
Accrued expenses and other ............................................. 289.0 356.0
---------- ----------
Total current liabilities ......................................... 526.6 583.0
Long-term debt - third parties ............................................... 1,641.9 1,388.8
Long-term debt - affiliates .................................................. 26.2 30.9
Other long-term liabilities .................................................. 209.7 211.8
Stockholders' deficiency:
Preferred stock, par value $.01 per share; 20,000,000 shares authorized,
546 Series A Preferred Stock issued
and outstanding ................................................... 54.6 54.6
Class B Common Stock, par value $.01 per share; 200,000,000
shares authorized, 31,250,000 issued and outstanding .............. 0.3 0.3
Class A Common Stock, par value $.01 per share; 350,000,000
shares authorized, 19,986,521 and 19,886,575, respectively,
issued and outstanding ............................................ 0.2 0.2
Capital deficiency ..................................................... (228.5) (231.1)
Accumulated deficit since June 24, 1992 ................................ (332.9) (258.8)
Accumulated other comprehensive loss ................................... (36.4) (23.7)
---------- ----------
Total stockholders' deficiency .................................... (542.7) (458.5)
---------- ----------
Total liabilities and stockholders' deficiency .................... $ 1,861.7 $ 1,756.0
========== ==========
See Notes to Unaudited Consolidated Condensed Financial Statements.
2
REVLON, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, . SEPTEMBER 30,
-------------------------------- --------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
Net sales ...............................................$ 548.6 $ 581.0 $ 1,621.7 $ 1,598.7
Cost of sales ........................................... 186.1 191.7 543.4 533.3
-------------- -------------- -------------- --------------
Gross profit ....................................... 362.5 389.3 1,078.3 1,065.4
Selling, general and administrative expenses ............ 322.6 318.5 958.2 921.0
Business consolidation costs and other, net ............. (7.1) (1.0) (7.1) 4.4
-------------- -------------- -------------- --------------
Operating income ................................... 47.0 71.8 127.2 140.0
-------------- -------------- -------------- --------------
Other expenses (income):
Interest expense ................................... 33.0 33.0 103.3 99.2
Interest and net investment income ................. (1.4) (1.0) (3.8) (3.1)
Amortization of debt issuance costs ................ 1.1 1.5 3.9 5.3
Foreign currency losses, net ....................... 1.9 2.4 4.7 5.2
Miscellaneous, net ................................. 0.4 1.1 3.6 3.8
-------------- -------------- -------------- --------------
Other expenses, net ........................... 35.0 37.0 111.7 110.4
-------------- -------------- -------------- --------------
Income from continuing operations
before income taxes ................................ 12.0 34.8 15.5 29.6
(Benefit) provision for income taxes .................... (0.7) 0.2 6.4 9.2
-------------- -------------- -------------- --------------
Income from continuing operations ....................... 12.7 34.6 9.1 20.4
Discontinued operations:
Loss from discontinued operations .................. - (1.5) (16.5) (3.3)
Loss on disposal of discontinued operations ........ - - (15.0) -
-------------- -------------- -------------- --------------
Loss from discontinued operations .................. - (1.5) (31.5) (3.3)
Extraordinary items - early extinguishments of debt ..... - - (51.7) (14.9)
-------------- -------------- -------------- --------------
Net income (loss) .......................................$ 12.7 $ 33.1 $ (74.1) $ 2.2
============== ============== ============== ==============
Basic income (loss) per common share:
Income from continuing operations ..................$ 0.25 $ 0.68 $ 0.18 $ 0.40
Loss from discontinued operations .................. - (0.03) (0.62) (0.07)
Extraordinary items ................................ - - (1.01) (0.29)
-------------- -------------- -------------- --------------
Net income (loss) per common share .................$ 0.25 $ 0.65 $ (1.45) $ 0.04
============== ============== ============== ==============
Diluted income (loss) per common share:
Income from continuing operations ..................$ 0.24 $ 0.67 $ 0.17 $ 0.40
Loss from discontinued operations .................. - (0.03) (0.60) (0.07)
Extraordinary items ................................ - - (0.99) (0.29)
-------------- -------------- -------------- --------------
Net income (loss) per common share .................$ 0.24 $ 0.64 $ (1.42) $ 0.04
============== ============== ============== ==============
Weighted average number of common shares outstanding:
Basic .............................................. 51,234,946 51,133,791 51,211,511 51,129,792
============== ============== ============== ==============
Dilutive ........................................... 52,175,749 51,747,173 52,326,097 51,565,398
============== ============== ============== ==============
See Notes to Unaudited Consolidated Condensed Financial Statements.
3
REVLON, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
AND COMPREHENSIVE LOSS
(DOLLARS IN MILLIONS)
ACCUMULATED
OTHER
PREFERRED COMMON CAPITAL ACCUMULATED COMPREHENSIVE COMPREHENSIVE
STOCK STOCK DEFICIENCY DEFICIT LOSS (A) LOSS
--------- --------- ------------ ----------- ------------- -------------
Balance, January 1, 1997.................. $ 54.6 $ 0.5 $ (231.6) $ (302.4) $ (18.2)
Net income........................... 2.2 $ 2.2
Issuance of common stock............. 0.2
Net capital contribution............. 0.3 (c)
Currency translation adjustment...... (12.4) (12.4)
--------- --------- ----------- ----------- ------------- -------------
Balance, September 30, 1997............... $ 54.6 $ 0.5 $ (231.1) $ (300.2) $ (30.6) $ (10.2)
========= ========= =========== =========== ============= =============
Balance, January 1, 1998.................. $ 54.6 $ 0.5 $ (231.1) $ (258.8) $ (23.7)
Net loss............................. (74.1) $ (74.1)
Issuance of common stock............. 2.6
Revaluation of marketable securities. (2.4) (2.4)
Currency translation adjustment...... (10.3) (b) (10.3)(b)
--------- --------- ----------- ----------- ------------- -------------
Balance, September 30, 1998............... $ 54.6 $ 0.5 $ (228.5) $ (332.9) $ (36.4) $ (86.8)
========= ========= =========== =========== ============= =============
- - -------------------------------------------------------------
(a) Accumulated other comprehensive loss includes a revaluation of marketable
securities of $2.4 for the nine months ended September 30, 1998, currency
translation adjustments of $29.5 and $18.2 as of September 30, 1998 and 1997,
respectively, and adjustments for the minimum pension liability of $4.5 and
$12.4 as of September 30, 1998 and 1997, respectively.
(b) Accumulated other comprehensive loss and comprehensive loss each include a
reclassification adjustment of $2.2 for realized gains associated with the sale
of certain International operations assets.
(c) Represents change in capital from the acquisition of the Bill Blass
business.
See Notes to Unaudited Consolidated Condensed Financial Statements.
4
REVLON, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1998 1997
--------- --------
Net (loss) income ........................................................... $ (74.1) $ 2.2
Adjustments to reconcile net (loss) income to net cash (used for)
provided by operating activities:
Depreciation and amortization .......................................... 80.6 74.8
Gain on sale of business interests and certain fixed assets, net ....... (7.1) (1.0)
Loss from discontinued operations ...................................... 31.5 3.3
Extraordinary items .................................................... 51.7 14.9
Change in assets and liabilities:
Decrease (increase) in trade receivables .......................... 14.2 (36.9)
Increase in inventories ........................................... (50.5) (43.8)
Increase in prepaid expenses and other current assets ............. (5.8) (5.2)
Increase (decrease) in accounts payable ........................... 3.0 (12.1)
Decrease in accrued expenses and other current liabilities ........ (76.4) (49.3)
Other, net ........................................................ (63.9) (57.8)
--------- --------
Net cash used for operating activities ...................................... (96.8) (110.9)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ........................................................ (40.5) (27.8)
Proceeds from the sale of business interests and certain fixed assets ....... 13.7 2.5
Acquisition of businesses, net of cash acquired ............................. (57.6) (33.7)
--------- --------
Net cash used for investing activities ...................................... (84.4) (59.0)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short-term borrowings - third parties ....................... 1.3 2.5
Proceeds from the issuance of long-term debt - third parties ................ 1,178.9 681.7
Repayment of long-term debt - third parties ................................. (961.8) (506.1)
Net proceeds from issuance of common stock .................................. 1.1 0.2
Proceeds from the issuance of debt - affiliates ............................. 105.9 91.1
Repayment of debt - affiliates .............................................. (110.6) (90.6)
Net contribution from parent ................................................ - 0.3
Payment of debt issuance costs .............................................. (16.5) (4.1)
--------- --------
Net cash provided by financing activities ................................... 198.3 175.0
--------- --------
Effect of exchange rate changes on cash and cash equivalents ................ (2.0) (1.3)
Net cash used for discontinued operations ................................... (16.9) (2.8)
--------- --------
Net (decrease) increase in cash and cash equivalents ................... (1.8) 1.0
Cash and cash equivalents at beginning of period ....................... 37.4 35.1
--------- --------
Cash and cash equivalents at end of period ............................. $ 35.6 $ 36.1
========= ========
Supplemental schedule of cash flow information:
Cash paid for:
Interest .......................................................... $ 116.2 $ 108.6
Income taxes, net of refunds ...................................... 9.8 8.8
Supplemental schedule of noncash investing activities:
Liabilities assumed in connection with business acquisitions
(including discontinued operations):
Fair value of assets acquired ..................................... $ 74.5 $ 129.4
Cash paid ......................................................... (57.6) (57.7)
--------- --------
Liabilities assumed ............................................... $ 16.9 $ 71.7
========= ========
See Notes to Unaudited Consolidated Condensed Financial Statements.
5
REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(1) BASIS OF PRESENTATION
Revlon, Inc. (the "Company") is a holding company, formed in April
1992, that conducts its business exclusively through its direct subsidiary,
Revlon Consumer Products Corporation and its subsidiaries ("Products
Corporation"). The Company is an indirect majority owned subsidiary of
MacAndrews & Forbes Holdings Inc., a corporation wholly owned indirectly by
Mafco Holdings Inc.
The accompanying Consolidated Condensed Financial Statements are
unaudited. In management's opinion, all adjustments (consisting of only normal
recurring accruals) necessary for a fair presentation have been made.
The Unaudited Consolidated Condensed Financial Statements include the
accounts of the Company after elimination of all material intercompany balances
and transactions. The Company has made a number of estimates and assumptions
relating to the assets and liabilities, the disclosure of contingent assets and
liabilities and the reporting of revenues and expenses to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates. The Unaudited
Consolidated Condensed Financial Statements should be read in conjunction with
the consolidated financial statements and related notes contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997. The
financial information contained in this Quarterly Report on Form 10-Q reflects
the treatment of The Cosmetic Center, Inc. ("CCI") as a discontinued operation
(see Note 7).
The results of operations and financial position, including working
capital, for interim periods are not necessarily indicative of those to be
expected for a full year, due, in part, to seasonal fluctuations, which are
normal for the Company's business.
The Company matches advertising and promotion expenses with sales
revenues for interim reporting purposes. Advertising and promotion expenses
estimated for a full year are charged to earnings for interim reporting
purposes in proportion to the relationship that net sales for such period bear
to estimated full year net sales. As a result, for the nine months ended
September 30, 1998 and 1997, disbursements and commitments for advertising and
promotion exceeded advertising and promotion expenses by $48.4 and $38.7,
respectively, and such amounts were deferred.
During the first quarter of 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," which establishes standards for reporting and displaying comprehensive
income (loss) and its components in a full set of general-purpose financial
statements. The components of comprehensive income (loss) are comprised of net
income (loss), changes in the currency translation adjustment, adjustments for
minimum pension liability and changes in the valuation of marketable
securities.
During 1998, the Company adopted Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use," which requires capitalization of certain development costs of
software to be used internally. The adoption of this statement did not have a
material effect on the Company's financial condition or results of operations.
(2) INVENTORIES
SEPTEMBER 30, DECEMBER 31,
1998 1997
---------- ----------
Raw materials and supplies................................$ 97.1 $ 82.6
Work-in-process........................................... 21.5 14.9
Finished goods............................................ 191.1 163.2
---------- ----------
$ 309.7 $ 260.7
========== ==========
6
REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(3) BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE
The basic income (loss) per common share has been computed based upon
the weighted average number of shares of common stock outstanding. The diluted
income (loss) per common share is computed based upon the weighted average
number of shares of common stock outstanding and the dilutive effect of stock
options. The number of shares used in the calculation of diluted income (loss)
per common share was greater than the number of shares used in the calculation
of basic income (loss) per common share by 940,803 and 613,382 for the three
months ended September 30, 1998 and 1997, respectively, and by 1,114,586 and
435,606 for the nine months ended September 30, 1998 and 1997, respectively.
(4) REFINANCING
On February 2, 1998, Revlon Escrow Corp. ("Revlon Escrow"), an
affiliate of Products Corporation, issued and sold in a private placement
$650.0 aggregate principal amount of 8 5/8% Senior Subordinated Notes due 2008
(the "8 5/8% Notes") and $250.0 aggregate principal amount of 8 1/8% Senior
Notes due 2006 (the "8 1/8% Notes" and, together with the 8 5/8% Notes, the
"Notes"), with the net proceeds of approximately $886 deposited into escrow.
The proceeds from the sale of the Notes were used to finance the redemption by
Products Corporation of $555.0 aggregate principal amount of its 10 1/2% Senior
Subordinated Notes due 2003 (the "Senior Subordinated Notes") and $260.0
aggregate principal amount of its 9 3/8% Senior Notes due 2001 (the "Senior
Notes"). Products Corporation delivered a redemption notice to the holders of
the Senior Subordinated Notes for the redemption of the Senior Subordinated
Notes on March 4, 1998, at which time Products Corporation assumed the
obligations under the 8 5/8% Notes and the related indenture (the "8 5/8% Notes
Assumption"), and to the holders of the Senior Notes for the redemption of the
Senior Notes on April 1, 1998, at which time Products Corporation assumed the
obligations under the 8 1/8% Notes and the related indenture (the "8 1/8% Notes
Assumption" and, together with the 8 5/8% Notes Assumption, the "Assumption").
In connection with the redemptions of the Senior Subordinated Notes and the
Senior Notes, the Company recorded an extraordinary loss of $51.7 in the first
half of 1998 resulting primarily from the write-off of deferred financing costs
and payment of call premiums on the Senior Subordinated Notes and the Senior
Notes. On May 7, 1998, substantially all of the Notes were exchanged for
registered notes with substantially identical terms (the Notes and the
registered exchange notes shall each be referred to as the Notes).
The 8 5/8% Notes are general unsecured obligations of Products
Corporation and are (i) subordinate in right of payment to all existing and
future Senior Debt (as defined in the indenture relating to the 8 5/8% Notes
(the "8 5/8% Notes Indenture")) of Products Corporation, including the 9 1/2%
Senior Notes due 1999 (the "1999 Notes") until the maturity or earlier
retirement thereof, the 9% Notes (as defined in Note 9), the 8 1/8% Notes and
the indebtedness under the credit agreement which became effective in May 1997
(as subsequently amended, the "Credit Agreement"), (ii) pari passu in right of
payment with all future senior subordinated debt, if any, of Products
Corporation and (iii) senior in right of payment to all future subordinated
debt, if any, of Products Corporation. The 8 5/8% Notes are effectively
subordinated to the outstanding indebtedness and other liabilities of Products
Corporation's subsidiaries. Interest is payable on February 1 and August 1.
The 8 5/8% Notes may be redeemed at the option of Products Corporation
in whole or from time to time in part at any time on or after February 1, 2003
at the redemption prices set forth in the 8 5/8% Notes Indenture. In addition,
at any time prior to February 1, 2001, Products Corporation may redeem up to
35% of the aggregate principal amount of the 8 5/8% Notes originally issued at
a redemption price of 108 5/8% of the principal amount thereof, plus accrued
and unpaid interest, if any, thereon to the date fixed for redemption, with,
and to the extent Products Corporation receives, the net cash proceeds of one
or more Public Equity Offerings (as defined in the 8 5/8% Notes Indenture),
provided that at least $422.5 aggregate principal amount of the 8 5/8% Notes
remains outstanding immediately after the occurrence of each such redemption.
Upon a Change of Control (as defined in the 8 5/8% Notes Indenture),
Products Corporation will have the option to redeem the 8 5/8% Notes in whole
at a redemption price equal to the principal amount thereof, plus accrued and
unpaid interest, if any, thereon to the date of redemption plus the Applicable
Premium (as defined in the 8 5/8% Notes Indenture) and, subject to certain
conditions, each holder of the 8 5/8% Notes will have the right to require
Products Corporation to repurchase all or a portion of such holder's 8 5/8%
Notes at a price equal to 101% of the principal amount thereof, plus accrued
and unpaid interest, if any, thereon to the date of repurchase.
The 8 5/8% Notes Indenture contains covenants that, among other
things, limit (i) the issuance of additional debt and redeemable stock by
Products Corporation, (ii) the incurrence of liens, (iii) the issuance of debt
and preferred stock by Products
7
REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
Corporation's subsidiaries, (iv) the payment of dividends on capital stock of
Products Corporation and its subsidiaries and the redemption of capital stock
of Products Corporation, (v) the sale of assets and subsidiary stock, (vi)
transactions with affiliates, (vii) consolidations, mergers and transfers of
all or substantially all Products Corporation's assets and (viii) the issuance
of additional subordinated debt that is senior in right of payment to the
8 5/8% Notes. The 8 5/8% Notes Indenture also prohibits certain restrictions on
distributions from subsidiaries. All of these limitations and prohibitions,
however, are subject to a number of important qualifications.
The 8 1/8% Notes are senior unsecured obligations of Products
Corporation and rank pari passu in right of payment with all existing and
future Senior Debt (as defined in the indenture relating to the 8 1/8% Notes
(the "8 1/8% Notes Indenture")) of Products Corporation, including the 1999
Notes until the maturity or earlier retirement thereof, the 9% Notes and the
indebtedness under the Credit Agreement, and senior to the 8 5/8% Notes and to
all future subordinated indebtedness of Products Corporation. The 8 1/8% Notes
are effectively subordinated to the outstanding indebtedness and other
liabilities of Products Corporation's subsidiaries. Interest is payable on
February 1 and August 1.
The 8 1/8% Notes may be redeemed at the option of Products Corporation
in whole or from time to time in part at any time on or after February 1, 2002
at the redemption prices set forth in the 8 1/8% Notes Indenture. In addition,
at any time prior to February 1, 2001, Products Corporation may redeem up to
35% of the aggregate principal amount of the 8 1/8% Notes originally issued at
a redemption price of 108 1/8% of the principal amount thereof, plus accrued
and unpaid interest, if any, thereon to the date fixed for redemption, with,
and to the extent Products Corporation receives, the net cash proceeds of one
or more Public Equity Offerings (as defined in the 8 1/8% Notes Indenture),
provided that at least $162.5 aggregate principal amount of the 8 1/8% Notes
remains outstanding immediately after the occurrence of each such redemption.
Upon a Change of Control (as defined in the 8 1/8% Notes Indenture),
Products Corporation will have the option to redeem the 8 1/8% Notes in whole
at a redemption price equal to the principal amount thereof, plus accrued and
unpaid interest, if any, thereon to the date of redemption plus the Applicable
Premium (as defined in the 8 1/8% Notes Indenture) and, subject to certain
conditions, each holder of the 8 1/8% Notes will have the right to require
Products Corporation to repurchase all or a portion of such holder's 8 1/8%
Notes at a price equal to 101% of the principal amount thereof, plus accrued
and unpaid interest, if any, thereon to the date of repurchase.
The 8 1/8% Notes Indenture contains covenants that, among other
things, limit (i) the issuance of additional debt and redeemable stock by
Products Corporation, (ii) the incurrence of liens, (iii) the issuance of debt
and preferred stock by Products Corporation's subsidiaries, (iv) the payment of
dividends on capital stock of Products Corporation and its subsidiaries and the
redemption of capital stock of Products Corporation, (v) the sale of assets and
subsidiary stock, (vi) transactions with affiliates and (vii) consolidations,
mergers and transfers of all or substantially all Products Corporation's
assets. The 8 1/8% Notes Indenture also prohibits certain restrictions on
distributions from subsidiaries. All of these limitations and prohibitions,
however, are subject to a number of important qualifications.
(5) BUSINESS CONSOLIDATION COSTS AND OTHER, NET
In the third quarter of 1998 the Company recognized a gain of
approximately $7.1 on the sale of the wigs and hairpieces portion of its U.S.
operation. In connection with the business consolidation costs and other, net,
recorded in 1997, the Company made cash payments for severance of $5.3 and cash
payments for other business consolidation costs of $1.7 during the nine months
ended September 30, 1998, which payments reduced accrued expenses and other as
of September 30, 1998. As of September 30, 1998, the unpaid balance of the
business consolidation costs included in accrued expenses and other was $4.0.
(6) ACQUISITIONS
During the second quarter of 1998, the Company consummated
acquisitions for a combined purchase price of approximately $62.6, with
resulting goodwill recorded under the purchase method of $63.7.
(7) DISCONTINUED OPERATIONS
In the second quarter of 1998, the Company determined to exit the
retail and outlet store business comprised of its 85% ownership interest in CCI
and recorded an estimated loss on disposal of $15.0. The results of operations
of CCI have been
8
REVLON, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
reported as a discontinued operation and, accordingly, all prior periods have
been restated. The net assets of CCI included in the accompanying unaudited
consolidated condensed balance sheets consist primarily of inventory and
intangible assets, offset by third party debt, minority interest and a reserve
for estimated loss on disposal.
(8) GEOGRAPHIC SEGMENTS
The Company manages its business on the basis of one reportable
segment. The Company is exposed to the risk of changes in social, political and
economic conditions inherent in foreign operations and the Company's results of
operations and the value of its foreign assets and liabilities are affected by
such factors and by fluctuations in foreign currency exchange rates. The
Company's operations in Brazil have accounted for approximately 5.5% and 5.2%
of the Company's net sales for the third quarter of 1998 and 1997,
respectively, and 5.6% and 6.0% of the Company's net sales for the nine months
ended September 30, 1998 and 1997, respectively. Net sales by geographic area
are presented by attributing revenues from external customers on the basis of
where the products are sold.
THREE MONTHS ENDED NINE MONTHS ENDED
GEOGRAPHIC AREAS: SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ----------------------------------
Net sales: 1998 1997 1998 1997
-------------- -------------- -------------- --------------
United States..........................$ 332.9 $ 346.5 $ 954.7 $ 925.7
International.......................... 215.7 234.5 667.0 673.0
-------------- -------------- -------------- --------------
$ 548.6 $ 581.0 $ 1,621.7 $ 1,598.7
============== ============== ============== ==============
SEPTEMBER 30, DECEMBER 31,
Long-lived assets: 1998 1997
-------------- --------------
United States..........................$ 627.0 $ 545.4
International.......................... 283.7 280.5
-------------- --------------
$ 910.7 $ 825.9
============== ==============
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ----------------------------------
CLASSES OF SIMILAR PRODUCTS: 1998 1997 1998 1997
-------------- -------------- -------------- --------------
Net sales:
Cosmetics, skin care and fragrances....$ 324.4 $ 351.2 $ 982.9 $ 970.6
Personal care and professional......... 224.2 229.8 638.8 628.1
-------------- -------------- -------------- --------------
$ 548.6 $ 581.0 $ 1,621.7 $ 1,598.7
============== ============== ============== ==============
(9) SUBSEQUENT EVENT
On November 6, 1998, Products Corporation issued and sold in a private
placement $250.0 aggregate principal amount of 9% Senior Notes due 2006 (the
"9% Notes"), receiving net proceeds of $247.2. Products Corporation will use
$200.0 of the net proceeds from the sale of the 9% Notes to refinance the 1999
Notes, including through open market purchases. Products Corporation intends to
use the balance of the net proceeds for general corporate purposes, including
to temporarily reduce indebtedness under the working capital lines under the
Credit Agreement. Pending the refinancing of the 1999 Notes, such net proceeds
will be retained by Products Corporation and a portion of such proceeds will be
used to temporarily reduce indebtedness under the working capital lines under
the Credit Agreement and under other short-term facilities. Accordingly, the
Company has classified the 1999 Notes as "Long-term debt-third parties" in its
consolidated condensed balance sheet as of September 30, 1998.
9
REVLON, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(DOLLARS IN MILLIONS)
OVERVIEW
The Company operates in a single business segment with many different
products, which include an extensive array of glamorous, exciting and
innovative cosmetics and skin care, fragrance and personal care products, and
professional products, consisting of hair and nail care products principally
for use in and resale by professional salons. In addition, the Company also
engages in licensing. In the second quarter of 1998, the Company determined to
exit the retail and outlet store business comprised of its 85% ownership
interest in CCI (see Note 7).
The Company presents its business geographically as its United States
operation, which comprises the Company's business in the United States, and its
International operation, which comprises its business outside of the United
States.
RESULTS OF OPERATIONS
The following table sets forth the Company's net sales by operation
for the three months and nine months ended September 30, 1998 and 1997,
respectively:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- ----------------------------------
Net sales: 1998 1997 1998 1997
------------- ------------- --------------- ------------
United States...................... $ 332.9 $ 346.5 $ 954.7 $ 925.7
International...................... 215.7 234.5 667.0 673.0
------------- ------------- --------------- ------------
$ 548.6 $ 581.0 $ 1,621.7 $ 1,598.7
============= ============= =============== ============
The following sets forth certain statements of operations data as a
percentage of net sales for the three months and nine months ended September
30, 1998 and 1997, respectively:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- ----------------------------------
1998 1997 1998 1997
------------- ------------- --------------- ------------
Cost of sales.................................. 33.9% 33.0% 33.5% 33.4%
Gross profit................................... 66.1 67.0 66.5 66.6
Selling, general and administrative
expenses ("S,G&A")........................ 58.8 54.8 59.1 57.6
Business consolidation costs and other, net.... (1.3) (0.2) (0.4) 0.3
Operating income............................... 8.6 12.4 7.8 8.7
NET SALES
Net sales were $548.6 and $581.0 for the third quarters of 1998 and
1997, respectively, a decrease of $32.4, or 5.6% (or 3.5% on a constant U.S.
dollar basis), and were $1,621.7 and $1,598.7 for the nine months ended
September 30, 1998 and 1997, respectively, an increase of $23.0, or 1.4% (or
4.0% on a constant U.S. dollar basis).
United States. The United States operation's net sales were $332.9 for
the third quarter of 1998 compared to $346.5 for the third quarter of 1997, a
decrease of $13.6, or 3.9%, and were $954.7 for the nine months ended September
30, 1998 compared to $925.7 for the nine months ended September 30, 1997, an
increase of $29.0, or 3.1%. The increase in net sales for the nine months ended
September 30, 1998 reflects an increase in net sales for the six months ended
June 30, 1998 compared to the six months ended June 30, 1997, partially offset
by a decline in net sales in the third quarter of 1998 as compared to the third
quarter of 1997. For the six months ended June 30, 1998, net sales increased as
compared to the comparable 1997 period as a result of continued consumer
acceptance of new product offerings and general improvement in consumer demand
for the Company's color cosmetics. Factors affecting the U.S. business in the
third quarter of 1998 include a slowdown in the rate of growth in the mass
market color cosmetics category, a greater than expected seasonal flattening of
share and delays in some product introductions. Additionally, net sales for the
third quarter of 1998 and for the nine months ended September 30, 1998 were
impacted by reduced purchases by some retailers,
10
REVLON, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(DOLLARS IN MILLIONS)
particularly chain drugstores, resulting from inventory systems upgrades and
inventory reductions following several recent business combinations. The
foregoing factors were partially offset by improvements in net sales of
products in the Company's Almay and Ultima franchises. The Company expects
retail inventory balancing and reductions to continue to affect sales in the
fourth quarter of 1998 and in 1999.
