As filed with the Securities and Exchange Commission on September 10, 2001
Registration No. 333-67620
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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OFFICE DEPOT, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 5940 59-2663954
State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Number) Identification Number)
----------
David C. Fannin
Executive Vice President
General Counsel and Secretary
Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, Florida 33445
(561) 438-4800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------
COPIES TO:
Scott N. Gierke, Esq.
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606-5096
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Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act of 1933 registration statement number of the
earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act of 1933,
check the following box and list the Securities Act of 1933 registration
statement number of the earlier effective registration statement for the same
offering. [_]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON THE DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON THE DATE DETERMINED BY THE SECURITIES AND EXCHANGE COMMISSION IN
ACCORDANCE WITH SAID SECTION 8(A).
PROSPECTUS
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission relating to these securities is effective.
This prospectus is not an offer to sell these securities and it is not an offer
to buy these securities in any state where the offer or sale is not permitted.
- --------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 2001
[OFFICE DEPOT LOGO]
----------
OFFICE DEPOT, INC.
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OFFER TO EXCHANGE
UP TO $250,000,000 PRINCIPAL AMOUNT
OF OUTSTANDING
10% SENIOR SUBORDINATED NOTES DUE 2008
FOR
A LIKE PRINCIPAL AMOUNT OF
REGISTERED 10% SENIOR SUBORDINATED NOTES DUE 2008
We are offering to exchange an aggregate principal amount of up to
$250,000,000 of our new 10% Senior Subordinated Notes due 2008 (the "new notes")
for a like amount of our outstanding 10% Senior Subordinated Notes due 2008 (the
"old notes"). We are offering to issue the new notes to satisfy our obligations
contained in the registration rights agreement entered into when the old notes
were sold in transactions permitted by Rule 144A and Regulation S under the
Securities Act of 1933.
The terms of the new notes and the old notes are identical, except for
transfer restrictions, registration rights, and liquidated damages that apply to
the old notes.
The exchange offer expires at 5:00 p.m., New York City time, on [Date],
2001 unless we extend it.
The new notes will not trade on any established exchange.
----------
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF
CERTAIN FACTORS YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
----------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NEW NOTES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------
The date of this prospectus is [Date], 2001.
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TABLE OF CONTENTS
Page Page
---- ----
Where You Can Find More Information... iii Use of Proceeds............. 15
Incorporation of Documents by Reference iii Capitalization.............. 15
Forward-Looking Statements............ iii Selected Consolidated Financial 16
Data.......................
Prospectus Summary.................... 1 The Exchange Offer........ 18
Summary of the Exchange Offer......... 3 Description of Notes...... 25
Summary Description of the New Notes.. 6 Certain United States Federal 62
Tax Considerations........
Summary Historical Financial Data..... 8 Plan of Distribution...... 64
Risk Factors.......................... 10 Legal Matters............. 64
Experts................... 65
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy, at prescribed rates, any document we file at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the regional
offices of the SEC located at 7 World Trade Center, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. Please call
the SEC at 1-800-SEC-0330 for further information on its Public Reference Room.
Our SEC filings are also available at the offices of the New York Stock Exchange
at 20 Broad Street, New York, NY 10005.
-ii-
INCORPORATION OF DOCUMENTS BY REFERENCE
We "incorporate by reference" specified documents that we file with the
SEC which means:
o incorporated documents are considered part of this prospectus;
o we are disclosing important information to you by referring you to
these documents; and
o information that we file with the SEC will automatically update
and supersede information contained or incorporated by reference
in this prospectus.
We incorporate by reference the documents listed below to the extent
not superseded by the information contained in this prospectus and any documents
that we file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this prospectus and before the
end of the exchange offer:
o Annual Report on Form 10-K for the fiscal year ended December 30,
2000 (the "2000 Form 10-K");
o Our Proxy Statement dated March 28, 2001;
o Quarterly Reports on Form 10-Q for the quarters ended March 31,
2001 and June 30, 2001; and
o Current Reports on Form 8-K dated January 3, 2001, January 10,
2001, May 1, 2001, May 8, 2001, May 30, 2001, June 18, 2001, June
21, 2001, July 10, 2001, July 19, 2001, August 23, 2001 and
September 5, 2001.
You may request a copy of these filings at no cost, by writing or
telephoning us at:
Office Depot, Inc.
Attention: Vice President, Investor Relations & Public Relations
2200 Old Germantown Road
Delray Beach, Florida 33445
(561) 438-4800
If you request any incorporated documents from us, we will mail them to
you by first class mail, or by another equally prompt means. However, in order
to obtain timely delivery of these documents, you must make your request no
later than five business days before the expiration date of the exchange offer.
Unless the context requires otherwise, all references in this document to "this
prospectus" include all documents incorporated by reference into this
prospectus.
FORWARD-LOOKING STATEMENTS
This prospectus contains both historical information and other
information that you can use to infer future performance. We caution you that,
with the exception of information that is clearly historical, all the
information contained in this prospectus should be considered to be
"forward-looking statements" as referred to in the Securities Act of 1933.
Without limiting the generality of the preceding sentence, any time we use the
words "estimate," "project," "intend," "expect," "believe," "anticipate,"
"continue," and similar expressions, we intend to express that the information
addresses possible future events and is forward-looking in nature. We assume no
obligation (and specifically disclaim any obligation) to update any
forward-looking statements contained in this prospectus to reflect actual
results, changes in assumptions or other factors affecting the forward-looking
statements.
-iii-
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus or incorporated by reference herein. It may not contain all the
information that is important to you. We encourage you to read this entire
prospectus and each of the incorporated documents carefully. In particular, you
should read the section entitled "Risk Factors" and the financial statements and
the notes relating to those statements incorporated by reference into this
prospectus.
We operate on a 52- or 53-week fiscal year ending on the last Saturday
in December. Our results for fiscal 2000 contained 53 weeks and all other years
contained 52 weeks. Accordingly, unless otherwise specified, all references to a
year, such as 2000, are to our fiscal year that ends during that year, and all
references to the second quarter of 2001 and the second quarter of 2000, refer
to the 13-week periods ended June 30, 2001 and June 24, 2000, respectively. The
terms "Office Depot," "we," "our" and "us" refer to Office Depot, Inc. and its
consolidated subsidiaries unless the context suggests otherwise. The term "you"
refers to holders of our outstanding, unregistered 10% Senior Subordinated Notes
Due 2008.
OUR BUSINESS
We are the largest supplier of office products and services in the
world, based on sales of $11.4 billion in the twelve months ending June 30,
2001. We sell to consumers and businesses of all sizes through our three
business segments: North American Retail Division, Business Services Group or
"BSG" and International Division. These segments include multiple sales channels
consisting of office supply stores, a dedicated contract sales force, Internet
sites, and catalog and delivery operations.
NORTH AMERICAN RETAIL DIVISION
Our North American Retail Division sells office products, copy and
print services and other business-related services under the Office Depot(R) and
the Office Place(R) brands through our chain of high-volume retail office supply
stores in the United States and Canada. We opened our first retail office supply
store in Florida in October 1986. From our inception, we have concentrated on
expanding our store base and increasing our sales in markets with high
concentrations of small and medium-sized businesses. As of the end of 2000, our
North American Retail Division operated 888 retail stores in 47 states, the
District of Columbia and Canada. During the first quarter of 2001, we closed 70
under-performing retail stores and opened six new stores in existing markets.
During the second quarter of 2001 we opened five new retail stores and we plan
to add approximately 34 new retail stores during the remainder of 2001. Most of
these stores will be located in areas we currently serve, with the balance in
under-served markets. Our North American Retail Division generated $6.2 billion
in sales in the twelve months ended June 30, 2001.
BUSINESS SERVICES GROUP
In 1993 and 1994, we entered the contract office supply business by
acquiring eight contract stationers with 18 domestic customer service centers
and a professional sales force. These acquisitions also allowed us to broaden
our catalog and retail delivery businesses. In August 1998, we expanded our
direct mail business through our merger with Viking Office Products, Inc. Today,
our Business Services Group sells office products and services to contract and
commercial customers through our Office Depot(R) and Viking Office Products(R)
direct mail catalogs and Internet sites, and by means of our dedicated contract
sales force. Our customer service centers or "CSCs" are warehouse and delivery
facilities, some of which also house sales offices, call centers and
administrative offices. Our CSCs also perform warehousing and delivery services
on behalf of all segments of our business. As of June 30, 2001, BSG operated 25
CSCs in the United States. BSG had $3.8 billion in sales in the twelve months
ended June 30, 2001.
Since January 1998, we have also offered our customers the convenience
of shopping on-line through our publicly-accessible Internet site. The addition
of this site has expanded our domestic electronic commerce or "E-commerce"
capabilities beyond our Viking public Internet site and our Office Depot
business-to-business contract Internet sites. We believe our E-commerce business
will provide significant future growth opportunities for our Business Services
Group segment and our business as a whole, based on the growth rates we have
experienced over the last three years.
INTERNATIONAL DIVISION
Our International Division sells office products and services to a wide
range of customers, from large corporations to individual consumers, in 16
countries outside the United States and Canada. We conduct our operations
through the following four channels: 132 retail stores in seven countries, 35 of
which are wholly-owned; Office Depot(R) brand and Viking Office Products(R)
brand direct mail catalogs in 14 countries; nine Internet sites in seven
countries; and a dedicated contract sales force primarily focussed on the United
Kingdom. We have expanded internationally through licensing and joint venture
agreements, acquisitions and greenfield development. In August 1998, we merged
with Viking Office Products, which had strong catalog businesses in key markets.
Currently, our International Division has operations either owned directly or
operated through joint ventures or licensing agreements, in Australia, Austria,
Belgium, France, Germany, Hungary, Ireland, Israel, Italy, Japan, Luxembourg,
Mexico, The Netherlands, Poland, Thailand, and the United Kingdom. Our
International Division had $1.5 billion in sales in the twelve months ended June
30, 2001.
RECENT OPERATING IMPROVEMENTS AND IMPROVED COST POSITION RESULTING FROM OUR
2000 COMPREHENSIVE BUSINESS REVIEW
During the fourth quarter of 2000, we concluded a thorough review of
all aspects of our business (the "2000 Comprehensive Business Review"). This
review resulted in numerous initiatives designed to enhance our overall
profitability and drive organic growth in our stores by improving the overall
customer experience, including the following: closure of under-performing
stores, SKU reductions in stores and warehouses, increasing warehouse
efficiency, increasing contract business profitability and revaluation of
certain assets. Year to date, we have addressed all of the major issues and
completed all of the key initiatives that resulted from the review, and are
achieving improvements in our key operating metrics, including on-time delivery,
inventory efficiency and overall customer satisfaction. We expect these and
other metrics to show continuing improvement and to expand our overall margins.
OUR STRATEGY
We are committed to making Office Depot a more compelling place to shop
across every channel our customers choose when buying their office supplies and
services. To achieve our goal, our strategy is to continue building upon our
strengths across the retail, catalog, contract and Internet channels by:
o repositioning our North American Retail Division for rational
growth in a maturing environment, and using cash flows from our
retail operations to expand our Business Services Group and
International Division;
o developing a world-class warehouse and distribution network for
all of our businesses to improve service levels and lower our cost
position; and
o further leveraging our integrated sales channels to provide a
seamless and robust shopping experience
OUR EXECUTIVE OFFICES
Our executive offices are located at 2200 Old Germantown Road, Delray
Beach, Florida 33445, and our telephone number is (561) 438-4800.
-2-
SUMMARY OF THE EXCHANGE OFFER
The Exchange Offer..............................We are offering to exchange our
new notes, which have been
registered under the Securities
Act of 1933, for a like
principal amount of our
outstanding, unregistered old
notes. Old notes may only be
tendered in integral multiples
of $1,000 principal amount at
maturity.
As of the date of this
prospectus, old notes
representing an aggregate
principal amount of $250,000,000
are outstanding. For procedures
for tendering, see "The Exchange
Offer."
Resale of New Notes.............................We believe you may offer for
resale, sell or otherwise
transfer any new notes that are
issued to you pursuant to the
exchange offer without
compliance with the registration
and prospectus delivery
provisions of the Securities Act
of 1933, provided that:
o you are acquiring the
new notes in the
ordinary course of your
business;
o you have not engaged
in, do not intend to
engage in, and have no
arrangement or
understanding with any
person to participate
in the distribution of
the new notes; and
o you are not our
affiliate as defined
under Rule 405 of the
Securities Act of 1933.
Each participating broker-dealer
that receives new notes for its
own account pursuant to the
exchange offer in exchange for
old notes that were acquired as
a result of market-making or
other trading activity must
acknowledge that it will deliver
a prospectus in connection with
any resale of new notes. See
"Plan of Distribution."
Any holder of old notes who:
o is our affiliate;
o does not acquire new
notes in the ordinary
course of its business;
o tenders in the exchange
offer with the
intention to
participate, or for the
purpose of
participating, in a
distribution of new
notes; or
o is a broker-dealer that
acquired the old notes
directly from us,
must comply with the
registration and prospectus
delivery requirements of the
Securities Act of 1933 in
connection with the resale of
new notes.
Consequences If You Do Not Exchange Your Old
Notes................................ Old notes that are not tendered
in the exchange offer or are not
accepted for exchange will
continue to bear legends
restricting their transfer. You
will not be able to offer or
sell the old notes unless:
-3-
o pursuant to an
exemption from the
requirements of the
Securities Act of 1933;
o the old notes are
registered under the
Securities Act of 1933;
or
o the transaction
requires neither an
exemption from nor
registration under the
Securities Act of 1933.
After the exchange offer is
closed, we will no longer have
an obligation to register the
old notes, except for some
limited exceptions. See "Risk
Factors--Failure to Exchange
Your Old Notes."
Expiration Date.................................5:00 p.m., New York City time,
on [Date], 2001, unless we
extend the exchange offer.
Certain Conditions to the Exchange
Offer...........................................The exchange offer is subject to
certain customary conditions
that we may waive.
Procedures for Tendering Old Notes..............We issued the old notes in the
form of two global notes. The
global notes were deposited with
SunTrust Bank, as custodian for
Cede & Co., nominee of The
Depository Trust Company
("DTC"). Beneficial interests in
the notes are shown on records
that DTC maintains in book-entry
form.
To tender old notes in the
exchange offer, DTC must
transfer your outstanding notes
in accordance with DTC's
standard procedures for
transfer. In lieu of delivering
a letter of transmittal to the
exchange agent, a
computer-generated message, in
which the holder of the old
notes acknowledges and agrees to
be bound by the letter of
transmittal, must be transmitted
by DTC on behalf of a holder and
received by the exchange agent
before 5:00 p.m., New York City
time, on the expiration date of
the exchange offer.
Special Procedures for Beneficial
Holders.........................................If you beneficially own old
notes that are registered in the
name of a broker, dealer,
commercial bank, trust company
or other nominee and you wish to
tender in the exchange offer,
you should contact the
registered holder promptly and
instruct that person to tender
on your behalf. If you wish to
tender in the exchange offer on
your own behalf, you must, prior
to completing and executing the
letter of transmittal and
delivering your old notes,
either arrange to have the old
notes registered in your name or
obtain a properly completed bond
power from the registered
holder. The transfer of
registered ownership may take
considerable time.
Withdrawal Rights...............................You may withdraw your tender of
old notes at any time before the
exchange offer expires.
-4-
Accounting Treatment............................We will not recognize any gain
or loss for accounting purposes
upon the completion of the
exchange offer. The expenses of
the exchange offer that we pay
will increase our deferred
financing costs in accordance
with generally accepted
accounting principles. See "The
Exchange Offer--Accounting
Treatment."
Certain Tax Consequences........................The exchange pursuant to the
exchange offer generally will
not be a taxable event for U.S.
Federal income tax purposes.
Use of Proceeds.................................We will not receive any proceeds
from the exchange or the
issuance of new notes in
connection with the exchange
offer.
Exchange Agent..................................SunTrust Bank is serving as
exchange agent in connection
with the exchange offer.
-5-
SUMMARY DESCRIPTION OF THE NEW NOTES
The new notes have the same financial terms and covenants as the old notes,
which are as follows:
Issuer..........................................Office Depot, Inc.
Total Amount of Notes Offered...................$250,000,000 aggregate principal
amount of new 10% Senior
Subordinated Notes due 2008.
Maturity........................................July 15, 2008.
Interest........................................January 15 and July 15,
commencing on January 15, 2002.
Ranking.........................................These notes are senior
subordinated debt. They rank
behind all of our current and
future senior indebtedness,
other than trade payables,
except indebtedness that
expressly provides that it is
not senior to these notes. The
notes will be effectively
subordinated to all debt of our
subsidiaries. After giving
effect to the sale of the old
notes, at June 30, 2001, we
would have had no senior debt
outstanding and our subsidiaries
would have had $58.7 million of
outstanding debt in addition to
other liabilities, including
trade payables.
Optional Redemption.............................We may redeem the notes at any
time at a redemption price equal
to the greater of:
o 100% of their principal
amount, or
o the sum of the present
values of the remaining
scheduled payments of
principal and interest,
discounted to maturity
on a semi-annual basis
(assuming a 360-day
year consisting of
twelve 30-day months)
at the Treasury Yield
plus 50 basis points,
plus, in each case, accrued and
unpaid interest.
Offer to Repurchase.............................If we sell assets under some
circumstances, or experience
specific kinds of changes of
control, we must offer to
repurchase the notes at the
prices listed under "Description
of Notes" under the heading
"Repurchase at the Option of
Holders."
Basic Covenants.................................Before the notes receive the
ratings described under
"Description of Notes" from both
Standard & Poor's Ratings Group
and Moody's Investor's Services
Inc. and certain other
conditions are satisfied which
we call a "Fall-Away Event,"
covenants contained in the
indenture under which the notes
will be issued will, among other
things, limit our ability and
that of our restricted
subsidiaries to:
o borrow money;
o pay dividends on,
redeem or repurchase
our capital stock;
o make investments;
o sell assets;
-6-
o create restrictions on
the payment of
dividends or other
amounts to us from our
restricted
subsidiaries; and
o enter into transactions
with affiliates.
After the Fall-Away Event, the
above limitations will not
apply. So long as any notes are
outstanding, covenants contained
in the indenture will, among
other things, limit our ability
and the ability of our
restricted subsidiaries to:
o create liens; and
o consolidate, merge or
sell all or
substantially all of
our assets.
So long as any notes are
outstanding, the indenture will
require us to provide reports to
holders of notes. These
covenants are subject to a
number of important exceptions,
limitations and qualifications,
which are described under
"Description of Notes."
-7-
SUMMARY HISTORICAL FINANCIAL DATA
The summary historical financial data as of and for each of the five
years 1996 through 2000 were derived from our audited consolidated financial
statements. The summary historical data as of and for the first half of 2000 and
2001 were derived from unaudited financial statements. The 1998, 1999 and 2000
audited financial statements and the unaudited second quarter 2000 and 2001
financial statements are included in documents incorporated by reference in this
prospectus. This summary historical and pro forma data is qualified in its
entirety by the more detailed information appearing in our consolidated
historical financial statements and related notes and other financial
information incorporated by reference in this prospectus. We have reclassified
certain amounts in our prior year statements to conform them to presentation
used in the current year.