REVLON brand color cosmetics continued as the number one brand in
dollar market share in the U.S. self-select distribution channel. New product
introductions (including, in 1998, certain products launched during 1997)
generated incremental net sales in the third quarter and nine months ended
September 30, 1998, principally as a result of launches of TOP SPEED nail
enamel (which benefited the nine-month period), MOISTURESTAY lip makeup,
products in the NEW COMPLEXION line, COLORSTAY shampoo, ALMAY STAY SMOOTH
ANTI-CHAP lip makeup, ALMAY AMAZING SHEER makeup, products in the ALMAY ONE
COAT collection and products in the ULTIMA II BEAUTIFUL NUTRIENT and ULTIMA II
FULL MOISTURE lipcolor lines.
International. The International operation's net sales were $215.7 for
the third quarter of 1998 compared to $234.5 for the third quarter of 1997, a
decrease of $18.8, or 8.0%, on a reported basis (or a decrease of 2.9% on a
constant U.S. dollar basis) and were $667.0 for the nine months ended September
30, 1998 compared to $673.0 for the nine months ended September 30, 1997, a
decrease of $6.0, or 0.9%, on a reported basis (an increase of 5.1% on a
constant U.S. dollar basis). The decrease in net sales for the nine months
ended September 30, 1998 on a reported basis and the increase in net sales for
the nine months ended September 30, 1998 on a constant U.S. dollar basis
reflects an increase in net sales for the six months ended June 30, 1998
compared to the comparable 1997 period offset by a decline in net sales in the
third quarter of 1998 as compared to the third quarter of 1997. For the six
months ended June 30, 1998, net sales increased as compared to the comparable
1997 period as a result of increased distribution, including through
acquisitions, and successful new product introductions in several markets
partially offset, on a reported basis, by the unfavorable effect on sales of a
stronger U.S. dollar against most foreign currencies and unfavorable economic
conditions in several international markets. The aggregate effect of the weak
international economic environment impacted results in the third quarter of
1998 by restraining consumer and trade demand outside the U.S., particularly in
South America and the Far East, as well as Russia and other developing
economies. The Company's International performance also was affected (on a
reported basis) in the third quarter of 1998 by the unfavorable effect of a
stronger U.S. dollar against most foreign currencies. During the nine months
ended September 30, 1998, the Company introduced new products such as
MOISTURESTAY lip makeup and TOP SPEED nail enamel in selected international
markets. The International operation's sales are divided into three geographic
regions. In Europe, which is comprised of Europe, the Middle East and Africa,
net sales decreased by 8.1% on a reported basis to $91.3 for the third quarter
of 1998 as compared to the third quarter of 1997 (or a decrease of 6.0% on a
constant U.S. dollar basis), and decreased by 0.5% to $297.4 for the nine
months ended September 30, 1998 as compared to the nine months ended September
30, 1997 (an increase of 3.9% on a constant U.S. dollar basis). In the Western
Hemisphere, which is comprised of Canada, Mexico, Central America, South
America and Puerto Rico, net sales increased by 0.3% on a reported basis to
$91.2 for the third quarter of 1998 as compared to the third quarter of 1997
(or an increase of 5.0% on a constant U.S. dollar basis), and increased by 8.3%
on a reported basis to $264.9 for the nine months ended September 30, 1998 as
compared to the nine months ended September 30, 1997 (or an increase of 13.2%
on a constant U.S. dollar basis). The Company's operations in Brazil are
significant and, along with operations in certain other countries, have been
subject to, and may continue to be subject to, significant political and
economic uncertainties, including the weak international economic environment
referred to above. In Brazil, net sales were $30.1 and $30.2 for the third
quarter of 1998 and 1997, respectively, a decrease of $0.1, or 0.3%, on a
reported basis (an increase of 7.1% on a constant U.S. dollar basis) and were
$91.3 and $95.9 for the nine months ended September 30, 1998 and 1997,
respectively, a decrease of $4.6, or 4.8%, on a reported basis (an increase of
2.1% on a constant U.S. dollar basis). On a constant U.S. dollar basis, net
sales in Brazil increased as a result of increased sales of the Company's value
priced COLORAMA haircare and cosmetics brands. On a reported basis, net sales
were adversely affected by the stronger U.S. dollar against the Brazilian real.
In the Far East, net sales decreased by 24.9% on a reported basis to $33.2 for
the third quarter of 1998 as compared to the third quarter of 1997 (or a
decrease of 11.7% on a constant U.S. dollar basis), and decreased by 19.2% to
$104.7 for the nine months ended September 30, 1998 as compared to the nine
months ended September 30, 1997 (or a decrease of 7.4% on a constant U.S.
dollar basis). Net sales in the International operation were, and may continue
to be, adversely impacted by generally weak economic conditions and competitive
activities in certain markets.
11
REVLON, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(DOLLARS IN MILLIONS)
Cost of sales
As a percentage of net sales, cost of sales was 33.9% for the third
quarter of 1998 compared to 33.0% for the third quarter of 1997, and 33.5% for
the nine months ended September 30, 1998 compared to 33.4% for the nine months
ended September 30, 1997. The increase in cost of sales as a percentage of net
sales for the third quarter and nine months ended September 30, 1998 compared
to the comparable 1997 periods is due to changes in product mix and the effect
of weaker local currencies on the cost of imported purchases as well as the
effect of lower net sales. These factors were partially offset by the benefits
of more efficient global production and purchasing.
S,G&A expenses
As a percentage of net sales, S,G&A expenses were 58.8% for the third
quarter of 1998 compared to 54.8% for the third quarter of 1997, and 59.1% for
the nine months ended September 30, 1998 compared to 57.6% for the nine months
ended September 30, 1997. S,G&A expenses other than advertising and
consumer-directed promotion expenses, as a percentage of net sales, were 40.3%
for the third quarter of 1998 compared to 36.8% for the third quarter of 1997,
and 41.1% for the nine months ended September 30, 1998 compared to 40.3% for
the nine months ended September 30, 1997. The increase in S,G&A expenses other
than advertising and consumer-directed promotion expenses as a percentage of
net sales was due primarily to the effects of lower than expected sales
relative to generally constant S,G&A expenses. The Company increased
advertising and consumer-directed promotion expenditures for the nine months
ended September 30, 1998 compared with the comparable 1997 period to support
existing product lines, new product launches and increased distribution in many
of the Company's markets in the International operation. Advertising and
consumer-directed promotion expenses as a percentage of net sales were 18.5%,
or $101.4, for the third quarter of 1998 compared to 18.0%, or $104.5, for the
third quarter of 1997, and were 18.0%, or $291.9, for the nine months ended
September 30, 1998 compared to 17.3%, or $275.9, for the nine months ended
September 30, 1997.
Business consolidation costs and other, net
In the third quarter of 1998 the Company recognized a gain of
approximately $7.1 on the sale of the wigs and hairpieces portion of its U.S.
operation. In 1997 the Company incurred business consolidation costs in
connection with the implementation of its business strategy to rationalize
factory operations. These costs primarily included severance and other related
costs in certain International operations. Such costs were partially offset by
an approximately $12.7 settlement of a claim in the second quarter of 1997. In
the third quarter of 1997, the Company recognized a net gain of approximately
$1.0 on the sale of a factory in one of its International operations.
Operating income
As a result of the foregoing, operating income decreased by $24.8, or
34.5%, to $47.0 for the third quarter of 1998 from $71.8 for the third quarter
of 1997 and decreased by $12.8, or 9.1%, to $127.2 for the nine months ended
September 30, 1998 from $140.0 for the nine months ended September 30, 1997.
Other expenses/income
Interest expense was $33.0 for each of the third quarter of 1998 and
the third quarter of 1997 and $103.3 for the nine months ended September 30,
1998 compared to $99.2 for the nine months ended September 30, 1997. Interest
expense was at the same level for the third quarter of 1998 as compared to the
third quarter of 1997 due to lower interest rates offset by higher average
outstanding borrowings. The increase in interest expense for the nine months
ended September 30, 1998 as compared to the nine months ended September 30,
1997 is due to higher average outstanding borrowings partially offset by lower
interest rates.
Foreign currency losses, net, were $1.9 for the third quarter of 1998
compared to $2.4 for the third quarter of 1997 and $4.7 for the nine months
ended September 30, 1998 compared to $5.2 for the nine months ended September
30, 1997. The foreign currency losses for the third quarter and the nine months
ended September 30, 1998 were comprised primarily of losses in several markets
in Latin America. The losses in the 1997 comparable periods were comprised
primarily of losses in several markets in Europe and the Far East.
12
REVLON, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(DOLLARS IN MILLIONS)
(Benefit) provision for income taxes
The (benefit) provision for income taxes was $(0.7) and $0.2 for the
third quarters of 1998 and 1997, respectively, and $6.4 and $9.2 for the nine
months ended September 30, 1998 and 1997, respectively. The change for the
third quarter of 1998 and the nine months ended September 30, 1998 as compared
to the comparable 1997 periods was primarily attributable to lower taxable
income in the 1998 periods.
Discontinued operations
In the second quarter of 1998, the Company determined to exit the
retail and outlet store business comprised of its 85% ownership interest in CCI
and recorded an estimated loss on disposal of $15.0. (Loss) income from
discontinued operations was $(16.5) and $(3.3) for the nine months ended
September 30, 1998 and 1997, respectively. The 1997 periods include a $6.0
non-recurring gain resulting from the merger of Prestige Fragrance & Cosmetics,
Inc., then a wholly owned subsidiary of Products Corporation, with and into CCI
on April 25, 1997, partially offset by related business consolidation costs of
$4.0. The 1998 period includes the Company's share of a non-recurring charge of
$10.5 taken by CCI primarily related to inventory and severance. The Company
is evaluating preliminary proposals received in the second week of November for
possible disposition of its interest in CCI which, if consummated, could result
in a loss on disposal in excess of the Company's estimate. No decision has been
reached as to the acceptability or feasibility of any such proposals and, based
on facts currently available, the Company is unable to determine the likely
incremental loss that would result from consummation of any such proposals.
Extraordinary items
The extraordinary item of $51.7 in the 1998 period resulted from the
write-off of deferred financing costs and payment of call premiums associated
with the redemption of the Senior Notes and the Senior Subordinated Notes. The
extraordinary item in the 1997 period resulted from the write-off of deferred
financing costs associated with the extinguishment of borrowings under the
credit agreement in effect at that time (the "1996 Credit Agreement") prior to
maturity with proceeds from the Credit Agreement, and costs of approximately
$6.3 in connection with the redemption of Products Corporation's 10 7/8%
Sinking Fund Debentures due 2010 (the "Sinking Fund Debentures").
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash used for operating activities was $96.8 and $110.9 for the
nine months ended September 30, 1998 and 1997, respectively. The improvement in
net cash used for operating activities for the nine months ended September 30,
1998 compared with the nine months ended September 30, 1997 resulted primarily
from improved working capital management.
Net cash used for investing activities was $84.4 and $59.0 for the
nine months ended September 30, 1998 and 1997, respectively. Net cash used for
investing activities in both periods includes cash paid in connection with
acquisitions of businesses and capital expenditures, partially offset by the
proceeds from the sale of the wigs and hairpieces portion of the Company's U.S.
operation in the 1998 period and certain fixed assets.
Net cash provided by financing activities was $198.3 and $175.0 for
the nine months ended September 30, 1998 and 1997, respectively. Net cash
provided by financing activities for the nine months ended September 30, 1998
included proceeds from the issuance of the Notes and cash drawn under the
Credit Agreement, partially offset by the payment of fees and expenses related
to the issuance of the Notes, the redemption of the Senior Subordinated Notes
and the Senior Notes, and the repayment of borrowings under the Company's
Japanese yen-denominated credit agreement (the "Yen Credit Agreement"). During
the second and third quarters of 1998, the Company loaned $5.0 and $2.0,
respectively, to CCI to assist it with liquidity needs and its new business
strategy. Net cash provided by financing activities for the nine months ended
September 30, 1997 included cash drawn under the 1996 Credit Agreement and the
Credit Agreement, partially offset by the repayment of borrowings under the
1996 Credit Agreement, the payment of fees and expenses related to the Credit
Agreement, the repayment of borrowings under the Yen Credit Agreement and the
redemption of the Sinking Fund Debentures.
On November 6, 1998, Products Corporation issued and sold $250.0
aggregate principal amount of 9% Notes in a private placement, receiving net
proceeds of $247.2. Products Corporation will use $200.0 of the net proceeds
from the sale of the 9% Notes to refinance the 1999 Notes, including through
open market purchases. Products Corporation intends to use the balance of the
net proceeds for general corporate purposes, including to temporarily reduce
indebtedness under the working capital lines under the Credit Agreement.
Pending the refinancing of the 1999 Notes, such net proceeds will be retained
by Products Corporation and a portion of such proceeds will be used to
temporarily reduce indebtedness under the working capital lines under
13
REVLON, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(DOLLARS IN MILLIONS)
the Credit Agreement and under other short-term facilities. Pursuant to a
registration agreement, Products Corporation is required subject to certain
exceptions to file a registration statement on or before December 21, 1998 with
the Securities and Exchange Commission (the "Commission") with respect to an
offer to exchange the 9% Notes for registered notes with substantially
identical terms and is required subject to certain exceptions to consummate
such exchange offer on or before June 4, 1999.
The 9% Notes are senior unsecured obligations of Products Corporation
and rank pari passu in right of payment with all existing and future Senior
Debt (as defined in the indenture relating to the 9% Notes (the "9% Notes
Indenture")) of Products Corporation, including the 1999 Notes until the
maturity or earlier retirement thereof, the 8 1/8% Notes and the indebtedness
under the Credit Agreement, and senior to the 8 5/8% Notes and to all future
subordinated indebtedness of Products Corporation. The 9% Notes are effectively
subordinated to outstanding indebtedness and other liabilities of Products
Corporation's subsidiaries. Interest is payable on May 1 and November 1.
The 9% Notes may be redeemed at the option of Products Corporation in
whole or from time to time in part at any time on or after November 1, 2002 at
the redemption prices set forth in the 9% Notes Indenture. In addition, at any
time prior to November 1, 2001, Products Corporation may redeem up to 35% of
the aggregate principal amount of the 9% Notes originally issued at a
redemption price of 109% of the principal amount thereof, plus accrued and
unpaid interest, if any, thereon to the date fixed for redemption, with, and to
the extent Products Corporation receives, the net cash proceeds of one or more
Public Equity Offerings (as defined in the 9% Notes Indenture), provided that
at least $162.5 aggregate principal amount of the 9% Notes remains outstanding
immediately after the occurrence of each such redemption.
Upon a Change in Control (as defined in the 9% Notes Indenture),
Products Corporation will have the option to redeem the 9% Notes in whole at a
redemption price equal to the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of redemption plus the Applicable Premium
(as defined in the 9% Notes Indenture) and, subject to certain conditions, each
holder of the 9% Notes will have the right to require Products Corporation to
repurchase all or a portion of such holder's 9% Notes at a price equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of repurchase.
On February 2, 1998, Revlon Escrow issued and sold the Notes in a
private placement, with the net proceeds deposited into escrow. The proceeds
from the sale of the Notes were used to finance the redemptions of the Senior
Subordinated Notes and the Senior Notes. Products Corporation delivered a
redemption notice to the holders of the Senior Subordinated Notes for the
redemption of the Senior Subordinated Notes on March 4, 1998, at which time
Products Corporation consummated the 8 5/8% Notes Assumption, and to the
holders of the Senior Notes for the redemption of the Senior Notes on April 1,
1998, at which time Products Corporation consummated the 8 1/8% Notes
Assumption. On May 7, 1998, substantially all of the Notes were exchanged for
registered notes with substantially identical terms.
The 8 5/8% Notes Indenture, the 8 1/8% Notes Indenture and the 9%
Notes Indenture (together, the "Notes Indentures") contain covenants that,
among other things, limit (i) the issuance of additional debt and redeemable
stock by Products Corporation, (ii) the incurrence of liens, (iii) the issuance
of debt and preferred stock by Products Corporation's subsidiaries, (iv) the
payment of dividends on capital stock of Products Corporation and its
subsidiaries and the redemption of capital stock of Products Corporation, (v)
the sale of assets and subsidiary stock, (vi) transactions with affiliates,
(vii) consolidations, mergers and transfers of all or substantially all
Products Corporation assets and (viii) in the case of the 8 5/8% Notes
Indenture, the issuance of additional subordinated debt that is senior in right
of payment to the 8 5/8% Notes. The Notes Indentures also prohibit certain
restrictions on distributions from Products Corporation and subsidiaries of
Products Corporation. All of these limitations and prohibitions, however, are
subject to a number of important qualifications.
In May 1997, Products Corporation entered into the Credit Agreement
with a syndicate of lenders, whose individual members change from time to time.
The proceeds of loans made under the Credit Agreement were used for the purpose
of repaying the loans outstanding under the 1996 Credit Agreement and to redeem
Products Corporation's Sinking Fund Debentures and were and will be used for
general corporate purposes or, in the case of the Acquisition Facility, the
financing of acquisitions. At September 30, 1998, Products Corporation had
approximately $199.0 outstanding under the Term Loan Facilities, $216.4
outstanding under the Multi-Currency Facility, $103.7 outstanding under the
Acquisition Facility and $34.0 of issued but undrawn letters of credit under
the Special LC Facility. In connection with the issuance of the 9% Notes,
Products Corporation amended the Credit Agreement to provide that it can retain
the net proceeds of such issuance which exceed the amount of the 1999 Notes
refinanced plus related costs and expenses. Additionally, Products Corporation
agreed that until the 1999 Notes are refinanced, $200.0 of the Multi-
14
REVLON, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(DOLLARS IN MILLIONS)
Currency Facility available under the Credit Agreement (reduced by the amount
of 1999 Notes actually repurchased or refinanced), which would otherwise be
available for working capital purposes, will be used solely to refinance the
1999 Notes.
A subsidiary of Products Corporation is the borrower under the Yen
Credit Agreement, which had a principal balance of approximately (Yen)3.8
billion as of September 30, 1998 (approximately $27.6 U.S. dollar equivalent as
of September 30, 1998). In accordance with the terms of the Yen Credit
Agreement, approximately (Yen)539 million (approximately $4.6 U.S. dollar
equivalent) was paid in January 1997. In June 1997, Products Corporation
amended and restated the Yen Credit Agreement to extend the term to December
31, 2000 subject to earlier termination under certain circumstances. In
accordance with the terms of the Yen Credit Agreement, as so amended and
restated, approximately (Yen)539 million (approximately $4.2 U.S. dollar
equivalent) was paid in March 1998, approximately (Yen)539 million
(approximately $3.9 U.S. dollar equivalent as of September 30, 1998) is due in
each of March 1999 and 2000 and (Yen)2.7 billion (approximately $19.8 U.S.
dollar equivalent as of September 30, 1998) is due on December 31, 2000.
Products Corporation borrows funds from its affiliates from time to
time to supplement its working capital borrowings at interest rates more
favorable to Products Corporation than interest rates under the Credit
Agreement. No such borrowings were outstanding as of September 30, 1998.
The Company's principal sources of funds are expected to be cash flow
generated from operations and borrowings under the Credit Agreement,
refinancings and other existing working capital lines. The Credit Agreement,
the 1999 Notes, the Notes and the 9% Notes contain certain provisions that by
their terms limit Products Corporation's and/or its subsidiaries' ability to,
among other things, incur additional debt. The Company's principal uses of
funds are expected to be the payment of operating expenses, working capital and
capital expenditure requirements, expenses in connection with the restructuring
referred to below and debt service payments (including purchase and repayment
of the 1999 Notes).
The Company estimates that capital expenditures for 1998 will be
approximately $65 including upgrades to the Company's management information
systems. Pursuant to a tax sharing agreement, Revlon, Inc. may be required to
make tax sharing payments to Mafco Holdings Inc. as if Revlon, Inc. were filing
separate income tax returns, except that no payments are required by Revlon,
Inc. if and to the extent that Products Corporation is prohibited under the
Credit Agreement from making tax sharing payments to Revlon, Inc. The Credit
Agreement prohibits Products Corporation from making any tax sharing payments
other than in respect of state and local income taxes. Revlon, Inc. currently
anticipates that, as a result of net operating tax losses and prohibitions
under the Credit Agreement, no cash federal tax payments or cash payments in
lieu of federal taxes pursuant to the tax sharing agreement will be required
for 1998.
The Company anticipates recording a restructuring charge of
approximately $50 during the fourth quarter of 1998. This restructuring will
include the closing of certain plants in the International operation, a
reorganization of the Company's workforce principally outside the U.S., and
other actions designed to reduce costs. The resulting efficiencies are intended
to enhance the Company's competitive position.
Products Corporation was party to a series of interest rate swap
agreements totaling a notional amount of $225.0 in which Products Corporation
agreed to pay on such notional amount a variable interest rate equal to the six
month LIBOR to its counterparties and the counterparties agreed to pay on such
notional amounts fixed interest rates averaging approximately 6.03% per annum.
Products Corporation entered into these agreements in 1993 and 1994 (and in the
first quarter of 1996 extended a portion equal to a notional amount of $125.0
through December 2001) to convert the interest rate on $225.0 of fixed-rate
indebtedness to a variable rate. Products Corporation terminated these
agreements in January 1998 and realized a gain of approximately $1.6, which was
recognized upon repayment of the hedged indebtedness and is included in the
first quarter 1998 extraordinary item - early extinguishment of debt.
Products Corporation enters into forward foreign exchange contracts
and option contracts from time to time to hedge certain cash flows denominated
in foreign currencies. Products Corporation had forward foreign exchange
contracts denominated in various currencies of approximately $30.3 and $9.8
(U.S. dollar equivalent) outstanding at September 30, 1998 and 1997,
respectively, and option contracts of approximately $24.0 (U.S. dollar
equivalent) outstanding at September 30, 1998. Such contracts are entered into
to hedge transactions predominantly occurring within twelve months. If Products
Corporation had terminated these contracts on September 30, 1998 and 1997, no
material gain or loss would have been realized.
15
REVLON, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(DOLLARS IN MILLIONS)
Based upon the Company's current level of operations and anticipated
growth in net sales and earnings as a result of its business strategy, the
Company expects that cash flows from operations and funds from currently
available credit facilities and refinancings of existing indebtedness will be
sufficient to enable the Company to meet its anticipated cash requirements for
the foreseeable future on a consolidated basis, including for debt service
(including refinancing the 1999 Notes). However, there can be no assurance that
cash flow from operations and funds from existing credit facilities and
refinancing of existing indebtedness will be sufficient to meet the Company's
cash requirements on a consolidated basis. If the Company is unable to satisfy
such cash requirements, the Company could be required to adopt one or more
alternatives, such as reducing or delaying capital expenditures, restructuring
indebtedness, selling assets or operations, or seeking capital contributions or
loans from affiliates of the Company or issuing additional shares of capital
stock of Revlon, Inc. Revlon, Inc., as a holding company, is dependent on the
earnings and cash flow of, and dividends and distributions from, Products
Corporation to pay its expenses and to pay any cash dividends or distributions
on the Revlon Class A Common Stock that may be authorized by the Board of
Directors of Revlon, Inc. There can be no assurance that any of such actions
could be effected, that they would enable the Company to continue to satisfy
its capital requirements or that they would be permitted under the terms of the
Company's various debt instruments then in effect. Products Corporation
currently expects that at the end of the fourth quarter of 1998 it will not be
in compliance with certain of the financial ratios and tests contained in the
Credit Agreement as a result of, among other things, the expected charges in
connection with the Company's restructuring effort. Products Corporation is
currently negotiating an amendment to such provisions of the Credit Agreement
and expects to have an amendment executed and effective prior to December 31,
1998, although there can be no assurance in this regard. The terms of the
Credit Agreement, the 1999 Notes, the Notes, and the 9% Notes generally
restrict Products Corporation from paying dividends or making distributions,
except that Products Corporation is permitted to pay dividends and make
distributions to Revlon, Inc., among other things, to enable Revlon, Inc. to
pay expenses incidental to being a public holding company, including, among
other things, professional fees such as legal and accounting, regulatory fees
such as Commission filing fees and other miscellaneous expenses related to
being a public holding company and to pay dividends or make distributions in
certain circumstances to finance the purchase by Revlon, Inc. of its Class A
Common Stock in connection with the delivery of such Class A Common Stock to
grantees under the Revlon, Inc. Amended and Restated 1996 Stock Plan, provided
that the aggregate amount of such dividends and distributions taken together
with any purchases of Revlon, Inc. common stock on the open market to satisfy
matching obligations under the excess savings plan may not exceed $6.0 per
annum.
YEAR 2000
Commencing in 1997, the Company undertook a business process
enhancement program to substantially upgrade management information technology
systems in order to provide comprehensive order processing, production and
accounting support for the Company's business. The Company also developed a
comprehensive plan to address Year 2000 issues. The Year 2000 plan addresses
three main areas: (a) information technology systems; (b) non-information
technology systems (including factory equipment, building systems and other
embedded systems); and (c) business partner readiness (including without
limitation customers, inventory and non-inventory suppliers, service suppliers,
banks, insurance companies and tax and other governmental agencies). To oversee
the process, the Company has established a Steering Committee comprised of
senior executives of Products Corporation.
In connection with and as part of the Company's business process
enhancement program, certain information technology systems have been and will
continue to be upgraded to be Year 2000 compliant. In addition, as part of its
Year 2000 plan, the Company has identified potential deficiencies related to
Year 2000 in certain of its information technology systems, both hardware and
software, and is in the process of addressing them through upgrades and other
remediation. The Company currently expects to complete upgrade and remediation
and testing of its information systems by the third quarter of 1999. In respect
of non-information technology systems with date sensitive operating controls,
the Company is in the process of identifying those items which may require
remediation or replacement, and has commenced an upgrade and remediation
program for systems identified as Year 2000 non-compliant. The Company expects
to complete remediation or replacement and testing of these by the third
quarter of 1999. The Company has identified and contacted and continues to
identify and contact key suppliers, both inventory and non-inventory, key
customers and other strategic business partners, such as banks, pension trust
managers and marketing data suppliers, either by soliciting written responses
to questionnaires and/or by meeting with certain of such third parties. The
parties from whom the Company has received responses to date generally have
indicated that their systems are or will be Year 2000 compliant. The Company
currently expects to gain a better understanding of the Year 2000 readiness of
third party business partners by early 1999.
16
REVLON, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(DOLLARS IN MILLIONS)
The Company does not expect that incremental out-of-pocket costs of
its Year 2000 program (which do not include costs incurred in connection with
the Company's comprehensive business process enhancement program) will be
material. These costs are expected to continue to be incurred through fiscal
1999 and include the cost of third party consultants, remediation of existing
computer software and replacement and remediation of embedded systems.
The Company believes that at the current time it is difficult to
identify specifically the most reasonably likely worst case Year 2000 scenario.
As with all manufacturers and distributors of products such as those sold by
the Company, a reasonable worst case scenario would be the result of failures
of third parties (including, without limitation, governmental entities and
entities with which the Company has no direct involvement, as well as the
Company's suppliers of goods and services and customers) that continue for more
than a brief period in various geographic areas where the Company's products
are produced or sold at retail or in areas from which the Company's raw
materials and components are sourced. In connection with functions that
represent a particular Year 2000 risk, including the production, warehousing
and distribution of products and the supply of raw materials and components,
the Company is considering various contingency plans. Continuing failures in
key geographic areas in the United States and in certain European, South
American and Asian countries that limit the Company's ability to produce
products, its customers' ability to purchase the Company's products and/or
consumers' ability to shop, would be likely to have a material adverse effect
on the Company's results of operations, although it would be expected that at
least part of such lost sales eventually would be recouped. The extent of such
deferred or lost revenue cannot be estimated at this time.
The Company's Year 2000 efforts are ongoing and its overall plan, as
well as the consideration of contingency plans, will continue to evolve as new
information becomes available. While the Company currently anticipates
continuity of its business activities, that continuity will be dependent upon
its ability, and the ability of third parties upon which the Company relies
directly, or indirectly, to be Year 2000 compliant. There can be no assurance
that the Company will eliminate potential Year 2000 issues in a timely manner
or as to the ultimate cost of doing so.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q for the quarter ended September 30,
1998 as well as other public documents of the Company contain forward-looking
statements which involve risks and uncertainties. The Company's actual results
may differ materially from those discussed in such forward-looking statements.
Such statements include, without limitation, the Company's expectations and
estimates as to introduction of new products and expansion into markets; future
financial performance, including growth in net sales and earnings; the effect
on sales of retail inventory balancing and reductions; the effect on sales of
political and/or economic conditions in International markets; the Company's
estimate of restructuring activities, costs and benefits; the intent to dispose
of CCI and the estimated loss on disposition of CCI; cash flows from
operations; information system upgrades; the Company's plan to address the Year
2000 issue, the costs associated therewith and the results of Year 2000
non-compliance by the Company or one or more of its customers, suppliers or
other strategic business partners; capital expenditures; the availability of
funds from currently available credit facilities and refinancings of
indebtedness (including the 1999 Notes), capital contributions or loans from
affiliates or the sale of assets, operations or additional shares of Revlon,
Inc.; and the intent to obtain an amendment to certain of the financial
covenants in the Credit Agreement. Readers are urged to consider that
statements which use the terms "believes," "does not believe," "no reason to
believe," "expects," "plans," "intends," "estimates," "anticipated,"
"anticipates" and similar expressions, as they relate to the Company or the
Company's management, are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions. In
addition to factors that may be described in the Company's Commission filings,
including this filing, the following factors, among others, could cause the
Company's actual results to differ materially from those expressed in any
forward-looking statements made by the Company: (i) difficulties or delays in
developing and introducing new products or failure of customers to accept new
product offerings; (ii) changes in consumer preferences, including reduced
consumer demand for the Company's color cosmetics and other current products;
(iii) difficulties or delays in the Company's continued expansion into the
self-select distribution channel and into certain markets and development of
new markets; (iv) unanticipated costs or difficulties or delays in completing
projects associated with the Company's strategy to improve operating
efficiencies, including information system upgrades; (v) the inability to
refinance indebtedness (including the 1999 Notes), secure capital contributions
or loans from affiliates or sell assets, operations or additional shares of
Revlon, Inc.; (vi) effects of and changes in political and/or economic
conditions, including inflation and monetary conditions, and in trade,
monetary, fiscal and tax policies in International markets, including but not
limited to Brazil; (vii) actions by competitors, including business
combinations, technological breakthroughs, new product offerings and marketing
and promotional successes; (viii) combinations among significant customers or
the loss, insolvency or failure to pay its debts by a significant customer or
17
REVLON, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(DOLLARS IN MILLIONS)
customers; (ix) lower than expected sales as a result of a longer than expected
duration of retail inventory balancing and reductions; (x) difficulties,
delays, unanticipated costs or greater than expected losses in connection with
the disposition of CCI; (xi) difficulties, delays or unanticipated costs or
less than expected benefits resulting from the proposed restructuring; (xii)
difficulties, delays or unanticipated costs in achieving Year 2000 compliance
or unanticipated consequences from non-compliance by the Company or one or more
of its customers, suppliers or other strategic business partners; and (xiii)
inability to obtain an amendment to certain of the financial covenants in the
Credit Agreement. The Company assumes no responsibility to update
forward-looking information contained herein.
EFFECT OF NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. The effect of adopting
the statement and the date of such adoption by the Company have not yet been
determined.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS -
*4.12 Second Amendment, dated as of November 6, 1998, to the Credit
Agreement (the "Credit Agreement") dated as of May 30, 1997, among Products
Corporation, The Chase Manhattan Bank, Citibank N.A., Lehman Commercial Paper
Inc., Chase Securities Inc. and the lenders party thereto, and related Letter
Agreement from Products Corporation to The Chase Manhattan Bank, as
Administrative Agent under the Credit Agreement.
*4.13 Indenture, dated as of November 6, 1998, between Products
Corporation and U.S. Bank Trust National Association, as Trustee, relating to
Products Corporation's 9% Senior Notes due 2006.
- - --------------
*Filed herewith.
(b) REPORTS ON FORM 8-K - NONE
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
REVLON, INC.
Registrant
By:/s/ Frank J. Gehrmann By:/s/ Lawrence E. Kreider
- - ---------------------------------- ----------------------------------------
Frank J. Gehrmann Lawrence E. Kreider
Executive Vice President Senior Vice President, Controller
and Chief Financial Officer and Chief Accounting Officer
Dated: November 16, 1998
18
SECOND AMENDMENT
SECOND AMENDMENT, dated as of November 6, 1998 (this
"Amendment"), to the Credit Agreement, dated as of May 30, 1997 (as amended by
the First Amendment, dated as of January 29, 1998 and as may be further
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Revlon Consumer Products Corporation (the "Company"), the
Borrowing Subsidiaries from time to time parties thereto, the financial
institutions from time to time parties thereto (the "Lenders"), the Co-Agents
named therein, Citibank, N.A., as Documentation Agent, Lehman Commercial Paper
Inc., as Syndication Agent, and The Chase Manhattan Bank, as Administrative
Agent.
W I T N E S S E T H :
WHEREAS, the Company has requested that the Lenders and the
Agents amend certain provisions of the Credit Agreement;
WHEREAS, the Lenders and the Agents are willing to amend such
provisions upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the Company, the Lenders and the Agents
hereby agree as follows:
1. Definitions. (a) General. All terms defined in the
Credit Agreement shall have such defined meanings when used herein unless
otherwise defined herein.
2. Amendment to Section 14.2(f). Subsection 14.2(f) of the
Credit Agreement is hereby amended by deleting such subsection in its entirety
and substituting in lieu thereof the following new subsection 14.2(f):
"(f) the Subordinated Notes, Indebtedness under the
Indentures and the Sinking Fund Debentures, and any
Indebtedness resulting from the refinancing of any of such
Indebtedness; provided that (i) the primary obligor with
respect to any such refinancing Indebtedness is the same as
the primary obligor on the Indebtedness refinanced thereby
(except to the extent that such primary obligor may be
substituted by a new primary obligor which has no material
assets other than assets which, immediately prior to such
substitution, constituted the assets of the original primary
obligor), (ii) the principal amount of any such refinancing
Indebtedness (as determined as of the date of the incurrence
of such refinancing Indebtedness in accordance with GAAP)
does not exceed the amount equal to the sum (the "Refinanced
Amount") of the principal amount of the Indebtedness
refinanced thereby together with any premium actually paid
thereon and reasonable costs and expenses (including
underwriting discounts) incurred in connection with such
refinancing Indebtedness; provided, that the principal amount
of any such refinancing Indebtedness primarily used to
refinance the Indebtedness referred to in clause (b) of the
definition of "Indentures" may
2
exceed the Refinanced Amount by an amount not to exceed the
excess of $250,000,000 over the Refinanced Amount, (iii)
such refinancing Indebtedness does not have any scheduled
installments of principal thereof due prior to December 31,
2002 and is unsecured (except that any refinancing of the
Sinking Fund Debentures may be secured by a Lien on the
Mortgaged Property in Phoenix upon terms substantially
similar to those existing on the date hereof), (iv) if the
Indebtedness being refinanced is subordinated, the
subordination provisions of such refinancing Indebtedness
is no less favorable to the Administrative Agent and the
Lenders than the subordination provisions of the
Indebtedness refinanced thereby and (v) either (A) the
covenants, defaults and similar provisions applicable to
such refinancing Indebtedness or obligations are no more
restrictive, taken as a whole, than those in effect in the
Indebtedness refinanced thereby and do not conflict with
the provisions of this Agreement or (B) such refinancing
Indebtedness is otherwise upon terms and subject to
definitive documentation which is in form and substance
reasonably satisfactory to the Required Lenders;".
3. Conditions to Effectiveness. This Amendment shall become
effective on and as of the date that the Administrative Agent shall have
received counterparts of this Amendment duly executed by the Company and the
Required Lenders, and duly acknowledged and consented to by each Guarantor,
Grantor and Pledgor.
4. Representations and Warranties. The Company, as of the
date hereof and after giving effect to the amendment contained herein, hereby
confirms, reaffirms and restates the representations and warranties made by it
in Section 11 of the Credit Agreement and otherwise in the Credit Documents to
which it is a party; provided that each reference to the Credit Agreement
therein shall be deemed to be a reference to the Credit Agreement after giving
effect to this Amendment.
5. Reference to and Effect on the Credit Documents; Limited
Effect. On and after the date hereof and the satisfaction of the conditions
contained in Section 2 of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the other Credit
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended hereby. The execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any Lender or the Agents under any of
the Credit Documents, nor constitute a waiver of any provisions of any of the
Credit Documents. Except as expressly amended herein, all of the provisions and
covenants of the Credit Agreement and the other Credit Documents are and shall
continue to remain in full force and effect in accordance with the terms
thereof and are hereby in all respects ratified and confirmed.
6. Counterparts. This Amendment may be executed by one or
more of the parties hereto in any number of separate counterparts (which may
include counterparts delivered
3
by facsimile transmission) and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. Any executed counterpart
delivered by facsimile transmission shall be effective as for all purposes
hereof.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
REVLON CONSUMER PRODUCTS CORPORATION
By: /s/ Steven Berns
---------------------------------
Name: Steven Berns
Title: Vice President and Treasurer
DEUTSCHE REVLON GMBH & CO. KG
REVLON INTERNATIONAL CORPORATION
(UK Branch)
REVLON MANUFACTURING LIMITED
(Australia Branch)
REVLON MANUFACTURING (UK) LIMITED
EUROPEENNE DE PRODUITS DE BEAUTE
REVLON NEDERLAND B.V.
REVLON K.K.
REVLON CANADA, INC., as Local Subsidiaries
By: /s/ Robert Kretzman
---------------------------------
Name: Robert Kretzman
Title: Authorized Signatory
REVLON SA
REVLON-REALISTIC PROFESSIONAL
PRODUCTS LTD.
REVLON PROFESSIONAL LIMITED
REVLON (HONG KONG) LIMITED
EUROPEAN BEAUTY PRODUCTS S.P.A., as
Local Subsidiaries
By: /s/ Robert Kretzman
---------------------------------
Name: Robert Kretzman
Title: Authorized Signatory
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Neil R. Boylan
---------------------------------
Name: Neil R. Boylan
Title: Vice President
5
CHASE SECURITIES INC., as Arranger
By: /s/ Douglas Travers
---------------------------------
Name: Douglas Travers
Title: Managing Director
CITIBANK, N.A., as Documentation Agent and
as a Lender
By: /s/ James Buchanan
---------------------------------
Name: James Buchanan
Title: Attorney-In-Fact
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By: /s/ Michele Swanson
---------------------------------
Name: Michele Swanson
Title: Authorized Signatory
ABN AMRO BANK N.V., as a Local Fronting
Lender in the Federal Republic of Germany
By: /s/ Thomas T. Rogers
---------------------------------
Name: Thomas T. Rogers
Title: Vice President
By: /s/ David Carrington
---------------------------------
Name: David Carrington
Title: Vice President
BANKBOSTON, N.A., as a Local Fronting
Lender in the United Kingdom
By: /s/ Richard D. Hill, Jr.
---------------------------------
Name: Richard D. Hill, Jr.
Title: Managing Director
6
NATEXIS BANQUE BFCE, formerly BANQUE
FRANCAISE DU COMMERCE EXTERIEUR, as
a Local Fronting Lender in France
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
THE SANWA BANK LTD., as a Local Fronting
Lender in Japan
By:
---------------------------------
Name:
Title:
BANK OF AMERICA CANADA, as a Local
Fronting Lender in Canada
By: /s/ Thomas Cody
---------------------------------
Name: Thomas Cody
Title: Vice President & SCO
CITIBANK LIMITED, as a Local Fronting
Lender in Australia
By:
---------------------------------
Name:
Title:
7
CITIBANK, N.A., as a Local Fronting Lender
in Hong Kong
By:
---------------------------------
Name:
Title:
CITIBANK, N.A., as a Local Fronting Lender
in the Netherlands
By:
---------------------------------
Name:
Title:
CITIBANK, N.A., as a Local Fronting Lender
in Italy
By:
---------------------------------
Name:
Title:
ALLIED IRISH BANK, as a Local Fronting
Lender in Ireland
By: /s/ Marcia Meeker & W.J. Strickland
---------------------------------
Name: Marcia Meeker
Title: Vice President
Name: W.J. Strickland
Title: Senior Vice President
CITIBANK, N.A., as a Local Fronting
Lender in Spain
By:
---------------------------------
Name:
Title:
8
ABN AMRO BANK N.V.
New York Branch
By: /s/ Thomas T. Rogers
---------------------------------
Name: Thomas T. Rogers
Title: Vice President
By: /s/ David Carrington
---------------------------------
Name: David Carrington
Title: Vice President
ALLIED IRISH BANK PLC
Cayman Islands Branch
By: /s/ Marcia Meeker
---------------------------------
Name: Marcia Meeker
Title: Vice President
By: /s/ W.J. Strickland
---------------------------------
Name: W.J. Strickland
Title: Senior Vice President
BANKBOSTON, N.A., as a Co-Agent
By: /s/ Richard D. Hill, Jr.
---------------------------------
Name: Richard D. Hill, Jr.
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as a Co-Agent
By: /s/ Debra A. Seiter
---------------------------------
Name: Debra A. Seiter
Title: Vice President
9
THE BANK OF NEW YORK
By: /s/ Georgia Pan-Kita
---------------------------------
Name: Georgia Pan-Kita
Title: Vice President
NATEXIS BANQUE BFCE, formerly BANQUE
FRANCAISE DU COMMERCE EXTERIEUR, as
a Co-Agent
By: /s/ Jordan Sadler
---------------------------------
Name: Jordan Sadler
Title: Associate
By: /s/ William C. Maier
---------------------------------
Name: William C. Maier
Title: Senior Vice President
BANQUE PARIBAS
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
BARCLAYS BANK PLC
By: /s/ Marlene Wechselblatt
---------------------------------
Name: Marlene Wechselblatt
Title: Vice President
10
CREDIT AGRICOLE INDOSUEZ
By: /s/ Craig Welch
---------------------------------
Name: Craig Welch
Title: First Vice President
By: /s/ Sarah McClintock
---------------------------------
Name: Sarah McClintock
Title: VP,TL
CREDIT LYONNAIS, New York Branch
By:
---------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as a Co-Agent
By: /s/ Joel Glodowski
---------------------------------
Name: Joel Glodowski
Title: Managing Director
By: /s/ Chris T. Hogan
---------------------------------
Name: Chris T. Hogan
Title: Vice President
DEEPROCK & COMPANY
By EATON VANCE MANAGEMENT, as
Investment Manager
By: /s/ Payson F. Swaffield
---------------------------------
Name: Payson F. Swaffield
Title: Vice President
11
U.S. BANK NATIONAL ASSOCIATION, as a
Co-Agent
By: /s/ Greg Wilson
---------------------------------
Name: Greg Wilson
Title: Banking Officer
THE FUJI BANK, LIMITED, New York Branch,
as a Co-Agent
By: /s/ Teiji Teramoto
---------------------------------
Name: Teiji Teramoto
Title: Vice President and Manager
GENERAL ELECTRIC CAPITAL
CORPORATION, as a Co-Agent
By: /s/ Janet Williams
---------------------------------
Name: Janet Williams
Title: Duly Authorized Signatory
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., Los Angeles Agency
By: /s/ Shunji Sato
---------------------------------
Name: Shunji Sato
Title: Deputy General Manager
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By: /s/ Paul Travers
---------------------------------
Name: Paul Travers
Title: Authorized Signatory
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ Toshihiro Hayashi
---------------------------------
Name: Toshihiro Hayashi
Title: Senior Vice President
12
NATIONSBANK, N.A.
By: /s/ Debra A. Seiter
---------------------------------
Name: Debra A. Seiter
Title: Vice President
THE OCTAGON CREDIT INVESTORS LOAN PORTFOLIO
(A UNIT OF THE CHASE MANHATTAN BANK)
By:
---------------------------------
Name:
Title:
THE SANWA BANK, LIMITED
NEW YORK BRANCH
By:
---------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By:
---------------------------------
Name:
Title:
ROYAL BANK OF CANADA
By: /s/ Michael Korine
---------------------------------
Name: Michael Korine
Title: Senior Manager
SENIOR DEBT PORTFOLIO
By: /s/ Payson F. Swaffield
---------------------------------
Name: Payson F. Swaffield
Title: Vice President
13
AERIES FINANCE LTD.
By:
---------------------------------
Name:
Title:
STRATA FUNDING LTD.
By:
---------------------------------
Name:
Title:
MEDICAL LIABILITY MUTUAL INSURANCE COMPANY
By:
---------------------------------
Name:
Title:
CERES FINANCE LTD.
By:
---------------------------------
Name:
Title:
ACKNOWLEDGEMENT AND CONSENT
Dated as of November 6, 1998
Each of the undersigned (in its capacity as a Guarantor,
Grantor and/or Pledgor, as the case may be, under the Security Documents to
which it is a party) does hereby (a) consent, acknowledge and agree to the
transactions described in the foregoing Second Amendment and (b) after giving
effect to such Second Amendment, (i) confirms, reaffirms and restates the
representations and warranties made by it in each Credit Document to which it
is a party, (ii) ratifies and confirms each Security Document to which it is a
party and (iii) confirms and agrees that each such Security Document is, and
shall continue to be, in full force and effect, with the Collateral described
therein securing, and continuing to secure, the payment of all obligations of
the undersigned referred to therein; provided that each reference to the Credit
Agreement therein and in each of the other Credit Documents shall be deemed to
be a reference to the Credit Agreement after giving effect to such Second
Amendment.
ALEXANDRA DE MARKOFF, LTD. REVLON, INC.
ALMAY, INC. REVLON COMMISSARY SALES, INC.
AMERICAN CREW, INC. REVLON CONSUMER CORP.
AMERINAIL, INC. REVLON CONSUMER PRODUCTS
A.P. PRODUCTS LTD. CORPORATION
APPLIED SCIENCE & TECHNOLOGIES INC. REVLON GOVERNMENT SALES, INC.
CARRINGTON PARFUMS LTD. REVLON HOLDINGS INC.
CHARLES OF THE RITZ GROUP LTD. REVLON INTERNATIONAL CORPORATION
CHARLES REVSON INC. REVLON PRODUCTS CORP.
COSMETIQUES HOLDINGS, INC. REVLON PROFESSIONAL, INC.
CREATIVE NAIL DESIGN, INC. REVLON PROFESSIONAL PRODUCTS INC.
FERMODYL PROFESSIONALS INC. REVLON REAL ESTATE CORPORATION
MODERN ORGANIC PRODUCTS, INC. REVLON RECEIVABLES SUBSIDIARY, INC.
NEW ESSENTIALS LIMITED RIROS CORPORATION
NORELL PERFUMES, INC. RIT INC.
NORTH AMERICA REVSALE INC. ROUX LABORATORIES, INC.
OXFORD PROPERTIES CO. VISAGE BEAUTE COSMETICS, INC.
PACIFIC FINANCE & DEVELOPMENT CORP.
PPI TWO CORPORATION
PPI FOUR CORPORATION
PRESTIGE FRAGRANCES, LTD.
REALISTIC/ROUX PROFESSIONAL PRODUCTS By: /s/ Robert Kretzman
INC. -----------------------------
Title: Vice President
To The Chase Manhattan Bank,
administrative agent for the
financial institutions from time
to time parties to the
Credit Agreement referred to below
(in such capacity, the "Administrative Agent")
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Credit Agreement,
dated as of May 30, 1997, as amended by the First Amendment thereto, dated as
of January 29, 1998 (as so amended, the "Credit Agreement"), among Revlon
Consumer Products Corporation (the "Company"), the Borrowing Subsidiaries from
time to time parties thereto, the financial institutions from time to time
parties thereto, the Co-Agents named therein, Citibank, N.A. as Documentation
Agent, Lehman Commercial Paper, Inc., a Syndication Agent, and the
Administrative Agent, Capitalized terms used herein but not otherwise defined
shall have the meanings given to them in the Credit Agreement.
The Company intends to issue on or about November 6, 1998 (such date
of issuance, the "Trigger Date") up to $250 million aggregate principal amount
of Senior Notes due 2006. The Company hereby agrees that during the period (the
"Restricted Period") commencing on the Trigger Date and terminating on the
Repayment Date (as defined below) an aggregate amount of the Aggregate
Multi-Currency Commitment equal to $200,000,000 less the aggregate principal
amount of any 9-1/2% Senior Notes due 1999 of the Company repurchased by the
Company during the Restricted Period shall be available to the Company for
borrowing as Multi-Currency Loans solely for the purpose of repaying,
redeeming, defeasing, optionally prepaying or otherwise repurchasing all or any
portion of the 9-1/2% Senior Notes due 1999 of the Company (collectively, the
"Repayment"). For purposes of this letter agreement, "Repayment Date" shall
mean the date on which the Company has completed the Repayment in full.
This letter agreement shall be governed by, and construed and
interpreted in accordance with the laws of the State of New York.
This letter agreement may be executed by one or more of the parties
hereby in any number of separate counterparts (which may include counterparts
delivered by facsimile transmission) and all of and counterparts taken together
shall be deemed to constitute one and the same instrument. Any executed
counterpart delivered by facsimile transmission shall be effective as for all
purposes hereof.
The parties hereto have caused this letter agreement to be executed
and delivered by their proper and duly authorized officers as of the day and
year first above written.
Very truly yours,
REVLON CONSUMER PRODUCTS CORPORATION
By: /s/ Steven Berns
-----------------------------------
Name: Steven Berns
Title: Vice President and Treasurer
Acknowledged and agreed as of the date first above written:
THE CHASE MANHATTAN BANK, as
Administrative Agent under the
Credit Agreement
By: /s/ Neil R. Boylan
-----------------------
Name: Neil R. Boylan
Title: Vice President
===============================================================================
REVLON CONSUMER PRODUCTS CORPORATION
9% Senior Notes Due 2006
and
9% Senior Exchange Notes Due 2006
---------------
INDENTURE
Dated as of November 6, 1998
---------------
U.S. BANK TRUST NATIONAL ASSOCIATION
Trustee
===============================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I - Definitions and Incorporation by Reference
SECTION 1.01. Definitions............................................................ 1
SECTION 1.02. Other Definitions...................................................... 18
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act................................................... 18
SECTION 1.04. Rules of Construction.................................................. 19
ARTICLE II - The Securities
SECTION 2.01. Form and Dating........................................................ 20
SECTION 2.02. Execution and Authentication........................................... 21
SECTION 2.03. Registrar and Paying Agent............................................. 22
SECTION 2.04. Paying Agent To Hold Money in Trust.................................... 22
SECTION 2.05. Securityholder Lists................................................... 23
SECTION 2.06. Transfer and Exchange.................................................. 23
SECTION 2.08. Outstanding Securities................................................. 24
SECTION 2.09. Temporary Securities................................................... 24
SECTION 2.10 Cancellation............................................................ 24
SECTION 2.11. CUSIP Numbers.......................................................... 25
SECTION 2.12. Book-Entry Provisions for U.S. Global
Note........................................................... 25
SECTION 2.13. Special Transfer Provisions............................................ 26
SECTION 2.14. Defaulted Interest..................................................... 31
ARTICLE III - Redemption
SECTION 3.01. Notices to Trustee..................................................... 31
SECTION 3.02. Selection of Securities To Be Redeemed................................. 32
SECTION 3.03. Notice of Redemption................................................... 32
SECTION 3.04. Effect of Notice of Redemption......................................... 33
SECTION 3.05. Deposit of Redemption Price............................................ 33
SECTION 3.06. Securities Redeemed in Part............................................ 33
ARTICLE IV - Covenants
SECTION 4.01. Payment of Securities.................................................. 33
SECTION 4.02. SEC Reports............................................................ 34
SECTION 4.03. Limitation on Debt..................................................... 34
i
Page
----
SECTION 4.04. Limitation on Liens.................................................... 36
SECTION 4.05. Limitation on Restricted Payments...................................... 39
SECTION 4.06. Limitation on Restrictions on Distributions
from Subsidiaries............................................... 43
SECTION 4.07. Limitation on Sales of Assets and Subsidiary
Stock.......................................................... 44
SECTION 4.08. Limitation on Transactions with Affiliates............................. 49
SECTION 4.09. Change of Control...................................................... 51
SECTION 4.10. Compliance Certificate................................................. 52
SECTION 4.11. Further Instruments and Acts........................................... 52
ARTICLE V - Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets......................................................... 53
ARTICLE VI - Defaults and Remedies
SECTION 6.01. Events of Default...................................................... 54
SECTION 6.02. Acceleration........................................................... 56
SECTION 6.03. Other Remedies......................................................... 56
SECTION 6.04. Waiver of Past Defaults................................................ 56
SECTION 6.05. Control by Majority.................................................... 56
SECTION 6.06. Limitation on Suits.................................................... 57
SECTION 6.07. Rights of Holders To Receive Payment................................... 57
SECTION 6.08. Collection Suit by Trustee............................................. 57
SECTION 6.09. Trustee May File Proofs of Claim....................................... 58
SECTION 6.10. Priorities............................................................. 58
SECTION 6.11. Undertaking for Costs.................................................. 58
SECTION 6.12. Waiver of Stay or Extension Laws....................................... 58
ARTICLE VII - Trustee
SECTION 7.01. Duties of Trustee...................................................... 59
SECTION 7.02. Rights of Trustee...................................................... 60
SECTION 7.03. Individual Rights of Trustee........................................... 61
SECTION 7.04. Trustee's Disclaimer................................................... 61
SECTION 7.05. Notice of Defaults..................................................... 61
SECTION 7.06. Reports by Trustee to Holders.......................................... 61
SECTION 7.07. Compensation and Indemnity............................................. 62
SECTION 7.08. Replacement of Trustee................................................. 62
SECTION 7.09. Successor Trustee by Merger............................................ 63
SECTION 7.10. Eligibility; Disqualification.......................................... 64
ii
Page
----
SECTION 7.11. Preferential Collection of Claims Against
Company......................................................... 64
ARTICLE VIII - Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance...................................................... 64
SECTION 8.02. Conditions to Defeasance............................................... 65
SECTION 8.03. Application of Trust Money............................................. 66
SECTION 8.04. Repayment to Company................................................... 66
SECTION 8.05. Indemnity for Government Obligations................................... 67
SECTION 8.06. Reinstatement.......................................................... 67
ARTICLE IX - Amendments
SECTION 9.01. Without Consent of Holders............................................. 67
SECTION 9.02. With Consent of Holders................................................ 68
SECTION 9.03. Compliance with Trust Indenture Act.................................... 69
SECTION 9.04. Revocation and Effect of Consents and
Waivers......................................................... 69
SECTION 9.05. Notation on or Exchange of Securities.................................. 69
SECTION 9.06. Trustee To Sign Amendments............................................. 70
SECTION 9.07. Payment for Consent.................................................... 70
ARTICLE X - Miscellaneous
SECTION 10.01. Trust Indenture Act Controls.......................................... 70
SECTION 10.02. Notices............................................................... 70
SECTION 10.03. Communication by Holders with Other
Holders......................................................... 71
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent....................................................... 71
SECTION 10.05. Statements Required in Certificate or
Opinion......................................................... 72
SECTION 10.06. When Securities Disregarded........................................... 72
SECTION 10.07. Rules by Trustee, Paying Agent and
Registrar....................................................... 72
SECTION 10.08. Legal Holidays........................................................ 72
SECTION 10.09. Governing Law......................................................... 72
SECTION 10.10. No Recourse Against Others............................................ 72
SECTION 10.11. Successors............................................................ 73
SECTION 10.12. Multiple Originals.................................................... 73
SECTION 10.13. Table of Contents; Headings........................................... 73
iii
Exhibit A - Form of Initial Note
Exhibit B - Form of Exchange Note
Exhibit C - Form of Certificate to Be Delivered Upon Termination of
Restricted Period
Exhibit D - Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors
Exhibit E - Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S
Exhibit F - Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Rule 144A
Schedule I - Permitted Transactions
iv
INDENTURE dated as of November 6, 1998, between
REVLON CONSUMER PRODUCTS CORPORATION, a Delaware
corporation (the "Company"), and U.S. BANK TRUST
NATIONAL ASSOCIATION, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Affiliate" of any specified Person means (i) any other
Person which, directly or indirectly, is in control of, is controlled by or is
under common control with such specified Person or (ii) any other Person who is
a director or officer (A) of such specified Person, (B) of any Subsidiary of
such specified Person or (C) of any Person described in clause (i) above. For
purposes of this definition, control of a Person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applicable Premium" means, with respect to a Security at any
time, the greater of (i) 1.0% of the then outstanding principal amount of such
Security at such time and (ii) the excess of (A) the present value of the
required interest and principal payments due on such Security, computed using a
discount rate equal to the Treasury Rate plus 50 basis points, over (B) the
then outstanding principal amount of such Security at such time.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Subsidiary of the Company (other than directors'
qualifying shares and other than Capital Stock of a Non-Recourse Subsidiary),
property or other assets (each referred to for the purposes of this definition
as a "disposition") by the Company or any of its Subsidiaries (other than a
Non-Recourse Subsidiary) (including any disposition by means of a merger,
consolidation or similar transaction) other than (i) a disposition by a
Subsidiary of the Company to the Company or by the Company or a Subsidiary of
the Company to a Wholly Owned Recourse Subsidiary, (ii) a disposition of
property or assets by the Company or its Subsidiaries at fair market value in
the ordinary course of business, (iii) a disposition by the Company or its
Subsidiaries of obsolete assets in the ordinary course of business, (iv) a
disposition subject to or permitted by Section 4.05, (v) an issuance of
employee stock options and (vi) a disposition by the Company or its
Subsidiaries in which the Company or its Subsidiaries receive as consideration
Capital Stock of (or similar interests in) a Person engaged in, or assets
2
that will be used in, the businesses of the Company and its Wholly Owned
Recourse Subsidiaries, or additionally, in the case of a disposition by a
Subsidiary of the Company that is not a Wholly Owned Recourse Subsidiary, the
business of such Subsidiary, existing on the Issue Date or in businesses
reasonably related thereto, as determined by the Board of Directors of the
Company, the determination of which shall be conclusive and evidenced by a
resolution of the Board of Directors of the Company.