For the
Twelve
Months
Fiscal Year(1) First Half Ended
----------------------------------------------------------- ----------------------- June 30,
1996 1997 1998 1999 2000 2000 2001 2001 (6)
-------- -------- -------- -------- -------- -------- ---------- ---------
(dollars in thousands)
STATEMENT OF EARNINGS DATA:
Sales............................ $7,259,206 $8,108,714 $9,007,051 $10,272,060 $11,569,696 $5,698,507 $5,571,417 $11,442,606
Cost of goods sold and occupancy
costs.......................... 5,395,223 5,963,521 6,484,464 7,450,310 8,479,698 4,109,348 4,025,848 8,396,198
--------- --------- --------- --------- --------- --------- --------- ---------
Gross profit.................. 1,863,983 2,145,193 2,522,587 2,821,750 3,089,998 1,589,159 1,545,569 3,046,408
Store and warehouse operating
and selling expenses........... 1,288,382 1,451,587 1,651,355 1,969,817 2,361,301 1,105,740 1,138,784 2,394,345
Pre-opening expenses............. 9,827 6,609 17,150 23,628 13,465 5,807 2,600 10,258
General and administrative
expenses....................... 222,714 272,022 330,194 381,611 501,700 221,402 228,905 509,203
Merger and restructuring costs... - 16,094 119,129 (7,104) (6,732) 4,381 1,013 (10,100)
Facility closure and relocation
costs.......................... - - - 40,425 110,038 - (3,164) 106,874
--------- --------- --------- --------- --------- --------- ---------- ---------
Operating profit.............. 343,060 398,881 404,759 413,373 110,226 251,829 177,431 35,828
Interest income.................. 3,726 7,570 25,309 30,176 11,502 6,885 3,824 8,441
Interest expense................. (26,378) (21,680) (22,356) (26,148) (33,901) (14,266) (18,796) (38,431)
Miscellaneous income (expense),
net........................... (8,325) (13,180) (18,985) (3,514) 4,632 20,589 (6,426) (22,383)
---------- ---------- ---------- ---------- --------- --------- ---------- ----------
Earnings before income taxes.. 312,083 371,591 388,727 413,887 92,459 265,037 156,033 (16,545)
Income taxes..................... 115,865 136,730 155,531 156,249 43,127 98,064 57,730 2,793
--------- --------- --------- --------- --------- --------- --------- ---------
Net earnings..................... $ 196,218 $ 234,861 $ 233,196 $ 257,638 $ 49,332 $ 166,973 $ 98,303 $ (19,338)
========= ========= ========= ========= ========= ========= ========= ==========
OTHER DATA:
Cash flows provided by (used in):
Operating activities.......... $ 181,645 $ 446,975 $ 678,615 $ 369,449 $ 316,482 $ 319,166 $ 423,192 $ 420,508
Investing activities:
Capital expenditures........ (234,489) (165,213) (233,089) (392,305) (267,728) (126,370) (71,546) (212,904)
Other investing activities.. (7,950) 24,157) (38,228) (55,536) 28,363 (2,652) (6,842) 24,173
Financing activities.......... 61,690 (131,920) 61,747 (405,849) (134,093) (187,926) (283,714) (229,881)
EBITDA(2)........................ 433,853 505,177 526,378 580,942 320,568 368,597 268,749 220,720
Total debt to EBITDA(3)....... 1.3x 0.9x 0.9x 1.0x 2.3x 1.0x 2.1x 2.1x
EBITDA to interest expenses(3)... 16.4x 23.3x 23.5x 22.2x 9.5x 21.9x 5.7x 5.7x
Adjusted EBITDA(4)............... $ 433,853 $ 521,271 $ 645,507 $ 686,124 $ 578,340 $ 372,978 $ 266,598 $ 471,960
Total debt to adjusted EBITDA(3) 1.3x 0.9x 0.7x 0.8x 1.3x 0.9x 1.0x 1.0x
Adjusted EBITDA to interest
expense(3)..................... 16.4x 24.0x 28.9x 26.2x 17.1x 25.3x 12.3x 12.3x
BALANCE SHEET DATA (AT PERIOD END):
Working capital.................. $ 860,280 $1,093,463 $1,293,370 $ 687,007 $ 790,752 $ 612,621 $ 729,758 $ 729,758
Net PP&E......................... 785,058 846,676 979,229 1,145,628 1,119,306 1,178,182 1,092,862 1,092,862
Short-term debt.................. 142,339 2,473 2,834 250,466 153,259 256,685 7,925 7,925
Long-term debt................... 416,757 447,020 470,711 321,099 598,499 341,628 459,741 459,741
Stockholders' equity............. 1,469,110 1,717,638 2,028,879 1,907,720 1,601,251 1,824,061 1,684,955 1,684,955
Percentage of total debt to
capitalization................. 27.6% 20.7% 18.9% 23.1% 31.9% 24.7% 21.7% 21.7%
PRO FORMA INFORMATION(5):
Cash .............................................................................................................. $ 334,007
Short-term debt.................................................................................................... 7,925
Long-term debt..................................................................................................... 614,241
Percentage of total debt to capitalization......................................................................... 27.0%
Total debt to adjusted EBITDA...................................................................................... 1.3x
Adjusted EBITDA to interest expense................................................................................ 8.1x
- ------------------
-8-
(1) Our results for fiscal year 2000 contained 53 weeks; all other fiscal years contained 52 weeks.
(2) EBITDA represents earnings before interest, taxes, depreciation and amortization. EBITDA is presented because it
is a widely accepted financial indicator of a company's ability to incur and service debt. EBITDA does not
represent net income or cash flows from operations as those terms are defined in generally accepted accounting
principles or GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs.
(3) Ratios for interim periods are based on last twelve month operating data.
(4) Adjusted EBITDA represents EBITDA excluding the following charges and credits:
For the
Twelve
Months
Ended
Fiscal Year(1) First Half June 30,
--------------------------------------------------- -------------------
1996 1997 1998 1999 2000(a) 2000 2001 2001(a) (6)
-------- -------- -------- -------- ------------------- -------- -----------
(dollars in thousands)
Merger and restructuring charges
(credits)...................... $ - $ 16,094 $ 119,129 $ (7,104) $ (6,732) $ 4,381 $ 1,013 $ (10,100)
Other one-time charges and credits
(b) - - - 112,286 264,504 - (3,164) 261,340
--------- -------- --------- -------- --------- -------- ---------- ---------
$ - $ 16,094 $ 119,129 $105,182 $ 257,772 $ 4,381 $ (2,151) $ 251,240
========= ======== ========= ======== ========= ======== ========== =========
(a) Excludes $2.9 million charge that was recorded in depreciation
expense; aggregate net charge in 2000 was $260.6 million.
(b) For a discussion of these charges and credits see Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Results of Operations - One-time Charges and Credits
included in the 2000 Form 10-K incorporated by reference in this
prospectus.
(5) The pro forma information gives effect to this offering and the application of the net proceeds to repay
$95,500 of borrowings outstanding as of June 30, 2001.
(6) Financial data for the twelve months ended June 30, 2001 are unaudited. Amounts, other than ratios,
Balance Sheet Data and Pro Forma Information, were computed as Fiscal Year 2000 amounts less First
Half 2000 amounts plus First Half 2001 amounts.
-9-
RISK FACTORS
You should carefully consider the following risk factors and the other
information set forth in this prospectus before deciding to participate in the
exchange offer. You should also review the risk factors that are contained in
our cautionary statement in our 2000 Form 10-K, which is incorporated herein by
reference.
RISKS RELATING TO THE EXCHANGE OFFER
THE LIQUIDITY OF UNEXCHANGED OLD NOTES WILL BE SUBSTANTIALLY LIMITED FOLLOWING
THE EXCHANGE OFFER.
Although we believe there is currently a limited trading market for the
old notes, no generally reliable public pricing information for the old notes is
available. The trading market for unexchanged old notes could become even more
limited or nonexistent due to the reduction in the amount of old notes
outstanding after the exchange offer, which might adversely affect the
liquidity, market price and price volatility of the old notes. If a market for
unexchanged old notes exists or develops, the old notes may trade at a discount
to the price at which the old notes would have traded if the amount of the old
notes outstanding had not been reduced following the exchange offer, depending
on prevailing interest rates, the market for similar securities, our operating
results, and other factors. There can be no assurance that an active market in
the unexchanged old notes exists, will continue to exist or will develop, and no
assurance can be given as to the prices at which the unexchanged old notes may
be traded.
THERE IS CURRENTLY NO MARKET FOR THE NEW NOTES--IF AN ACTIVE TRADING MARKET FOR
THE NEW NOTES DOES NOT DEVELOP, THE LIQUIDITY AND VALUE OF THE NEW NOTES COULD
BE HARMED.
The new notes are new issues of securities for which there is currently
no trading market. We do not intend to apply for listing of the new notes on any
securities exchange. Although the notes represented by the Global Notes are
expected to be eligible to trade in the PORTAL market and to trade in DTC's
Same-Day Funds Settlement System, there can be no assurance that an active
market will develop upon completion of the exchange offer or, if developed, that
the market will be sustained or that any market will be liquid.
THE NEW NOTES WILL BE JUNIOR TO OUR SENIOR DEBT.
The new notes will be subordinated in right of payment to all of our
future senior debt. Upon any distribution to our creditors in a liquidation or
dissolution, the holders of senior debt will be entitled to be paid in full
before any payment may be made with respect to the new notes. In addition, the
subordination provisions of the indenture will provide that payments with
respect to the new notes will be blocked in the event of a payment default on
senior debt and may be blocked for up to 179 days each year in the event of
certain non-payment defaults on senior debt. In the event of our bankruptcy,
liquidation or reorganization, holders of the new notes will participate ratably
in our remaining assets with all holders of subordinated indebtedness that is
deemed to be of the same class as the new notes and potentially with all other
general creditors, based upon the respective amounts owed to each holder or
creditor. In any of the foregoing events, there can be no assurance that there
would be sufficient assets to pay amounts due on the new notes. As a result,
holders of new notes may receive less, ratably, than the holders of senior debt.
In addition, under the subordination provisions of the indenture, payments that
would otherwise be made to holders of the new notes will instead be paid to
holders of senior debt under certain circumstances. As a result of these
provisions, other creditors (including trade creditors) that are not holders of
senior debt may recover more, ratably, than the holders of the new notes. In
addition, the new notes will be effectively subordinated to all outstanding
obligations of any of our subsidiaries.
As of June 30, 2001, after application of the net proceeds from the
sale of the old notes, we had no senior debt outstanding and our subsidiaries
would have had $58.7 million of outstanding debt in addition to other
liabilities, including trade payables. In addition, we would be able to incur a
significant amount of additional senior indebtedness under our existing credit
facilities. The indenture will permit us and our subsidiaries to incur a
substantial amount of additional indebtedness, including senior debt, in the
future.
-10-
WE ENTERED INTO AN EXCHANGE AND REGISTRATION RIGHTS AGREEMENT WITH THE INITIAL
PURCHASERS OF THE OLD NOTES THAT MAY REQUIRE US TO PAY SPECIAL INTEREST WITH
RESPECT TO THE OLD NOTES IN CERTAIN CIRCUMSTANCES.
Under the Exchange and Registration Rights Agreement with the initial
purchasers of the old notes, if (i) Office Depot fails to file an exchange offer
registration statement within 90 days after July 2, 2001; or (ii) the exchange
offer registration statement fails to become effective within 180 days after
July 2, 2001; or (iii) Office Depot fails to complete the exchange offer within
45 days after the effectiveness of the exchange offer registration statement, or
(iv) Office Depot becomes obligated to file a shelf registration statement with
respect to the old notes, and does not thereafter file the shelf registration
statement within 90 days after the obligation to file the shelf registration
statement matures; or (v) the shelf registration statement has not been declared
effective on or prior to 180 days after its filing; or (vi) after becoming
effective, either the exchange offer registration statement or the shelf
registration statement, as the case may be, becomes subject to a stop order
issued pursuant to Section 8(d) of the Securities Act of 1933, as amended,
without being succeeded immediately by an additional filed and effective
registration statement (any of the foregoing events, a "Registration Default"),
then during each period that a Registration Default has occurred and is
continuing, Office Depot must pay special interest to the holders of old notes,
in addition to any other interest due and payable to such holders, at a per
annum rate of 0.25% for the first 90 days during which the Registration Default
continues, at a per annum rate of 0.50% for the second 90 days during which the
Registration Default continues, at a per annum rate of 0.75% for the third 90
days during which the Registration Default continues and at a per annum rate of
1.0% during any remaining period during which the Registration Default
continues.
A SIGNIFICANT PORTION OF OUR OPERATIONS EXIST AT OUR SUBSIDIARY LEVEL AND OUR
SUBSIDIARIES HAVE NO OBLIGATIONS UNDER THE NEW NOTES.
We derive much of our revenue from our subsidiaries. The indenture
governing the notes permits us and our subsidiaries to incur a substantial
amount of additional indebtedness, and does not require our subsidiaries to
guarantee the notes. In the event of a bankruptcy, liquidation or reorganization
of a subsidiary, holders of any of subsidiary's indebtedness will have a claim
to the assets of the subsidiary that is prior to our interest in those assets.
As of June 30, 2001, after giving effect to the sale of the old notes and the
application of the net proceeds therefrom, the aggregate amount of indebtedness
of our subsidiaries would have been approximately $58.7 million, in addition to
other liabilities, including trade payables. If any subsidiary indebtedness were
to be accelerated, there can be no assurance that the assets of that subsidiary
would be sufficient to repay the indebtedness or that our assets and the assets
of our other subsidiaries would be sufficient to repay in full our indebtedness,
including the new notes.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE ANY CHANGE
OF CONTROL OFFER REQUIRED BY THE INDENTURE.
Upon a change of control, we will be required to offer to repurchase
all outstanding new and old notes at 101% of the principal amount thereof plus
accrued and unpaid interest to the date of repurchase. However, there can be no
assurance that sufficient funds will be available at the time of any change of
control to make any required repurchases of new or old notes tendered or that
restrictions in our credit facilities will allow us to make the required
repurchases. Notwithstanding these provisions, we could enter into certain
transactions, including certain recapitalizations, that would not constitute a
change of control but would increase the amount of debt outstanding at that
time. See "Description of Notes -- Repurchase at the Option of Holders -- Change
of Control."
FEDERAL AND STATE LAWS PERMIT A COURT TO VOID THE NOTES UNDER CERTAIN
CIRCUMSTANCES.
Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if, among other things, we, at the
time we incurred the indebtedness evidenced by the new notes, (1) (a) were or
are insolvent or rendered insolvent by reason of incurring the indebtedness or
(b) were or are engaged in a business or transaction for which the assets
remaining with us constituted unreasonably small capital or (c) intended or
intend to incur, or believed or believe that we would incur, debts beyond our
ability to pay such debts as they mature, and (2) we received or receive less
than reasonably equivalent value or fair consideration for incurring the
indebtedness, then the new notes could be voided, or claims in respect of the
new notes could be subordinated to all of our other debts. In addition, the
payment of interest and principal by us pursuant to the new notes could be
voided and required to be returned to the person making payment, or to a fund
for the benefit of our creditors.
-11-
The measures of insolvency for purposes of the foregoing considerations
will vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, we would be considered insolvent if:
o the sum of our debts, including contingent liabilities, were
greater than the saleable value of all of our assets at a fair
valuation or if the present fair saleable value of our assets were
less than the amount that would be required to pay our probable
liability on our existing debts, including contingent liabilities,
as they become absolute and mature; or
o we could not pay our debts as they become due.
On the basis of historical financial information, recent operating
history and other factors, we believe that, after giving effect to the
indebtedness incurred in connection with the exchange offer, we will not be
insolvent, will not have unreasonably small capital for the business in which we
are engaged and will not incur debts beyond our ability to pay as the debts
mature. There can be no assurance, however, as to what standard a court would
apply in making a determination or that a court would agree with our conclusions
in this regard.
RISKS RELATING TO OUR BUSINESS
THE CURRENT ECONOMIC DOWNTURN IN THE U.S. ECONOMY HAS AND IS LIKELY TO CONTINUE
TO ADVERSELY IMPACT OUR BUSINESS AND OPERATING RESULTS.
In the past decade, the favorable United States economy has contributed
to the expansion and growth of retailers like us. Since the third quarter of
2000, the U.S. economy has shown signs of a downturn, particularly in the
technology sector. The retail industry, in particular, is displaying signs of a
slowdown, with several specialty retailers, both in and outside our industry
segment, reporting earnings warnings in the last few months. Technology
manufacturers, some of whom supply us with products, have issued earnings
warnings as a result of slow product sales. This general economic slowdown
negatively impacted our results during the second half of 2000 and the first
half of 2001 and is likely to continue to adversely impact our business and
operating results.
WE FACE INTENSE COMPETITION AND WILL FACE MORE COMPETITION IN THE FUTURE.
We compete with a variety of retailers, dealers and distributors in a
highly competitive marketplace that includes high-volume office supply chains,
warehouse clubs, computer stores, contract stationers, Internet-based
merchandisers and well-established mass merchant retailers. Significant
competitive factors include, among others, the following:
o Well-established mass merchant retailers that have the financial
and distribution ability to compete very effectively with us
should they choose to increase their presence in the office
superstore retail category, Internet office supply or contract
stationer business or should they substantially expand their
product offerings in their existing retail outlets.
o Many start-up operations that are heavily focused on Internet
sales may be able to compete with us in the areas of price and
selection. In addition, certain manufacturers of computer
hardware, software and peripherals, including certain of our
suppliers, have expanded their own direct marketing of products,
particularly over the Internet.
o Some of our competitors focus exclusively on the contract and/or
commercial businesses and therefore may gain a competitive
advantage in those areas.
In order to achieve and maintain expected profitability levels, we must
continue to grow our business while maintaining the service levels and
aggressive pricing necessary to retain existing customers in each of our
business segments. Our failure to adequately address these challenges could put
us at a competitive disadvantage relative to these competitors.
-12-
OUR QUARTERLY OPERATING RESULTS HAVE FLUCTUATED SIGNIFICANTLY IN THE PAST AND
MAY CONTINUE TO DO SO IN THE FUTURE.
Fluctuations in our quarterly operating results have occurred in the
past and may occur in the future. A variety of factors could contribute to this
quarter-to-quarter variability, including:
o new store openings that require an outlay of pre-opening expenses,
generate lower initial profit margins and cannibalize existing
stores;
o timing and effectiveness of warehouse integration;
o competitors' pricing;
o changes in our product mix;
o effects of seasonality; and
o competitive store openings or other events.
In addition, our operating results may fall below securities analysts'
expectations, which may cause the price of our securities to fall abruptly and
significantly. Our operating results should not be relied upon as an indication
of future performance.
THE LOSS OF KEY MEMBERS OF OUR SENIOR MANAGEMENT TEAM COULD ADVERSELY AFFECT OUR
BUSINESS.
Our success depends largely on the efforts and abilities of our current
senior management team. Their experience and industry contacts significantly
benefit us. Our management team has undergone changes in the last year with the
appointment of a new Chief Executive Officer and presidents to each of our three
operating business segments. We are currently searching for a Chief Financial
Officer. If we were to lose the benefit of their experience and contacts or if
the changes in management do not generate the benefits we seek, our business
could be adversely affected.
DOING BUSINESS OUTSIDE THE UNITED STATES INVOLVES NUMEROUS RISKS THAT COULD
NEGATIVELY AFFECT OUR BUSINESS AND OPERATING RESULTS.
We operate in a number of international markets and intend to continue
to enter into additional international markets as attractive opportunities
arise. In addition to the risks described above, internationally we face risks
such as:
o foreign currency fluctuations;
o unstable political, economic, financial and market conditions;
o compromised operating control of some of our foreign operations
that are not wholly owned;
o system changes and harmonization of prices to accommodate the
adoption of the euro; and
o lack of adequate management resources.
All of these risks have in the past and could have in the future a
material adverse effect on our business and operating results.
-13-
VARIOUS GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL RISKS APPLICABLE TO OUR
BUSINESS MAY REQUIRE US TO TAKE ACTIONS THAT WILL ADVERSELY AFFECT OUR RESULTS
OF OPERATIONS.
Our business is subject to numerous federal, state, provincial, local
and foreign laws and regulations, including regulations with respect to air
emissions, wastewater discharges and the generation, handling, storage,
transportation, treatment and disposal of waste materials. Although we believe
we are in substantial compliance with all applicable laws and regulations, legal
requirements are frequently changed and subject to interpretation, and we are
unable to predict the ultimate cost of compliance with these requirements or
their effect on our operations. We may be required to make significant
expenditures to comply with governmental laws and regulations. We cannot be
certain that existing laws or regulations, as currently interpreted or
reinterpreted in the future, or future laws or regulations, will not have a
material adverse effect on our results of operations and financial condition.
-14-
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer.
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
June 30, 2001, as adjusted to give effect to the sale of old notes and the
application of the estimated net proceeds therefrom. The information in this
table does not give effect to any other events subsequent to June 30, 2001.
As of June 30, 2001
-------------------
Actual As Adjusted
------ -----------
(unaudited)
(in thousands)
Current portion of long-term debt ................................................ $ 7,925 $ 7,925
Long-term debt, less current portion ............................................. 229,718 134,218(1)
Zero coupon, convertible subordinated notes ...................................... 230,023 230,023
Issuance of old notes ............................................................ _____ 250,000
Common stockholders' equity:
Common stock, $0.01 par value; 800,000,000 shares
authorized, 380,686,294 issued at June 30, 2001(2)......................... 3,807 3,807
Additional paid-in capital .................................................. 953,459 953,459
Unamortized value of long-term incentive stock grant ........................ (2,770) (2,770)
Accumulated other comprehensive loss ........................................ (82,377) (82,377)
Retained earnings ........................................................... 1,614,994 1,614,994
Treasury stock, at cost; deferred compensation and other .................... (802,158) (802,158)
----------- -----------
Total common stockholders' equity ......................................... 1,684,955 1,684,955
----------- -----------
Total capitalization ................................................... $ 2,152,621 $ 2,307,121
=========== ===========
- ------------------------
1 The actual amount repaid with the proceeds of the notes will depend upon the
amount outstanding under our domestic credit facilities when we repay them.
2 Does not include 55,005,061 shares of our common stock that are reserved for
issuance under our stock option plans, under which 21,408,503 options for shares
were exercisable at June 30, 2001.
-15-
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain of our selected consolidated
financial and operating data. The selected consolidated financial and operating
data as of and for the fiscal years ended December 28, 1996, December 27, 1997,
December 26, 1998, December 25, 1999, and December 30, 2000 have been derived
from our audited financial statements. The selected consolidated financial and
operating data as of and for the twenty-six weeks ended June 24, 2000 and June
30, 2001 have been derived from our unaudited consolidated financial statements.
Our operating results for the interim periods are not necessarily indicative of
the results that may be expected for 2001. This information should be read in
conjunction with the detailed information and consolidated financial statements
and accompanying notes incorporated by reference herein. See "Available
Information." On August 26, 1998, we merged with Viking Office Products in a
transaction accounted for as a pooling of interests. Accordingly, all periods
prior to the merger have been restated to include Viking. We have reclassified
certain amounts in our prior year statements to conform them to presentation
used in the current year.
FISCAL YEAR(1) FIRST HALF
------------------------------------------------------------ ---------------------
1996 1997 1998 1999 2000 2000 2001
---------- ---------- ---------- ---------- ---------- ---------- --------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
STATEMENT OF EARNINGS DATA:
Sales................... $7,259,206 $8,108,714 $9,007,051 $10,272,060 $11,569,696 $5,698,507 $5,571,417
Cost of goods sold and
occupancy costs....... 5,395,223 5,963,521 6,484,464 7,450,310 8,479,698 4,109,348 4,025,848
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross profit............ 1,863,983 2,145,193 2,522,587 2,821,750 3,089,998 1,589,159 1,545,569
Store and warehouse
operating and selling
expenses.............. 1,288,382 1,451,587 1,651,355 1,969,817 2,361,301 1,105,740 1,138,784
Pre-opening expenses.... 9,827 6,609 17,150 23,628 13,465 5,807 2,600
General and
administrative expenses 222,714 272,022 330,194 381,611 501,700 221,402 228,905
Merger and restructuring
costs................. - 16,094 119,129 (7,104) (6,732) 4,381 1,013
Facility closure and
relocation costs...... - - - 40,425 110,038 - (3,164)
---------- ---------- ---------- ---------- ---------- ---------- -----------
Operating profit........ 343,060 398,881 404,759 413,373 110,226 251,829 177,431
Interest income......... 3,726 7,570 25,309 30,176 11,502 6,885 3,824
Interest expense........ (26,378) (21,680) (22,356) (26,148) (33,901) (14,266) (18,796)
Miscellaneous income
(expense), net........ (8,325) (13,180) (18,985) (3,514) 4,632 20,589 (6,426)
----------- ----------- ----------- ----------- ---------- ---------- -----------
Earnings before income
taxes................. 312,083 371,591 388,727 413,887 92,459 265,037 156,033
Income taxes............ 115,865 136,730 155,531 156,249 43,127 98,064 57,730
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings............ $ 196,218 $ 234,861 $ 233,196 $ 257,638 $ 49,332 $ 166,973 $ 98,303
========== ========== ========== ========== ========== ========== ==========
EARNINGS PER SHARE(2):
Basic................... $ 0.55 $ 0.65 $ 0.64 $ 0.71 $ 0.16 $ 0.52 $ 0.33
Diluted................. 0.53 0.62 0.61 0.69 0.16 0.50 0.33
-16-
Fiscal Year(1) First Half
------------------------------------------------------------ ---------------------
1996 1997 1998 1999 2000 2000 2001
---------- ---------- ---------- ---------- ---------- ---------- --------
(dollars in thousands)
STATISTICAL DATA:
Facilities open at end of
period:
United States and Canada:
Office supply stores.. 561 602 702 825 888 855 829
Customer service centers 32 33 30 30 25 30 25
Call centers.......... 6 8 8 7 7 7 8
International(3):
Office supply stores.. 21 39 87 118 132 123 132
Customer service centers 12 16 17 17 17 17 19
Call centers.......... 8 12 13 14 14 13 15
OTHER DATA:
Ratio of earnings to
fixed charges(4).... 4.4x 5.0x 4.6x 4.1x 1.6x 4.5x 2.9x
BALANCE SHEET DATA (AT PERIOD END):
Working capital......... $ 860,280 $1,093,463 $1,293,370 $ 687,007 $ 790,752 $ 612,621 $ 729,758
Total assets............ 3,186,630 3,498,891 4,025,283 4,276,183 4,196,334 4,025,665 3,729,046
Long-term debt, excluding
current maturities.... 416,757 447,020 470,711 321,099 598,499 341,628 459,741
Common stockholders'
equity................ 1,469,110 1,717,638 2,028,879 1,907,720 1,601,251 1,824,061 1,684,955
SEGMENT DATA(5):
North American Retail
Division
Sales................... NA $4,734,626 $5,150,854 $5,927,666 $6,517,022 $3,211,753 $2,895,466
Gross profit............ NA 1,017,092 1,229,434 1,392,044 1,462,265 739,735 646,240
Store and warehouse
operating profit...... NA 386,584 536,761 508,455 452,595 259,853 159,587
Business Services Group
Sales................... NA 2,489,984 2,807,573 3,057,187 3,632,068 1,754,642 1,894,758
Gross profit............ NA 766,886 859,406 964,777 1,101,308 558,480 587,505
Store and warehouse
operating profit...... NA 193,582 187,815 250,642 205,791 130,660 134,365
International Division
Sales................... NA 887,408 1,052,543 1,325,372 1,467,357 734,069 782,669
Gross profit............ NA 362,394 435,244 538,456 577,046 291,675 312,480
Store and warehouse
operating profit...... NA 113,840 147,071 164,881 184,168 92,989 112,911
- ------------------
NA = not available
(1) Our results for fiscal year 2000 contained 53 weeks; all other fiscal years
contained 52 weeks. (2) Earnings per share previously reported for 1996
through 1998 have been restated to reflect the three-for-two stock
split declared on February 24, 1999.
(3) Includes facilities in our International Division that we wholly own or
lease, as well as those that we operate through licensing and joint venture
agreements.
(4) The ratio of earnings to fixed charges is based on earnings before income
taxes, fixed charges and undistributed earnings of joint ventures. Fixed
charges include interest expense and an estimated interest portion of
rents.
(5) Certain one-time charges and credits were excluded from the segment results
for the fiscal years because the effects of these charges and credits are
not comparable on a year-over-year basis.
-17-
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the old notes, we entered into a
registration rights agreement with the initial purchasers of the old notes,
under which we agreed to use our best efforts to file and have declared
effective an exchange offer registration statement under the Securities Act of
1933, and to complete the exchange offer as described in this prospectus. As
used in this section, the word "notes" when used without specific reference to
either new notes or old notes, refers to both old notes and new notes.
We are making the exchange offer in reliance on the position of the SEC
as expressed in certain no-action letters, although we have not sought our own
no-action letter. Based upon the interpretations by the SEC, we believe that a
holder of new notes (except a holder who is our "affiliate" within the meaning
of Rule 405 of the Securities Act of 1933) who exchanges old notes for new notes
in the exchange offer, generally may offer the new notes for resale, sell the
new notes and otherwise transfer the new notes without further registration
under the Securities Act of 1933 and without delivery of a prospectus that
satisfies the requirements of Section 10 of the Securities Act of 1933. This
does not apply, however, to a holder who is our "affiliate" within the meaning
of Rule 405 of the Securities Act of 1933. We also believe that a holder may
offer, sell or transfer the new notes only if the holder acquires the new notes
in the ordinary course of its business and is not participating, does not intend
to participate and has no arrangement or understanding with any person to
participate in a distribution of the new notes.
Holders of the old notes using the exchange offer to participate in a
distribution of new notes may not rely on the no-action letters referenced
above. This includes broker-dealers that acquired old notes directly from us,
but not as a result of market-making activities or other trading activities.
Consequently, those holders must comply with the registration and prospectus
delivery requirements of the Securities Act of 1933 in the absence of an
exemption from those requirements.
Each broker-dealer that receives new notes for its own account in
exchange for old notes, as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of the new notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by broker-dealers in connection with
the resale of new notes received in exchange for old notes where the old notes
were acquired by the broker-dealers as a result of market-making activities or
other trading activities. The letter of transmittal states that by acknowledging
and delivering a prospectus, a broker-dealer will not be considered to admit
that it is an "underwriter" within the meaning of the Securities Act of 1933. We
have agreed that for a period of 180 days after the expiration date, we will
make this prospectus available to broker-dealers for use in connection with any
resale. See the section entitled "Plan of Distribution."
Except as described above, this prospectus may not be used for an offer
to resell, resale or other transfer of new notes.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or the acceptance of it would not be in compliance with the securities or
blue sky laws of that jurisdiction.
TERMS OF THE EXCHANGE
Upon the terms and subject to the conditions of the exchange offer, we
will accept any and all old notes validly tendered prior to 5:00 p.m., New York
City time, on the expiration date. The date of acceptance for exchange of the
old notes, and completion of the exchange offer, is the exchange date, which
will be the first business day following the expiration date (unless extended as
described in this prospectus). We will issue, on or promptly after the exchange
date, an aggregate principal amount of up to $250,000,000 new notes for a like
principal amount of outstanding old notes tendered and accepted in connection
with the exchange offer. The new notes issued in connection with the exchange
offer will be delivered on the earliest practicable date following the exchange
date. Holders may tender some or all of their old notes in connection with the
exchange offer, but only in $1,000 increments of principal amount at maturity.
The exchange offer is not conditioned upon holders tendering a minimum principal
amount of old notes.
-18-
The terms of the new notes are identical in all material respects to
the terms of the old notes, except that the new notes have been registered under
the Securities Act of 1933 and are issued free from any covenant regarding
registration, including the payment of additional interest upon a failure to
file or have declared effective an exchange offer registration statement or to
complete the exchange offer by certain dates. The new notes will evidence the
same debt as the old notes and will be issued pursuant to the same indenture. As
of the date of this prospectus, $250,000,000 in aggregate principal amount of
the old notes is outstanding.
In connection with the issuance of the old notes, we arranged for the
old notes originally purchased by qualified institutional buyers and those sold
in reliance on Regulation S under the Securities Act of 1933 to be issued and
transferable in book-entry form through the facilities of The Depository Trust
Company, acting as depositary. Except as described under "Description of
Notes--Book-Entry, Delivery and Form," the new notes will be issued in the form
of a global note registered in the name of DTC or its nominee and each
beneficial owner's interest in it will be transferable in book-entry form
through DTC. See "Description of Notes--Book-Entry, Delivery and Form."
Holders of old notes do not have any appraisal or dissenters' rights in
connection with the exchange offer. Old notes that are not tendered for exchange
or are tendered but not accepted in connection with the exchange offer will
remain outstanding and be entitled to the benefits of the indenture under which
they were issued, but will not be entitled to any registration rights under the
registration rights agreement.
We shall be considered to have accepted validly tendered old notes if
and when we have given oral or written notice to the exchange agent. The
exchange agent will act as agent for the tendering holders for the purposes of
receiving the new notes from us.
If any tendered old notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events described in this
prospectus or otherwise, we will return the old notes, without expense, to the
tendering holder as quickly as possible after the expiration date.
Holders who tender old notes will not be required to pay brokerage
commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes on the exchange of old notes in connection with the
exchange offer. We will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the exchange offer.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date for the exchange offer is 5:00 p.m., New York City
time, on [Date], 2001, unless extended by us in our sole discretion (but in no
event to a date later than [Date], 2001), in which case the term "expiration
date" shall mean the latest date and time to which the exchange offer is
extended.
We reserve the right, in our sole discretion:
o to delay accepting any old notes;
o to extend or terminate the exchange offer if, in our reasonable
judgment, any of the conditions described below shall not have
been satisfied, by giving oral or written notice of the delay,
extension or termination to the exchange agent; and/or
o to amend or waive any term or condition of the exchange offer in
any manner.
If we amend the exchange offer in a manner that we consider material,
we will disclose the amendment by means of a prospectus supplement, and we will
extend the exchange offer for a period of five to ten business days. If we
determine to make a public announcement of any delay, extension, amendment or
termination of the exchange offer, we will do so by making a timely release
through an appropriate news agency.
INTEREST ON THE NEW NOTES
Interest on the new notes will accrue at the rate of 10% per annum from
the most recent date to which interest on the notes has been paid or, if no
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interest has been paid, from the date of the indenture governing the notes. We
will pay interest on the new notes semiannually in arrears on January 15 and
July 15, commencing on January 15, 2002.
CONDITIONS TO THE EXCHANGE OFFER
We will not be required to accept old notes for exchange and may
terminate the exchange offer as provided in this prospectus before the
acceptance of the old notes, if:
o any action or proceeding is instituted or threatened in any court
or by or before any governmental agency relating to the exchange
offer which, in our reasonable judgment, might materially impair
our ability to proceed with the exchange offer or materially
impair the contemplated benefits of the exchange offer to us, or
any material adverse development has occurred in any existing
action or proceeding relating to us or any of our subsidiaries;
o any change, or any development involving a prospective change, in
our business or financial affairs or those of any of our
subsidiaries has occurred which, in our reasonable judgment, might
materially impair our ability to proceed with the exchange offer
or materially impair the contemplated benefits of the exchange
offer to us;
o any law, statue, rule or regulation is proposed, adopted or
enacted, which in our reasonable judgment, might materially impair
our ability to proceed with the exchange offer or materially
impair the contemplated benefits of the exchange offer to us; or
o any governmental approval has not been obtained, which approval
we, in our reasonable discretion, consider necessary for the
completion of the exchange offer as contemplated by this
prospectus.
The conditions listed above are for our sole benefit and may be
asserted by us regardless of the circumstances giving rise to any of these
conditions. We may waive these conditions in our reasonable discretion in whole
or in part at any time and from time to time. The failure by us at any time to
exercise any of the above rights shall not be considered a waiver of the right,
and the right shall be considered an ongoing right that may be asserted at any
time and from time to time. If we determine in our reasonable discretion that
any of the conditions to the exchange offer are not satisfied, we may:
o refuse to accept any old notes and return all tendered old notes
to the tendering holders;
o extend the exchange offer and retain all old notes tendered before
the expiration of the exchange offer, subject, however, to the
rights of holders to withdraw their previously tendered old notes
(See "--Withdrawal of Tenders" below); or
o waive unsatisfied conditions relating to the exchange offer and
accept all properly tendered old notes that have not been
withdrawn.
PROCEDURES FOR TENDERING
Any financial institution that is a participant in DTC's Book-Entry
Transfer Facility system may make book-entry delivery of the old notes by
causing DTC to transfer the old notes into the exchange agent's account. In lieu
of delivering a letter of transmittal to the exchange agent, the holder may
cause a computer-generated message to be transmitted to DTC and the exchange
agent on the holder's behalf, in which the holder of old notes (i) makes the
representations contained in the letter of transmittal, (ii) agrees to be bound
by the terms of the letter of transmittal, and (ii) acknowledges and agrees that
Office Depot may enforce the letter of transmittal against the holder. The
computer-generated message must be transmitted to DTC on behalf of the holder
and received by the exchange agent prior to 5:00 p.m., New York City time, on
the expiration date. Delivery of documents to DTC in accordance with its
procedures does not constitute delivery to the exchange agent.
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Unless a tender is being made in book-entry form, to tender in the
exchange offer, a holder must:
o complete, sign and date the letter of transmittal; and
o mail or otherwise deliver the letter of transmittal, the old notes
and any other required documents to the exchange agent prior to
5:00 p.m., New York City time, on the expiration date. Do not send
any letters of transmittal to us.
The tender by a holder of old notes will constitute an agreement
between us and the holder in accordance with the terms and subject to the
conditions set forth in this prospectus and in the letter of transmittal.
The method of delivery of old notes and the letter of transmittal and
all other required documents to the exchange agent is at the election and risk
of the holders. Instead of delivery by mail, we recommend that holders use an
overnight or hand delivery service. In all cases, holders should allow
sufficient time to assure delivery to the exchange agent before the expiration
date. Holders may request their respective brokers, dealers, commercial banks,
trust companies or nominees to effect tenders on their behalf.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on behalf of the beneficial owner. If a beneficial
owner wishes to tender on that owner's own behalf, the owner must, prior to
completing and executing the letter of transmittal and delivering the owner's
old notes, either make appropriate arrangements to register ownership of the old
notes in the owner's name or obtain a properly completed bond power from the
registered holder. Please note that the transfer of registered ownership may
take considerable time.
If the letter of transmittal is signed by a person other than the
registered holder of any old notes, the old notes must be endorsed by the
registered holder or accompanied by a properly completed bond power, in each
case signed or endorsed in blank by the registered holder and guaranteed by a
member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in the United States.
If the letter of transmittal or any old notes or bond powers are signed
or endorsed by trustees, executors, administrators, guardians, attorney-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing and, unless waived by
us, submit evidence satisfactory to us of their authority to act in that
capacity with the letter of transmittal.