"Bank Debt" means any and all amounts payable by the Company
or any of its Subsidiaries under or in respect of the Credit Agreement or any
Refinancing thereof, or any other agreements with lenders party to the
foregoing, including principal, premium (if any), interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company), fees, charges, expenses, reimbursement
obligations, Guarantees and all other amounts payable thereunder or in respect
thereof; provided, however, that nothing in this definition shall permit the
Company or any of its Subsidiaries to Issue any Debt that is not permitted
pursuant to Section 4.03.
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any committee thereof duly authorized to
act on behalf of such Board of Directors.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a Person means any obligation
which is required to be classified and accounted for as a capital lease on the
face of a balance sheet of such Person prepared in accordance with GAAP; the
amount of such obligation shall be the capitalized amount thereof, determined
in accordance with GAAP; and the Stated Maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into or exchangeable for such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) any "Person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all shares that any such Person has the
right to acquire, whether such right is exercisable immediately or
only after the passage of time),
3
directly or indirectly, of more than 35% of the total voting power of
the Voting Stock of the Company; provided, however, that the Permitted
Holders "beneficially own" (as so defined), directly or indirectly, in
the aggregate a lesser percentage of the total voting power of the
Voting Stock of the Company than such other Person and do not have the
right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the
Company (for the purposes of this clause (i), such other Person shall
be deemed to beneficially own any Voting Stock of a specified
corporation held by a parent corporation, if such other Person
beneficially owns, directly or indirectly, more than 35% of the voting
power of the Voting Stock of such parent corporation and the Permitted
Holders beneficially own, directly or indirectly, in the aggregate a
lesser percentage of the voting power of the Voting Stock of such
parent corporation and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of such parent corporation); or
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the
shareholders of the Company was approved by a vote of 66-2/3% of the
directors of the Company then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the
Company then in office.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Revlon Consumer Products Corporation, a
Delaware corporation, until a successor replaces it and, thereafter, means the
successor and, for purposes of any provision contained herein and required by
the TIA, each other obligor on the indenture securities.
"Commencement Date" means February 2, 1998.
"Consolidated EBITDA Coverage Ratio" means, for any period,
the ratio of (i) the aggregate amount of EBITDA for such period to (ii)
Consolidated Interest Expense for such period; provided, however, that (1) if
the Company or any Subsidiary of the Company has Issued any Debt since the
beginning of such period that remains outstanding or if the transaction giving
rise to the need to calculate the Consolidated EBITDA Coverage Ratio is an
Issuance of Debt, or both, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving effect on a pro forma basis to such
Debt as if such Debt had been Issued on the first day of such period and the
discharge of any other Debt Refinanced or otherwise discharged with the
proceeds of such new Debt as if such discharge had occurred on the first day
4
of such period, (2) if since the beginning of such period the Company or any
Subsidiary of the Company shall have made any Asset Disposition, EBITDA for
such period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to the EBITDA (if
negative), directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Debt of the Company
or any Subsidiary of the Company Refinanced or otherwise discharged with
respect to the Company and its continuing Subsidiaries in connection with such
Asset Dispositions for such period (or if the Capital Stock of any Subsidiary
of the Company is sold, the Consolidated Interest Expense for such period
directly attributable to the Debt of such Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such Debt after such
sale) and (3) if since the beginning of such period the Company or any
Subsidiary of the Company (by merger or otherwise) shall have made an
Investment in any Subsidiary of the Company (or any Person which becomes a
Subsidiary of the Company) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all of an operating unit of
a business, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto, as if such Investment or
acquisition occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto, and the amount of
Consolidated Interest Expense associated with any Debt Issued in connection
therewith, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting Officer of the Company. If any Debt bears a
floating rate of interest and is being given pro forma effect, the interest on
such Debt shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period.
"Consolidated Interest Expense" means, for any period, the
sum of (a) the interest expense, net of any interest income, of the Company and
its consolidated Subsidiaries (other than Non-Recourse Subsidiaries) for such
period as determined in accordance with GAAP consistently applied, plus (b)
Preferred Stock dividends in respect of Preferred Stock of the Company or any
Subsidiary of the Company (other than a Non-Recourse Subsidiary) held by
Persons other than the Company or a Wholly Owned Recourse Subsidiary, plus (c)
the cash contributions to an employee stock ownership plan of the Company and
its Subsidiaries (other than Non-Recourse Subsidiaries) to the extent such
contributions are used by an employee stock ownership plan to pay interest.
"Consolidated Net Income" means with respect to any Person,
for any period, the consolidated net income (or loss) of such Person and its
consolidated Subsidiaries for such period as determined in accordance with
GAAP, adjusted to the extent included in calculating such net income (or loss),
by excluding (i) all extraordinary gains or losses; (ii) the portion of net
income (or loss) of such Person
5
and its consolidated Subsidiaries attributable to minority interests in
unconsolidated Persons except to the extent that, in the case of net income,
cash dividends or distributions have actually been received by such Person or
one of its consolidated Subsidiaries (subject, in the case of a dividend or
distribution received by a Subsidiary of such Person, to the limitations
contained in clause (v) below) and, in the case of net loss, such Person or any
Subsidiary of such Person has actually contributed, lent or transferred cash to
such unconsolidated Person; (iii) net income (or loss) of any other Person
attributable to any period prior to the date of combination of such other
Person with such Person or any of its Subsidiaries on a "pooling of interests"
basis; (iv) net gains or losses in respect of dispositions of assets by such
Person or any of its Subsidiaries (including pursuant to a sale-and-leaseback
arrangement) other than in the ordinary course of business; (v) the net income
of any Subsidiary of such Person to the extent that the declaration of
dividends or distributions by that Subsidiary of that income is not at the time
permitted, directly or indirectly, by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulations applicable to that Subsidiary or its shareholders;
(vi) any net income or loss of any Non-Recourse Subsidiary, except that such
Person's equity in the net income of any such Non-Recourse Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distrib uted by such Non-Recourse Subsidiary during
such period to such Person as a dividend or other distribution; and (vii) the
cumulative effect of a change in account ing principles; provided, however,
that in using Consolidated Net Income for purposes of calculating the
Consolidated EBITDA Coverage Ratio at any time, net income of a Subsidiary of
the type described in clause (v) of this definition shall not be excluded.
"Consolidated Net Worth" of any Person means, at any date,
all amounts which would, in conformity with GAAP, be included under
shareholders' equity on a consolidated balance sheet of such Person as at such
date, less (x) any amounts attributable to Redeemable Stock and (y) any amounts
attributable to Exchangeable Stock.
"Credit Agreement" means the Amended and Restated Credit
Agreement dated as of May 30, 1997 by and among the Company, The Chase
Manhattan Bank, Citibank, N.A. and Lehman Commercial Paper Inc., as agents, and
the Banks named therein, as the same may be amended or restated from time to
time.
"Debt" of any Person means, without duplication,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such Person is responsible or liable;
(ii) all Capital Lease Obligations of such Person;
6
(iii) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable and other
accrued current liabilities arising in the ordinary course of
business);
(iv) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i)
through (iii) above) entered into in the ordinary course of business
of such Person to the extent such letters of credit are not drawn upon
or, if and to the extent drawn upon, such drawing is reim bursed no
later than the third Business Day following receipt by such Person of
a demand for reimbursement following payment on the letter of credit);
(v) the amount of all obligations of such Person with respect
to the redemption, repayment (including liquidation preference) or
other repurchase of, in the case of a Subsidiary of the Company, any
Preferred Stock and, in the case of any other Person, any Redeemable
Stock (but excluding in each case any accrued dividends);
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons and all dividends of other Persons for
the payment of which, in either case, such Person is responsible or
liable, directly or indirectly, as obligor, guarantor or otherwise,
including Guarantees of such obligations and dividends; and
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the
lesser of the value of such property or assets or the amount of the
obligation so secured.
"Default" means any event which is, or after notice or
passage of time or both would be, an Event of Default.
"Depository" means, with respect to the Securities issuable
or issued in whole or in part in global form, The Depository Trust Company,
until a successor shall have been appointed and become such pursuant to the
applicable provisions of this Indenture and, thereafter, "Depository" shall
mean or include such successor.
"EBITDA" means, for any period, the Consolidated Net Income
of the Company for such period, plus the following to the extent included in
calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, (v) all other noncash charges (excluding any noncash charge to the
extent that it requires an accrual of or a reserve
7
for cash disbursements for any future period) and (vi) foreign currency gains
or losses.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the 9% Senior Exchange Notes Due 2006
of the Company to be issued pursuant to this Indenture in connection with a
Registered Exchange Offer pursuant to the Registration Agreement or otherwise.
"Exchangeable Stock" means any Capital Stock of a Person
which by its terms or otherwise is required to be exchanged or converted or is
exchangeable or convertible at the option of the holder into another security
(other than Capital Stock of such Person which is neither Exchangeable Stock
nor Redeemable Stock).
"Existing 8-1/8% Senior Securities" means the Company's
8-1/8% Senior Notes Due 1999 and any securities exchanged therefor.
"Existing 9-1/2% Senior Securities" means the Company's
9-1/2% Senior Notes Due 2006 and any securities exchanged therefor.
"Existing Senior Subordinated Securities" means the Company's
8-5/8% Senior Subordinated Notes Due 2008 and any securities exchanged
therefor.
"Foreign Subsidiary" means any Subsidiary of the Company
which (i) is organized under the laws of any jurisdiction outside of the United
States, (ii) is organized under the laws of Puerto Rico or the U.S. Virgin
Islands, (iii) has substantially all its operations outside of the United
States, or (iv) has substantially all its operations in Puerto Rico or the U.S.
Virgin Islands.
"GAAP" means generally accepted accounting principles in the
United States, as in effect from time to time, except that for purposes of
calculating the Consolidated EBITDA Coverage Ratio, it shall mean generally
accepted accounting principles in the United States as in effect on the
Commencement Date.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by agreement
to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for purposes of assuring in any other manner the obligee of
such Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); provided, however, that
the term "Guarantee" shall not include endorsements for collection or deposit
in the
8
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate collar agreement, option or futures contract
or other similar agreement or arrangement designed to protect such Person
against changes in interest rates or foreign exchange rates.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Initial Cash Payment" means the $100 million received by the
Company prior to February 15, 1993.
"Initial Notes" means the 9% Senior Notes Due 2006 of the
Company issued pursuant to this Indenture on the Issue Date.
"Initial Purchasers" means Chase Securities Inc. and Credit
Suisse First Boston Corporation.
"Investment" in any Person means any loan or advance to, any
net payment on a Guarantee of, any acquisition of Capital Stock, equity
interest, obligation or other security of, or capital contribution or other
investment in, such Person. Investments shall exclude advances to customers and
suppliers in the ordinary course of business. The term "Invest" used as verb
has a corresponding meaning. For purposes of the definitions of "Non-Recourse
Subsidiary" and "Restricted Payment" and for purposes of Section 4.05, (i)
"Investment" shall include a designation after the Commencement Date of a
Subsidiary of the Company as a Non-Recourse Subsidiary, and such Investment
shall be valued at an amount equal to the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time that such Subsidiary is designated a
Non-Recourse Subsidiary; and (ii) any property transferred to or from a
Non-Recourse Subsidiary shall be valued at its fair market value at the time of
such transfer, in each case as determined in good faith by the Board of
Directors of the Company, and if such property so transferred (including in a
series of related transactions) has a fair market value, as so determined by
the Board of Directors, in excess of $10,000,000, such determination shall be
confirmed by an independent appraiser.
"Issue" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Debt or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary of another Person
(whether by merger,
9
consolidation, acquisition or otherwise) shall be deemed to be issued by such
Subsidiary at the time it becomes a Subsidiary of such other Person. The term
"Issuance" or Issued" has a corresponding meaning.
"Issue Date" means the date of original issue of the Initial
Notes.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of New York or in
the state where the principal office of the Trustee is located.
"Lien" means any mortgage, pledge, security interest,
conditional sale or other title retention agreement or other similar lien.
"Mafco Consolidated Group" means the "Affiliated Group"
(within the meaning of Section 1504(a)(1) of the Code) of which Mafco Holdings
is the common parent.
"Mafco Holdings" means Mafco Holdings Inc., a Delaware
corporation, and its successors.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received
in the form of assumption by the acquiring Person of Debt or other obligations
relating to such properties or assets or received in any other noncash form)
therefrom, in each case net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required or estimated in good faith to be
required to be accrued as a liability under GAAP, as a consequence of such
Asset Disposition, (ii) all payments made on any Debt which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon or other security agreement of any kind with respect to such assets,
or which must by its terms, or in order to obtain a necessary consent to such
Asset Disposition, or by applicable law be repaid out of the proceeds from or
in connection with such Asset Disposition and (iii) all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Disposition; provided, however, that
in connection with an Asset Disposition to a Subsidiary of the Company (other
than a Wholly Owned Recourse Subsidiary), Net Available Cash will be deemed to
be a percentage of Net Available Cash (as calculated above) equal to (A) 100%
minus (B) the Company's percentage ownership in such Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such
10
issuance or sale and net of taxes paid or estimated in good faith to be payable
as a result thereof.
"Non-Convertible Capital Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible
common stock of such corporation; provided, however, that Non-Convertible
Capital Stock shall not include any Redeemable Stock or Exchangeable Stock.
"Non-Recourse Debt" means Debt or that portion of Debt (i) as
to which neither the Company nor its Subsidiaries (other than a Non-Recourse
Subsidiary) (A) provides credit support (including any undertaking, agreement
or instrument which would constitute Debt), (B) is directly or indirectly
liable or (C) constitutes the lender and (ii) no default with respect to which
(including any rights which the holders thereof may have to take enforcement
action against the assets of a Non-Recourse Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Debt of the Company or
its Subsidiaries (other than Non-Recourse Subsidiaries) to declare a default on
such other Debt or cause the payment thereof to be accelerated or payable prior
to its Stated Maturity.
"Non-Recourse Subsidiary" means a Subsidiary of the Company
(i) which has been designated as such by the Company, (ii) which has no Debt
other than Non-Recourse Debt and (iii) which is in the same line of business as
the Company and its Wholly Owned Recourse Subsidiaries existing on the Issue
Date or in businesses reasonably related thereto.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, Vice Chairman, the President or a Vice President
(regardless of Vice Presidential designation), and by the Treasurer, an
Assistant Treasurer, Secretary or an Assistant Secretary, of the Company and
delivered to the Trustee. One of the Officers signing an Officers' Certificate
given pursuant to Section 4.10 shall be the principal executive, financial or
accounting officer of the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company (or to its Parent or one of its
Subsidiaries or the Trustee.)
"Parent" means Revlon, Inc., a Delaware corporation, and any
other Person which acquires or owns directly or indirectly 80% or more of the
voting power of the Voting Stock of the Company.
11
"Pari Passu Debt" means the following obligations, whether
outstanding on the Issue Date or thereafter created, incurred or assumed, and
whether at any time owing actually or contingent:
(i) all obligations consisting of the Bank Debt, the
Securities, the Existing 8-1/8% Senior Securities and the Existing
9-1/2% Senior Securities;
(ii) all obligations consisting of the principal of and
premium (if any) and accrued and unpaid interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company), and all fees, expenses and
other amounts in respect of (A) indebtedness of the Company for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which the Company is
responsible or liable;
(iii) all Capital Lease Obligations of the Company;
(iv) all obligations of the Company (A) for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar
credit transaction, (B) under interest rate swaps, caps, collars,
options and similar arrangements and foreign currency hedges entered
into in respect of any obligations described in clauses (i), (ii) and
(iii) or (C) Issued or assumed as the deferred purchase price of
property and all conditional sale obligations of the Company and all
obligations of the Company under any title retention agreement;
(v) all obligations of other Persons of the type referred to
in clauses (ii), (iii) and (iv) and all dividends of other persons for
the payment of which, in either case, the Company is responsible or
liable as obligor, guarantor or otherwise, including by means of any
agreement which has the economic effect of a Guarantee; and
(vi) all obligations consisting of Refinancings of any
obligation described in clauses (i), (ii), (iii), (iv) or (v);
unless, in the case of any particular obligation, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are subordinate in right of payment to the
Securities. However, Pari Passu Debt will not include (1) any obligation of the
Company to any Subsidiary or any Permitted Affiliate Debt, (2) any liability
for Federal, state, local or other taxes owed or owing by the Company, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including Guarantees thereof or instruments evidencing such
liabilities), (4) any indebtedness, Guarantee or obligation of the Company
(including the Existing Senior Subordinated Securities) that is subordinate or
junior in any respect to any other indebtedness, Guarantee or obligation of the
Company or (5) that portion of any Debt which at the time of
12
Issuance is issued in violation of this Indenture; provided, however, that in
the case of this clause (5), (A) any Debt Issued to any person who had no
actual knowledge that the Issuance of such Debt was not permitted under this
Indenture and who received on the date of Issuance thereof a certificate from
an officer of the Company to the effect that the Issuance of such Debt would
not violate this Indenture shall constitute Pari Passu Debt and (B) any Debt
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of business
shall constitute Pari Passu Debt provided that such Debt would normally be
extinguished within three Business Days of Issuance.
"Permitted Affiliate" means any individual that is a director
or officer of the Company, of Parent, of a Subsidiary of the Company or of an
Unrestricted Affiliate; provided, however, that such individual is not also a
director or officer of Mafco Holdings or any Person that controls Mafco
Holdings.
"Permitted Affiliate Debt" means (i) Debt Issued to an
Affiliate of the Company representing amounts owing by the Company pursuant to
the Tax Sharing Agreement and (ii) Debt Issued to an Affiliate of the Company
to the extent of cash actually received by the Company, which cash either is
required to be advanced or contributed to the Company pursuant to the terms of
the Credit Agreement or any Refinancing thereof or, if not advanced or
contributed to the Company, would lead to a default under the Credit Agreement
or any Refinancing thereof.
"Permitted Holders" means Ronald O. Perelman (or in the event
of his incompetence or death, his estate, heirs, executor, administrator,
committee or other personal representative (collectively, "heirs")) or any
Person controlled, directly or indirectly, by Ronald O. Perelman or his heirs.
"Permitted Transactions" means (i) any transaction or series
of similar transactions (including the purchase, sale, lease or exchange of any
property or the rendering of any service between the Company or any Subsidiary
of the Company, on the one hand, and any Affiliate of the Company or any legal
or beneficial owner of 10% or more of the voting power of Voting Stock of the
Company or an Affiliate of any such owner, on the other hand), existing on, or
pursuant to an agreement in effect on, the Issue Date and disclosed in Schedule
I to this Indenture and any amendments thereto which do not adversely affect
the rights of the Holders and (ii) any Tax Sharing Agreement.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary
13
or involuntary liquidation or dissolution of such corporation, over shares of
Capital Stock of any other class of such corporation.
"Principal" of a Security as of any date means the principal
of the Security as of such date.
"Private Exchange Notes" means the 9% Senior Private Exchange
Notes due 2006 of the Company to be issued pursuant to this Indenture in
connection with a Private Exchange Offer pursuant to the Registration
Agreement.
"Private Exchange Offer" means the offer by the Company,
pursuant to the Registration Agreement, to the Initial Purchasers to issue and
deliver to each Initial Purchaser, in exchange for the Initial Notes held by
the Initial Purchaser as part of its initial distribution, a like aggregate
principal amount of Private Exchange Notes.
"Public Equity Offering" means an underwritten public
offering of equity securities of the Company or Revlon, Inc. pursuant to an
effective registration statement under the Securities Act.
"Put Amount" as of any date means, with respect to each
$1,000 principal amount of Securities, 101% of the outstanding principal amount
thereof as of the date of repurchase.
"QIB" means a "Qualified Institutional Buyer" under Rule 144A.
"Redeemable Stock" means any Capital Stock that by its terms
or otherwise is required to be redeemed on or prior to the first anniversary of
the Stated Maturity of the Securities or is redeemable at the option of the
holder thereof at any time on or prior to the first anniversary of the Stated
Maturity of the Securities.
"Refinance" means, in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
Debt in exchange or replacement for, such Debt. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Costs" means, with respect to any Debt being
Refinanced, any premium actually paid thereon and reasonable costs and
expenses, including underwriting discounts, in connection with such
Refinancing.
"Registered Exchange Offer" means an offer by the Company,
pursuant to the Registration Agreement or otherwise, to certain Holders of
Initial Notes, to issue and deliver to such Holders, in exchange for Initial
Notes, a like aggregate Principal amount of Exchange Notes registered under the
Securities Act.
14
"Registration Agreement" means the Registration Agreement
dated November 6, 1998, between the Company and the Initial Purchasers.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Initial Notes, the Exchange Notes and
the Private Exchange Notes, treated as a single class of securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" has the meaning ascribed
thereto in the Appendix.
"Significant Subsidiary" means (i) any Subsidiary (other than
a Non- Recourse Subsidiary) of the Company which at the time of determination
either (A) had assets which, as of the date of the Company's most recent
quarterly consolidated balance sheet, constituted at least 5% of the Company's
total assets on a consolidated basis as of such date, in each case determined
in accordance with GAAP, or (B) had revenues for the 12-month period ending on
the date of the Company's most recent quarterly consolidated statement of
income which constituted at least 5% of the Company's total revenues on a
consolidated basis for such period, or (ii) any Subsidiary of the Company
(other than a Non-Recourse Subsidiary) which, if merged with all Defaulting
Subsidiaries (as defined below) of the Company, would at the time of
determination either (A) have had assets which, as of the date of the Company's
most recent quarterly consolidated balance sheet, would have constituted at
least 10% of the Company's total assets on a consolidated basis as of such date
or (B) have had revenues for the 12-month period ending on the date of the
Company's most recent quarterly consolidated statement of income which would
have constituted at least 10% of the Company's total revenues on a consolidated
basis for such period (each such determination being made in accordance with
GAAP). "Defaulting Subsidiary" means any Subsidiary of the Company (other than
a Non-Recourse Subsidiary) with respect to which an event described under
Section 6.01(6), 6.01(7), 6.01(8) or 6.01(9) has occurred and is continuing.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the principal of
such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency).
"Subordinated Obligation" means any Debt of the Company
(whether outstanding on the date hereof or hereafter Issued) which is
subordinate or junior in right of payment to the Securities.
15
"Subsidiary" means, with respect to any Person, any
corporation, association, partnership or other business entity of which more
than 50% of the total voting power of shares of Capital Stock or other
interests (including partnership interests) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned, directly or indirectly, by (i) such
Person, (ii) such Person and one or more Subsidiaries of such Person or (iii)
one or more Subsidiaries of such Person.
"Tax Sharing Agreement" means (i) that certain agreement
dated June 24, 1992, as amended, among the Company, certain of its
Subsidiaries, Revlon Holdings Inc., Revlon, Inc. and Mafco Holdings, and (ii)
any other tax allocation agreement between the Company or any of its
Subsidiaries with any direct or indirect shareholder of the Company with
respect to consolidated or combined tax returns including the Company or any of
its Subsidiaries but only to the extent that amounts payable from time to time
by the Company or any such Subsidiary under any such agreement do not exceed
the corresponding tax payments that the Company or such Subsidiary would have
been required to make to any relevant taxing authority had the Company or such
Subsidiary not joined in such consolidated or combined returns, but instead had
filed returns including only the Company or its Subsidiaries (provided that any
such agreement may provide that, if the Company or any such Subsidiary ceases
to be a member of the affiliated group of corporations of which Mafco Holdings
is the common parent for purposes of filing a consolidated Federal income tax
return (such cessation, a "Deconsolidation Event"), then the Company or such
Subsidiary shall indemnify such direct or indirect shareholder with respect to
any Federal, state or local income, franchise or other tax liability (including
any related interest, additions or penalties) imposed on such shareholder as
the result of an audit or other adjustment with respect to any period prior to
such Deconsolidation Event that is attributable to the Company, such Subsidiary
or any predecessor business thereof (computed as if the Company, such
Subsidiary or such predecessor business, as the case may be, were a stand-alone
entity that filed separate tax returns as an independent corporation), but only
to the extent that any such tax liability exceeds any liability for taxes
recorded on the books of the Company or such Subsidiary with respect to any
such period).