DETERMINATION OF VALIDITY
We will determine all questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of tendered old notes in
our sole discretion. We reserve the absolute right to reject any and all old
notes not properly tendered or any old notes whose acceptance by us would, in
the opinion of our U.S. counsel, be unlawful. We also reserve the right to waive
any defects, irregularities or conditions of tender as to any particular old
notes either before or after the expiration date. Our interpretation of the
terms and conditions of the exchange offer (including the instructions in the
letter of transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of old notes must be
cured within a time period we will determine. Although we intend to request the
exchange agent to notify holders of defects or irregularities relating to
tenders of old notes, neither we, the exchange agent nor any other person will
have any duty or incur any liability for failure to give such notification.
Tenders of old notes will not be considered to have been made until any defects
or irregularities have been cured or waived. Any old notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the exchange
agent to the tendering holders, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
By tendering, each holder represents to us, among other things, that:
o the holder has full power and authority to tender, exchange, sell,
assign and transfer old notes;
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o we will acquire good, marketable and unencumbered title to the
tendered old notes, free and clear of all liens, restrictions,
charges and other encumbrances;
o the old notes tendered for exchange are not subject to any adverse
claims or proxies;
o the new notes acquired in connection with the exchange offer are
being obtained in the ordinary course of business of the person
receiving the new notes, whether or not the person is the holder;
o neither the holder nor any other person has an arrangement or
understanding with any person to participate in the distribution
of the new notes; and
o neither the holder nor any such other person is our "affiliate"
(as defined in Rule 405 under the Securities Act of 1933).
Additionally, if the holder is a broker-dealer that will receive new
notes for its own account in exchange for old notes, the holder acknowledges
that it acquired old notes as the result of market-making or other trading
activities and covenants that the holder will deliver a prospectus in connection
with any resale of the new notes. See the section entitled "Plan of
Distribution."
GUARANTEED DELIVERY PROCEDURES
A holder who wishes to tender old notes and (i) whose old notes are not
immediately available, or (ii) who cannot deliver the old notes, the letter of
transmittal or any other required documents to the exchange agent prior to the
expiration date; or (iii) who cannot complete the procedures for book-entry
transfer before the expiration date, may effect a tender if the tender is made
through an Eligible Guarantor Institution (as that term is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934). Under Rule 17Ad-15, an
Eligible Guarantor Institution is:
o any Bank (as defined in section 3(a) of the Federal Deposit
Insurance Act);
o any broker, dealer, municipal securities dealer, municipal
securities broker, government securities dealer, or government
securities broker (as those terms are defined under the Securities
Exchange Act of 1934);
o any Credit Union (as that term is defined in Section 19
(b)(1)(A)of the Federal Reserve Act);
o any National securities exchange, registered securities
association or clearing agency, as those terms are used under the
Securities Exchange Act of 1934; or
o any Savings Association (as that term is defined in section 3(b)
of the Federal Deposit Insurance Act).
The Eligible Guarantor Institution must deliver to the exchange agent,
prior to the expiration date:
o a properly completed and duly executed notice of guaranteed
delivery by facsimile transmission, mail or hand delivery;
o the name and address of the holder; and
o the certificate number(s) of the old notes and the principal
amount at maturity of old notes tendered, stating that the tender
is being made and guaranteeing that, within three New York Stock
Exchange trading days after the expiration date, the letter of
transmittal and the certificate(s) representing the old notes (or
a confirmation of book-entry transfer), and any other documents
required by the letter of transmittal will be deposited by the
Eligible Guarantor Institution with the exchange agent.
The exchange agent must thereafter receive, within three New York Stock
Exchange trading days after the expiration date, a properly completed and
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executed letter of transmittal or facsimile, as well as the certificate(s)
representing all tendered old notes in proper form for transfer or a
confirmation of book-entry transfer, and all other documents required by the
letter of transmittal.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of old notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration
date. To withdraw a tender of old notes in connection with the exchange offer, a
written facsimile transmission notice of withdrawal must be received by the
exchange agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the expiration date. Any notice of withdrawal must:
o specify the name of the person who deposited the old notes to be
withdrawn;
o identify the old notes to be withdrawn (including the certificate
number or numbers and principal amount at maturity of the old
notes);
o be signed by the depositor in the same manner as the original
signature on the letter of transmittal by which the old notes were
tendered (including any required signature guarantees) or be
accompanied by documents or transfer sufficient to have the
trustee register the transfer of the old notes into the name of
the person withdrawing the tender; and
o specify the name in which any old notes are to be registered, if
different from that of the depositor.
If old notes have been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at the book-entry transfer facility to be credited with the
withdrawn old notes or otherwise comply with the book-entry transfer facility's
procedures. We will determine all questions as to the validity, form and
eligibility (including time of receipt) of any withdrawal notices. Any old notes
withdrawn will be considered not to have been validly tendered for purposes of
the exchange offer, and no new notes will be issued unless the old notes
withdrawn are validly re-tendered prior to the expiration date. Any old notes
that have been tendered but which are not accepted for exchange or which are
withdrawn will be returned to the holder without cost as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer.
Properly withdrawn old notes may be re-tendered by following one of the
procedures described above under the caption "Procedures for Tendering" at any
time prior to the expiration date.
EXCHANGE AGENT
SunTrust Bank has been appointed as exchange agent in connection with
the exchange offer. Questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal should be
directed to the exchange agent, at its offices at 777 Brickell Avenue, Miami,
Florida 33131. The exchange agent's telephone number is (305) 579-7009 and
facsimile number is (305) 579-7017.
FEES AND EXPENSES
We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer. We will pay certain other expenses to be
incurred in connection with the exchange offer, including the fees and expenses
of the exchange agent, accounting and certain legal fees. Holders who tender
their old notes for exchange will not be obligated to pay transfer taxes. If,
however:
o new notes are to be delivered to, or issued in the name of, any
person other than the registered holder of the old notes tendered;
or
o old notes are registered in the name of any person other than the
person signing the letter of transmittal; or
o a transfer tax is imposed for any reason other than the exchange
of old notes in connection with the exchange offer;
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then the amount of any transfer taxes (whether imposed on the registered holder
or any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of the taxes or exemption from them is not submitted with
the letter of transmittal, the amount of the transfer taxes will be billed
directly to the tendering holder.
ACCOUNTING TREATMENT
The new notes will be recorded at the same carrying value as the old
notes as reflected in our accounting records on the date of the exchange.
Accordingly, we will not recognize any gain or loss for accounting purposes upon
the completion of the exchange offer. The expenses of the exchange offer that we
pay will increase our deferred financing costs in accordance with generally
accepted accounting principles.
CONSEQUENCES OF FAILURE TO PROPERLY TENDER OLD NOTES IN THE EXCHANGE OFFER
We will issue new notes in exchange for the old notes pursuant to the
exchange offer only after timely receipt by the exchange agent of the old notes,
a properly completed and duly executed letter of transmittal and all other
required documents. Therefore, holders of the old notes desiring to tender their
old notes in exchange for new notes should allow sufficient time to ensure
timely delivery. We are under no duty to give notification of defects or
irregularities of tenders of old notes for exchange. Old notes that are not
tendered or that are tendered but not accepted by us will, following completion
of the exchange offer, continue to be subject to the existing restrictions upon
transfer thereof under the Securities Act of 1933, and, upon completion of the
exchange offer, certain registered rights under the registration rights
agreement will terminate.
If the exchange offer is completed, we will no longer be required to
register any old notes that remain outstanding. Remaining old notes will
continue to be subject to the following restrictions on transfer:
o the remaining old notes may be resold only if registered pursuant
to the Securities Act of 1933, if any exemption from registration
is available, or if neither registration nor exemption is required
by law, and
o the remaining old notes will bear a legend restricting transfer in
the absence of registration or an exemption.
We do not currently anticipate that we will register the remaining old
notes under the Securities Act of 1933. If a substantial number of old notes are
exchanged in connection with the exchange offer, any trading market for the
remaining old notes could be adversely affected.
In addition, although we have no present plan to acquire any old notes
that are not tendered in the exchange offer, we reserve the right in our sole
discretion to:
o purchase or make offers for any old notes that remain outstanding
subsequent to the expiration date; and
o to the extent permitted by applicable law, purchase old notes in
the open market, in privately negotiated transactions or
otherwise.
The terms of any such purchases or offers may differ from the terms of
the exchange offer.
DECISION TO PARTICIPATE IN THE EXCHANGE OFFER
Participation in the exchange offer is voluntary, and holders of old
notes should carefully consider whether or not to participate. We urge holders
of old notes to consult with their financial and tax advisors in making their
own decisions on which action to take.
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DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions" at the end of this section. In this
section, "Office Depot" refers only to Office Depot, Inc. and not to any of its
subsidiaries.
Office Depot will issue the new notes under the same indenture between
itself and SunTrust Bank, as trustee, that governs the old notes. See "Notice to
Investors." The terms of the new and old notes include those stated in the
indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939. As used in this section, the word "notes" when used
without specific reference to either new notes or old notes, refers to both old
notes and new notes.
The following description is a summary of the material provisions of
the indenture and the registration rights agreement. It does not restate those
agreements in their entirety. We urge you to read the indenture and the
registration rights agreement because they, and not this description, define
your rights as holders of the new and/or old notes. Copies of the indenture and
the registration rights agreement are available as set forth below under "--
Additional Information." Certain defined terms used in this description but not
defined below under "-- Certain Definitions" have the meanings assigned to them
in the indenture.
The registered Holder of a note will be treated as the owner of it for
all purposes. Only registered Holders will have rights under the indenture.
BRIEF DESCRIPTION OF THE NOTES
The notes:
o are general unsecured obligations of Office Depot;
o are subordinated in right of payment to all existing and future
Senior Debt of Office Depot; and
o are pari passu in right of payment with any future senior
subordinated Indebtedness of Office Depot.
Giving effect to application of the net proceeds from the sale of old
notes, as of June 30, 2001, Office Depot had no Senior Debt outstanding. As
indicated above and as discussed in detail below under the caption "--
Subordination," payments on the notes will be subordinated to the payment of
Senior Debt. The indenture permits us to incur additional Senior Debt without
limitation as to amount.
As of the date of the indenture, all of our subsidiaries were
"Restricted Subsidiaries." However, under the circumstances described below
under the subheading "-- Certain Covenants - Designation of Restricted and
Unrestricted Subsidiaries," we are permitted to designate certain of our
subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries are
not subject to many of the restrictive covenants in the indenture.
PRINCIPAL, MATURITY AND INTEREST
Office Depot will issue new notes having a maximum aggregate principal
amount of $250 million pursuant to the exchange offer. Office Depot may issue
additional notes from time to time after this exchange offer. Any offering of
additional notes is subject to the covenant described below under the caption
"-- Certain Covenants -- Undertaking of Indebtedness and Issuance of Preferred
Stock." New and old notes together with any additional notes subsequently issued
under the indenture will be treated as a single class for all purposes under the
indenture, including, without limitation, waivers, amendments, redemptions and
offers to purchase. Office Depot will issue new notes in denominations of $1,000
and integral multiples of $1,000. The notes will mature on July 15, 2008.
Interest on the notes will accrue at the rate of 10% per annum and will
be payable semi-annually in arrears on January 15 and July 15, commencing on
January 15, 2002. Office Depot will make each interest payment to the Holders of
record on the immediately preceding January 1 and July 1.
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Interest on the notes will accrue from the date of original issuance
or, if interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a Holder has given wire transfer instructions to Office Depot,
Office Depot will pay all principal, interest and premium and Special Interest,
if any, on that Holder's notes in accordance with those instructions. All other
payments on notes will be made at the office or agency of the paying agent and
registrar within the City and State of New York unless Office Depot elects to
make interest payments by check mailed to the Holders at their address set forth
in the register of Holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The trustee will initially act as paying agent and registrar. Office
Depot may change the paying agent or registrar without prior notice to the
Holders of the notes, and Office Depot or any of its Subsidiaries may act as
paying agent or registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange notes in accordance with the
indenture. The registrar and the trustee may require a Holder to furnish
appropriate endorsements and transfer documents in connection with a transfer of
notes. Holders will be required to pay all taxes due on transfer. Office Depot
is not required to transfer or exchange any note selected for redemption. Also,
Office Depot is not required to transfer or exchange any note for a period of 15
days before a selection of notes to be redeemed.
SUBORDINATION
The payment of principal, interest and premium and Special Interest, if
any, on the notes will be subordinated to the prior payment in full of all
Senior Debt of Office Depot, including Senior Debt incurred after the date of
the indenture.
The holders of Senior Debt will be entitled to receive payment in full
of all Obligations due in respect of Senior Debt (including interest after the
commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt) before the Holders of notes will be entitled to receive
any payment with respect to the notes (except that Holders of notes may receive
and retain Permitted Junior Securities and payments made from the trust
described under "-- Legal Defeasance and Covenant Defeasance"), in the event of
any distribution to creditors of Office Depot:
(1) in a liquidation or dissolution of Office Depot;
(2) in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to Office Depot or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of Office Depot's assets and liabilities.
Office Depot also may not make any payment in respect of the notes
(except in Permitted Junior Securities or from the trust described under "--
Legal Defeasance and Covenant Defeasance") if:
(1) a payment default on Designated Senior Debt occurs and is
continuing beyond any applicable grace period; or
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(2) any other default occurs and is continuing on any series of
Designated Senior Debt that permits holders of that series of
Designated Senior Debt to accelerate its maturity and the
trustee receives a notice of such default (a "Payment Blockage
Notice") from Office Depot or the holders of any Designated
Senior Debt.
Payments on the notes may and will be resumed:
(1) in the case of a payment default, upon the date on which the
default is cured or waived; and
(2) in the case of a nonpayment default, upon the earlier of the
date on which the nonpayment default is cured or waived or 179
days after the date on which the applicable Payment Blockage
Notice is received, unless the maturity of any Designated
Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the delivery of the immediately
prior Payment Blockage Notice; and
(2) all scheduled payments of principal, interest and premium and
Special Interest, if any, on the notes that have come due have
been paid in full in cash.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee will be, or be made, the
basis for a subsequent Payment Blockage Notice.
If the trustee or any Holder of the notes receives a payment in respect
of the notes (except in Permitted Junior Securities or from the trust described
under "-- Legal Defeasance and Covenant Defeasance") when:
(1) the payment is prohibited by these subordination provisions;
and
(2) the trustee or the Holder has actual knowledge that the
payment is prohibited;
the trustee or the Holder, as the case may be, will hold the payment in trust
for the benefit of the holders of Senior Debt. Upon the proper written request
of the holders of Senior Debt, the trustee or the Holder, as the case may be,
will deliver the amounts in trust to the holders of Senior Debt or their proper
representative.
Office Depot must promptly notify holders of Senior Debt if payment of
the notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the
event of a bankruptcy, liquidation or reorganization of Office Depot, Holders of
notes may recover less ratably than creditors of Office Depot who are holders of
Senior Debt. See "Risk Factors - The new notes will be junior to our senior
debt."
OPTIONAL REDEMPTION
The notes will not be redeemable at the option of Office Depot except
as set forth in the following paragraph.
The notes may be redeemed, in whole or in part, at any time at the
option of Office Depot upon not less than 30 nor more than 60 days prior notice
mailed by first-class mail to each Holder's registered address, at a redemption
price equal to the greater of (i) 100% of the principal amount thereof or (ii)
as determined by an Independent Investment Banker, the sum of the present values
of the Remaining Scheduled Payments discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate, plus, in each case, accrued and unpaid interest and
Special Interest, if any, to the date of redemption.
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Unless Office Depot defaults in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the notes or portion
thereof called for redemption.
MANDATORY REDEMPTION
Office Depot is not required to make mandatory redemption or sinking
fund payments with respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each Holder of notes will have the right
to require Office Depot to repurchase all or any part (equal to $1,000 or an
integral multiple of $1,000) of that Holder's notes pursuant to a Change of
Control Offer on the terms set forth in the indenture. In the Change of Control
Offer, Office Depot will offer a Change of Control Payment in cash equal to 101%
of the aggregate principal amount of notes repurchased plus accrued and unpaid
interest and Special Interest, if any, on the notes repurchased, to the date of
purchase. Within ninety days following any Change of Control, Office Depot will
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase notes on the Change
of Control Payment Date specified in the notice, which date will be no earlier
than 30 days and no later than 60 days from the date such notice is mailed,
pursuant to the procedures required by the indenture and described in such
notice. Office Depot will comply with the requirements of Rule 14e-1 under the
Securities Exchange Act of 1934 and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection
with the repurchase of the notes as a result of a Change of Control. To the
extent that the provisions of any securities laws or regulations conflict with
the Change of Control provisions of the indenture, Office Depot will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations under the Change of Control provisions of the indenture
by virtue of such conflict.
On the Change of Control Payment Date, Office Depot will, to the extent
lawful:
(1) accept for payment all notes or portions of notes properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all notes or portions of notes
properly tendered; and
(3) deliver or cause to be delivered to the trustee the notes
properly accepted together with an officers' certificate
stating the aggregate principal amount of notes or portions of
notes being purchased by Office Depot.
The paying agent will promptly mail to each Holder of notes properly
tendered the Change of Control Payment for the notes, and the trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new note equal in principal amount to any unpurchased portion of
the notes surrendered, if any; provided that each new note will be in a
principal amount of $1,000 or an integral multiple of $1,000.
Prior to complying with any of the provisions of this "Change of
Control" covenant, but in any event within 90 days following a Change of
Control, Office Depot will either repay all outstanding Senior Debt or obtain
the requisite consents, if any, under all agreements governing outstanding
Senior Debt to permit the repurchase of notes required by this covenant. Office
Depot will publicly announce the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Payment Date.
The provisions described above that require Office Depot to make a
Change of Control Offer following a Change of Control will be applicable whether
or not any other provisions of the indenture are applicable. Except as described
above with respect to a Change of Control, the indenture does not contain
provisions that permit the Holders of the notes to require that Office Depot
repurchase or redeem the notes in the event of a takeover, recapitalization or
similar transaction.
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Office Depot will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in the indenture applicable to a Change of Control Offer made by Office
Depot and purchases all notes properly tendered and not withdrawn under the
Change of Control Offer.
The agreements governing Office Depot's Senior Debt currently prohibit
Office Depot from purchasing any notes, and also provide that certain change of
control or asset sale events with respect to Office Depot would constitute a
default under those agreements. Any future credit agreements or other agreements
relating to Senior Debt to which Office Depot becomes a party may contain
similar restrictions and provisions. In the event a Change of Control or Asset
Sale occurs at a time when Office Depot is prohibited from purchasing notes,
Office Depot could seek the consent of its senior lenders to the purchase of
notes or could attempt to refinance the borrowings that contain the prohibition.
If Office Depot does not obtain consent or repay the borrowings, Office Depot
will remain prohibited from purchasing notes. In that case, Office Depot's
failure to purchase tendered notes would constitute an Event of Default under
the indenture which could, in turn, constitute a default under the Senior Debt.
In those circumstances, the subordination provisions in the indenture would
likely restrict payments to the Holders of notes.
The definition of Change of Control includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of
"all or substantially all" of the properties or assets of Office Depot and its
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of notes to require Office Depot to repurchase the Holder's notes as a
result of a sale, lease, transfer, conveyance or other disposition of less than
all of the assets of Office Depot and its Subsidiaries taken as a whole to
another Person or group may be uncertain.