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, in each case, maturing within 360 days of the date of
acquisition thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company (including the Trustee)
which is organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States of America
having capital, surplus and undivided profits aggregating in excess of $250
million and whose debt is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act) or any money-market fund
sponsored by any registered broker dealer or mutual fund distributor, (iii)
repurchase obligations with a
16
term of not more than 30 days for underlying securities of the types described
in clause (i) above entered into with a nationally recognized broker-dealer,
(iv) invest ments in commercial paper, maturing not more than 90 days after the
date of acquisition, issued by a corporation (other than an Affiliate or
Subsidiary of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-2" (or higher) according to Moody's Investors Service, Inc. or "A-2" (or
higher) according to Standard and Poor's Corporation, (v) securities with
maturities of six months or less from the date of acquisition backed by standby
or direct pay letters of credit issued by any bank satisfying the requirements
of clause (ii) above and (vi) securities with maturities of six months or less
from the date of acquisition issued or fully Guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by Standard &
Poor's Corporation or "A" by Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbbb) as in effect on the Issue Date.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two Business Days prior
to the date fixed for repayment or, in the case of defeasance, prior to the
date of deposit (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
then remaining average life to Stated Maturity of the Securities; provided,
however, that if the average life to Stated Maturity of the Securities is not
equal to the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
yields of United States Treasury securities for which such yields are given,
except that if the average life to Stated Maturity of the Securities is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Affiliate" means a Person (other than a
Subsidiary of the Company) controlled (as defined in the definition of an
"Affiliate") by the Company,
17
in which no Affiliate of the Company (other than (x) a Wholly Owned Recourse
Subsidiary of the Company, (y) a Permitted Affiliate and (z) another
Unrestricted Affiliate) has an Investment.
"U.S. Government Obligations" 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 at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Recourse Subsidiary" means a Subsidiary of the
Company (other than a Non-Recourse Subsidiary) all the Capital Stock of which
(other than directors' qualifying shares) is owned by (i) the Company, (ii) the
Company and one or more Wholly Owned Recourse Subsidiaries or (iii) one or more
Wholly Owned Recourse Subsidiaries.
18
SECTION 1.02. Other Definitions.
DEFINED IN
TERM SECTION
----------- ----------
"Agent Members".......................................... 2.12(a)
"Bankruptcy Law"......................................... 6.01
"covenant defeasance option"............................. 8.01(b)
"CUSIP".................................................. 2.11
"Custodian".............................................. 6.01
"DTC".................................................... 4.1
"Event of Default"....................................... 6.01
"IAI Global Note"........................................ 2.01(b)
"IAIs"................................................... 2.01(b)
"legal defeasance option"................................ 8.01(b)
"Notice of Default"...................................... 6.01
"Offer".................................................. 4.07(b)
"Offer Amount"........................................... 4.07(c)(2)
"Offer Period"........................................... 4.07(c)(2)
"Offshore Notes Exchange Date"........................... 2.01(c)
"Outstanding"............................................ 2.08
"Paying Agent"........................................... 2.03
"Permanent Offshore Physical Notes"...................... 2.01(c)
"Physical Notes"......................................... 2.01(e)
"Purchase Date".......................................... 4.07(c)(1)
"QIB Global Note"........................................ 2.01(b)
"Registrar".............................................. 2.03
"Restricted Contribution"................................ 4.05(a)(3)(e)
"Restricted Period"...................................... 2.01(c)
"Restricted Payment"..................................... 4.05
"Temporary Offshore Physical Notes"...................... 2.01(c)
"U.S. Physical Notes".................................... 2.01(d)
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
19
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP and all accounting calculations
will be determined in accordance with such principles;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured debt shall not be deemed to be subordinate or
junior to secured debt merely by virtue of its nature as unsecured
debt;
(7) the principal amount of any noninterest bearing or other
discount security at any date of Issuance shall be the principal
amount thereof that would be shown on a balance sheet of the issuer
dated such date prepared in accordance with GAAP and accretion of
principal on such security shall be deemed to be the Issuance of Debt;
provided, however, that the accretion of principal on such security
shall not be deemed to be the Issuance of Debt if the issuer elects,
at the time of original Issuance of such security, to treat such
accretion as if, on such date of original Issuance, there were an
additional Issuance of Debt in an aggregate principal amount equal to
the excess of the principal amount at maturity of such security over
the principal amount thereof that would be shown on a balance sheet of
the issuer dated on such date prepared in accordance with GAAP and,
unless redeemed or repurchased, the amount of such additional Issuance
of Debt shall be treated as being outstanding for all purposes under
this Indenture until such security is paid in full;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater; and
20
(9) whenever in this Indenture or the Securities it is
provided that the Put Amount or the Principal with respect to a
Security shall be paid, such provision shall be deemed to require
(whether or not so expressly stated) the simultaneous payment of any
accrued and unpaid interest to the date of payment on such Security
payable pursuant to paragraph 1 of the Securities.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. (a) The Initial Notes and the
Trustee's certificate of authentication thereon shall be substantially in the
form of Exhibit A, which is hereby incorporated in and expressly made a part of
this Indenture, and as otherwise provided in this Article II. The Exchange
Notes and the Private Exchange Notes and the Trustee's certificate of
authentication thereon shall be substantially in the form of Exhibit B, which
is hereby incorporated in and expressly made a part of this Indenture, and as
otherwise provided in this Article II. The Securities may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such
notation, legend or endorsement is in a form acceptable to the Company). Each
Security shall be dated the date of its authentication. The terms of the
Securities set forth in Exhibit A and Exhibit B are part of the terms of this
Indenture.
(b) The Initial Notes offered and sold in reliance on Rule
144A to QIBs or on another exemption under the Securities Act to institutional
"Accredited Investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of the
Securities Act) ("IAIs") will be issued on the Issue Date in the form of two
permanent global Securities (with separate CUSIP numbers) substantially in the
form set forth in Exhibit A (each a "U.S. Global Note") deposited with the
Trustee, as custodian for the Depository, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. One U.S. Global Note
(which may be represented by more than one certificate, if so required by the
Depository's rules regarding the maximum principal amount to be represented by
a single certificate) will represent Initial Notes sold to QIB's (the "QIB
Global Note"), and the other will represent Initial Notes subsequently sold to
IAIs (the "IAI Global Note"). The aggregate principal amount of each U.S.
Global Note may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depository or its nominee,
as hereinafter provided. Transfers of Initial Notes from QIBs to IAIs, and from
IAIs to QIBs, will be represented by appropriate increases and decreases to the
respective amounts of the appropriate U.S. Global Notes, as more fully provided
in Section 2.13.
(c) Initial Notes offered and sold in reliance on Regulation
S, if any, shall be issued initially in the form of temporary certificated
Notes in registered form substantially in the form set forth in Exhibit A (the
"Temporary Offshore Physical Notes"). The Temporary Offshore Physical Notes
will be registered in the name of, and
21
held by, a temporary certificate holder designated by Chase Securities Inc.
until the later of the completion of the distribution of the Initial Notes and
the termination of the "restricted period" (as defined in Regulation S) with
respect to the offer and sale of the Initial Notes (the "Offshore Notes
Exchange Date"). The Company shall promptly notify the Trustee in writing of
the occurrence of the Offshore Notes Exchange Date and, at any time following
the Offshore Notes Exchange Date, upon receipt by the Trustee and the Company
of a certificate substantially in the form set forth in Exhibit C, the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
permanent certificated Notes in registered form substantially in the form set
forth in Exhibit A (the "Permanent Offshore Physical Notes") in exchange for
the Temporary Offshore Physical Notes of like tenor and amount.
(d) Initial Notes offered and sold other than as described in
the preceding two paragraphs, if any, shall be issued in the form of permanent
certificated Notes in registered form in substantially the form set forth in
Exhibit A (the "U.S. Physical Notes").
(e) The Temporary Offshore Physical Notes, Permanent Offshore
Physical Notes and U.S. Physical Notes are sometimes collectively herein
referred to as the "Physical Notes".
SECTION 2.02. Execution and Authentication. Two Officers
shall sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the Security, the
Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory
of the Trustee manually signs the certificate of authentication on the
Security. The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and deliver (1) Initial Notes
for original issue in an aggregate principal amount of $250,000,000 and (2)
Exchange Notes or Private Exchange Notes for issue only in a Registered
Exchange Offer or a Private Exchange Offer, respectively, pursuant to the
Registration Agreement or otherwise in exchange for a like principal amount of
Initial Notes, in each case upon a written order of the Company signed by two
Officers. Such order shall specify the amount of the Securities to be
authenticated, the date on which the original issue of Securities is to be
authenticated and, if such order is being delivered other than on the Issue
Date, whether the Securities are to be Exchange Notes or Private Exchange
Notes. The
22
aggregate principal amount of Securities outstanding at any time may not exceed
that amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or
agent for service of notices and demands. The Company agrees to pay any
authenticating agent compensation for its services hereunder.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate comp ensation therefor pursuant to Section
7.07. The Company or any of its domestically incorporated Wholly Owned Recourse
Subsidiaries may act as Paying Agent, Reg istrar or co-registrar.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. On or
prior to each due date of the Principal and interest on any Security, the
Company shall deposit with the Paying Agent a sum sufficient to pay such
Principal and interest when so becoming due. The Company shall require each
Paying Agent (other than the Trustee) to agree in writing that the Paying Agent
shall hold in trust for the benefit of Securityholders or the Trustee all money
held by the Paying Agent for the payment of Principal of or interest on the
Securities and shall notify the Trustee of any default by the Company in making
any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
23
SECTION 2.05. Securityholder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee
is not the Registrar, the Company shall furnish to the Trustee, in writing at
least five Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of
a Security for registration of transfer and in accordance with the provisions
of this Article II. When a Security is presented to the Registrar or a
co-registrar with a request to register a transfer, the Registrar shall
register the transfer as requested if the requirements of Section 8-401(l) of
the Uniform Commercial Code and this Article II are met. When Securities are
presented to the Registrar or a co-registrar with a request to exchange them
for an equal Principal amount of Securities of other denominations, the
Registrar shall make the exchange as requested if the same requirements are
met. To permit registration of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Securities at the Registrar's or
co-registrar's request. The Company may require payment of a sum sufficient to
pay all taxes, assessments or other governmental charges in connection with any
transfer or exchange pursuant to this Section. The Company shall not be
required to make and the Registrar need not register transfers or exchanges of
Securities selected for redemption (except, in the case of Securities to be
redeemed in part, the portion thereof not to be redeemed) or any Securities for
a period of 15 days before a selection of Securities to be redeemed or 15 days
before an interest payment date.
Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of Principal of and interest on such Security and for all other
purposes whatsoever, whether or not such Security is overdue, and none of the
Company, the Trustee, the Paying Agent, the Registrar or any co-registrar shall
be affected by notice to the contrary.
Any Holder of a U.S. Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interest in such Global Note
may be effected only through a book-entry system maintained by the Holder of
such Global Note (or its agent), and that ownership of a beneficial interest in
such Global Note shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant
to this Section 2.06 will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
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SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall Issue
and the Trustee shall authenticate a replacement Security if the requirements
of Section 8-405 of the Uniform Commercial Code are met and the Holder
satisfies any other reasonable requirements of the Trustee. If required by the
Trustee or the Company, such Holder shall furnish an indemnity bond sufficient
in the judgment of the Company and the Trustee to protect the Company, the
Trustee, the Paying Agent, the Registrar and any co-registrar from any loss
which any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen
Security has become due and payable, the Company, in its discretion, may
instead of issuing a new Security, pay such Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
("Outstanding") at any time are all Securities authenticated and delivered by
the Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section as not Outstanding. A Security
does not cease to be Outstanding because the Company or an Affiliate of the
Company holds the Security.
If a Security is paid or replaced pursuant to Section 2.07,
it ceases to be Outstanding unless the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a bona fide
purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all Principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be Outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities and deliver them in exchange for temporary
Securities upon surrender of such temporary Securities at the office or agency
of the Company, without charge to the Holder.
SECTION 2.10 Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the
Paying Agent shall
25
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver a certificate of such destruction to the Company
unless the Company directs the Trustee to deliver cancelled Securities to the
Company. The Company may not Issue new Securities to replace Securities it has
redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 2.12. Book-Entry Provisions for U.S. Global Note.
(a) Each U.S. Global Note initially shall (i) be registered
in the name of the Depository for such U.S. Global Note or the nominee of such
Depository and (ii) be delivered to the Trustee as custodian for such
Depository.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any U.S.
Global Note held on their behalf by the Depository, or the Trustee as its
custodian, or under the U.S. Global Note, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such U.S. Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or shall impair, as between the Depository and its Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder of any
Note.
(b) Transfers of a U.S. Global Note shall be limited to
transfers of such U.S. Global Note in whole, but not in part, to the
Depository, its successors or their respective nominees. Interests of
beneficial owners in a U.S. Global Note may be transferred in accordance with
the rules and procedures of the Depository and the provisions of Section 2.13.
If required to do so pursuant to any applicable law or regulation, beneficial
owners may obtain U.S. Physical Notes in exchange for their beneficial
interests in a U.S. Global Note upon written request in accordance with the
Depository's and the Registrar's procedures. In addition, U.S. Physical Notes
shall be transferred to all beneficial owners in exchange for their beneficial
interests in a U.S. Global Note if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository for such U.S. Global Note
or the Depository ceases to be a
26
clearing agency registered under the Exchange Act, at a time when the
Depository is required to be so registered in order to act as Depository, and
in each case a successor depositary is not appointed by the Company within 90
days of such notice or, (ii) the Company executes and delivers to the Trustee
and Note Registrar an Officers' Certificate stating that such U.S. Global Note
shall be so exchangeable or (iii) an Event of Default has occurred and is
continuing and the Registrar has received a request from the Depository.
(c) In connection with any transfer of a portion of the
beneficial interest in a U.S. Global Note pursuant to subsection (b) of this
Section to beneficial owners who are required to hold U.S. Physical Notes, the
Registrar shall reflect on its books and records the date and a decrease in the
Principal amount of such U.S. Global Note in an amount equal to the Principal
amount of the beneficial interest in the U.S. Global Note to be transferred,
and the Company shall execute, and the Trustee shall authenticate and deliver,
one or more U.S. Physical Notes of like tenor and amount.
(d) In connection with the transfer of an entire U.S. Global
Note to beneficial owners pursuant to subsection (b) of this Section, such U.S.
Global Note shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depository in exchange for its
beneficial interest in such U.S. Global Note, an equal aggregate Principal
amount of U.S. Physical Notes of authorized denominations.
(e) Any U.S. Physical Note delivered in exchange for an
interest in a U.S. Global Note pursuant to subsection (c) or subsection (d) of
this Section shall, except as otherwise provided by paragraph (f) of Section
2.13, bear the applicable legend regarding transfer restrictions applicable to
the U.S. Physical Note set forth in Exhibit A.
(f) The registered holder of a U.S. Global Note may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a
Holder is entitled to take under this Indenture or the Securities.
SECTION 2.13. Special Transfer Provisions. Unless and until
an Initial Note is transferred or exchanged under an effective registration
statement under the Securities Act, the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors.
The following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Note to any IAI which is not a QIB (excluding
Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Initial
Note if (x) the requested transfer is at least two years after the
original issue date of the Initial
27
Note or (y) the proposed transferee has delivered to the Registrar a
certificate substantially in the form set forth in Exhibit D.
(ii) If the proposed transferee is an Agent Member, and the
Initial Note to be transferred consists of U.S. Physical Notes or an
interest in the QIB Global Note, upon receipt by the Registrar of (x)
the document, if any, required by paragraph (i) and (y) instructions
given in accordance with the Depository's and the Registrar's
procedures therefor, the Registrar shall reflect on its books and
records the date and an increase in the Principal amount of the IAI
Global Note in an amount equal to (x) the Principal amount of the U.S.
Physical Notes to be transferred, and the Trustee shall cancel the
U.S. Physical Note so transferred or (y) the amount at maturity of the
beneficial interest in the QIB Global Note to be so transferred (in
which case the Registrar shall reflect on its books and records the
date and an appropriate decrease in the Principal amount of the QIB
Global Note).
(iii) If the proposed transferee is entitled to receive a
U.S. Physical Note as provided in Section 2.12 and the proposed
transferor is an Agent Member holding a beneficial interest in a U.S.
Global Note, upon receipt by the Registrar of (x) the documents, if
any, required by paragraph (i) and (y) instructions given in
accordance with the Depository's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the
date and a decrease in the Principal amount of such U.S. Global Note
in an amount equal to the Principal amount of the beneficial interest
in such U.S. Global Note to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
U.S. Physical Notes of like tenor and amount.
(iv) If the Initial Note to be transferred consists of U.S.
Physical Notes and the proposed transferee is entitled to receive a
U.S. Physical Note as provided in Section 2.12, upon receipt by the
Registrar of the document, if any, required by paragraph (i), the
Registrar shall register such transfer and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more U.S.
Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of an Initial Note to
a QIB (excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of U.S. Physical
Notes, Temporary Offshore Physical Notes, Permanent Offshore Physical
Notes or an interest in the IAI Global Note, the Registrar shall
register the transfer if such transfer is being made by a proposed
transferor who has provided the Registrar with a certificate
substantially in the form set forth in Exhibit F hereto.
28
(ii) If the proposed transferee is an Agent Member, and the
Initial Note to be transferred consists of U.S. Physical Notes,
Temporary Offshore Physical Notes, Permanent Offshore Physical Notes
or an interest in the IAI Global Note, upon receipt by the Registrar
of (x) the document, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depository's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and an increase in the Principal amount of
the QIB Global Note in an amount equal to (x) the Principal amount of
the U.S. Physical Notes, Temporary Offshore Physical Notes or
Permanent Offshore Physical Notes, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Note so
transferred or (y) the amount at maturity of the beneficial interest
in the IAI Global Note to be so transferred (in which case the
Registrar shall reflect on its books and records the date and an
appropriate decrease in the Principal amount of the IAI Global Note).
(iii) If the proposed transferee is entitled to receive a
U.S. Physical Note as provided in Section 2.12 and the proposed
transferor is an Agent Member holding a beneficial interest in a U.S.
Global Note, upon receipt by the Registrar of (x) the documents, if
any, required by paragraph (i) and (y) instructions given in
accordance with the Depository's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the
date and a decrease in the Principal amount of such U.S. Global Note
in an amount equal to the Principal amount of the beneficial interest
in such U.S. Global Note to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
U.S. Physical Notes of like tenor and amount.
(iv) If the Initial Note to be transferred consists of U.S.
Physical Notes, Temporary Offshore Physical Notes or Permanent
Offshore Physical Notes and the proposed transferee is entitled to
receive a U.S. Physical Note as provided in Section 2.12, upon receipt
by the Registrar of the document, if any, required by paragraph (i),
the Registrar shall register such transfer and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
U.S. Physical Notes of like tenor and amount.
(c) Transfers by Non-U.S. Persons Prior to December 16, 1998.
The following provisions shall apply with respect to registration of any
proposed transfer of an Initial Note by a Non-U.S. Person prior to December 16,
1998:
(i) The Registrar shall register the transfer of any Initial
Note (x) if the proposed transferee is a Non-U.S. Person and the
proposed transferor has provided the Registrar with a certificate
substantially in the form set forth in Exhibit E hereto or (y) if the
proposed transferee is a QIB and the proposed transferor has provided
the Registrar with a certificate substantially in the form set forth
in Exhibit F hereto. Unless clause (ii) below is applicable, the
29
Company shall execute, and the Trustee shall authenticate and deliver,
one or more Temporary Offshore Physical Notes of like tenor and
amount.
(ii) If the proposed transferee is an Agent Member in
connection with a proposed transfer of an Initial Note to a QIB, upon
receipt by the Registrar of (x) the document, if any, required by
paragraph (i) and (y) instructions given in accordance with the
Depository's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and an increase in the
Principal amount of the QIB Global Note in an amount equal to the
Principal amount of the Temporary Offshore Physical Note to be
transferred, and the Registrar shall cancel the Temporary Offshore
Physical Notes so transferred.
(d) Transfers by Non-U.S. Persons on or After December 16,
1998. The following provisions shall apply with respect to any transfer of an
Initial Note by a Non-U.S. Person on or after December 16, 1998:
(i)(x) If the Initial Note to be transferred is a Permanent
Offshore Physical Note, the Registrar shall register such transfer,
(y) if the Initial Note to be transferred is a Temporary Offshore
Physical Note, upon receipt of a certificate substantially in the form
set forth in Exhibit E from the proposed transferor, the Registrar
shall register such transfer and (z) in the case of either clause (x)
or (y), unless clause (ii) below is applicable, the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
Permanent Offshore Physical Notes of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in
connection with a proposed transfer of an Initial Note to a QIB, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and an increase in the
Principal amount of the QIB Global Note in an amount equal to the
Principal amount of the Temporary Offshore Physical Note or of the
Permanent Offshore Physical Note to be transferred, and the Trustee
shall cancel the Physical Note so transferred.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of an Initial Note to a
Non-U.S. Person:
(i) Prior to December 16, 1998, the Registrar shall register
any proposed transfer of an Initial Note to a Non-U.S. Person upon
receipt of a certificate substantially in the form set forth in
Exhibit E from the proposed transferor and the Company shall execute,
and the Trustee shall authenticate and make available for delivery,
one or more Temporary Offshore Physical Notes.
30
(ii) On and after December 16, 1998, the Registrar shall
register any proposed transfer to any Non-U.S. Person (w) if the
Initial Note to be transferred is a Permanent Offshore Physical Note,
(x) if the Initial Note to be transferred is a Temporary Offshore
Physical Note, upon receipt of a certificate substantially in the form
set forth in Exhibit E from the proposed transferor, (y) if the
Initial Note to be transferred is a U.S. Physical Note or an interest
in a U.S. Global Note, upon receipt of a certificate substantially in
the form set forth in Exhibit E from the proposed transferor and (z)
in the case of either clause (w), (x) or (y), the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
Permanent Offshore Physical Notes of like tenor and amount.
(iii) If the proposed transferor is an Agent Member holding a
beneficial interest in a U.S. Global Note, upon receipt by the
Registrar of (x) the document, if any, required by paragraph (i), and
(y) instructions in accordance with the Depository's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and a decrease in the Principal amount of
such U.S. Global Note in an amount equal to the Principal amount of
the beneficial interest in the U.S. Global Note to be transferred and
the Company shall execute, and the Trustee shall authenticate and
deliver, one or more Permanent Offshore Physical Notes of like tenor
and amount.
(f) Private Placement Legend.
(i) Upon the transfer, exchange or replacement of Securities
not bearing the Private Placement Legend, the Registrar shall deliver
Securities that do not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of Securities bearing the Private Placement Legend, the
Registrar shall deliver only Securities that bear the Private Placement Legend
unless either (i) the circumstances contemplated by the paragraph of Section
2.01(c) (relating to Permanent Offshore Physical Notes) or paragraph (a)(i)(x),
(d)(i) or (e)(ii) of this Section 2.13 exist or (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(ii) After a transfer of any Initial Notes or Private
Exchange Notes during the period of the effectiveness of the Shelf Registration
Statement with respect to such Initial Notes or Private Exchange Notes, as the
case may be, all requirements pertaining to the Private Placement Legend on
such Initial Notes or such Private Exchange Notes shall cease to apply and the
requirements that any such Initial Notes or such Private Exchange Notes be
issued in global form shall continue to apply.
(iii) Upon the consummation of a Private Exchange Offer with
respect to the Initial Notes pursuant to which holders of such Initial Notes
are offered Private Exchange Notes in exchange for their Initial Notes, all
requirements pertaining to
31
such Initial Notes that Initial Notes be issued in global form shall continue
to apply, and Private Exchange Notes in global form with the Private Placement
Legend shall be available to holders that exchange such Initial Notes in such
Private Exchange Offer.
(g) General. By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Note only as
provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.12 or this Section
2.13. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
SECTION 2.14. Defaulted Interest. If the Company defaults in
a payment of interest on the Securities, the Company shall pay defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the Persons who
are Securityholders on a subsequent special record date. The Company shall fix
or cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities it shall notify the
Trustee in writing of the redemption date, the Principal amount of Securities
to be redeemed and the paragraph of the Securities pursuant to which the
redemption will occur.
In the case of a redemption pursuant to paragraph 5 of the
Securities, the Company shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Any notice delivered pursuant to paragraph 5 of
the Securities shall be accompanied by an Officers' Certificate to the effect
that such redemption will comply with the conditions herein. If fewer than all
the Securities are to be redeemed, the record date relating to such redemption
for determining the Holders to whom notice of redemption will be sent pursuant
to Section 3.03 shall be selected by the Company and given to the Trustee,
which record date shall be not less than 15 days after the date of notice to
the Trustee unless the Trustee consents to a shorter period.
32
SECTION 3.02. Selection of Securities To Be Redeemed. If
fewer than all the Securities are to be redeemed, the Trustee in its discretion
shall select the Securities to be redeemed either on a pro rata basis or by lot
or by a method that complies with applicable legal and securities exchange
requirements, if any, and that the Trustee considers fair and appropriate. The
Trustee shall make the selection from Outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
Principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
por tions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. In the case of a
redemption pursuant to paragraph 5 of the Securities, at least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the Outstanding Securities are to be
redeemed, the identification of the particular Securities to be
redeemed as well as the aggregate Principal amount of Securities to be
redeemed and if any Security is being redeemed in part, the portion of
the Principal amount of such Security to be redeemed and that after
the redemption date and upon surrender of such Security a new Security
or Securities will be issued having a Principal amount equal to the
Principal amount of the Security surrendered less the Principal amount
of the portion of the Security redeemed;
(6) that, unless the Company defaults in making such
redemption payment, interest on Securities (or portion thereof) called
for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed;
33
(8) the CUSIP number (if any) printed on the Securities being
redeemed; and
(9) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at the Company's expense. In such
event, the Company shall provide the Trustee with the information required by
this Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date.
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. On or prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to
the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of
a Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
having a Principal amount equal to the Principal amount of the Security
surrendered less the Principal amount of the portion of the Security so
redeemed.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the Principal of and interest on the Securities on the dates and
in the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee
or the Paying Agent holds in accordance with this Indenture money sufficient to
pay all Principal and interest then due.
34
The Company shall pay interest on overdue Principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be required to be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company shall file or cause to be filed with
the SEC and provide the Trustee and Securityholders with the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) with respect to the Company
which are specified in Sections 13 and 15(d) of the Exchange Act. The Company
also shall comply with the other provisions of TIA ss. 314(a).
SECTION 4.03. Limitation on Debt.
(a) The Company shall not, and shall not permit any
Subsidiary of the Company to, Issue, directly or indirectly, any Debt;
provided, however, that the Company and its Subsidiaries shall be permitted to
Issue Debt if, at the time of such Issuance, the Consolidated EBITDA Coverage
Ratio for the period of the most recently completed four consecutive fiscal
quarters ending at least 45 days prior to the date such Debt is Issued exceeds
the ratio of 2.0 to 1.0.