Asset Sales
Office Depot will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) Office Depot (or the Restricted Subsidiary, as the case may
be) receives consideration at the time of the Asset Sale at
least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of;
(2) the fair market value is determined by Office Depot's Board of
Directors and evidenced by a resolution of the Board of
Directors set forth in an officers' certificate delivered to
the trustee; and
(3) at least 75% of the consideration received in the Asset Sale
by Office Depot or the Restricted Subsidiary is in the form of
cash. For purposes of this provision, each of the following
will be deemed to be cash:
(a) any liabilities, as shown on Office Depot's or the
Restricted Subsidiary's most recent balance sheet, of
Office Depot or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by
their terms subordinated to the notes) that are
assumed by the transferee of any assets and the
transferee expressly releases Office Depot or the
Restricted Subsidiary from further liability;
(b) any securities, notes or other obligations received
by Office Depot or any Restricted Subsidiary from the
transferee that are delivered within 20 days of the
sale, subject to ordinary settlement periods,
converted by Office Depot or the Restricted
Subsidiary into cash, to the extent of the cash
received in that conversion; and
(c) any payment of Senior Debt secured by the assets sold
in the Asset Sale.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, Office Depot may apply those Net Proceeds at its option:
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(1) to repay Senior Debt;
(2) to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Permitted Business;
(3) to make a capital expenditure; or
(4) to acquire other long-term assets that are used or useful in a
Permitted Business.
Pending the final application of any Net Proceeds, Office Depot may
temporarily reduce revolving credit borrowings or otherwise invest the Net
Proceeds in any manner that is not prohibited by the indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $25 million, Office Depot will make
an Asset Sale Offer to all Holders of notes and all holders of other
Indebtedness that is pari passu with the notes containing provisions similar to
those set forth in the indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100%
of principal amount plus accrued and unpaid interest and Special Interest, if
any, to the date of purchase, and will be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, Office Depot may use
those Excess Proceeds for any purpose not otherwise prohibited by the indenture.
If the aggregate principal amount of notes and other pari passu Indebtedness
tendered into the Asset Sale Offer exceeds the amount of Excess Proceeds, the
trustee will select the notes and other pari passu Indebtedness to be purchased
on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds will be reset at zero.
Office Depot will comply with the requirements of Rule 14e-1 under the
Securities Exchange Act of 1934 and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection
with each repurchase of notes pursuant to an Asset Sale Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
Asset Sale provisions of the indenture, Office Depot will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the Asset Sale provisions of the indenture by
virtue of the conflict.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the
trustee will select notes for redemption as follows:
(1) if the notes are listed on any national securities exchange,
in compliance with the requirements of the principal national
securities exchange on which the notes are listed; or
(2) if the notes are not listed on any national securities
exchange, on a pro rata basis, by lot or by any method the
trustee deems fair and appropriate.
No notes of $1,000 or less may be redeemed in part. Notices of
redemption will be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of notes to be redeemed at its
registered address, except that redemption notices may be mailed more than 60
days prior to a redemption date if the notice is issued in connection with a
defeasance of the notes or a satisfaction and discharge of the indenture.
Notices of redemption may not be conditional.
If any note is to be redeemed in part only, the notice of redemption
that relates to that note will state the portion of the principal amount of the
note that is to be redeemed. A new note in principal amount equal to the
unredeemed portion of the original note will be issued in the name of the Holder
of notes upon cancellation of the original note. Notes called for redemption
become due on the date fixed for redemption. On and after the redemption date,
interest ceases to accrue on notes or portions of them called for redemption.
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CERTAIN COVENANTS
CHANGES IN COVENANTS WHEN NOTES RATED INVESTMENT GRADE
Following the first date upon which the notes are rated Baa3 or better
by Moody's Investors Service, Inc. ("Moody's") and BBB- or better by Standard &
Poor's Ratings Group ("S&P") (or, in either case, if such person ceases to rate
the notes for reasons outside of the control of Office Depot, the equivalent
investment grade credit rating from any other "nationally recognized statistical
rating organization" (within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the
Securities Exchange Act of 1934) selected by Office Depot as a replacement
agency) and neither Moody's nor S&P attaches any "negative outlook" or "negative
credit watch" to the rating of the notes (the "Rating Event Date") (and provided
no Event of Default or event that with notice or the passage of time would
constitute an Event of Default shall exist on the Rating Event Date), the
covenants specifically listed under "-- Repurchase at the Option of Holders --
Asset Sales," "-- Repurchase at the Option of Holders -- Change of Control," "--
Restricted Payments," "-- Undertaking of Indebtedness and Issuance of Preferred
Stock," "-- Dividend and Other Payment Restrictions Affecting Subsidiaries," "--
Designation of Restricted and Unrestricted Subsidiaries," "-- Transactions with
Affiliates," and clause (4)(b) of the covenant listed under "-- Merger,
Consolidation or Sale of Assets" in this prospectus will no longer be applicable
to the notes.
There can be no assurance that a Rating Event Date will occur or, if
one occurs, that the notes will continue to maintain an investment grade rating
without a negative outlook.
The indenture contains, among others, the following covenants:
RESTRICTED PAYMENTS
Office Depot will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of Office Depot's or any of its
Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or
consolidation involving Office Depot or any of its Restricted
Subsidiaries) or to the direct or indirect holders of Office
Depot's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than
Disqualified Stock) of Office Depot or to Office Depot or a
Restricted Subsidiary of Office Depot);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger
or consolidation involving Office Depot) any Equity Interests
of Office Depot or any direct or indirect parent of Office
Depot;
(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the notes, except a
payment of interest or principal at the Stated Maturity
thereof; or
(4) make any Restricted Investment (all such payments and other
actions set forth in these clauses (1) through (4) above being
collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to the Restricted Payment:
(1) no Default or Event of Default has occurred and is continuing
or would occur as a consequence of the Restricted Payment; and
(2) Office Depot would, at the time of the Restricted Payment and
after giving pro forma effect thereto as if the Restricted
Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the
covenant described below under the caption "-- Undertaking of
Indebtedness and Issuance of Preferred Stock;" and
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(3) the Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by Office Depot and its
Restricted Subsidiaries after the date of the indenture
(excluding Restricted Payments permitted by clauses (2), (3)
and (4) of the next succeeding paragraph), is less than the
sum, without duplication, of:
(a) 50% of the Consolidated Net Income of Office Depot
for the period (taken as one accounting period) from
the beginning of the first fiscal quarter commencing
after the date of the indenture to the end of Office
Depot's most recently ended fiscal quarter for which
internal financial statements are available at the
time of the Restricted Payment (or, if the
Consolidated Net Income for that period is a deficit,
less 100% of the deficit), plus
(b) 100% of the aggregate net cash proceeds received by
Office Depot since the date of the indenture as a
contribution to its common equity capital or from the
issue or sale of Equity Interests of Office Depot
(other than Disqualified Stock) or from the issue or
sale of convertible or exchangeable Disqualified
Stock or convertible or exchangeable debt securities
of Office Depot that have been converted into or
exchanged for such Equity Interests (other than
Equity Interests (or Disqualified Stock or debt
securities) sold to a Subsidiary of Office Depot),
plus
(c) to the extent any Restricted Investment that was made
after the date of the indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser
of (i) the cash return of capital with respect to the
Restricted Investment (less the cost of disposition,
if any) and (ii) the initial amount of the Restricted
Investment.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit any of the following:
(1) the payment of any dividend within 60 days after the date of
declaration of the dividend, if at the date of declaration the
dividend payment would have complied with the provisions of
the indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of Office Depot
or of any Equity Interests of Office Depot in exchange for, or
out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of Office Depot) of, Equity
Interests of Office Depot (other than Disqualified Stock);
provided that the amount of any net cash proceeds that are
used for any such redemption, repurchase, retirement,
defeasance or other acquisition will be excluded from clause
(3)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of Office Depot with the net cash
proceeds from an undertaking of Permitted Refinancing
Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of
Office Depot to the holders of its Equity Interests on a pro
rata basis;
(5) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of Office Depot or any
Restricted Subsidiary of Office Depot held by any member of
Office Depot's (or any of its Restricted Subsidiaries')
management pursuant to any management equity subscription
agreement, stock option agreement or similar agreement;
provided that the aggregate price paid for all repurchased,
redeemed, acquired or retired Equity Interests may not exceed
$15.0 million in any twelve-month period;
(6) Repayment of LYONS; or
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(7) other Restricted Payments in an amount not to exceed $50.0
million.
The amount of all Restricted Payments (other than cash) will be the
fair market value on the date of the Restricted Payment of the assets) or
securities proposed to be transferred or issued by Office Depot or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be valued
by this covenant will be determined by the Board of Directors whose resolution
with respect thereto will be delivered to the trustee. The Board of Directors'
determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $25.0 million. Not later than the date of making any
Restricted Payment, Office Depot will deliver to the trustee an officers'
certificate stating that the Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this "Restricted Payments"
covenant were computed, together with a copy of any fairness opinion or
appraisal required by the indenture.
UNDERTAKING OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Office Depot will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and Office
Depot will not issue any Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that
Office Depot may incur Indebtedness (including Acquired Debt) or issue
Disqualified Stock, if the Fixed Charge Coverage Ratio for Office Depot's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred or the Disqualified Stock had been issued, as the case may be,
at the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit any of the
following items of Indebtedness (collectively, "Permitted Debt"):
(1) the undertaking by Office Depot of additional Indebtedness and
letters of credit under Credit Facilities in an aggregate
principal amount at any one time outstanding under this clause
(1) (with letters of credit being deemed to have a principal
amount equal to the maximum potential liability of Office
Depot and its Restricted Subsidiaries thereunder) not to
exceed $600.0 million;
(2) the undertaking by Office Depot and its Restricted
Subsidiaries of the Existing Indebtedness;
(3) the undertaking by Office Depot of Indebtedness represented by
the notes to be issued on the date of the indenture and the
new notes to be issued pursuant to the registration rights
agreement;
(4) the undertaking by Office Depot or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease
Obligations, mortgage financings or purchase money
obligations, in each case, incurred for the purpose of
financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment
used in the business of Office Depot or the Restricted
Subsidiary, in an aggregate principal amount, including all
Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to
this clause (4), not to exceed $100.0 million at any time
outstanding;
(5) the undertaking by Office Depot or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange
for, or the net proceeds of which are used to refund,
refinance or replace Indebtedness (other than intercompany
Indebtedness) that was permitted by the indenture to be
incurred under the first paragraph of this covenant or clauses
(2), (3), (4), (5), (9) or (12) of this paragraph;
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(6) the undertaking by Office Depot or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among
Office Depot and any of its Restricted Subsidiaries; provided,
however, that:
(a) if Office Depot is the obligor on the Indebtedness,
the Indebtedness must be expressly subordinated to
the prior payment in full in cash of all Obligations
with respect to the notes and
(b) (i) any subsequent issuance or transfer of Equity
Interests that results in any Indebtedness being held
by a Person other than Office Depot or a Restricted
Subsidiary of Office Depot and (ii) any sale or other
transfer of any the Indebtedness to a Person that is
not either Office Depot or a Restricted Subsidiary of
Office Depot; will be deemed, in each case, to
constitute an undertaking of Indebtedness by Office
Depot or the Restricted Subsidiary, as the case may
be, that was not permitted by this clause (6);
(7) the undertaking by Office Depot or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the
purpose of fixing or hedging interest rate risk with respect
to any floating rate Indebtedness that is permitted by the
terms of the indenture to be outstanding or Hedging
Obligations with respect to foreign currency translations;
(8) the undertaking by Office Depot's Unrestricted Subsidiaries of
Non-Recourse Debt; provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, the event will be deemed to constitute an
undertaking of Indebtedness by a Restricted Subsidiary of
Office Depot that was not permitted by this clause (8);
(9) the undertaking by Office Depot's Subsidiaries of Indebtedness
of up to 10.4 billion yen under the Yen Credit Facility and
the Guarantee of that Indebtedness by Office Depot;
(10) the guarantee by Office Depot of Indebtedness of a Restricted
Subsidiary of Office Depot that was permitted to be incurred
by another provision of this covenant;
(11) the undertaking by a Receivables Subsidiary of Indebtedness in
a Qualified Receivables Transaction that is without recourse
to Office Depot or to any other Subsidiary of Office Depot or
their assets (other than the Receivables Subsidiary and its
assets and, as to Office Depot or any Subsidiary of Office
Depot, other than pursuant to representations, warranties,
covenants and indemnities customary for such transactions) and
is not guaranteed by any Person; and
(12) the undertaking by Office Depot or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate
principal amount (or accreted value, as applicable) at any
time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (12), not to
exceed $175.0 million.
The accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an undertaking of Indebtedness or an
issuance of Disqualified Stock for purposes of this covenant; provided that, in
each case, the amount thereof is included in the Fixed Charges of Office Depot
as accrued.
For purposes of determining compliance with this "Undertaking of
Indebtedness and Issuance of Preferred Stock" covenant, if an item of proposed
Indebtedness meets the criteria of more than one of the categories of Permitted
Debt described in clauses (1) through (12) above, or is entitled to be incurred
pursuant to the first paragraph of this covenant, Office Depot will be permitted
to classify the item of Indebtedness on the date of its undertaking, or later
reclassify all or a portion of the item of Indebtedness, in any manner that
complies with this covenant. Indebtedness under Credit Facilities outstanding on
the date on which notes are first issued and authenticated under the indenture
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will be deemed to have been incurred on that date in reliance on the exception
provided by clause (1) of the definition of Permitted Debt.
ANTI-LAYERING
Office Depot will not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt of Office Depot and senior in any respect in
right of payment to the notes.
LIENS
Office Depot will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of any
kind securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, except Permitted Liens.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
Office Depot will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital
Stock to Office Depot or any of its Restricted Subsidiaries,
or with respect to any other interest or participation in, or
measured by, its profits, or pay any indebtedness owed to
Office Depot or any of its Restricted Subsidiaries;
(2) make loans or advances to Office Depot or any of its
Restricted Subsidiaries; or
(3) transfer any of its properties or assets to Office Depot or
any of its Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) agreements governing Existing Indebtedness and Credit
Facilities as in effect on the date of the indenture and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of those
agreements, provided that the amendments, modifications,
restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive, taken as
a whole, with respect to the dividend and other payment
restrictions, than those contained in those agreements on the
date of the indenture;
(2) the indenture and the notes;
(3) applicable law;
(4) any instrument governing Indebtedness or Capital Stock of a
Person acquired by Office Depot or any of its Restricted
Subsidiaries as in effect at the time of the acquisition
(except to the extent the Indebtedness or Capital Stock was
incurred in connection with or in contemplation of the
acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of
the Person, so acquired, provided that, in the case of
Indebtedness, the Indebtedness was permitted by the terms of
the indenture to be incurred;
(5) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past
practices;
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(6) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on that
property of the nature described in clause (3) of the
preceding paragraph;
(7) any agreement for the sale or other disposition of a
Restricted Subsidiary that restricts distributions by that
Restricted Subsidiary pending its sale or other disposition;
(8) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing the
Permitted Refinancing Indebtedness are no more restrictive,
taken as a whole, than those contained in the agreements
governing the Indebtedness being refinanced;
(9) Liens securing Indebtedness otherwise permitted to be incurred
under the provisions of the covenant described above under the
caption "-- Liens" that limit the right of the debtor to
dispose of the assets subject to Liens;
(10) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, assets sale
agreements, stock sale agreements and other similar agreements
entered into in the ordinary course of business;
(11) Indebtedness or other contractual requirements of a
Receivables Subsidiary in connection with a Qualified
Receivables Transaction, provided that the restrictions apply
only to the Receivables Subsidiary or the receivables which
are subject to the Qualified Receivables Transaction; and
(12) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course
of business.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Office Depot may not, directly or indirectly: (i) consolidate or merge
with or into another Person (whether or not Office Depot is the surviving
corporation); or (ii) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of Office Depot and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person, unless:
(1) either: (a) Office Depot is the surviving corporation; or (b)
the Person formed by or surviving any such consolidation or
merger (if other than Office Depot) or to which the sale,
assignment, transfer, conveyance or other disposition has been
made is a corporation organized or existing under the laws of
the United States, any state of the United States or the
District of Columbia;
(2) the Person formed by or surviving any such consolidation or
merger (if other than Office Depot) or the Person to which the
sale, assignment, transfer, conveyance or other disposition
has been made assumes all the obligations of Office Depot
under the notes, the indenture and the registration rights
agreement pursuant to agreements reasonably satisfactory to
the trustee;
(3) immediately after the transaction, no Default or Event of
Default exists; and
(4) Office Depot or the Person formed by or surviving any such
consolidation or merger (if other than Office Depot), or to
which the sale, assignment, transfer, conveyance or other
disposition has been made:
(a) will have Consolidated Net Worth immediately after
the transaction equal to or greater than the
Consolidated Net Worth of Office Depot immediately
preceding the transaction; and
(b) will, on the date of the transaction after giving pro
forma effect thereto and any related financing
transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage
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Ratio test set forth in the first paragraph of the
covenant described above under the caption "--
Undertaking of Indebtedness and Issuance of Preferred
Stock."
In addition, Office Depot may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. This "Merger, Consolidation or Sale of
Assets" covenant will not apply to a sale, assignment, transfer, conveyance or
other disposition of assets between or among Office Depot and any of its
Restricted Subsidiaries.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by Office Depot and its
Restricted Subsidiaries in the Subsidiary properly designated will be deemed to
be an Investment made as of the time of the designation and will reduce the
amount available for Restricted Payments under the first paragraph of the
covenant described above under the caption "-- Restricted Payments" or Permitted
Investments, as determined by Office Depot. That designation will only be
permitted if the Investment would be permitted at that time and if the
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the redesignation would not cause a Default.
TRANSACTIONS WITH AFFILIATES
Office Depot will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to occur any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (an "Affiliate
Transaction"), other than Affiliate Transactions on terms that are not
materially less favorable than those that might reasonably have been obtained in
a comparable transaction at that time on an arm's-length basis from a Person
that is not an Affiliate of Office Depot or the Restricted Subsidiary; provided,
that for an Affiliate Transaction with an aggregate value of $25.0 million or
more, at Office Depot's option, either:
(1) a majority of the disinterested members of the Board of
Directors of Office Depot shall determine in good faith that
the Affiliate Transaction is on terms that are not materially
less favorable than those that might reasonably have been
obtained in a comparable transaction at that time on an
arm's-length basis from a Person that is not an Affiliate of
Office Depot; or
(2) the Board of Directors of Office Depot or any Restricted
Subsidiary to the Affiliate Transaction shall obtain an
opinion from a nationally recognized investment banking,
appraisal or accounting firm that the Affiliate Transaction is
on terms that are not materially less favorable than those
that might reasonably have been obtained in a comparable
transaction at that time on an arm's-length basis from a
Person that is not an Affiliate of Office Depot.
The following items will not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by Office Depot or any
of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of Office Depot
or the Restricted Subsidiary;
(2) transactions between or among Office Depot and/or its
Restricted Subsidiaries;
(3) transactions with a Person that is an Affiliate of Office
Depot solely because Office Depot owns an Equity Interest in,
or controls, the Person;
(4) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of Office Depot;
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(5) sales of Equity Interests (other than Disqualified Stock) to
Affiliates of Office Depot;
(6) transactions between or among Office Depot and/or its
Restricted Subsidiaries or transactions between a Receivables
Subsidiary and any Person in which the Receivables Subsidiary
has an Investment; or
(7) Restricted Payments that are permitted by the provisions of
the indenture described above under the caption "-- Restricted
Payments."