(b) Notwithstanding the foregoing, the Company and its
Subsidiaries may Issue the following Debt:
(1) Debt Issued pursuant to the Credit Agreement,
any Refinancing thereof, or any other credit agreement,
indenture or other agreement, in an aggregate principal
amount not to exceed $950 million outstanding at any one
time;
(2) Debt (other than Debt described in clause (1)
above) Issued for working capital and general corporate
purposes in an aggregate principal amount at the time of such
Issue which, when taken together with the aggregate principal
amount then outstanding of all other Debt Issued pursuant to
this clause (2), shall not exceed the sum of (x) 50% of the
book value of the inventory of the Company and its
consolidated Subsidiaries and (y) 80% of the book value of
the accounts receivable of the Company and its consolidated
Subsidiaries, in each case as determined in accordance with
GAAP;
(3) Debt (other than Debt described in clauses (1)
and (2) above) in respect of the undrawn portion of the face
amount of or unpaid reimbursement obligations in respect of
letters of credit for the account of the Company or any of
its Subsidiaries in an aggregate amount at any time
outstanding not to exceed the excess of (i) $150 million over
(ii) the undrawn portion of the face amount of or
35
unpaid reimbursement obligations in respect of letters of
credit Issued under the Credit Agreement or any Refinancing
thereof or any other credit agreement, indenture or other
agreement pursuant to clause (1) above;
(4) Debt of the Company Issued to and held by a
Wholly Owned Recourse Subsidiary of the Company and Debt of a
Subsidiary of the Company Issued to and held by the Company
or a Wholly Owned Recourse Subsidiary; provided, however,
that any subsequent Issuance or transfer of any Capital Stock
that results in any such Wholly Owned Recourse Subsidiary
ceasing to be a Wholly Owned Recourse Subsidiary or any
subsequent transfer of such Debt (other than to the Company
or a Wholly Owned Recourse Subsidiary) shall be deemed, in
each case, to constitute the Issuance of such Debt by the
Company or of such Debt by such Subsidiary;
(5) the Securities, the Existing 8-1/8% Senior
Securities, the Existing Senior Subordinated Securities and
Debt Issued to Refinance any Debt permitted by this clause
(5); provided, however, that, in the case of a Refinancing,
the principal amount of the Debt so Issued shall not exceed
the principal amount of the Debt so Refinanced plus any
Refinancing Costs thereof; provided further, however, that
any Debt Issued pursuant to this clause (5) to Refinance the
Existing Senior Subordinated Securities or any Refinancing
thereof shall be subordinated to the Securities to at least
the same extent as the Existing Senior Subordinated
Securities are subordinated to the Securities;
(6) Debt (other than Debt described in clause (1),
(2), (3), (4) or (5) above or (11) below) of the Company or
any of its Subsidiaries outstanding or committed on the Issue
Date and Debt Issued to Refinance any Debt permitted by this
clause (6) or by Section 4.03(a); provided, however, that, in
the case of a Refinancing, the principal amount of the Debt
so Issued shall not exceed the principal amount of the Debt
so Refinanced plus any Refinancing Costs thereof; provided
further, however, that no Debt may be Issued pursuant to this
clause (6) for the purpose of Refinancing the Existing 9-1/2%
Senior Securities;
(7) Debt Issued and arising out of purchase money
obligations for property acquired in an amount not to exceed,
for the period through June 30, 1999, $30 million, plus for
each period of twelve consecutive months ending on June 30
thereafter, $15 million; provided, however, that any such
amounts which are available to be
36
utilized during any such twelve month period and are not so
utilized may be utilized during any succeeding period;
(8) Debt of a Subsidiary of the Company Issued and
outstanding on or prior to the date on which such Subsidiary
was acquired by the Company (other than Debt Issued as
consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to
which such Subsidiary became a Subsidiary of the Company or
was acquired by the Company);
(9) Debt Issued to Refinance Debt referred to in the
foregoing clause (8) or this clause (9); provided, however,
that the principal amount of the Debt so Issued shall not
exceed the principal amount of the Debt so Refinanced plus
any Refinancing Costs thereof;
(10) Non-Recourse Debt of a Non-Recourse Subsidiary;
provided, however, that if any such Debt thereafter ceases to
be Non- Recourse Debt of a Non-Recourse Subsidiary, then such
event shall be deemed for the purpose of this Section 4.03 to
constitute the Issuance of such Debt by the issuer thereof;
(11) Permitted Affiliate Debt; and
(12) Debt (other than Debt described in clauses (1)
through (11) above and in Section 4.03(a)) in an aggregate
principal amount outstanding at any time not to exceed $150
million.
(c) To the extent the Company or any Subsidiary of the
Company Guarantees any Debt of the Company or a Subsidiary of the Company, such
Guarantee and such Debt will be deemed to be the same indebtedness and only the
amount of the Debt will be deemed to be outstanding. If the Company or a
Subsidiary of the Company Guarantees any Debt of a Person that, subsequent to
the Issuance of such Guarantee, becomes a Subsidiary, such Guarantee and the
Debt so Guaranteed shall be deemed to be the same indebtedness, which shall be
deemed to have been Issued when the Guarantee was Issued and shall be deemed to
be permitted to the extent the Guarantee was permitted when Issued.
SECTION 4.04. Limitation on Liens. The Company shall not, and
shall not permit any Subsidiary of the Company to, create or suffer to exist
any Lien upon any of its property or assets (including Capital Stock or Debt of
any Subsidiary of the Company) now owned or hereafter acquired by it, securing
any obligation unless contemporaneously therewith effective provision is made
to secure the Securities equally and ratably with such obligation with a Lien
on the same assets securing such obligation for so long as such obligation is
secured by such Lien. The
37
preceding sentence shall not require the Company or any Subsidiary of the
Company to equally and ratably secure the Securities if the Lien consists of
the following:
(1) Liens existing as of the Issue Date;
(2) any Lien arising by reason of (i) any judgment, decree or
order of any court or arbitrator, so long as such judgment, decree or
order is being contested in good faith and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or
the period within which such proceedings may be initiated shall not
have expired, (ii) taxes not delinquent or which are being contested
in good faith, for which adequate reserves (as determined by the
Company) have been established, (iii) security for payment of workers'
compensation or other insurance, (iv) security for the performance of
tenders, contracts (other than contracts for the payment of borrowed
money) or leases in the ordinary course of business, (v) deposits to
secure public or statutory obligations, or in lieu of surety or appeal
bonds entered into in the ordinary course of business, (vi) operation
of law in favor of carriers, warehousemen, landlords, mechanics,
materialmen, laborers, employees, suppliers or similar Persons,
incurred in the ordinary course of business for sums which are not
delinquent for a period of more than 30 days or are being contested in
good faith by negotiations or by appropriate proceedings which suspend
the collection thereof, (vii) security for surety, appeal,
reclamation, performance or other similar bonds and (viii) security
for Hedging Obligations;
(3) Liens to secure the payment of all or a part of the
purchase price of, or Capital Lease Obligations with respect to,
assets (including Capital Stock) or property or business acquired or
constructed after the Issue Date; provided, however, that (i) the Debt
secured by such Liens shall have otherwise been permitted to be Issued
under this Indenture and (ii) such Liens shall not encumber any other
assets or property of the Company or any of its Subsidiaries and shall
attach to such assets or property within 180 days of the completion of
construction or acquisition of such assets or property;
(4) Liens on the assets or property of a Subsidiary of the
Company existing at the time such Subsidiary became a Subsidiary of
the Company and not incurred as a result of (or in connection with or
in anticipation of) such Subsidiary becoming a Subsidiary of the
Company; provided, however, that such Liens do not extend to or cover
any other property or assets of the Company or any of its
Subsidiaries;
(5) Liens (i) on any assets of the Company or any Subsidiary
of the Company securing obligations in respect of any Debt permitted
by Sec tion 4.03(b)(1) or 4.03(b)(12), (ii) on any assets of the
Company or any Subsidiary of the Company securing obligations in
respect of any Debt permitted by Section 4.03(b)(5) which is Issued to
Refinance the Securities or
38
any Refinancing thereof, and (iii) on the inventory or receivables of
the Company or any Subsidiary of the Company securing obligations in
respect of any Debt permitted by Section 4.03(b)(2);
(6) leases and subleases of real property by the Company and
its Subsidiaries (in any such case, as lessor) which do not interfere
with the ordinary conduct of the business of the Company or any of its
Subsidiaries, and which are made on customary and usual terms
applicable to similar properties;
(7) Liens securing Debt which is Issued to Refinance Debt
which has been secured by a Lien permitted under this Indenture and is
permitted to be Refinanced under this Indenture; provided, however,
that such Liens do not extend to or cover any property or assets of
the Company or any of its Subsidiaries not securing the Debt so
Refinanced, other than as otherwise permitted by this Section 4.04;
(8) easements, reservations, licenses, rights-of-way, zoning
restrictions and covenants, conditions and restrictions and other
similar encumbrances or title defects which, in the aggregate, do not
materially detract from the use of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(9) Liens on assets of a Non-Recourse Subsidiary;
(10) Liens on assets located outside the United States and
Canada;
(11) Liens in favor of the United States of America for
amounts paid by the Company or any of its Subsidiaries as progress
payments under government contracts entered into by them;
(12) other Liens incidental to the conduct of the business of
the Company and its Subsidiaries or the ownership of any of their
assets not incurred in connection with Debt, including Liens arising
in connection with reimbursement obligations not constituting Debt in
favor of issuers of standby letters of credit for the account of the
Company or a Subsidiary, which Liens do not in any case materially
detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Company or any of its
Subsidiaries;
(13) Liens granted in the ordinary course of business of the
Company or any of its Subsidiaries in favor of issuers of documentary
or trade letters of credit for the account of the Company or such
Subsidiary or bankers' acceptances, which Liens secure the
reimbursement obligations of the Company or such Subsidiary on account
of such letters of credit or bankers' acceptances; provided that each
such Lien is limited to (i) the assets acquired
39
or shipped with the support of such letter of credit or bankers'
acceptances and (ii) any assets of the Company or such Subsidiary
which are in the care, custody or control of such issuer in the
ordinary course of business; and
(14) Liens securing Debt which, together with all other Debt
secured by Liens (excluding Debt secured by Liens permitted by clauses
(1) through (13) above) at the time of determination does not exceed
$25 million.
SECTION 4.05. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any Subsidiary of the Company, directly
or indirectly, to (i) declare or pay any dividend or make any distribution on
or in respect of its Capital Stock (including any payment in connection with
any merger or consolidation involving the Company) or to the holders of its
Capital Stock (except dividends or distributions payable solely in its
Non-Convertible Capital Stock or in options, warrants or other rights to
purchase its Non-Convertible Capital Stock and except dividends or
distributions payable to the Company or a Subsidiary of the Company and, if a
Subsidiary of the Company is not wholly owned, to its other equity holders to
the extent they are not Affiliates of the Company), (ii) purchase, redeem or
otherwise acquire or retire for value any Capital Stock of the Company, (iii)
purchase, repurchase, redeem, defease or otherwise acquire or retire for value,
prior to scheduled maturity, scheduled repayment or scheduled sinking fund
payment any Subordinated Obligations (other than the purchase, repurchase or
other acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case within one year of the date of acquisition) or (iv) make any
Investment in (A) an Affiliate of the Company other than a Subsidiary of the
Company and other than an Affiliate of the Company which will become a
Subsidiary of the Company as a result of any such Investment, or (B) a
Non-Recourse Subsidiary (any such dividend, distribution, purchase, redemption,
repurchase, defeasance, other acquisition, retirement or Investment being
herein referred to as a "Restricted Payment") if at the time the Company or
such Subsidiary makes such Restricted Payment (the amount of any such
Restricted Payment, if other than in cash, as determined in good faith by the
Board of Directors, the determination of which shall be evidenced by a
resolution of the Board of Directors):
(1) a Default shall have occurred and be continuing (or would
result therefrom); or
(2) the Company is not able to incur $1.00 of additional Debt
in accordance with the provisions of Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments after the Commencement Date would exceed the
sum of:
(a) 50% of the Consolidated Net Income of the
Company accrued during the period (treated as one accounting
period) from
40
January 1, 1998, to the end of the most recent fiscal quarter
ending at least 45 days prior to the date of such Restricted
Payment (or, in case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit);
(b) the aggregate Net Cash Proceeds received by the
Company from the Issue or sale of its Capital Stock (other
than Redeemable Stock or Exchangeable Stock) subsequent to
the Commencement Date (other than an Issuance or sale to a
Subsidiary of the Company or an employee stock ownership plan
or other trust established by the Company or any Subsidiary
for the benefit of their employees);
(c) the aggregate Net Cash Proceeds received by the
Company from the Issue or sale of its Capital Stock (other
than Redeemable Stock or Exchangeable Stock) to an employee
stock ownership plan subsequent to January 1, 1998; provided,
however, that if such employee stock ownership plan incurs
any Debt, such aggregate amount shall be limited to an amount
equal to any increase in the Consolidated Net Worth of the
Company resulting from principal repayments made by such
employee stock ownership plan with respect to Debt incurred
by it to finance the purchase of such Capital Stock;
(d) the amount by which Debt of the Company is
reduced on the Company's balance sheet upon the conversion or
exchange (other than by a Subsidiary) subsequent to the
Commencement Date of any Debt of the Company convertible or
exchangeable for Capital Stock (other than Redeemable Stock
or Exchangeable Stock) of the Company (less the amount of any
cash, or other property, distributed by the Company upon such
conversion or exchange);
(e) the aggregate net cash proceeds received by the
Company subsequent to the Commencement Date as capital
contributions (which shall not be deemed to include any net
cash proceeds received in connection with (i) the issuance of
any Permitted Affiliate Debt, (ii) the Initial Cash Payment
and (iii) any contribution designated at the time it is made
as a restricted contribution (a "Restricted Contribution");
(f) to the extent that an Investment made by the
Company or a Subsidiary subsequent to the Commencement Date
has theretofore been included in the calculation of the
amount of Restricted Payments, the aggregate cash repayments
to the Company or a Subsidiary of such Investment to the
extent not included in Consolidated Net Income of the
Company; and
(g) $26 million.
41
Notwithstanding the foregoing, the Company may take actions
to make a Restricted Payment in anticipation of the occurrence of any of the
events described in this Section 4.05(a) or Section 4.05(b); provided, however,
that the making of such Restricted Payment shall be conditional upon the
occurrence of such event.
(b) Section 4.05(a) shall not prohibit the following:
(i) any purchase, repurchase, redemption, defeasance
or other acquisition or retirement for value of Capital Stock
or Subordinated Obligations of the Company made by exchange
for, or out of the proceeds of the substantially concurrent
Issue or sale of, Capital Stock of the Company (other than
Redeemable Stock or Exchangeable Stock and other than Capital
Stock issued or sold to a Subsidiary or an employee stock
ownership plan) or of a cash capital contribution to the
Company; provided, however, that (A) such purchase,
repurchase, redemption, defeasance or other acquisition or
retirement for value shall be excluded in the calculation of
the amount of Restricted Payments and (B) the Net Cash
Proceeds from such sale shall be excluded from Section
4.05(a)(3)(b) and Section 4.05(a)(3)(c);
(ii) any purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value of
Subordinated Obligations of the Company made by exchange for,
or out of the proceeds of the substantially concurrent sale
of, Subordinated Obligations; provided, however, that such
purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(iii) any purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value of
Subordinated Obligations from Net Available Cash to the
extent permitted by Section 4.07; provided, however, that
such purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of
declaration thereof, or Restricted Payments made within 60
days after the making of a binding commitment in respect
thereof, if at such date of declaration or commitment such
dividend or other Restricted Payment would have complied with
Section 4.05(a); provided, however, that at the time of
payment of such dividend or the making of such other
Restricted Payment, no other Default shall have occurred and
be continuing (or result therefrom); provided further,
however, that such dividend or other Restricted Payment shall
be included in the calculation of the amount of Restricted
Payments;
42
(v) dividends in an aggregate amount per annum not
to exceed 6% of the aggregate Net Cash Proceeds received by
the Company in connection with all Public Equity Offerings
occurring after February 15, 1993; provided, however, that
such amount shall be included in the calculation of the
amount of Restricted Payments;
(vi) so long as no Default has occurred and is
continuing or would result from such transaction, (x) amounts
paid or property transferred pursuant to the Permitted
Transactions and (y) dividends, distributions, redemptions of
Capital Stock and other Restricted Payments in an aggregate
amount not to exceed the sum of the Initial Cash Payment and
all Restricted Contributions; provided, however, that in the
case of clause (y), such dividends, distributions,
redemptions of Capital Stock and other Restricted Payments
are not prohibited by the Credit Agreement or any Refinancing
thereof (whether pursuant to its terms or as a result of
waiver, amendment, termination or otherwise); provided
further, however, that such amounts paid, property
transferred, dividends, distributions, redemptions and
Restricted Payments shall be excluded in the calculation of
the amount of Restricted Payments;
(vii) so long as no Default has occurred and is
continuing or would result from such transaction, Restricted
Payments in an aggregate amount not to exceed the sum of (x)
$25 million and (y) $5 million per annum (net of any
applicable cash exercise price actually received by the
Company) made from time to time to finance the purchase by
the Company or Parent of its common stock (for not more than
fair market value) in connection with the delivery of such
common stock to grantees under any stock option plan of the
Company or Parent upon the exercise by such grantees of stock
options or stock appreciation rights settled with common
stock or upon the grant of shares of restricted common stock
pursuant thereto; provided, however, that (A) amounts
available pursuant to this clause (vii) to be utilized for
Restricted Payments during any such year may be carried
forward and utilized in any succeeding year and (B) no
Restricted Payments shall be permitted pursuant to this
clause unless, at the time of such purchase, the issuance by
the Company or Parent of new shares of common stock to such
optionee would cause more than 19.9% of the total voting
power or more than 19.9% of the total value of the stock of
the Company or Parent to be held by Persons other than
members of the Mafco Consolidated Group (the term "stock" for
purposes of this clause shall have the same meaning as such
term has for purposes of Section 1504 of the Code); provided
further, however, that such amounts shall be excluded in the
calculation of the amount of Restricted Payments;
43
(viii) any purchase, repurchase, redemption,
defeasance or other acquisition by any Non-Recourse
Subsidiary of Non-Recourse Debt of such Non-Recourse
Subsidiary; provided, however, that the amount of such
purchase, repurchase, redemption, defeasance or other
acquisition shall be excluded in the calculation of the
amount of Restricted Payments;
(ix) any purchase of Existing Senior Subordinated
Securities pursuant to the "Change of Control" provisions
thereof and any purchase of any other Subordinated
Obligations pursuant to an option given to a holder of such
Subordinated Obligation pursuant to a "Change of Control"
covenant which is no more favorable to the holders of such
Subordinated Obligations than the provisions of this
Indenture relating to a Change of Control are to Holders as
determined in good faith by the Board of Directors of the
Company, the determination of which shall be evidenced by a
resolution adopted by such Board of Directors; provided,
however, that no such purchase shall be permitted prior to
the time when the Company shall have purchased all Securities
tendered for purchase by Holders electing to have their
Securities purchased pursuant to Section 4.09; provided
further, however, that such purchases shall be excluded from
the calculation of Restricted Payments;
(x) so long as no Default shall have occurred
and be continuing, amounts paid to Parent, to the extent
necessary to enable Parent to pay actual expenses, other than
those paid to Affiliates of the Company, incidental to being
a publicly reporting, but non-operating, company; provided,
however, that such amounts paid shall be excluded in the
calculation of the amount of Restricted Payments; or
(xi) any loan to a Permitted Affiliate entered
into in the ordinary course of business; provided, however,
that such Permitted Affiliate holds, directly or indirectly,
no more than 10% of the outstanding Capital Stock of the
Company.
SECTION 4.06. Limitation on Restrictions on Distributions
from Subsidiaries. The Company shall not, and shall not permit any Subsidiary
of the Company to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Subsidiary of the Company to (i) pay dividends or make any other distributions
on its Capital Stock or pay any Debt owed to the Company, (ii) make any loans
or advances to the Company or (iii) transfer any of its property or assets to
the Company, except:
(1) any encumbrance or restriction pursuant to an agreement
in effect at or entered into on the Issue Date;
44
(2) any encumbrance or restriction with respect to a
Subsidiary of the Company pursuant to an agreement relating to any
Debt Issued by such Subsidiary on or prior to the date on which such
Subsidiary was acquired by the Company (other than Debt Issued as
consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Subsidiary became a
Subsidiary of the Company or was acquired by the Company) and
outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement
effecting an Issuance of Bank Debt or a Refinancing of any other Debt
Issued pursuant to an agreement referred to in clause (1) or (2) above
or this clause (3) or contained in any amendment to an agreement
referred to in clause (1) or (2) above or this clause (3); provided,
however, that any such encumbrance or restriction with respect to any
Subsidiary is no less favorable to the Securityholders than the least
favorable of the encumbrances and restrictions with respect to such
Subsidiary contained in the agreements referred to in clause (1) or
(2) above, as determined in good faith by the Board of Directors of
the Company, the determination of which shall be evidenced by a
resolution of such Board of Directors;
(4) any such encumbrance or restriction consisting of
customary nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the
lease;
(5) in the case of clause (iii) above, restrictions contained
in security agreements securing Debt of a Subsidiary (other than
security agreements securing Debt of a Subsidiary Issued in connection
with any agreement referred to in clause (1), (2) or (3) above) and
restrictions contained in agreements relating to a disposition of
property of a Subsidiary, to the extent such restrictions restrict the
transfer of the property subject to such agreements;
(6) any encumbrance or restriction binding on a Foreign
Subsidiary contained in an agreement pursuant to which such Foreign
Subsidiary has Issued Debt consisting of working capital borrowings;
and
(7) any encumbrance or restriction relating to a Non-Recourse
Subsidiary.
SECTION 4.07. Limitation on Sales of Assets and Subsidiary
Stock.
(a) The Company shall not, and shall not permit any
Subsidiary of the Company (other than a Non-Recourse Subsidiary) to, make any
Asset Disposition unless
45
(i) the Company or such Subsidiary receives
consideration at the time of such Asset Disposition at least
equal to the fair market value, as determined in good faith
by the Board of Directors of the Company, the determination
of which shall be conclusive and evidenced by a resolution of
the Board of Directors of the Company (including as to the
value of all noncash consideration), of the Capital Stock and
assets subject to such Asset Disposition;
(ii) at least 75% of the consideration consists of
cash, cash equivalents, readily marketable securities which
the Company intends, in good faith, to liquidate promptly
after such Asset Disposition or the assumption of liabilities
(including, in the case of the sale of the Capital Stock of a
Subsidiary of the Company, liabilities of the Company or such
Subsidiary); and
(iii) an amount equal to 100% of the Net Available
Cash from such Asset Disposition is applied by the Company
(or such Subsidiary, as the case may be):
(A) first, to the extent the Company is
required by the terms of any Pari Passu Debt or Debt
of a Subsidiary of the Company to prepay, repay or
purchase Pari Passu Debt or Debt of a Wholly Owned
Recourse Subsidiary or additionally, in the case of
an Asset Disposition by a Subsidiary that is not a
Wholly Owned Recourse Subsidiary, Debt of such
Subsidiary (in each case other than Debt owed to the
Company or an Affiliate of the Company) in
accordance with the terms of such Debt;
(B) second, to the extent of the balance of
such Net Available Cash after application in
accordance with clause (A), at the Company's
election, to either (1) the optional prepayment,
repayment or repurchase of Pari Passu Debt or Debt
of a Wholly Owned Recourse Subsidiary or,
additionally in the case of an Asset Disposition by
a Subsidiary that is not a Wholly Owned Recourse
Subsidiary, Debt of such Subsidiary (in each case
other than Debt owed to the Company or an Affiliate
of the Company) which the Company is not required by
the terms thereof to prepay, repay or repurchase
(whether or not the related loan commitment is
permanently reduced in connection therewith), or (2)
the investment by the Company or any Wholly Owned
Recourse Subsidiary (or, additionally in the case of
an Asset Disposition by a Subsidiary that is not a
Wholly Owned Recourse Subsidiary, the investment by
such Subsidiary) in assets to replace the assets
that were the subject of such Asset Disposition or
in assets that (as determined by the Board of
46
Directors of the Company, the determination of which
shall be conclusive and evidenced by a resolution of
such Board of Directors) will be used in the
businesses of the Company and its Wholly Owned
Recourse Subsidiaries (or, additionally in the case
of an Asset Disposition by a Subsidiary that is not
a Wholly Owned Recourse Subsidiary, the businesses
of such Subsidiary) existing on the Issue Date or in
businesses reasonably related thereto, in all cases,
within the later of one year from the date of such
Asset Disposition or the receipt of such Net
Available Cash; and
(C) third, to the extent of the balance of
such Net Available Cash after application in
accordance with clauses (A) and (B), to make an
offer to purchase Securities and other Pari Passu
Debt designated by the Company pursuant to and
subject to the conditions of Section 4.07(b);
provided, however, that in connection with an offer pursuant to clause (C)
above, if the principal amount and premium of such Securities and such Pari
Passu Debt, together with accrued and unpaid interest tendered for acceptance
pursuant to such offer exceeds the balance of Net Available Cash, then the
Company will accept for purchase the Securities and such Pari Passu Debt of
each such tendering holder on a pro rata basis in accordance with the principal
amount so tendered.
Notwithstanding the foregoing provisions of this Section
4.07(a), the Company and the Subsidiaries shall not be required to apply any
Net Available Cash in accordance with this Section 4.07(a) except to the extent
that the aggregate Net Available Cash from all Asset Dispositions which are not
applied in accordance with this Section 4.07(a) exceed $10 million. Pending
application of Net Available Cash pursuant to this Section 4.07(a), such Net
Available Cash shall be (i) invested in Temporary Cash Investments or (ii) used
to make an optional prepayment under any revolving credit facility constituting
Pari Passu Debt or Debt of a Wholly Owned Recourse Subsidiary (or, additionally
in the case of a Subsidiary that is not a Wholly Owned Recourse Subsidiary,
Debt of such Subsidiary), whether or not the related loan commitment is
permanently reduced in connection therewith.
(b) In the event of an Asset Disposition that requires the
purchase of Securities pursuant to Section 4.07(a)(iii)(C), the Company will be
required to pur chase Securities and other Pari Passu Debt designated by the
Company tendered pursuant to an offer by the Company for the Securities and
such Pari Passu Debt (the "Offer") at a purchase price of 100% of their
principal amount, without premium, plus accrued interest to the Purchase Date
(or in respect of other Pari Passu Debt such lesser price, if any, as may be
provided for by the terms of such Pari Passu Debt) in accordance with the
procedures (including prorationing in the event of over subscription) set forth
in Section 4.07(c), provided that the procedures for making an offer to holders
of other Pari Passu Debt will be as provided for by the terms of such
47
Pari Passu Debt. If (x) the aggregate purchase price of Securities and other
Pari Passu Debt tendered pursuant to the Offer is less than the Net Available
Cash allotted to the purchase of the Securities and Pari Passu Debt, (y) the
Company shall not be obligated to make an offer pursuant to the last sentence
of this paragraph, or (z) the Company shall be unable to purchase Securities
from Holders thereof in an Offer because of the provisions of applicable law or
of the Company's or its Subsidiaries' loan agreements, indentures or other
contracts governing Debt or Debt of Subsidiaries (in which case the Company
need not make an Offer) the Company shall apply the remaining Net Available
Cash to (i) invest in assets to replace the assets that were the subject of the
Asset Disposition or in assets that (as determined by the Board of Directors of
the Company, the determination of which shall be conclusive and evidenced by a
resolution of such Board of Directors) will be used in the businesses of the
Company and its Wholly Owned Recourse Subsidiaries (or, additionally in the
case of an Asset Disposition by a Subsidiary that is not a Wholly Owned
Recourse Subsidiary, the business of such Subsidiary) existing on the Issue
Date or in businesses reasonably related thereto or (ii) in the case of clause
(x) or (y) above, prepay, repay or repurchase Debt of the Company or Debt of a
Wholly Owned Recourse Subsidiary or, additionally in the case of an Asset
Disposition by a Subsidiary that is not a Wholly Owned Recourse Subsidiary,
Debt of such Subsidiary which the Company or such Wholly Owned Recourse
Subsidiary or Subsidiary is not required by the terms thereof to prepay, repay,
repurchase or redeem (in each case other than Debt owed to the Company or an
Affiliate of the Company), whether or not the related loan commitment is
permanently reduced in connection therewith. the Company shall not be required
to make an Offer for Securities and other Pari Passu Debt pursuant to this
Section if the Net Available Cash available therefor (after application of the
proceeds as provided in clause (A) and clause (B) of Sec tion 4.07(a)(iii)) are
less than $10 million for any particular Asset Disposition (which lesser
amounts shall not be carried forward for purposes of determining whether an
Offer is required with respect to the Net Available Cash from any subsequent
Asset Disposition).
(c) (1) Promptly, and in any event within five days after the
last date by which the Company must have applied Net Available Cash
pursuant to Section 4.07(a)(iii)(B), the Company shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a
written notice stating that the Holder may elect to have his
Securities purchased by the Company either in whole or in part
(subject to prorationing as hereinafter described in the event the
Offer is oversubscribed) in integral multiples of $1,000 of Principal
amount, at the applicable purchase price. The notice shall specify a
purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain
information concerning the business of the Company which the Company
in good faith believes will enable such Holders to make an informed
decision (which at a minimum will include (i) the most recently filed
Annual Report on Form 10-K (including audited consolidated financial
statements) of the Company, the most recent subsequently filed
Quarterly Report on Form 10-Q and any Current Report on
48
Form 8-K of the Company filed subsequent to such Quarterly Report,
other than Current Reports describing Asset Dispositions otherwise
described in the offering materials (or corresponding successor
reports), and (ii) if material, appropriate pro forma financial
information) and all instructions and materials necessary to tender
Securities pursuant to the Offer, together with the information
contained in clause (2) below.
(2) Not later than the date upon which written
notice of an Offer is delivered to the Trustee as provided above, the
Company shall deliver to the Trustee an Officers' Certificate as to
(i) the amount of the Offer (the "Offer Amount"), (ii) the allocation
of the Net Available Cash from the Asset Dispositions pursuant to
which such Offer is being made and (iii) the compliance of such
allocation with the provisions of Section 4.07(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a
paying agent (or, if the Company is acting as its own paying agent,
segregate and hold in trust) in immediately available funds an amount
equal to the Offer Amount to be held for payment in accordance with
the provisions of this Section. The amount so deposited, at the option
of, and pursuant to the specific written direction of, the Company,
may be invested in Temporary Cash Investments the maturity date of
which is not later than the Purchase Date. The Company shall be
entitled to any interest or dividends accrued, earned or paid on such
Temporary Cash Investments. Upon the expiration of the period for
which the Offer remains open (the "Offer Period"), the Company shall
deliver to the Trustee for cancellation the Securities or portions
thereof which have been properly tendered to and are to be accepted by
the Company. The Trustee shall, on the Purchase Date, mail or deliver
payment to each tendering Holder in the amount of the purchase price.
In the event that the aggregate purchase price of the Securities and
other Pari Passu Debt delivered by the Company to the Trustee is less
than the Offer Amount, the Trustee shall deliver the excess to the
Company promptly after the expiration of the Offer Period.
(3) Holders electing to have a Security purchased
will be required to surrender the Security, with an appropriate form
duly completed, to the Company at the address specified in the notice
at least ten Business Days prior to the Purchase Date. Holders will be
entitled to withdraw their election if the Trustee or the Company
receives not later than three Business Days prior to the Purchase
Date, a facsimile transmission or letter setting forth the name of the
Holder, the Principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing
his election to have such Security purchased. If at the expiration of
the Offer Period the aggregate Principal amount of Securities
surrendered by Holders exceeds the Offer Amount, the Company shall
select the Securities to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only
Securities in denominations of $1,000, or integral multiples thereof,
shall be purchased). Holders whose
49
Securities are purchased only in part will be Issued new Securities
equal in Principal amount to the unpurchased portion of the Securities
surrendered.
(4) At the time the Company delivers Securities to
the Trustee which are to be accepted for purchase, the Company will
also deliver an Officers' Certificate stating that such Securities are
to be accepted by the Company pursuant to and in accordance with the
terms of this Section. A Security shall be deemed to have been
accepted for purchase at the time the Trustee, directly or through an
agent, mails or delivers payment therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.08. Limitation on Transactions with Affiliates. (a)
The Company shall not, and shall not permit any of its Subsidiaries (other than
a Non- Recourse Subsidiary) to, conduct any business or enter into any
transaction or series of similar transactions (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company or any legal or beneficial owner of 10% or more of the
voting power of the Voting Stock of the Company or with an Affiliate of any
such owner unless:
(i) the terms of such business, transaction or series of
transactions are (A) set forth in writing and (B) at least as
favorable to the Company or such Subsidiary as terms that would be
obtainable at the time for a comparable transaction or series of
similar transactions in arm's-length dealings with an unrelated third
Person and
(ii) to the extent that such business, transaction or series
of transactions (other than Debt Issued by the Company which is
permitted by Section 4.03) is known by the Board of Directors of the
Company to involve an Affiliate of the Company or a legal or
beneficial owner of 10% or more of the voting power of the Voting
Stock of the Company or an Affiliate of such owner, then
(A) with respect to a transaction or series of
related transactions, other than any purchase or sale of
inventory in the ordinary course of business (an "Inventory
Transaction"), involving aggregate payments or other
consideration in excess of $5.0 million, such transaction or
series of related transactions has been approved (and the
value of any noncash consideration has been determined) by a
majority of those members of the Board of Directors of the
Company
50
having no personal stake in such business, transaction or
series of transactions and
(B) with respect to a transaction or series of
related transactions, other than any Inventory Transaction,
involving aggregate payments or other consideration in excess
of $20.0 million (with the value of any noncash consideration
being determined by a majority of those members of the Board
of Directors of the Company having no personal stake in such
business, transaction or series of transactions), such
transaction or series of related transactions has been
determined, in the written opinion of a nationally
recognized, investment banking firm to be fair, from a
financial point of view, to the Company or such Subsidiary,
as the case may be.
(b) The provisions of Section 4.08(a) shall not prohibit:
(i) any Restricted Payment permitted to be paid
pursuant to Section 4.05;
(ii) any transaction between the Company and any of
its Subsidiaries; provided, however, that no portion of any minority
interest in any such Subsidiary is owned by (x) any Affiliate (other
than the Company, a Wholly Owned Recourse Subsidiary of the Company, a
Permitted Affiliate or an Unrestricted Affiliate) of the Company or
(y) any legal or beneficial owner of 10% or more of the voting power
of the Voting Stock of the Company or any Affiliate of such owner
(other than the Company, any Wholly Owned Recourse Subsidiary of the
Company or an Unrestricted Affiliate);
(iii) any transaction between Subsidiaries of the
Company; provided, however, that no portion of any minority interest
in any such Subsidiary is owned by (x) any Affiliate (other than the
Company, a Wholly Owned Recourse Subsidiary of the Company, a
Permitted Affiliate or an Unrestricted Affiliate) of the Company or
(y) any legal or beneficial owner of 10% or more of the voting power
of the Voting Stock of the Company or any Affiliate of such owner
(other than the Company, any Wholly Owned Recourse Subsidiary of the
Company or an Unrestricted Affiliate);
(iv) any transaction between the Company or a
Subsidiary of the Company and its own employee stock ownership plan;
(v) any transaction with an officer or director of
the Company, of Parent or of any Subsidiary of the Company entered
into in the ordinary course of business (including compensation or
employee benefit arrangements with any such officer or director);
provided, however, that such officer holds, directly or indirectly, no
more than 10% of the outstanding Capital Stock of the Company;
51
(vi) any business or transaction with an
Unrestricted Affiliate;
(vii) any transaction which is a Permitted
Transaction; and
(viii) any transaction pursuant to which Mafco
Holdings will provide to the Company and its Subsidiaries at their
request and at the cost to Mafco Holdings with certain allocated
services to be purchased from third party providers, such as legal and
accounting services, insurance coverage and other services.
SECTION 4.09. Change of Control.
(a) Upon a Change of Control, each Holder shall have the
right to require that the Company repurchase all or any part of such Holder's
Securities at a repurchase price in cash equal to their Put Amount as of the
date of repurchase plus accrued and unpaid interest to the date of repurchase,
in accordance with the terms contemplated in Section 4.09(b). Prior to the
mailing of the notice to Holders provided for in Section 4.09(b) but in any
event within 30 days following any Change of Control, the Company covenants to
(i) repay in full all Bank Debt or to offer to repay in full all Bank Debt and
to repay the Bank Debt of each lender who has accepted such offer or (ii)
obtain the requisite consent under the Bank Debt to permit the repurchase of
the Securities as provided for in Section 4.09(b). The Company shall first
comply with the covenant in the preceding sentence before it shall be required
to purchase Securities pursuant to this Section 4.09.
(b) Within 45 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that
such Holder has the right to require the Company to repurchase all or
any part of such Holder's Securities at a repurchase price in cash
equal to their Put Amount as of the date of repurchase plus accrued
and unpaid interest to the date of repurchase;
(2) the circumstances and relevant facts regarding
such Change of Control;
(3) the repurchase date (which shall be no earlier
than 30 days nor later than 60 days from the date such notice is
mailed); and
(4) the instructions determined by the Company,
consistent with this Section, that a Holder must follow in order to
have its Securities purchased.
(c) Holders electing to have a Security repurchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at
52
the address specified in the notice at least 10 Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than three Business Days prior to the
purchase date, a facsimile transmission or letter setting forth the name of the
Holder, the Principal amount of the Security which was delivered for purchase
by the Holder and a statement that such Holder is withdrawing his election to
have such Security repurchased.
(d) On the repurchase date, all Securities repurchased by the
Company under this Section shall be delivered to the Trustee for cancellation,
and the Company shall pay the repurchase price plus accrued and unpaid interest
to the Holders entitled thereto. Upon surrender of a Security that is
repurchased under this Section in part, the Company shall execute and the
Trustee shall authenticate for the Holder thereof (at the Company's expense) a
new Security having a Principal amount equal to the Principal amount of the
Security surrendered less the portion of the Principal amount of the Security
repurchased.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.10. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default by the Company and whether or not the signers
know of any Default that occurred during such period. If they do, the
certificate shall describe the Default, its status and what action the Company
is taking or proposes to take with respect thereto. The Company also shall
comply with TIA ss. 314(a)(4). The Trustee shall have no responsibility or
obligation to monitor the Company's compliance with its obligations set forth
in Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08 and 4.09.
SECTION 4.11. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
53
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets.
(a) The Company shall not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (if not the
Company) shall be a Person organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia and such Person shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Debt which becomes an obligation of the resulting,
surviving or transferee Person or any of its Subsidiaries as a result
of such transaction as having been Issued by such Person or such
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the resulting, surviving or transferee Person would be able to incur
at least $1.00 of Debt pursuant to Section 4.03(a);
(iv) immediately after giving effect to such transaction, the
resulting, surviving or transferee Person shall have a Consolidated
Net Worth in an amount which is not less than the Consolidated Net
Worth of the Company immediately prior to such transaction; and
(v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture
(if any) comply with this Indenture;
provided that this Section 5.01 shall not prohibit a Wholly Owned Recourse
Subsidiary from consolidating with or merging with or into, or conveying,
transferring or leasing all or substantially all its assets to, the Company.
(b) The resulting, surviving or transferee Person shall be the
successor Company and shall succeed to, and be substituted for, and may
exercise every right and power of, the predecessor Company under this
Indenture, and thereafter, except in the case of a lease, the predecessor
Company shall be discharged from all obligations and covenants under the
Indenture and the Securities.
54
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable and such default
continues for a period of 30 days;
(2) the Company (i) defaults in the payment of the Principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon redemption, upon declaration or otherwise or (ii) fails
to redeem or purchase Securities when required pursuant to this
Indenture or the Securities;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08 or 4.09 (other than a failure to purchase
Securities) and such failure continues for 30 days after the notice
specified below;
(5) the Company fails to comply with any of the other
agreements applicable to it in the Securities or this Indenture (other
than those referred to in (1), (2), (3) or (4) above) and such failure
continues for 60 days after the notice specified below;
(6) Debt of the Company or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default, the total
principal amount of the portion of such Debt that is unpaid or
accelerated exceeds $25 million or its foreign currency equivalent and
such default continues for 10 days after the notice specified below;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
55
(D) makes a general assignment for the benefit of
its creditors; or takes any comparable action under any
foreign laws relating to insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days; or
(9) any judgment or decree for the payment of money in excess
of $25 million or its foreign currency equivalent is entered against
the Company or any Significant Subsidiary and is not discharged and
either (A) an enforcement proceeding has been commenced by any
creditor upon such judgment or decree or (B) there is a period of 60
days following the entry of such judgment or decree during which such
judgment or decree is not discharged, waived or the execution thereof
stayed and, in the case of (B), such default continues for 10 days
after the notice specified below.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4), (5), (6) or (9)(B) is not an
Event of Default until the Trustee or the Holders of at least 25% in Principal
amount of the Securities notify the Company of the Default and the Company does
not cure such Default within the time specified after receipt of such Notice.
Such Notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
56
The Company shall deliver to the Trustee, within 30 days
after the occurrence thereof, written notice in the form of an Officers'
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (4), (5), (6) or (9), its status
and what action the Company is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other
than an Event of Default specified in Section 6.01(7) or (8) with respect to
the Company) occurs and is continuing, the Trustee by notice to the Company, or
the Holders of at least 25% in Principal amount of the Securities by notice to
the Company and the Trustee, may declare the Principal of and accrued interest
on all the Securities to be due and payable immediately. If an Event of Default
specified in Section 6.01(7) or (8) with respect to the Company occurs, the
Principal of and interest on all the Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholders. The Holders of a majority in Principal
amount of the Securities by notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of Principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of Principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in Principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the Principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in Principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee under this Indenture.
However, the
57
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.01, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all
losses, liabilities and expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in Principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense which
might be incurred in compliance with such request or direction;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in Principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of Principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default in payment of interest or Principal specified in Section 6.01(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
Principal and interest remaining unpaid (together with interest on such unpaid
interest to the extent lawful) and the amounts provided for in Section 7.07.
58
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. Priorities. If the Trustee collects any money
or property pursuant to this Article VI, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for Principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for Principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including rea sonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in Principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may
59
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in its exercise as a prudent man
would exercise or use under the circumstances in the conduct of such man's own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such opinions or
certificates which by any provision hereof are specifically required
to be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own wilful misconduct, except that:
(1) this paragraph does not limit the effect of
paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
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(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating in any way to
the Trustee or its conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of each paragraph
of this Section and Section 7.02 (unless expressly not applicable) to the
provisions of the TIA.
SECTION 7.02. Rights of Trustee.
(a) The Trustee may rely on and shall be protected in acting
or refraining from acting on any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel of its selection,
and the advice or opinion of counsel with respect to legal matters relating to
this Indenture
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and the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
SECTION 7.03. Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the Securities or of the proceeds from the Securities, and it shall not
be responsible for any statement of the Company in the Indenture or in any
document Issued in connection with the sale of the Securities or in the
Securities other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of Principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security), the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. The Trustee
shall transmit to Holders such reports concerning the Trustee and its actions
under this Indenture as may be required pursuant to the TIA at the times and in
the manner provided pursuant thereto. To the extent that any such report shall
cover the 12-month period ending each December 31 it shall be transmitted by
the next succeeding each July 15. The Trustee also shall comply with TIA ss.
313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
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SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time such compensation as shall be agreed to in
writing from time to time by the Company and the Trustee for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability, damage, claim or expense (including attorneys' fees and expenses)
incurred by it in connection with the acceptance or administration of this
trust and the performance of its duties hereunder. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay Principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(7) or (8) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in Principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
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If the Trustee resigns, is removed by the Company, is removed
by Holders of a majority in Principal amount of the Securities and they do not
promptly appoint a successor Trustee, or if a vacancy exists in the office of
Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not accept appointment or take
office within 60 days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of a majority in Principal amount
of the Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
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SECTION 7.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA ss. 310(a). The Trustee
shall have a combined capital and surplus of at least $50 million as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA ss. 310(b); provided, however, that there shall be excluded
from the operation of TIA ss. 310(b)(1) any indenture or indentures under which
other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance.
(a) When (i) the Company delivers to the Trustee all
Outstanding Securities (other than Securities replaced pursuant to Section
2.07) for cancellation or (ii) all Outstanding Securities have become due and
payable and the Company irrevocably deposits with the Trustee funds sufficient
to pay at maturity all Outstanding Securities, including interest thereon, if
any (other than Securities replaced pursuant to Section 2.07), and if in either
case the Company pays all other sums payable hereunder by the Company, then
this Indenture shall, subject to Sections 8.01(c) and 8.06, cease to be of
further effect. The Trustee shall acknow ledge satisfaction and discharge of
this Indenture on demand of the Company accompanied by an Officers' Certificate
and an Opinion of Counsel as to the satisfaction of all conditions to such
satisfaction and discharge of this Indenture and at the cost and expense of the
Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company
at any time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 5.01(ii), (iii) and (iv) and
the operation of Section 6.01(4), 6.01(6), 6.01(7) (with respect to Significant
Subsidiaries only), 6.01(8) (with respect to Significant Subsidiaries only) and
6.01(9) ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwith standing its prior exercise of its covenant
defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be
65
accelerated because of an Event of Default specified in 6.01(4), 6.01(6),
6.01(7) (with respect to Significant Subsidiaries only), 6.01(8) (with respect
to Significant Subsidiaries only) and 6.01(9) or because of the failure of the
Company to comply with Section 5.01(ii), (iii) and (iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obliga tions that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05
and 8.06 shall survive until the Securities have been paid in full. Thereafter,
the Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment of
Principal and interest on the Securities to maturity or redemption, as
the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of Principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay Principal and
interest when due on all the Securities to maturity or redemption, as
the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is quali fied as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect
66
that, and based thereon such Opinion of Counsel shall confirm that,
the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance
had not occurred;
(7) in the case of the covenant defeasance option, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Securityholders will not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Securities
as contemplated by this Article VIII have been complied with.
Notwithstanding the foregoing provisions of this Section, the
conditions set forth in the foregoing paragraphs (2), (3), (4), (5), (6) and
(7) need not be satisfied so long as, at the time the Company makes the deposit
described in paragraph (1), (i) no Default under Section 6.01(1), 6.01(2),
6.01(7) or 6.01(8) has occurred and is continuing on the date of such deposit
and after giving effect thereto and (ii) either (x) a notice of redemption has
been mailed pursuant to Section 3.03 providing for redemption of all the
Securities not more than 60 days after such mailing and the provisions of
Section 3.01 with respect to such redemption shall have been complied with or
(y) the Stated Maturity of the Securities will occur within 60 days. If the
conditions in the preceding sentence are satisfied, the Company shall be deemed
to have exercised its covenant defeasance option.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article VIII. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with
this Indenture to the payment of Principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any excess
money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the
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payment of Principal or interest that remains unclaimed for two years, and,
thereafter, Securityholders entitled to the money must look to the Company for
payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the Principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article VIII by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or Principal of any Securities
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to
or in place of certificated Securities; provided, however, that the
uncertificated Securities are Issued in registered form for purposes
of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the
Code;
(4) to add Guarantees with respect to the Securities or to
secure the Securities;
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(5) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(6) to provide for issuance of the Exchange Notes and Private
Exchange Notes, which will have terms substantially identical in all
material respects to the Initial Notes (except that the interest rate
and transfer restrictions contained in the Initial Notes will be
modified or eliminated as appropriate), and which will be treated,
together with any Outstanding Initial Notes, as a single issue of
securities;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA or to otherwise comply
with the TIA;
(8) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in Principal amount of the Outstanding Securities. However, without
the consent of each Securityholder affected, an amendment may not:
(1) reduce the Principal amount of Securities whose Holders
must consent to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the Principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article III;
(5) make any Security payable in money other than that stated
in the
Security; or
(6) make any change in Section 6.04 or 6.07 or the second
sentence of this Section.
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It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers.
Any amendment to this Indenture or the Securities shall become effective in
accordance with its terms when executed and delivered by the Company and the
Trustee provided that the Company has received the requisite consents prior
thereto. The Company shall not be obligated to execute any such amendment
regardless of whether such consents have been received. Any waiver shall become
effective when the requisite consents have been received or such later time as
the Company may elect by notice to the Trustee. A consent to an amendment or a
waiver by a Holder of a Security shall bind the Holder and every subsequent
Holder of that Security or portion of the Security that evidences the same debt
as the consenting Holder's Security, even if notation of the consent or waiver
is not made on the Security. However, any such Holder or subsequent Holder may
revoke the consent or waiver as to such Holder's Security or portion of the
Security if the Trustee receives the notice of revocation prior to the time
that the Company receives the requisite number of consents to such proposed
amendment or waiver. After an amendment or waiver becomes effective, it shall
bind every Securityholder. A consent to any amendment or waiver hereunder by
any Holder given in connection with a tender of such Holder's Securities shall
not be rendered invalid by such tender.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date. No such consent shall be
valid or effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder.
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Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Security shall Issue and the Trustee shall authenticate a new
Security that reflects the changed terms. Failure to make the appropriate
notation or to Issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company, any
Affiliate of the Company nor any Subsidiary shall, directly or indirectly, pay
or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities
unless such consideration is offered to be paid or agreed to be paid to all
Holders which so consent, waive or agree to amend in the time frame set forth
in solicitation documents relating to such consent, waiver or amendment.
ARTICLE X
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which
is required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 10.02. Notices. Any notice or communication shall be
in writing and delivered in Person or mailed by first-class mail addressed as
follows:
if to the Company:
625 Madison Avenue
New York, New York 10022
Attention: Chief Financial Officer
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if to the Trustee:
180 East 5th Street
St. Paul, Minnesota 55101
Attention: Richard Prokosch
Facsimile: (612) 244-0711
The Company or the Trustee by notice to the other party
hereto may designate additional or different addresses for subsequent notices
or communications.
Any notice or communication mailed to a Securityholder shall
be sent by first-class mail to the Securityholder at the Securityholder's
address as it appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed to a Securityholder in
the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 10.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with;
provided, however, that, in any case of such application or request as to which
the furnishing of such documents, certificates or opinions is specifically
required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be furnished.
72
SECTION 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with.
SECTION 10.06. When Securities Disregarded. In determining
whether the Holders of the required Principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be Outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities Outstanding at the
time shall be considered in any such determination.
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 10.08. Legal Holidays. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.
SECTION 10.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 10.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company or the Trustee shall
not have any
73
liability for any obligations of the Company or the Trustee under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the Issue of the Securities.
SECTION 10.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 10.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
REVLON CONSUMER PRODUCTS
CORPORATION
by /s/ Steven Berns
-------------------------------------
Name: Steven Berns
Title: Vice President and Treasurer
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee,
by /s/ Richard Prokosch
---------------------------------------
Name: Richard Prokosch
Title: Assistant Vice President
EXHIBIT A
to
INDENTURE
[FORM OF FACE OF INITIAL NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (A) TO OFFER, SELL,
PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO THE COMPANY, (2)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A
2
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH A(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN IAI,
IN EACH CASE, IN A TRANSACTION INVOLVING A MINIMUM PURCHASE PRICE OF $250,000
FOR SUCH NOTES, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR
SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
(6) PURSUANT TO A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT OR (7) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (AND BASED ON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO
THE APPLICABLE JURISDICTION AND (B) THAT IT WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
[Regulation S Global Security/Additional Legend]
PRIOR TO THE COMMENCEMENT OF THE REGISTERED EXCHANGE OFFER OR THE EFFECTIVENESS
OF THE SHELF REGISTRATION STATEMENT, TRANSFERS OF INTERESTS IN THE REGULATION S
GLOBAL SECURITY TO U.S. PERSONS SHALL BE LIMITED TO TRANSFERS TO QUALIFIED
INSTITUTIONAL BUYERS PURSUANT TO RULE 144A.
[Regulation S Temporary Global Security/Additional Legend]
THE RIGHTS ATTACHED TO THIS REGULATION S TEMPORARY GLOBAL SECURITY, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED SECURITIES,
ARE AS SPECIFIED IN THE INDENTURE.
3
[*/]
No. $
CUSIP:
9% Senior Note Due 2006
Revlon Consumer Products Corporation, a Delaware corporation,
promises to pay to , or registered assigns, the principal sum of Dollars on
November 1, 2006.
Interest Payment Dates: November 1 and May 1.
Record Dates: October 15 and April 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: REVLON CONSUMER PRODUCTS
CORPORATION
by
---------------------------
[Title]
by
---------------------------
[Title]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
------------------------------------
Authorized Signatory
- - ---------------
*/ [If the Security is to be issued in global form add the Global Securities
Legend from Exhibit A and the attachment from such Exhibit A captioned "[TO BE
ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
SECURITY".]
4
[FORM OF REVERSE SIDE OF INITIAL NOTE]
9% Senior Note Due 2006
1. Interest
Revlon Consumer Products Corporation, a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay
interest on the Principal amount of this Security at the rate per annum shown
above; provided, however, that if (a) by December 21, 1998, neither the Shelf
Registration Statement nor the Exchange Offer Registration Statement has been
filed with the SEC, interest will accrue on the Securities from and including
such date until but excluding the earlier of (i) the date on which the Shelf
Registration Statement or the Exchange Offer Registration Statement is filed
and (ii) June 4, 1999 at a rate of 9.5% per annum and (b) by June 4, 1999,
neither (i) the Registered Exchange Offer is consummated nor (ii) the Shelf
Registration Statement is declared effective, interest will accrue on the
Securities from and including such date until but excluding the earlier of (i)
the consummation of the Registered Exchange Offer and (ii) the effective date
of the Shelf Registration Statement at a rate of 9.5% per annum. The Company
will pay interest semiannually on November 1 and May 1 of each year, commencing
May 1, 1999; provided, however, that interest accruing on this Security prior
to the consummation of the Registered Exchange Offer will be paid to the holder
of this Security, the Exchange Note or the Private Exchange Note, as the case
may be, on the record date next preceding the interest payment date following
the consummation of the Registered Exchange Offer. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from November 6, 1998. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest
on overdue Principal at the rate borne by the Securities plus 1% per annum, and
it shall pay interest on overdue installments of interest at the same rate to
the extent lawful.
2. Method of Payment
The Company will pay interest referred to in paragraph 1
above (except defaulted interest) on the Securities to the persons who are
registered holders of Securities at the close of business on the April 15 and
October 15 next preceding the interest payment date even if Securities are
cancelled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect Principal
payments. The Company will pay Principal, interest and premium, if any, in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay Principal,
interest and premium, if any, by check payable in such money. It may mail an
interest check to a Holder's registered address.
5
3. Paying Agent and Registrar
Initially, U.S. Bank Trust National Association, as trustee
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice. The
Company or any of its domestically incorporated Wholly Owned Recourse
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of November 6, 1998 ("Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such
terms, and Securityholders are referred to the Indenture and the Act for a
statement of those terms.
The Securities are general unsecured obligations of the
Company limited to $250,000,000 aggregate Principal amount (subject to Section
2.07 of the Indenture). This Security is one of the Initial Notes referred to
in the Indenture. The Securities constitute "Designated Senior Debt" of the
Company for purposes of the Company's Indenture dated as of February 1, 1998
with U.S. Bank Trust National Association, as trustee. The Securities include
the Initial Notes, the Exchange Notes and the Private Exchange Notes issued in
exchange for the Initial Notes pursuant to the Indenture. The Initial Notes,
the Exchange Notes and the Private Exchange Notes are treated as a single class
of securities under the Indenture. The Indenture imposes certain limitations
on, among other things, the issuance of debt and redeemable stock by the
Company, the issuance of debt and preferred stock by the Subsidiaries of the
Company, the payment of dividends and other distributions and acquisitions or
retirements of the Company's Capital Stock and Subordinated Obligations, the
incurrence by the Company and its Subsidiaries of Liens on its property and
assets which do not equally and ratably secure the Securities, the sale or
transfer of assets and Subsidiary stock by the Company and transactions with
Affiliates. In addition, the Indenture limits the ability of the Company and
its Subsidiaries to restrict distributions and dividends from Subsidiaries.