PAYMENTS FOR CONSENT
Office Depot will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the indenture or the notes unless
the consideration is offered to be paid and is paid to all Holders of the notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to the consent, waiver or agreement.
REPORTS
Whether or not required by the SEC, so long as any notes are
outstanding, Office Depot will furnish to the Holders of notes, within the time
periods specified in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms
10-Q and 10-K if Office Depot were required to file those
Forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with
respect to the annual information only, a report on the annual
financial statements by Office Depot's certified independent
accountants; and
(2) all current reports that would be required to be filed with
the SEC on Form 8-K if Office Depot were required to file
those reports.
In addition, following the consummation of the exchange offer
contemplated by the registration rights agreement, whether or not required by
the SEC, Office Depot will file a copy of all of the information and reports
referred to in clauses (1) and (2) above with the SEC for public availability
within the time periods specified in the SEC's rules and regulations (unless the
SEC will not accept such a filing) and make the information available to
securities analysts and prospective investors upon request. In addition, Office
Depot has agreed that, for so long as any notes remain outstanding, it will
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act of 1933.
If Office Depot has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph will include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereto, and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of Office Depot
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of Office Depot.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Special Interest with respect to, the notes whether or not
prohibited by the subordination provisions of the indenture;
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(2) default in payment when due of the principal of, or premium,
if any, on the notes whether or not prohibited by the
subordination provisions of the indenture;
(3) failure by Office Depot or any of its Subsidiaries to comply
with the provisions described under the captions "--
Repurchase at the Option of Holders -- Change of Control," "--
Repurchase at the Option of Holders -- Asset Sales," "--
Certain Covenants -- Restricted Payments," "-- Certain
Covenants -- Undertaking of Indebtedness and Issuance of
Preferred Stock" or "-- Certain Covenants -- Merger,
Consolidation or Sale of Assets;"
(4) failure by Office Depot or any of its Subsidiaries for 60 days
after notice to comply with any of the other agreements in the
indenture;
(5) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by Office Depot
or any of its Subsidiaries (or the payment of which is
guaranteed by Office Depot or any of its Subsidiaries) whether
the Indebtedness or guarantee now exists, or is created after
the date of the indenture, if that default:
(a) is caused by a failure to pay principal of, or
interest or premium, if any, on the Indebtedness
prior to the expiration of the grace period provided
in such Indebtedness on the date of the default (a
"Payment Default"); or
(b) results in the acceleration of the Indebtedness prior
to its express maturity,
and, in each case, the principal amount of any Indebtedness,
together with the principal amount of any other Indebtedness
under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $35.0 million or
more;
(6) failure by Office Depot or any of its Subsidiaries to pay
final judgments aggregating in excess of $35.0 million, which
judgments are not paid, discharged or stayed pending appeal
(or otherwise stayed) for a period of 60 days; or
(7) certain events of bankruptcy or insolvency described in the
indenture with respect to Office Depot, any of its Significant
Subsidiaries, or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to Office Depot, any Subsidiary that is a
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding notes will become due and
payable immediately without further action or notice. If any other Event of
Default occurs and is continuing, the trustee or the Holders of at least 25% in
principal amount of the then outstanding notes may declare all the notes to be
due and payable immediately.
Holders of the notes may not enforce the indenture or the notes except
as provided in the indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding notes may direct the
trustee in its exercise of any trust or power. The trustee may withhold from
Holders of the notes notice of any continuing Default or Event of Default if it
determines that withholding notes is in their interest, except a Default or
Event of Default relating to the payment of principal or interest or Special
Interest.
The Holders of a majority in aggregate principal amount of the notes
then outstanding by notice to the trustee may on behalf of the Holders of all of
the notes waive any existing Default or Event of Default and its consequences
under the indenture except a continuing Default or Event of Default in the
payment of interest or Special Interest on, or the principal of, the notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of Office Depot with the
intention of avoiding payment of the premium that Office Depot would have had to
pay if Office Depot then had elected to redeem the notes pursuant to the
optional redemption provisions of the indenture, an equivalent premium will also
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become and be immediately due and payable to the extent permitted by law upon
the acceleration of the notes.
Office Depot is required to deliver to the trustee annually a statement
regarding compliance with the indenture. Upon becoming aware of any Default or
Event of Default, Office Depot is required to deliver to the trustee a statement
specifying the Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Office
Depot, as such, will have any liability for any obligations of Office Depot
under the notes or the indenture, or for any claim based on, in respect of, or
by reason of, the obligations or their creation. Each Holder of notes by
accepting a note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the notes. The waiver may not be
effective to waive liabilities under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Office Depot may, at its option and at any time, elect to have all of
its obligations discharged with respect to the outstanding notes ("Legal
Defeasance") except for:
(1) the rights of Holders of outstanding notes to receive payments
in respect of the principal of, or interest or premium and
Special Interest, if any, on the notes when the payments are
due from the trust referred to below;
(2) Office Depot's obligations with respect to the notes
concerning issuing temporary notes, registration of notes,
mutilated, destroyed, lost or stolen notes and the maintenance
of an office or agency for payment and money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the
trustee, and Office Depot's obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the indenture.
In addition, Office Depot may, at its option and at any time, elect to
have the obligations of Office Depot released with respect to certain covenants
that are described in the indenture ("Covenant Defeasance") and thereafter any
omission to comply with those covenants will not constitute a Default or Event
of Default with respect to the notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "-- Events of Default and
Remedies" will no longer constitute an Event of Default with respect to the
notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Office Depot must irrevocably deposit with the trustee, in
trust, for the benefit of the Holders of the notes, cash in
U.S. dollars, non-callable Government Securities, or a
combination of cash in U.S. dollars and non-callable
Government Securities, in amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, or interest and
premium, if any, on the outstanding notes on the stated
maturity or on the applicable redemption date, as the case may
be, and Office Depot must specify whether the notes are being
defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, Office Depot has delivered to
the trustee an opinion of counsel reasonably acceptable to the
trustee confirming that (a) Office Depot has received from, or
there has been published by, the Internal Revenue Service a
ruling or (b) since the date of the indenture, there has been
a change in the applicable federal income tax law, in either
case to the effect that, and based thereon the opinion of
counsel will confirm that, the Holders of the outstanding
notes will not recognize income, gain or loss for federal
income tax purposes as a result of Legal Defeasance and will
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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 the Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, Office Depot has delivered
to the trustee an opinion of counsel reasonably acceptable to
the trustee confirming that the Holders of the outstanding
notes 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 the Covenant Defeasance had not occurred;
(4) no Default or Event of Default has occurred and is continuing
on the date of the deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to
the deposit);
(5) the Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under any
material agreement or instrument (other than the indenture) to
which Office Depot or any of its Subsidiaries is a party or by
which Office Depot or any of its Subsidiaries is bound;
(6) Office Depot must deliver to the trustee an officers'
certificate stating that the deposit was not made by Office
Depot with the intent of preferring the Holders of notes over
the other creditors of Office Depot with the intent of
defeating, hindering, delaying or defrauding creditors of
Office Depot or others; and
(7) Office Depot must deliver to the trustee an officers'
certificate and an opinion of counsel, each stating that all
conditions precedent relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture
or the notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).
Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any notes held by a non-consenting Holder):
(1) reduce the principal amount of notes whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any
note or alter the provisions with respect to the redemption of
the notes (other than provisions relating to the covenants
described above under the caption "-- Repurchase at the Option
of Holders");
(3) reduce the rate of or change the time for payment of interest
on any note;
(4) waive a Default or Event of Default in the payment of
principal of, or interest or premium, or Special Interest, if
any, on the notes (except a rescission of acceleration of the
notes by the Holders of at least a majority in aggregate
principal amount of the notes and a waiver of the payment
default that resulted from the acceleration);
(5) make any note payable in money other than that stated in the
notes;
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(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of Holders of notes to
receive payments of principal of, or interest or premium or
Special Interest, if any, on the notes;
(7) waive a redemption payment with respect to any note (other
than a payment required by one of the covenants described
above under the caption "-- Repurchase at the Option of
Holders"); or
(8) make any change in the preceding amendment and waiver
provisions.
In addition, any amendment to, or waiver of, the provisions of the
indenture relating to subordination that adversely affects the rights of the
Holders of the notes will require the consent of the Holders of at least 75% in
aggregate principal amount of notes then outstanding.
Notwithstanding the preceding, without the consent of any Holder of
notes, Office Depot and the trustee may amend or supplement the indenture or the
notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place
of certificated notes;
(3) to provide for the assumption of Office Depot's obligations to
Holders of notes in the case of a merger or consolidation or
sale of all or substantially all of Office Depot's assets;
(4) to make any change that would provide any additional rights or
benefits to the Holders of notes or that does not adversely
affect the legal rights under the indenture of any Holder; or
(5) to comply with requirements of the SEC in order to effect or
maintain the qualification of the indenture under the Trust
Indenture Act.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect
as to all notes issued thereunder, when:
(1) either:
(a) all notes that have been authenticated, except lost,
stolen or destroyed notes that have been replaced or
paid and notes for whose payment money has been
deposited in trust and thereafter repaid to Office
Depot, have been delivered to the trustee for
cancellation; or
(b) all notes that have not been delivered to the trustee
for cancellation have become due and payable by
reason of the mailing of a notice of redemption or
otherwise or will become due and payable within one
year and Office Depot has irrevocably deposited or
caused to be deposited with the trustee as trust
funds in trust solely for the benefit of the Holders,
cash in U.S. dollars, non-callable Government
Securities, or a combination of cash in U.S. dollars
and non-callable Government Securities, in amounts as
will be sufficient without consideration of any
reinvestment of interest, to pay and discharge the
entire indebtedness on the notes not delivered to the
trustee for cancellation for principal, premium and
Special Interest, if any, and accrued interest to the
date of maturity or redemption;
(2) no Default or Event of Default has occurred and is continuing
on the date of the deposit or will occur as a result of the
deposit and the deposit will not result in a breach or
violation of, or constitute a default under, any other
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instrument to which Office Depot is a party or by which Office
Depot is bound;
(3) Office Depot has paid or caused to be paid all sums payable by
it under the indenture; and
(4) Office Depot has delivered irrevocable instructions to the
trustee under the indenture to apply the deposited money
toward the payment of the notes at maturity or the redemption
date, as the case may be.
In addition, Office Depot must deliver an officers' certificate and an opinion
of counsel to the trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of Office Depot, the indenture limits
its right to obtain payment of claims in certain cases, or to realize on certain
property received in respect of any claim as security or otherwise. The trustee
will be permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate the conflict within 90 days, apply to the
SEC for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
occurs and is continuing, the trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to those provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
Holder of notes, unless such Holder has offered to the trustee security and
indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture
and registration rights agreement without charge by writing to Office Depot,
Inc., Attention: Vice President, Investor Relations and Public Relations.
BOOK-ENTRY, DELIVERY AND FORM
The new notes initially will be represented by one or more notes in
registered, global form without interest coupons (collectively, the "Global
Notes"). The Global Notes will be deposited upon issuance with the trustee as
custodian for The Depository Trust Company ("DTC"), in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. Beneficial interests in the Global Notes may not be exchanged
for notes in certificated form except in the limited circumstances described
below. See "-- Exchange of Book-Entry Notes for Certificated Notes." Except in
the limited circumstances described below, owners of beneficial interests in the
Global Notes will not be entitled to receive physical delivery of notes in
certificated form.
Transfers of beneficial interests in the Global Notes will be subject
to the applicable rules and procedures of DTC and its Direct or Indirect
Participants, which may change from time to time.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC is
provided solely as a matter of convenience. These operations and procedures are
solely within the control of DTC and are subject to changes by DTC. Office Depot
takes no responsibility for these operations and procedures and urges investors
to contact DTC directly to discuss these matters.
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DTC has advised Office Depot that DTC is a limited-purpose trust
company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the initial purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interests in, and transfers of ownership
interests in, each security held by or on behalf of DTC are recorded on the
records of the Participants and Indirect Participants.
DTC has also advised Office Depot that, pursuant to procedures
established by it:
(1) upon deposit of the Global Notes, DTC will credit the accounts
of Participants designated by the initial purchasers with
portions of the principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown
on, and the transfer of ownership of these interests will be
effected only through, records maintained by DTC (with respect
to the Participants) or by the Participants and the Indirect
Participants (with respect to other owners of beneficial
interest in the Global Notes).
All interests in a Global Note may be subject to the procedures and
requirements of DTC. The laws of some states require that certain Persons take
physical delivery in definitive form of securities that they own. Consequently,
the ability to transfer beneficial interests in a Global Note to those Persons
will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants, the ability
of a Person having beneficial interests in a Global Note to pledge those
interests to Persons that do not participate in the DTC system, or otherwise
take actions in respect of those interests, may be affected by the lack of a
physical certificate evidencing the interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL
NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and interest and premium and
Special Interest, if any, on a Global Note registered in the name of DTC or its
nominee will be payable to DTC in its capacity as the registered Holder under
the indenture. Under the terms of the indenture, Office Depot and the trustee
will treat the Persons in whose names the notes, including the Global Notes, are
registered as the owners of the notes for the purpose of receiving payments and
for all other purposes. Consequently, neither Office Depot, the trustee nor any
agent of Office Depot or the trustee has or will have any responsibility or
liability for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account
of beneficial ownership interests in the Global Notes or for
maintaining, supervising or reviewing any of DTC's records or
any Participant's or Indirect Participant's records relating
to the beneficial ownership interests in the Global Notes; or
(2) any other matter relating to the actions and practices of DTC
or any of its Participants or Indirect Participants.
DTC has advised Office Depot that its current practice, upon receipt of
any payment in respect of securities such as the notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will not receive
payment on such payment date. Each relevant Participant is credited with an
amount proportionate to its beneficial ownership of an interest in the principal
amount of the relevant security as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will not
be the responsibility of DTC, the trustee or Office Depot. Neither Office Depot
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nor the trustee will be liable for any delay by DTC or any of its Participants
in identifying the beneficial owners of the notes, and Office Depot and the
trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
Subject to the transfer restrictions set forth under "Notice to
Investors," transfers between Participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in same-day funds.
DTC has advised Office Depot that it will take any action permitted to
be taken by a Holder of notes only at the direction of one or more Participants
to whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the notes as to
which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the notes, DTC reserves the right
to exchange the Global Notes for legended notes in certificated form, and to
distribute such notes to its Participants.
DTC is under no obligation to perform or to continue to perform the
foregoing procedures to facilitate transfers of interests and may discontinue
the procedures at any time. Neither Office Depot nor the trustee nor any of
their respective agents will have any responsibility for the performance by DTC
or its participants or indirect participants of its obligations under the rules
and procedures governing DTC's operations.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive notes in registered
certificated form ("Certificated Notes") if:
(1) DTC (a) notifies Office Depot that it is unwilling or unable
to continue as depositary for the Global Notes and Office
Depot fails to appoint a successor depositary or (b) has
ceased to be a clearing agency registered under the Securities
Exchange Act of 1934;
(2) Office Depot, at its option, notifies the trustee in writing
that it elects to cause the issuance of the Certificated
Notes; or
(3) there has occurred and is continuing a Default or Event of
Default with respect to the notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the trustee by or on
behalf of DTC in accordance with the indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary
procedures) and will bear the applicable restrictive legend referred to in
"Notice to Investors," unless that legend is not required by applicable law.
EXCHANGE OF CERTIFICATED NOTES FOR GLOBAL NOTES
Certificated Notes may not be exchanged for beneficial interests in any
Global Note unless the transferor first delivers to the trustee a written
certificate (in the form provided in the indenture) to the effect that such
transfer will comply with the appropriate transfer restrictions applicable to
such notes. See "Notice to Investors."
SAME DAY SETTLEMENT AND PAYMENT
Office Depot will make payments in respect of the notes represented by
the Global Notes (including principal, premium, if any, interest and Special
Interest, if any) by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. Office Depot will make all
payments of principal, interest and premium and Special Interest, if any, with
respect to Certificated Notes by wire transfer of immediately available funds to
the accounts specified by the Holders of the Certificated Notes or, if no
account is specified, by mailing a check to each such Holder's registered
address. The notes represented by the Global Notes are expected to be eligible
to trade in the PORTAL market and to trade in DTC's Same-Day Funds Settlement
System, and any permitted secondary market trading activity in the notes will,
therefore, be required by DTC to be settled in immediately available funds.
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Office Depot expects that secondary trading in any Certificated Notes will also
be settled in immediately available funds.
REGISTRATION RIGHTS; SPECIAL INTEREST
The following description is a summary of the material provisions of
the registration rights agreement. It does not restate that agreement in its
entirety. We urge you to read the registration rights agreement in its entirety
because it, and not this description, defines the registration rights of Holders
of old notes.
Office Depot and the initial purchasers of old notes entered into a
registration rights agreement upon the closing of the offering of the old notes.
Pursuant to the registration rights agreement, Office Depot agreed to file with
the SEC an Exchange Offer Registration Statement on the appropriate form under
the Securities Act of 1933 with respect to the new notes. Upon the effectiveness
of the Exchange Offer Registration Statement, Office Depot will offer to
exchange the old notes for new notes pursuant to the Exchange Offer provided the
Holders of old notes are able to make certain representations to us.
If:
(1) Office Depot is not:
(a) required to file the Exchange Offer Registration
Statement; or
(b) permitted to consummate the Exchange Offer because
the Exchange Offer is not permitted by applicable law
or SEC policy; or
(2) any Holder of Transfer Restricted Securities (as hereinafter
defined) notifies Office Depot prior to the 20th day following
consummation of the Exchange Offer that:
(a) it is prohibited by law or SEC policy from
participating in the Exchange Offer; or
(b) that it may not resell the new notes acquired by it
in the Exchange Offer to the public without
delivering a prospectus and the prospectus contained
in the Exchange Offer Registration Statement is not
appropriate or available for resales; or
(c) that it is a broker-dealer and owns notes acquired
directly from Office Depot or an affiliate of Office
Depot,
Office Depot will file with the SEC a Shelf Registration Statement to cover
resales of the notes by the Holders of the notes who satisfy certain conditions
relating to the provision of information in connection with the Shelf
Registration Statement.
Office Depot will use its best efforts to cause the applicable
registration statement to be declared effective as promptly as possible by the
SEC.
For purposes of the preceding, "Transfer Restricted Securities" means
each note until:
(1) the date on which the note has been exchanged by a Person
other than a broker-dealer for a new note in the Exchange
Offer;
(2) following the exchange by a broker-dealer in the Exchange
Offer of an old note for a new note, the date on which the new
note is sold to a purchaser who receives from the
broker-dealer on or prior to the date of sale a copy of the
prospectus contained in the Exchange Offer Registration
Statement;
(3) the date on which the note has been effectively registered
under the Securities Act of 1933 and disposed of in accordance
with the Shelf Registration Statement; or
(4) the date on which the note is distributed to the public
pursuant to Rule 144 under the Securities Act of 1933.