5. Optional Redemption
Except as set forth in this paragraph 5, the Company may not
redeem the Securities prior to November 1, 2002. On and after such date, the
Securities may be redeemed at the option of the Company in whole at any time or
in part from time to time at the following redemption prices (expressed in
percentages of Principal amount), plus accrued interest to the redemption date
(subject to the right of Holders
6
of record on the relevant record date to receive interest due on the related
interest payment date), if redeemed during the 12-month periods beginning
November 1,
Year Percentages
- - ---- -----------
2002............................................................ 104.5%
2003............................................................ 103.0
2004............................................................ 101.5
2005 and thereafter............................................. 100.0
In addition, the Securities may be redeemed at the option of
the Company in connection with the occurrence of a Change of Control at any
time as a whole at a redemption price equal to the sum of (i) the then
outstanding aggregate Principal amount thereof, plus (ii) accrued and unpaid
interest (if any) to the redemption date, plus (iii) the Applicable Premium.
Prior to November 1, 2001, the Company, at its option, may
redeem up to 35% of the aggregate Principal amount of the Securities with, and
to the extent the Company actually receives, the net proceeds of one or more
Public Equity Offerings from time to time, at a redemption price of 109.0% of
the Principal amount thereof, plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date); provided, however,
that at least $162,500,000 aggregate Principal amount of the Securities must
remain outstanding after each such redemption. A "Public Equity Offering" means
an underwritten public offering of equity securities of the Company or Revlon,
Inc. pursuant to an effective registration statement under the Securities Act.
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to
accrue on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions, to cause the Company to repurchase
all or any part of the Securities of such Holder at a repurchase price equal to
the Put Amount of
7
the Securities to be repurchased plus accrued and unpaid interest to the
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the related interest payment date) as provided
in, and subject to the terms of, the Indenture.
8. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed.
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
10. Unclaimed Money
If money for the payment of Principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
11. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of Principal and interest on the Securities to redemption or
maturity, as the case may be.
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in Principal amount outstanding of the
Securities and (ii) any default or
8
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in Principal amount outstanding of the Securities.
Subject to certain exceptions set forth in the Indenture, without the consent
of any Securityholder, the Company and the Trustee may amend the Indenture or
the Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article V of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
Guarantees with respect to the Securities or to secure the Securities, or to
add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to otherwise comply with the Act, or to provide
for the issuance of the Exchange Notes or the Private Exchange Notes, or to
make any change that does not adversely affect the rights of any
Securityholder. A consent to any amendment or waiver of any provision in the
Indenture or in the Securities by any Holder given in connection with a tender
of such Holder's Securities shall not be rendered invalid by such tender.
13. Defaults and Remedies
Under the Indenture, Events of Default include (i) default
for 30 days in payment of interest on the Securities; (ii) default in payment
of Principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 of the Securities, upon declaration or otherwise, or failure by the
Company to repurchase Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of
other Debt of the Company or any Significant Subsidiary if the amount
accelerated (or so unpaid) exceeds $25 million and continues for 10 days after
the required notice to the Company; (v) certain events of bankruptcy or
insolvency with respect to the Company or any Significant Subsidiary; and (vi)
certain judgments or decrees for the payment of money in excess of $25 million.
If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in Principal amount of the Securities may declare all the
Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities being due
and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in Principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of Principal or interest) if it determines
that withholding notice is in their interest.
9
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.
15. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company or the Trustee under the Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder waives and releases all such
liability. The waiver and release are part of the consideration for the issue
of the Securities.
16. Authentication
This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.
17. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
18. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
10
19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to the
Company at:
625 Madison Avenue
New York, New York 10022
Attention of Chief Financial Officer
11
- - -------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
- - -------------------------------------------------------------------------------
Date: Your Signature:
---------------- ----------------------------------------
(Sign exactly as your name appears on
the other side of this Security.)
- - -------------------------------------------------------------------------------
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original
issuance of such Securities and the last date, if any, on which such Securities
were owned by the Company or any Affiliate of the Company, the undersigned
confirms that such Securities are being transferred in accordance with its
terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) [ ] inside the United States to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933) that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer is
being made in reliance on Rule 144A, in each case pursuant to
and in compliance with Rule 144A under the Securities Act of
1933; or
12
(4) [ ] outside the United States in an offshore
transaction within the meaning of Regulation S under
the Securities Act in compliance with Rule 904 under
the Securities Act of 1933; or
(5) [ ] inside the United States to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act of 1933) that, prior to such transfer,
furnishes to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee) and, if such transfer is in respect of
an aggregate Principal amount of Securities at the time of
transfer of less than $250,000, an opinion of counsel acceptable
to the Company that such transfer is in compliance with the
restrictions set forth in the legend on the Securities; or
(6) [ ] pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any person
other than the registered holder thereof; provided, however, that if box
(4), (5) or (6) is checked, the Trustee may require, prior to registering
any such transfer of the Securities, such legal opinions, certifications and
other information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act.
-----------------------------------
Signature
Signature Guarantee:
-----------------------------------
Signature must be guaranteed
13
- - -------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
---------------- -----------------------------------------------
NOTICE: To be executed by an executive officer
14
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Security following officer of Trustee or
Global Security Global Security such decrease or increase) Securities Custodian
15
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.07 or 4.09 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.07 or 4.09 of the Indenture,
state the amount in Principal amount: $
Date: Your Signature:
-------------------------------------
(Sign exactly as your name appears on
the other side of this Security.)
Signature Guarantee:
----------------------------------------
(Signature must be guaranteed.)
EXHIBIT B
to
INDENTURE
[FORM OF FACE OF EXCHANGE NOTE OR PRIVATE EXCHANGE NOTE]
[*/]
No. $
CUSIP:
9% Senior Exchange Note Due 2006
Revlon Consumer Products Corporation, a Delaware corporation,
promises to pay to , or registered assigns, the principal sum of Dollars on
November 1, 2006.
Interest Payment Dates: November 1 and May 1.
Record Dates: October 15 and April 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: REVLON CONSUMER PRODUCTS
CORPORATION,
by
-----------------------
[Title]
by
-----------------------
[Title]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
--------------------------------
Authorized Signatory
2
- - ---------------
*/ [If the Security is to be issued in global form add the Global Securities
Legend from Exhibit A and the attachment from such Exhibit A captioned "[TO BE
ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
SECURITY".]
**/ [If the Security is a Private Exchange Note issued in a Private Exchange
Offer to an Initial Purchaser holding an unsold portion of its initial
allotment, add the Restricted Securities Legend from Exhibit A and replace the
Assignment Form included in this Exhibit B with the Assignment Form included in
such Exhibit A.]
3
[FORM OF REVERSE SIDE OF EXCHANGE NOTE
OR PRIVATE EXCHANGE NOTE]
9% Senior Exchange Note Due 2006
1. Interest
Revlon Consumer Products Corporation, a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay
interest on the Principal amount of this Security at the rate per annum shown
above (without duplication of the interest that accrued on the Initial Note in
exchange for which this Security was issued)[; provided, however, that if (a)
by December 21, 1998, neither the Shelf Registration Statement nor the Exchange
Offer Registration Statement has been filed with the SEC, interest will accrue
on the Securities from and including such date until but excluding the earlier
of (i) the date on which the Shelf Registration Statement or the Exchange Offer
Registration Statement is filed and (ii) June 4, 1999 at a rate of 9.5% per
annum and (b) by June 4, 1999, neither (i) the Registered Exchange Offer is
consummated nor (ii) the Shelf Registration Statement is declared effective,
interest will accrue on the Securities from and including such date until but
excluding the earlier of (i) the consummation of the Registered Exchange Offer
and (ii) the effective date of the Shelf Registration Statement at a rate of
9.5% per annum.].1/ The Company will pay interest semiannually on May 1 and
November 1 of each year, commencing May 1, 1999. Interest on the Securities
will accrue from the most recent date to which interest has been paid on the
Initial Notes, or, if no interest has been paid on the Initial Notes, the
Exchange Notes or the Private Exchange Notes, as the case may be, from November
6, 1998. Interest will be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay interest on overdue Principal at the rate
borne by the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest referred to in paragraph 1
above (except defaulted interest) on the Exchange Notes or Private Exchange
Notes to the persons who are registered holders of Securities at the close of
business on the April 15 and October 15 next preceding the interest payment
date even if Exchange
- - --------
1/ Insert if at the time of issuance of the Exchange Note or Private
Exchange Note (as the case may be) neither the Registered Exchange
Offer has been consummated nor a Shelf Registration Statement has been
declared effective in accordance with the Registration Agreement.
4
Notes or Private Exchange Notes are cancelled after the record date and on or
before the interest payment date. The Company will pay interest referred to in
paragraph 1 of the Initial Notes (except defaulted interest) on the Initial
Notes in exchange for which the Exchange Notes or Private Exchange Notes were
issued to the Persons who, at the close of business on the April 15 or the
October 15 next preceding each interest payment date, are registered holders of
such Initial Notes, if such record date occurs prior to such exchange, or
registered holders of the Exchange Notes or Private Exchange Notes, if such
record date occurs on or after the date of such exchange, even if Exchange
Notes or Private Exchange Notes are cancelled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect Principal payments. The Company will pay Principal, interest
and premium, if any, in money of the United States that at the time of payment
is legal tender for payment of public and private debts. However, the Company
may pay Principal, interest and premium, if any, by check payable in such
money. It may mail an interest check to a Holder's registered address.
3. Paying Agent and Registrar
Initially, U.S. Bank Trust National Association, as trustee
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice. The
Company or any of its domestically incorporated Wholly Owned Recourse
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of November 6, 1998 ("Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such
terms, and Securityholders are referred to the Indenture and the Act for a
statement of those terms.
The Securities are general unsecured obligations of the
Company limited to $250,000,000 aggregate Principal amount (subject to Section
2.07 of the Indenture). This Security is one of the Exchange Notes referred to
in the Indenture. The Securities constitute "Designated Senior Debt" of the
Company for purposes of the Company's Indenture dated as of February 1, 1998
with U.S. Bank Trust National Association, as trustee. The Securities include
the Initial Notes, the Exchange Notes and the Private Exchange Notes, if any,
issued in exchange for the Initial Notes pursuant to the Indenture. The Initial
Notes, the Exchange Notes and the Private Exchange Notes are treated as a
single class of securities under the
5
Indenture. The Indenture imposes certain limitations on, among other things,
the issuance of debt and redeemable stock by the Company, the issuance of debt
and preferred stock by the Subsidiaries of the Company, the payment of
dividends and other distributions and acquisitions or retirements of the
Company's Capital Stock and Subordinated Obligations, the incurrence by the
Company and its Subsidiaries of Liens on its property and assets which do not
equally and ratably secure the Securities, the sale or transfer of assets and
Subsidiary stock by the Company and transactions with Affiliates. In addition,
the Indenture limits the ability of the Company and its Subsidiaries to
restrict distributions and dividends from Subsidiaries.
5. Optional Redemption
Except as set forth in this paragraph 5, the Company may not
redeem the Securities prior to November 1, 2002. On and after such date, the
Securities may be redeemed at the option of the Company in whole at any time or
in part from time to time at the following redemption prices (expressed in
percentages of Principal amount), plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date), if redeemed during
the 12-month period beginning November 1,
Year Percentages
- - ---- -----------
2002............................................................ 104.5%
2003............................................................ 103.0
2004............................................................ 101.5
2005 and thereafter............................................. 100.000
In addition, the Securities may be redeemed at the option of
the Company in connection with the occurrence of a Change of Control at any
time as a whole, at a redemption price equal to the sum of (i) the then
outstanding aggregate Principal amount thereof, plus (ii) accrued and unpaid
interest (if any) to the redemption date, plus (iii) the Applicable Premium.
Prior to November 1, 2001, the Company, at its option, may
redeem up to 35% of the aggregate Principal amount of the Securities with, and
to the extent the Company actually receives, the net proceeds of one or more
Public Equity Offerings, at any time or from time to time, at a redemption
price of 109.0% of the Principal amount thereof, plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the related interest payment date);
provided, however, that at least $162,500,000 aggregate Principal amount of the
Securities must remain outstanding after each such redemption. A "Public Equity
Offering" means an underwritten public offering of equity securities of the
Company or Revlon, Inc. pursuant to an effective registration statement under
the Securities Act.
6
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to
accrue on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions, to cause the Company to repurchase
all or any part of the Securities of such Holder at a repurchase price equal to
the Put Amount of the Securities to be repurchased plus accrued and unpaid
interest to the repurchase date (subject to the right of Holders of record on
the relevant record date to receive interest due on the related interest
payment date) as provided in, and subject to the terms of, the Indenture.
8. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed.
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
7
10. Unclaimed Money
If money for the payment of Principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
11. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of Principal and interest on the Securities to redemption or
maturity, as the case may be.
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in Principal amount outstanding of the
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in Principal
amount outstanding of the Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company and
the Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article V of the
Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to add Guarantees with respect to the
Securities or to secure the Securities, or to add additional covenants or
surrender rights and powers conferred on the Company, or to comply with any
request of the SEC in connection with qualifying the Indenture under the Act,
or to otherwise comply with the Act or to provide for the issuance of the
Exchange Notes or the Private Exchange Notes, or to make any change that does
not adversely affect the rights of any Securityholder. A consent to any
amendment or waiver of any provision in the Indenture or in the Securities by
any Holder given in connection with a tender of such Holder's Securities shall
not be rendered invalid by such tender.
8
13. Defaults and Remedies
Under the Indenture, Events of Default include (i) default
for 30 days in payment of interest on the Securities; (ii) default in payment
of Principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 of the Securities, upon declaration or otherwise, or failure by the
Company to repurchase Securities when required; (iii) failure by the Company,
as applicable, to comply with other agreements in the Indenture or the
Securities, in certain cases subject to notice and lapse of time; (iv) certain
accelerations (including failure to pay within any grace period after final
maturity) of other Debt of the Company or any Significant Subsidiary if the
amount accelerated (or so unpaid) exceeds $25 million and continues for 10 days
after the required notice to the Company; (v) certain events of bankruptcy or
insolvency with respect to the Company or any Significant Subsidiary; and (vi)
certain judgments or decrees for the payment of money in excess of $25 million.
If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in Principal amount of the Securities may declare all the
Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities being due
and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in Principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of Principal or interest) if it determines
that withholding notice is in their interest.
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.
15. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company or the Trustee under the Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
9
accepting a Security, each Securityholder waives and releases all such
liability. The waiver and release are part of the consideration for the issue
of the Securities.
16. Authentication
This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.
17. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
18. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
19. Holders' Compliance with Registration Agreement
Each Holder of a Security, by acceptance hereof, acknowledges
and agrees to the provisions of the Registration Agreement, including, without
limitation, the obligations of the Holders with respect to a registration and
the indemnification of the Company to the extent provided therein.
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
10
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to the
Company at:
625 Madison Avenue
New York, New York 10022
Attention of Chief Financial Officer
11
- - -------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
Date: Your Signature:
---------------- ----------------------------------------
(Sign exactly as your name appears on
the other side of this Security.)
- - -------------------------------------------------------------------------------
12
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE
COMPANY PURSUANT TO SECTION 4.07 OR 4.09 OF THE INDENTURE, CHECK THE BOX:
[ ]
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY
PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.07 OR 4.09 OF THE INDENTURE,
STATE THE AMOUNT IN PRINCIPAL AMOUNT:
$
DATE: YOUR SIGNATURE:
------------------ --------------------------------------
(SIGN EXACTLY AS YOUR NAME APPEARS ON
THE OTHER SIDE OF THE SECURITY.)
SIGNATURE GUARANTEE:
---------------------------------------------
(SIGNATURE MUST BE GUARANTEED BY A MEMBER FIRM OF
THE NEW YORK STOCK EXCHANGE OR A COMMERCIAL BANK OR
TRUST COMPANY.)
EXHIBIT C
to
INDENTURE
[FORM OF CERTIFICATE TO BE DELIVERED UPON TERMINATION OF RESTRICTED PERIOD]
On or after December 16, 1998
U.S. Bank Trust National Association
180 East 5th Street
St. Paul, MN 55101
Re: REVLON CONSUMER PRODUCTS CORPORATION (the "Company")
9% Senior Notes due 2006 (the "Initial Notes") and
Series B Senior Notes due 2006 (the "Exchange Notes"
and, together with the Initial Notes, the "Notes")
Ladies and Gentlemen:
This letter relates to Notes represented by a temporary
global note certificate (the "Temporary Certificate"). Pursuant to Section 2.01
of the Indenture dated as of November 6, 1998 relating to the Notes (the
"Indenture"), we hereby certify that (1) we are the beneficial owner of $[ ]
principal amount of Initial Notes represented by the Temporary Certificate and
(2) we are a person outside the United States to whom the Initial Notes could
be transferred in accordance with Rule 904 of Regulation S promulgated under
the Securities Act of 1933, as amended. Accordingly, you are hereby requested
to issue a Certificated Note representing the undersigned's interest in the
principal amount of Initial Notes represented by the Temporary Certificate, all
in the manner provided by the Indenture.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
-------------------------------
Authorized Signature
EXHIBIT D
to
INDENTURE
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO
NON-QIB INSTITUTIONAL ACCREDITED INVESTORS]
[date]
Revlon Consumer Products Corporation
c/o U.S. Bank Trust National Association
180 East 5th Street
St. Paul, MN 55101
Attention: Corporate Trust Department
Dear Sirs:
This certificate is delivered to request a transfer of $
aggregate principal amount of 9% Senior Notes due 2006 (the "Notes") of Revlon
Consumer Products Corporation (the "Company").
The undersigned represents and warrants to you that:
(1) We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act of 1933, as amended (the "Securities Act")) purchasing
for our own account or for the account of such an institutional
"accredited investor," and we are acquiring the Notes not with a view
to, or for offer or sale in connection with, any distribution in
violation of the Securities Act or other applicable securities law and
we have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Notes and invest in or purchase securities similar
to the Notes in the normal course of our business. We and any accounts
for which we are acting are each able to bear the economic risk of our
or its investment.
(2) We understand and acknowledge that the Notes have not
been registered under the Securities Act, or any other applicable
securities law and unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on
behalf of any investor account for which we are purchasing Notes to
offer, sell or otherwise transfer such Notes prior to the date which
is two years after the later of the date of original issue and the
last date on which the Company or any affiliate of the Company was the
owner of such Notes (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) if it is an initial investor
in the Notes, (i) to the Company, (ii) pursuant to a registration
statement which has been declared effective under the Securities Act,
(iii) in a transaction complying with the requirements of Rule 144A
2
under the Securities Act, to a person we reasonably believe is a
"Qualified Institutional Buyer" within the meaning of Rule l44A (a
"QIB") that purchases for its own account or for the account of a QIB
and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (iv) pursuant to offers and sales that occur
outside the United States within the meaning of Regulation S under the
Securities Act, or (v) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 thereunder (if
available), and (b) if it is a subsequent investor in the Notes, (i)
as set forth in (a) above and (ii) to an institutional "accredited
investor" within the meaning of subparagraphs (a)(1), (a)(2), (a)(3)
or (a)(7) of Rule 501 under the Securities Act that is purchasing the
Notes for its own account or for the account of such an institutional
"accredited investor", in each case, in a transaction involving a
minimum purchase price of $250,000 for such Notes, subject in each of
the foregoing cases to any requirement of law that the disposition of
our property or the property of such investor account or accounts be
at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale
will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Notes is proposed to be made
pursuant to clause (b)(ii) above prior to the Resale Restriction
Termination Date, the transferor shall deliver to the Company and the
trustee under the Indenture pursuant to which the Notes are issued a
letter from the transferee substantially in the form of this letter,
which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of
subparagraphs (a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501 under the
Securities Act and that it is acquiring such Notes for investment
purposes and not for distribution in violation of the Securities Act.
We acknowledge that the Company and the Trustee reserve the right
prior to any offer, sale or other transfer of the Notes pursuant to
clauses (a)(iv), (a)(v) or (b)(ii) above prior to the Resale
Restriction Termination Date to require the delivery of an opinion of
counsel, certifications and/or other information satisfactory to the
Company and the Trustee.
(3) We are acquiring the Notes purchased by us for our own
account or for one or more accounts as to each of which we exercise
sole investment discretion.
3
(4) You are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
By:
-----------------------------
(Name of Purchaser)
Date:
Upon transfer the Notes would be registered in the name of the new beneficial
owner as follows:
TAXPAYER ID
NAME ADDRESS NUMBER:
- - ---- ------- -------
EXHIBIT E
to
INDENTURE
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S]
[date]
U.S. Bank Trust National Association
180 East 5th Street
St. Paul, MN 55101
Re: Revlon Consumer Products Corporation (the "Company")
9% Senior Notes due 2006 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting
on our behalf reasonably believed that the transferee was outside the
United States or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may
be.
2
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
--------------------------------
Authorized Signature
EXHIBIT F
to
INDENTURE
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS PURSUANT TO RULE 144A]
U.S. Bank Trust National Association
180 East 5th Street
St. Paul, MN 55101
[date]
Re: Revlon Consumer Products Corporation
(the "Company") 9% Senior Notes due 2006 (the
"Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $_______ aggregate
principal amount of the Notes, we hereby certify that such transfer is being
effected pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
hereby further certify that the Notes are being transferred to a person that we
reasonably believe is purchasing the Notes for its own account, or for one or
more accounts with respect to which such person exercises sole investment
discretion, and such person and each such account is a "qualified institutional
buyer" within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A and such Notes are being transferred in compliance
with any applicable blue sky securities laws of any state of the United States.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
-----------------------------------
[Name of Transferor]
By:
--------------------------------
Authorized Signature
SCHEDULE I
to
INDENTURE
Permitted Transactions
1. Asset Transfer Agreement by and among Revlon, Inc. (now known as
Revlon Holdings Inc.), Charles of the Ritz Group Ltd., National Health
Care Group Inc., New Revlon, Inc. (now known as Revlon, Inc.) and
Revlon Consumer Products Corporation dated as of June 24, 1992 (and
the ancillary agreements thereto).
2. Real Property Asset Transfer Agreement by and among Revlon, Inc., (now
known as Revlon Holdings Inc.), New Revlon, Inc. (now known as Revlon,
Inc.) and Revlon Consumer Products Corporation dated as of June 24,
1992.
3. Benefit Plans Assumption Agreement dated as of July 1, 1992 by and
among Revlon Holdings Inc. (formerly known as Revlon, Inc.) , Revlon,
Inc., (formerly known as New Revlon, Inc) and Revlon Consumer Products
Corporation.
4. Second Amended and Restated Operating Services Agreement by and among
Revlon Holdings Inc., Revlon, Inc. and Revlon Consumer Products
Corporation dated June 24, 1996 (Amended and Restated as of January 1,
1996) (the "Operating Services Agreement").
5. Amendment to the Operating Services Agreement dated as of July 1,
1997.
6. Reimbursement and Expense Allocation Agreement dated May 3, 1996 by
and among MacAndrews & Forbes Holdings Inc., Revlon, Inc. and Revlon
Consumer Products Corporation.
7. Reimbursement Agreement by and among MacAndrews & Forbes Holdings
Inc., New Revlon, Inc. and Revlon Consumer Products Corporation dated
June 24, 1992.
8. Tax Sharing Agreement by and among Mafco Holdings, Inc., Revlon
Holdings Inc., Revlon, Inc. and Revlon Consumer Products Corporation,
as amended by the First Amendment dated as of February 28, 1995 and
the Second Amendment dated as of January 1, 1997.
9. Purchase and Sale Agreement, as amended, dated as of February 18, 1993
by and between Revlon Consumer Products Corporation and Revlon
Holdings Inc. (Transfer of Edison facility).
2
10. Reassignment and Release Agreement dated as of November 4, 1993
between Revlon Consumer Products Corporation, Revlon Holdings Inc. and
SJDH Truman Drive Trust. (Transfer of 1 Truman Drive, Edison, New
Jersey).
11. Lease Agreement between Revlon Holdings Inc. and Revlon Consumer
Products Corporation dated April 2, 1993 (Edison R&D facility).
12. Occupancy Memorandum dated as of July 1, 1997 by and between
MacAndrews & Forbes Group Incorporated and Revlon Consumer Products
Corporation (625 Madison Avenue)
13. Occupancy Agreement dated as of January 1, 1995 between Revlon
Holdings Inc. and Revlon Consumer Products Corporation (Administration
Building, Plant and Company store).
14. Occupancy Memorandum dated as of February 28, 1995 between Revlon
International Corporation and MacAndrews & Forbes Group Incorporated
(Occupancy of 88 Brook Street).
15. Airplane Usage Memorandum dated November 16, 1994 between GDL
Aviation Inc. and Revlon Consumer Products Corporation.
16. Stock and Asset Purchase Agreement dated as of January 1, 1994 by and
between Revlon Consumer Products Corporation and Revlon Holdings Inc.
(New Essentials)
17. Asset Transfer Agreement dated as of September 1, 1993 by and between
Revlon Consumer Products Corporation and Revlon Holdings Inc. (Tarlow
Advertising Division).
18. Lipstick Assembly Agreement dated February 1, 1993 between Revlon,
Inc. and Tabacalera de Garcia, S.A. as amended by First Amendment to
Lipstick Assembly Agreement dated as of January 1, 1994 between Revlon
Consumer Products Corporation and Tabacalera de Garcia S.A.
19. Sublicense Agreement dated as of January 1, 1993 between Revlon
Holdings Inc., as Sublicensor, and Revlon Consumer Products
Corporation, as Sublicensee, (for all duty free shops throughout the
world and in all other channels of distribution in countries of the
world other than the U.S.)
(Sublicense of Bill Blass trademark)
20. Sublicense Agreement (Bill Blass) dated as of July 1, 1997 between
Revlon Holdings Inc. And Revlon Consumer Products Corporation.
21. Occupancy Memorandum dated as of July 1, 1997 by and between
MacAndrews & Forbes Group Incorporated and The Coleman Company, Inc.
(625 Madison Avenue).
3
22. Assumption Agreement dated as of February 18, 1993 by and between
Revlon Holdings Inc. And Revlon Consumer Products Corporation (Edison
Facility).
23. Assignment and Assumption of Lease dated as of December 23, 1997
between Revlon Consumer Products Corporation and The Cosmetic Center,
Inc. (767 Fifth Avenue)
24. Assignment, Assumption and Indemnification Agreement dated as of July
1, 1997 by and between Revlon Holdings Inc. and Revlon Consumer
Products Corporation.
25. Transfer Agreement dated as of March 31, 1997 by and between Revlon
Consumer Products Corporation and The Coleman Company, Inc. (Coleman,
Japan).
26. Permitted Affiliate Debt.
5
1,000
9-MOS
DEC-31-1998
JAN-01-1998
SEP-30-1998
35,600
0
505,800
26,700
309,700
920,700
594,700
225,400
1,861,700
526,600
1,641,900
0
54,600
500
(597,800)
1,861,700
1,621,700
1,621,700
543,400
543,400
0
3,400
103,300
15,500
6,400
9,100
(31,500)
(51,700)
0
(74,100)
(1.45)
(1.42)