The registration rights agreement provides that:
(1) Office Depot will file an Exchange Offer Registration
Statement with the SEC on or prior to 90 days after the
closing of the offering of old notes;
(2) Office Depot will use its best efforts to have the Exchange
Offer Registration Statement declared effective by the SEC on
or prior to 180 days after the closing of the offering of old
notes;
(3) unless the Exchange Offer would not be permitted by applicable
law or SEC policy, Office Depot will
(a) commence the Exchange Offer; and
(b) use best efforts to issue on or prior to 45 business
days, or longer, if required by the federal
securities laws, after the date on which the Exchange
Offer Registration Statement was declared effective
by the SEC, new notes in exchange for all old notes
tendered prior thereto in the Exchange Offer; and
(4) if obligated to file the Shelf Registration Statement, Office
Depot will use its best efforts to file the Shelf Registration
Statement with the SEC on or prior to 90 days after the filing
obligation arises and to cause the Shelf Registration to be
declared effective by the SEC on or prior to 180 days after
the obligation arises.
If:
(1) Office Depot fails to file any of the registration statements
required by the registration rights agreement on or before the
date specified for the filing; or
(2) any of the registration statements is not declared effective
by the SEC on or prior to the date specified for effectiveness
(the "Effectiveness Target Date"); or
(3) Office Depot fails to consummate the Exchange Offer within 45
business days of the Effectiveness Target Date with respect to
the Exchange Offer Registration Statement; or
(4) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter
ceases to be effective or usable in connection with resales of
Transfer Restricted Securities during the periods specified in
the registration rights agreement (each event referred to in
clauses (1) through (4) above, a "Registration Default"),
then Office Depot will pay additional interest ("Special Interest") to each
Holder of notes, with respect to the first 90-day period immediately following
the occurrence of the first Registration Default in an amount equal to $.05 per
week per $1,000 principal amount of notes held by the Holder.
The amount of the Special Interest will increase by an additional $.05
per week per $1,000 principal amount of notes with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of Special Interest for all Registration Defaults of $.50 per week per
$1,000 principal amount of notes.
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All accrued Special Interest will be paid by Office Depot on each
Damages Payment Date to the Global Note Holder by wire transfer of immediately
available funds or by federal funds check and to Holders of Certificated Notes
by wire transfer to the accounts specified by them or by mailing checks to their
registered addresses if no accounts have been specified.
Following the cure of all Registration Defaults, the accrual of Special
Interest will cease.
Holders of notes will be required to make certain representations to
Office Depot (as described in the registration rights agreement) in order to
participate in the Exchange Offer and will be required to deliver certain
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the registration rights agreement in order to have their notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Special Interest set forth above. By acquiring Transfer Restricted
Securities, a Holder will be deemed to have agreed to indemnify Office Depot
against certain losses arising out of information furnished by the Holder in
writing for inclusion in any Shelf Registration Statement. Holders of notes will
also be required to suspend their use of the prospectus included in the Shelf
Registration Statement under certain circumstances upon receipt of written
notice to that effect from Office Depot.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture.
Reference is made to the indenture for a full disclosure of all the terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time the
other Person is merged with or into or became a Subsidiary of
the specified Person, whether or not the Indebtedness is
incurred in connection with, or in contemplation of, the other
Person merging with or into, or becoming a Subsidiary of, the
specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired
by the specified Person.
"Adjusted Treasury Rate" means with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for the redemption date, plus 50 basis points.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings. No Person (other than Office Depot or any
Subsidiary of Office Depot) in whom a Receivables Subsidiary makes an Investment
in connection with a Qualified Receivables Transaction will be deemed to be an
Affiliate of Office Depot or any of its Subsidiaries solely by reason of the
Investment.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets
or rights, other than sales of inventory in the ordinary
course of business; provided that the sale, conveyance or
other disposition of all or substantially all of the assets of
Office Depot and its Subsidiaries taken as a whole will be
governed by the provisions of the indenture described above
under the caption "-- Repurchase at the Option of Holders --
Change of Control" and/or the provisions described above under
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the caption "-- Certain Covenants -- Merger, Consolidation or
Sale of Assets" and not by the provisions of the Asset Sale
covenant; and
(2) the issuance of Equity Interests in any of Office Depot's
Restricted Subsidiaries or the sale of Equity Interests in any
of its Subsidiaries.
Notwithstanding the preceding, none of the following items will be
deemed to be Asset Sales:
(1) any single transaction or series of related transactions that
involves assets having a fair market value of less than $10.0
million;
(2) a transfer of assets between or among Office Depot and its
Subsidiaries;
(3) an issuance of Equity Interests by a Subsidiary to Office
Depot or to another Subsidiary;
(4) the sale or lease of equipment, inventory, accounts receivable
or other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents;
(6) sales of accounts receivable and related assets of the type
specified in the definition of "Qualified Receivables
Transaction" to a Receivables Subsidiary for the fair market
value thereof, including cash in an amount at least equal to
75% of the book value thereof as determined in accordance with
GAAP, it being understood that, for the purposes of this
clause (6), notes received in exchange for the transfer of
accounts receivable and related assets will be deemed cash if
the Receivables Subsidiary or other payor is required to repay
said notes as soon as practicable from available cash
collections less amounts required to be established as
reserves pursuant to contractual agreements with entities that
are not Affiliates of Office Depot entered into as part of a
Qualified Receivables Transaction;
(7) transfers of accounts receivable and related assets of the
type specified in the definition of "Qualified Receivables
Transaction" (or a fractional undivided interest therein) by a
Receivables Subsidiary in a Qualified Receivables Transaction;
(8) sale of assets deemed to occur in sale/lease back transactions
in an amount not to exceed $175 million; or
(9) a Restricted Payment or Permitted Investment that is permitted
by the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments."
"Beneficial Owner" has the meaning assigned to that term in Rule 13d-3
and Rule 13d-5 under the Securities Exchange Act of 1934, except that in
calculating the beneficial ownership of any particular "person" (as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934), the "person"
will be deemed to have beneficial ownership of all securities that the "person"
has the right to acquire by conversion or exercise of other securities, whether
the right is currently exercisable or is exercisable only upon the occurrence of
a subsequent condition. The terms "Beneficially Owns" and "Beneficially Owned"
have a corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of the
corporation;
(2) with respect to a partnership, the Board of Directors of the
general partner of the partnership; and
(3) with respect to any other Person, the board or committee of
the Person serving a similar function.
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"Capital Lease Obligation" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured
by the United States government or any agency or
instrumentality of the United States government (provided that
the full faith and credit of the United States is pledged in
support of those securities) having maturities of not more
than six months from the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case, with any domestic
commercial bank having capital and surplus in excess of $500.0
million and a Thomson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses
(2) and (3) above entered into with any financial institution
meeting the qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from
Moody's or S&P and in each case maturing within six months
after the date of acquisition; and
(6) money market funds at least 90% of the assets of which
constitute Cash Equivalents of the kinds described in clauses
(1) through (5) of this definition.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or
substantially all of the properties or assets of Office Depot
and its Restricted Subsidiaries taken as a whole to any
"person" (as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934);
(2) the adoption of a plan relating to the liquidation or
dissolution of Office Depot;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), becomes the
Beneficial Owner, directly or indirectly, of more than 50% of
the Voting Stock of Office Depot, measured by voting power
rather than number of shares; or
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(4) the first day on which a majority of the members of the Board
of Directors of Office Depot are not Continuing Directors.
"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding the redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if the release (or any successor release) is not
published or does not contain the prices on such Business Day, (A) the Reference
Treasury Dealer Quotations for the redemption date, after excluding the highest
and lowest of the Reference Treasury Dealer Quotations, or (B) if the trustee
obtains fewer than three such Reference Treasury Dealer Quotations, the average
of all such Quotations.
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of the Person for that period plus:
(1) an amount equal to any extraordinary loss plus any net loss
realized by the Person or any of its Restricted Subsidiaries
in connection with an Asset Sale, to the extent the losses
were deducted in computing the Consolidated Net Income; plus
(2) provision for taxes based on income or profits of the Person
and its Restricted Subsidiaries for the period, to the extent
that the provision for taxes was deducted in computing such
Consolidated Net Income; plus
(3) consolidated interest expense of the Person and its Restricted
Subsidiaries for the period, whether paid or accrued and
whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings,
and net of the effect of all payments made or received
pursuant to Hedging Obligations), to the extent that any
expense was deducted in computing the Consolidated Net Income;
plus
(4) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid
cash expenses that were paid in a prior period) and other
non-cash expenses (excluding any non-cash expense to the
extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid
cash expense that was paid in a prior period) of the Person
and its Restricted Subsidiaries for the period to the extent
that the depreciation, amortization and other non-cash
expenses were deducted in computing the Consolidated Net
Income; minus
(5) non-cash items increasing the Consolidated Net Income for the
period, other than the accrual of revenue in the ordinary
course of business,
in each case, on a consolidated basis and determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of the Person and its
Subsidiaries for the period, on a consolidated basis, determined in accordance
with GAAP; provided that:
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(1) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of
accounting will be included only to the extent of the amount
of dividends or distributions paid in cash to the specified
Person or a Restricted Subsidiary of the Person;
(2) the Net Income of any Restricted Subsidiary will be excluded
to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that
Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been
obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of the
acquisition will be excluded;
(4) the cumulative effect of a change in accounting principles
will be excluded;
(5) charges taken by Office Depot in connection with the
restructuring of its operations in an amount not to exceed
$260.7 million will be excluded; and
(6) the Net Income (but not loss) of any Unrestricted Subsidiary
will be excluded (except to the extent distributed to Office
Depot or one of its Restricted Subsidiaries).
"Consolidated Net Worth" means, with respect to any specified Person as
of any date, the sum of:
(1) the consolidated equity of the common stockholders of the
Person and its consolidated Subsidiaries as of the date; plus
(2) the respective amounts reported on the Person's balance sheet
as of such date with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is not
entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of
the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of
such preferred stock.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of Office Depot who:
(1) was a member of the Board of Directors on the date of the
indenture; or
(2) was nominated for election or elected to the Board of
Directors with the approval of a majority of the Continuing
Directors who were members of the Board at the time of the
nomination or election.
"Credit Facilities" means, one or more debt facilities or commercial
paper facilities, in each case with banks or other institutional lenders
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from the lenders against the receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Designated Senior Debt" means:
(1) any Indebtedness outstanding under the Existing Credit
Facilities; and
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(2) after payment in full of all Obligations under the Existing
Credit Facilities, any other Senior Debt permitted under the
indenture the principal amount of which is $25.0 million or
more and that has been designated by Office Depot as
"Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require Office
Depot to repurchase the Capital Stock upon the occurrence of a change of control
or an asset sale will not constitute Disqualified Stock if the terms of the
Capital Stock provide that Office Depot may not repurchase or redeem any Capital
Stock pursuant to the provisions unless the repurchase or redemption complies
with the covenant described above under the caption "-- Certain Covenants --
Restricted Payments."
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock) and beneficial interests
and trusts created by a Receivables Subsidiary.
"Existing Credit Facilities" means (1) the $255 million, 364-Day
Revolving Credit Agreement dated May 10, 2001 among Office Depot, Inc., Bank
One, N.A., BNP Paribas, Citibank, N.A., First Union National Bank, Fleet
National Bank, The Royal Bank of Scotland, SunTrust Bank and Wells Fargo Bank,
N.A.; and (2) the $300 million, five-year, Revolving Credit and Line of Credit
Agreement dated February 20, 1998 among Office Depot, Inc., SunTrust Bank and
other lenders.
"Existing Indebtedness" means the aggregate principal amount of
Indebtedness of Office Depot and its Restricted Subsidiaries (other than
Indebtedness under Credit Facilities) in existence on the date of the indenture,
until the amounts are repaid.
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its
Restricted Subsidiaries for the period, whether paid or
accrued, including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment
obligations, the interest component of all payments associated
with Capital Lease Obligations, commissions, discounts and
other fees and charges incurred in respect of letter of credit
or bankers' acceptance financings, and net of the effect of
all payments made or received pursuant to Hedging Obligations;
plus
(2) the consolidated interest of the Person and its Restricted
Subsidiaries that was capitalized during the period; plus
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by the Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of the Person or one of its
Restricted Subsidiaries, whether or not the Guarantee or Lien
is called upon; plus
(4) the product of (a) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred stock of
the Person or any of its Restricted Subsidiaries, other than
dividends on Equity Interests payable solely in Equity
Interests of Office Depot (other than Disqualified Stock) or
to Office Depot or a Restricted Subsidiary of Office Depot,
times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis
and in accordance with GAAP.
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"Fixed Charge Coverage Ratio" means with respect to any specified
Person and its Restricted Subsidiaries for any period, the ratio of the
Consolidated Cash Flow of the Person for that period to the Fixed Charges of the
Person for that period. In the event that the specified Person or any of its
Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or
redeems any Indebtedness (other than ordinary working capital borrowings) or
issues, repurchases or redeems preferred stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being calculated and on
or prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio will be calculated giving pro forma effect to the undertaking,
assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
(1) acquisitions that have been made by the specified Person or
any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing
transactions, during the four-quarter reference period or
subsequent to the reference period and on or prior to the
Calculation Date will be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period
and Consolidated Cash Flow for the reference period will be
calculated on a pro forma basis in accordance with Regulation
S-X under the Securities Act of 1933, but without giving
effect to clause (3) of the proviso set forth in the
definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation
Date, will be excluded; and
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, will be
excluded, but only to the extent that the obligations giving
rise to such Fixed Charges will not be obligations of the
specified Person or any of its Subsidiaries following the
Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in other statements by any other
entity that has been approved by a significant segment of the accounting
profession, which are in effect on the date of the indenture.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of the Person under:
(1) interest rate swap agreements, interest rate cap agreements
and interest rate collar agreements; and
(2) other agreements or arrangements designed to protect the
Person against fluctuations in interest rates, foreign
currency translation and commodity prices.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of the Person, whether or not contingent:
(1) in respect of borrowed money;
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(2) evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect
thereof);
(3) in respect of banker's acceptances;
(4) representing Capital Lease Obligations;
(5) representing the balance deferred and unpaid of the purchase
price of any property, except any the balance that constitutes
an accrued expense or trade payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not the Indebtedness is assumed by the
specified Person) and, to the extent not otherwise included, the Guarantee by
the specified Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any
Indebtedness issued with original issue discount; and
(2) the principal amount of the Indebtedness, together with any
interest on the Indebtedness that is more than 30 days past
due, in the case of any other Indebtedness.
"Independent Investment Banker" means the Reference Treasury Dealers
appointed by the trustee after consultation with Office Depot.
"Investments" means, with respect to any Person, all direct or indirect
investments by the Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If Office Depot
or any Subsidiary of Office Depot sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of Office Depot such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of Office Depot, Office Depot will be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant described
above under the caption "-- Certain Covenants -- Restricted Payments." The
acquisition by Office Depot or any Subsidiary of Office Depot of a Person that
holds an Investment in a third Person will be deemed to be an Investment by
Office Depot or such Subsidiary in such third Person in an amount equal to the
fair market value of the Investment held by the acquired Person in such third
Person in an amount determined as provided in the final paragraph of the
covenant described above under the caption "-- Certain Covenants-Restricted
Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of the asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and, except in connection with any Qualified Receivables
Transaction, any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"LYON" means the Liquid Yield Option Notes due 2007 issued by Office
Depot in 1992.
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"Net Income" means, with respect to any specified Person, the net
income (loss) of the Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain (but not loss), together with any related provision
for taxes on such gain (but not loss), realized in connection
with: (a) any Asset Sale; or (b) the disposition of any
securities by the Person or any of its Restricted Subsidiaries
or the extinguishment of any Indebtedness of the Person or any
of its Restricted Subsidiaries; and
(2) any extraordinary gain (but not loss), together with any
related provision for taxes on such extraordinary gain (but
not loss).
"Net Proceeds" means the aggregate cash proceeds received by Office
Depot or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to the Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result of the Asset Sale, taxes paid or
payable as a result of the Asset Sale, in each case, after taking into account
any available tax credits or deductions and any tax sharing arrangements, and
amounts required to be applied to the repayment of Indebtedness, other than
Indebtedness under a Credit Facility, secured by a Lien on the asset or assets
that were the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither Office Depot nor any of its Restricted
Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable
as a guarantor or otherwise, or (c) constitutes the lender;
(2) no default with respect to which (including any rights that
the holders of the Indebtedness may have to take enforcement
action against an Unrestricted Subsidiary) would permit upon
notice, lapse of time or both any holder of any other
Indebtedness of Office Depot or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness
or cause the payment of the Indebtedness to be accelerated or
payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of
Office Depot or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means any business that derives a majority of its
revenues from the business engaged in by Office Depot and its Restricted
Subsidiaries on the date of original issuance of the notes and/or activities
that are reasonably similar, ancillary or related to, or a reasonable extension,
development or expansion of, the businesses in which Office Depot and its
Restricted Subsidiaries are engaged on the date of original issuance of the
notes.
"Permitted Investments" means:
(1) any Investment in Office Depot or in a Restricted Subsidiary
of Office Depot;
(2) any Investment in Cash Equivalents;
(3) any Investment by Office Depot or any Restricted Subsidiary of
Office Depot in a Person, if as a result of the Investment:
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(a) the Person becomes a Restricted Subsidiary of Office
Depot; or
(b) the Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, Office
Depot or a Restricted Subsidiary of Office Depot;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and
in compliance with the covenant described above under the
caption "-- Repurchase at the Option of Holders -- Asset
Sales;"
(5) any acquisition of assets to the extent in exchange for the
issuance of Equity Interests (other than Disqualified Stock)
of Office Depot;
(6) any Investments received in compromise of obligations of the
persons incurred in the ordinary course of trade creditors or
customers that were incurred in the ordinary course of
business, including pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of any
trade creditor or customer;
(7) Hedging Obligations;
(8) the acquisition by a Receivables Subsidiary in connection with
a Qualified Receivables Transaction of Equity Interests of a
trust or other Person established by the Receivables
Subsidiary to effect the Qualified Receivables Transaction;
and any other Investment by Office Depot or a Subsidiary of
Office Depot in a Receivables Subsidiary or any Investment by
a Receivables Subsidiary in any other Person in connection
with a Qualified Receivables Transaction provided, that the
other Investment is in the form of a note or other instrument
that the Receivables Subsidiary or other Person is required to
repay as soon as practicable from available cash collections
less amounts required to be established as reserves pursuant
to contractual agreements with entities that are not
Affiliates of Office Depot entered into as part of a Qualified
Receivables Transaction; and
(9) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was
made and without giving effect to subsequent changes in
value), when taken together with all other Investments made
pursuant to this clause (9) that are at the time outstanding
not to exceed $50.0 million.
"Permitted Junior Securities" means:
(1) Equity Interests in Office Depot; or
(2) debt securities that are subordinated to all Senior Debt and
any debt securities issued in exchange for Senior Debt to
substantially the same extent as, or to a greater extent than,
the notes are subordinated to Senior Debt under the indenture.
"Permitted Liens" means any of the following:
(1) Liens in favor of Office Depot;
(2) Liens on property of a Person existing at the time such Person
is merged with or into or consolidated with Office Depot or
any Restricted Subsidiary of Office Depot; provided that the
Liens were in existence prior to the contemplation of the
merger or consolidation and do not extend to any assets other
than those of the Person merged into or consolidated with
Office Depot or the Restricted Subsidiary;
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(3) Liens on property existing at the time of acquisition of the
property by Office Depot or any Restricted Subsidiary of
Office Depot, provided that such Liens were in existence prior
to the contemplation of such acquisition;
(4) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations
of a like nature incurred in the ordinary course of business;
(5) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (4) of the second paragraph
of the covenant entitled "-- Certain Covenants-Undertaking of
Indebtedness and Issuance of Preferred Stock" covering only
the assets acquired with such Indebtedness;
(8) Liens existing on the date of the indenture;
(7) Liens on all Senior Debt;
(8) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other
appropriate provision as is required in conformity with GAAP
has been made therefor;
(9) Liens on assets of Office Depot or a Receivables Subsidiary
incurred in connection with a Qualified Receivables
Transaction;
(10) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries; and
(11) Liens incurred in the ordinary course of business of Office
Depot or any Restricted Subsidiary of Office Depot with
respect to obligations that do not exceed $25.0 million at any
one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of Office
Depot or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Office Depot or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of the
Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the
Indebtedness extended, refinanced, renewed, replaced, defeased
or refunded (plus all accrued interest on the Indebtedness and
the amount of all expenses and premiums incurred in connection
therewith) (the "Original Principal Amount"); provided,
however, if the Indebtedness exceeds the Original Principal
Amount, the Permitted Refinancing Indebtedness shall be
limited to the Original Principal Amount;
(2) the Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of
payment to the notes, the Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date
of, and is subordinated in right of payment to, the notes on
terms at least as favorable to the Holders of notes as those
contained in the documentation governing the Indebtedness
being extended, refinanced, renewed, replaced, defeased or
refunded; and
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(4) such Indebtedness is incurred either by Office Depot or by the
Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Qualified Receivables Transaction" means any transaction or series of
transactions entered into by Office Depot or any of its Subsidiaries pursuant to
which Office Depot or any of its Subsidiaries sells, conveys or otherwise
transfers to (i) a Receivables Subsidiary (in the case of a transfer by Office
Depot or any of its Subsidiaries) and (ii) any other Person (in the case of a
transfer by a Receivables Subsidiary), or grants a security interest in, any
accounts receivable (whether now existing or arising in the future) of Office
Depot or any of its Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"Receivables Subsidiary" means a Subsidiary of Office Depot which
engages in no activities other than in connection with the financing of accounts
receivable and which is designated by the Board of Directors of Office Depot (as
provided below) as a Receivables Subsidiary (a) no portion of the Indebtedness
or any other Obligations (contingent or otherwise) of which (i) is guaranteed by
Office Depot or any Subsidiary of Office Depot (excluding guarantees of
Obligations (other than the principal of, and interest on, Indebtedness)
pursuant to representations, warranties, covenants and indemnities entered into
in the ordinary course of business in connection with a Qualified Receivables
Transaction), (ii) is recourse to or obligates Office Depot or any Subsidiary of
Office Depot in any way other than pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction or (iii) subjects any
property or asset of Office Depot or any Subsidiary of Office Depot (other than
accounts receivable and related assets as provided in the definition of
"Qualified Receivables Transaction"), directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to representations,
warranties, covenants and indemnities entered into in the ordinary course of
business in connection with a Qualified Receivables Transaction, (b) with which
neither Office Depot nor any Subsidiary of Office Depot has any material
contract, agreement, arrangement or understanding other than on terms customary
for securitization of receivables and (c) with which neither Office Depot nor
any Subsidiary of Office Depot has any obligation to maintain or preserve the
Subsidiary's financial condition or cause such Subsidiary to achieve certain
levels of operating results. Any designation by the Board of Directors of Office
Depot will be evidenced to the Trustee by filing with the Trustee a certified
copy of the resolution of the Board of Directors of Office Depot giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions.
"Reference Treasury Dealer" means Goldman, Sachs & Co. and its
successors; provided, however, that if Goldman, Sachs & Co. shall cease to be a
primary U.S. Government securities dealer in New York city (a "Primary Treasury
Dealer"), Office Depot shall substitute therefor another Primary Treasury
Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average as determined by
the trustee, of the bid and asked prices of the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to each note to be
redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due after the related redemption date but for the
redemption; provided, however, that, if the redemption date is not an interest
payment date with respect to the note, the amount of the next succeeding
scheduled interest payment thereon will be reduced by the amount of interest
accrued thereon to such redemption date.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
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"Senior Debt" means:
(1) all Indebtedness of Office Depot outstanding under Credit
Facilities and all Hedging Obligations with respect thereto;
(2) any other Indebtedness of Office Depot permitted to be
incurred under the terms of the indenture, unless the
instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right
of payment to the notes; and
(3) all Obligations with respect to the items listed in the
preceding clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt
will not include:
(1) any liability for federal, state, local or other taxes owed or
owing by Office Depot;
(2) any intercompany Indebtedness of Office Depot or any of its
Subsidiaries to Office Depot or any of its Affiliates;
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in violation
of the indenture.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act of 1933, as that Regulation is in
effect on the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing the Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or
trustees of the corporation, association or other business
entity is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is the Person or a Subsidiary of the
Person or (b) the only general partners of which are that
Person or one or more Subsidiaries of that Person (or any
combination thereof).
"Unrestricted Subsidiary" means any Subsidiary of Office Depot that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent the Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with Office Depot or any Restricted Subsidiary
of Office Depot unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable
to Office Depot or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not
Affiliates of Office Depot;
(3) is a Person with respect to which neither Office Depot nor any
of its Restricted Subsidiaries has any direct or indirect
obligation (a) to subscribe for additional Equity Interests or
(b) to maintain or preserve the Person's financial condition
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or to cause the Person to achieve any specified levels of
operating results;
(4) is guaranteeing or otherwise providing credit support for any
Indebtedness of Office Depot or any of its Restricted
Subsidiaries; and
(5) has at least one director on its Board of Directors that is
not a director or executive officer of Office Depot or any of
its Restricted Subsidiaries and has at least one executive
officer that is not a director or executive officer of Office
Depot or any of its Restricted Subsidiaries.
Any designation of a Subsidiary of Office Depot as an Unrestricted
Subsidiary will be evidenced to the trustee by filing with the trustee a
certified copy of the Board Resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with the
preceding conditions and was permitted by the covenant described above under the
caption "-- Certain Covenants -- Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted
Subsidiary for purposes of the indenture and any Indebtedness of the Subsidiary
will be deemed to be incurred by a Restricted Subsidiary of Office Depot as of
the date and, if the Indebtedness is not permitted to be incurred as of the date
under the covenant described under the caption "-- Certain Covenants --
Undertaking of Indebtedness and Issuance of Preferred Stock," Office Depot will
be in default of the covenant. The Board of Directors of Office Depot may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that the designation will be deemed to be an undertaking of
Indebtedness by a Restricted Subsidiary of Office Depot of any outstanding
Indebtedness of the Unrestricted Subsidiary and the designation will only be
permitted if (1) the Indebtedness is permitted under the covenant described
under the caption "-- Certain Covenants -- Undertaking of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if the
designation had occurred at the beginning of the four-quarter reference period
and (2) no Default or Event of Default would be in existence following the
designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
the Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount
of each then remaining installment, sinking fund, serial
maturity or other required payments of principal, including
payment at final maturity, in respect of the Indebtedness, by
(b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making
of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Yen Credit Facility" means that certain credit facility dated July 1,
1994, by and among Office Depot Japan Ltd., Industrial Bank of Japan, Ltd, Union
Bank of California, N.A. Tokyo Branch and the Fuji Bank.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material U.S. federal income tax
consequences relating to the ownership and disposition of the notes based on the
Internal Revenue Code of 1986, as amended to the date hereof (the "Code"),
administrative pronouncements, judicial decisions and final, temporary and
proposed Treasury regulations and interpretations of the foregoing, changes to
any of which subsequent to the date of this prospectus may affect the tax
consequences described herein, possibly with retroactive effect. This summary
discusses notes held as capital assets within the meaning of Section 1221 of the
Code. It does not discuss all of the tax consequences that may be relevant to a
holder in light of the holder's particular circumstances or to holders subject
to special rules, like certain financial institutions, tax-exempt entities,
holders whose "functional currency" is not the U.S. dollar, insurance companies,
dealers in securities or foreign currencies, foreign partnerships, persons
holding notes as part of a hedge, straddle or other integrated transaction,
foreign persons engaged in a trade or business in the United States or persons
who have ceased to be United States citizens or to be taxed as aliens. The U.S.
federal income tax consequences to an owner of a note that is a partnership may
depend on the status of its partners and activities of the partnership.
Prospective purchasers, including foreign partnerships and their partners,
should consult their own tax advisors with regard to the application of federal
income tax laws to their particular situation, as well as any tax consequences
arising under the laws of any state, local or foreign taxing jurisdiction.
As used herein, a "United States holder" of a note means a beneficial
owner of a note that is for United States federal income tax purposes:
o a citizen or resident of the United States;
o a corporation or partnership (including an entity treated as a
corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United
States, any state thereof or the District of Columbia (unless, in
the case of a partnership, Treasury regulations are adopted that
provide otherwise);
o an estate the income of which is subject to United States federal
income taxation regardless of its source; or
o a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one
or more United States persons have the authority to control all
substantial decisions of the trust or the trust has a valid
election in effect under applicable Treasury regulations to be
treated as a United States person.
As used herein, the term "non-U.S. holder" means a beneficial owner of a note
that is not a United States holder.
TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of old notes for new notes pursuant to the exchange offer
will not be a taxable sale or exchange. Holders' basis in the old notes will
carry over to the new notes received and the holding period of the new notes
will include the holding period of the old notes surrendered. Accordingly, there
will be no U.S. Federal income tax consequences to holders who exchange their
old notes for new notes in connection with the exchange offer and any such
holder will have the same adjusted tax basis and holding period in the new notes
as it had in the old notes immediately before the exchange.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
PAYMENTS OF INTEREST
Interest on a note, including additional interest payable upon a
Registration Default, if any, will generally be taxable to a United States
holder as ordinary interest income at the time it accrues or is received in
accordance with the United States holder's regular method of accounting for
federal income tax purposes.
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SALES, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of a note, a United States holder
will recognize gain or loss equal to the difference between the amount realized
on the sale, exchange, or retirement of the note and the holder's adjusted tax
basis in the note. A United States holder's adjusted tax basis in a note will
generally equal the cost of the note to the holder. The amount realized excludes
any amounts attributable to interest accrued between interest payment dates
which will be includible in income as interest in accordance with the United
States holder's method of accounting if not previously included in income. Any
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if at the time of the sale, exchange, or retirement the note has been held
for more than one year. Under current law, the excess of net long-term capital
gains over net short-term capital losses is taxed at a lower rate than ordinary
income for certain non-corporate taxpayers. The distinction between capital gain
or loss and ordinary income or loss is also relevant for purposes of, among
other things, the limitations on the deductibility of capital losses.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
PAYMENTS OF INTEREST
Subject to the discussion below concerning backup withholding, payments
of interest on the notes, including additional interest payable upon a
Registration Default, if any, by us or any paying agent to any non-U.S. holder
will not be subject to U.S. federal income tax or a 30% withholding tax provided
that (i) the interest is not effectively connected with the conduct by the
holder of a trade or business in the United States, (ii) the holder does not
own, actually or constructively, 10% or more of the combined voting power of all
classes of our stock entitled to vote, (iii) the holder is not a controlled
foreign corporation (within the meaning of the Code) that is related, directly
or indirectly, to us through stock ownership and (iv) the certification
requirements required to claim the portfolio interest exemption set forth in
Section 871(h) or Section 881(c) of the Code have been fulfilled with respect to
the beneficial owner. Generally, to satisfy the certification requirements set
forth in Section 871(h) or Section 881(c) of the Code, the beneficial owner of a
note must certify on IRS Form W-8BEN, under penalties of perjury, that the
holder is not a United States person. If notes are held by a foreign partnership
or a foreign intermediary, certain certification requirements apply to the
foreign partnership or the foreign intermediary, as the case may be, as well as
partners and beneficial owners, as the case may be.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Subject to the discussion below concerning backup withholding, a
non-U.S. holder of a note will not be subject to U.S. federal income tax on any
gain realized on the sale, exchange or other disposition of a note unless (i)
the holder is an individual who is present in the United States for 183 days or
more during the taxable year of disposition and certain other conditions are met
or (ii) the gain is effectively connected with the conduct by the holder of a
trade or business in the United States.
EFFECTIVELY CONNECTED INCOME
If a non-U.S. holder is engaged in a trade or business in the United
States and its investment in a note is effectively connected with that trade or
business, the non-U.S. holder, although exempt from the 30% withholding tax
(provided a required certification, generally on IRS form W-8ECI, is met), will
generally be subject to regular U.S. federal income tax on any interest and gain
with respect to the notes in the same manner as if it were a United States
holder and may also be subject to branch profits tax at 30% (or a reduced rate
under an applicable treaty).
INFORMATION REPORTING AND BACKUP WITHHOLDING
Both a United States Holder and a Non-United States Holder of notes may
be subject to information reporting and backup withholding which is presently at
a rate of up to 31% on certain amounts paid to the holder unless such holder
provides proof of an applicable exemption (including a general exemption for
Non-U.S. Holders and for corporations) or correct taxpayer identification
number, and otherwise complies with applicable requirements of the information
reporting and backup withholding rules. Any amount withheld under the backup
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withholding rules may be allowed as a refund or a credit against the holder's
United States federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service.
Under current United States federal income tax law, information
reporting requirements apply to certain payments of principal and interest made
to, and to the proceeds of sales before maturity by, non-corporate United States
holders. In addition, a backup withholding tax at a rate of up to 31% will apply
if the non-corporate United States holder (i) fails to furnish its Taxpayer
Identification Number ("TIN") which, for an individual, is his Social Security
Number, (ii) furnishes an incorrect TIN, (iii) is notified by the IRS that it
has failed to properly report payments of interest and dividends, or (iv) under
certain circumstances, fails to certify, under penalty of perjury, that it has
furnished a correct TIN and has not been notified by the IRS that it is subject
to backup withholding for failure to report interest and dividend payments.
Holders should consult their tax advisers regarding their qualification for
exemption from backup withholding and the procedure for obtaining such an
exemption if applicable.
Under current Treasury regulations, payments on the sale, exchange, or
other disposition of a note made to or through a foreign office of a broker
generally will not be subject to information reporting or backup withholding.
However, if the broker is (i) a United States person, (ii) a controlled foreign
corporation for United States federal income tax purposes, (iii) a foreign
person 50% or more of whose gross income is effectively connected with a United
States trade or business for a specified three-year period, or (iv) a foreign
partnership if, at any time during its tax year, one or more of its partners are
United States persons who in the aggregate hold more than 50% of the income or
capital interests in the partnership or if the partnership is engaged in a trade
or business in the United States, then information reporting will be required
unless the broker has in its records documentary evidence that the beneficial
owner is not a United States person and certain other conditions are met or the
beneficial owner otherwise establishes an exemption. Backup withholding may
apply to any payment that the broker is required to report if the broker has
actual knowledge that the payee is a United States person. Payments to or
through the United States office of a broker will be subject to backup
withholding and information reporting unless the beneficial owner certifies,
under penalties of perjury, that it is not a United States person or otherwise
establishes an exemption.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in
connection with the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of new notes. This prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of new notes received in exchange for old notes where
the old notes were acquired as a result of market-making activities or other
trading activities. We have agreed that for a period of 180 days after the
expiration date, we will make available a prospectus, as amended or
supplemented, meeting the requirements of the Securities Act of 1933 to any
broker-dealer for use in connection with any such resale. In addition, until
[Date], 2001 (90 days after the date of this prospectus), all dealers effecting
transactions in the new notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the new notes or a combination of those methods of
resale, at market prices prevailing at the time of resale, at prices related to
the prevailing market prices or negotiated prices. Any resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any broker-dealer or
the purchasers of any new notes. Any broker-dealer that resells new notes that
were received by it for its own account pursuant to the exchange offer and any
broker or dealer that participates in a distribution of new notes may be deemed
to be an "underwriter" within the meaning of the Securities Act of 1933, and any
profit on any resale of new notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act of 1933. The letter of transmittal states that by acknowledging
that it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933.
Each initial purchaser of the old notes agreed that (i) it had not
offered or sold, and prior to the six months after the date of issue of the old
notes would not offer or sell any notes to persons in the United Kingdom except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for purposes of
their businesses or otherwise in circumstances which have not resulted and will
-64-
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it had complied, and will
comply with, all applicable provisions of the Financial Services Act 1986 of
Great Britain with respect to anything done by it in relation to the notes in,
from or otherwise involving the United Kingdom, and (iii) it had only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the notes to a person who is
of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 (as amended) or is a person
to whom the document may otherwise lawfully be issued or passed on.
The notes may not be offered, sold, transferred or delivered in or from
The Netherlands, as part of their initial distribution or as part of any
re-offering, and neither this prospectus nor any other document in respect of
the exchange offer may be distributed or circulated in The Netherlands, other
than to individuals or legal entities which include, but are not limited to,
banks, brokers, dealers, institutional investors and undertakings with a
treasury department, who or which trade or invest in securities in the conduct
of a business or profession.
LEGAL MATTERS
The validity of the new notes offered hereby will be passed on by
McDermott, Will & Emery, Chicago, Illinois.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from the Office Depot's Annual
Report on Form 10-K for the year ended December 30, 2000 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
-65-
$250,000,000 10% Senior Subordinated Notes Due 2008
[OFFICE DEPOT LOGO]
OFFICE DEPOT, INC.
Offer to Exchange
all Outstanding 10% Senior Subordinated Notes Due 2008 for
10% Senior Subordinated Notes Due 2008 that have been Registered under
the Securities Act of 1933
------------
PROSPECTUS
[Date], 2001
------------
Until [Date], 2001, all dealers that effect transactions in these
securities, whether or not participating in this exchange offer, may be required
to deliver a prospectus. This is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The General Corporation law of the State of Delaware (the "Delaware
Law") permits indemnification of directors, employees and agents of corporations
under certain conditions and subject to certain limitations. Pursuant to the
Delaware Law, Office Depot has included in its Restated Certificate of
Incorporation and bylaws a provision to eliminate the personal liability of its
directors for monetary damages for breach or alleged breach of their duty of
care to the fullest extent permitted by Delaware Law and to provide that Office
Depot shall indemnify its directors and officers to the fullest extent permitted
by the Delaware Law. Office Depot believes that its charter and bylaw provisions
are necessary to attract and retain qualified persons as directors and officers.
Office Depot has obtained insurance policies under which its directors
and officers are insured, within the limits and subject to the limitations of
the policies, against certain expenses in connection with the defense of certain
actions, suits or proceedings, and certain liabilities which might be imposed as
a result of certain actions, suits or proceedings, to which they are parties by
reason of being or having been such directors or officers.
ITEM 21. EXHIBITS.
Exhibit Number Description of Exhibit
- -------------- ----------------------
4(a)* Indenture, dated as of July 2, 2001, between Office Depot,
Inc. and SunTrust Bank, N.A., relating to the 10% Senior
Subordinated Notes due 2008.
4(b)* Exchange and Registration Rights Agreement dated July 2,
2001 between Office Depot, Inc. and Goldman Sachs, as
representatives of the purchasers.
4(c) Form of Indenture (including form of LYON(R)) between Office
Depot, Inc. and The Bank of New York, as Trustee
(incorporated by reference to the respective exhibit to the
Office Depot's Registration Statement No. 33-54574).
4(d) Form of Indenture (including form of LYON(R)) between Office
Depot, Inc. and Bankers Trust Company, as Trustee
(incorporated by reference to the respective exhibit to the
Office Depot's Registration Statement No. 33-70378).
5* Opinion of McDermott, Will & Emery as to the legality of the
securities being registered.
12* Computation of Ratios of Earnings to Fixed Charges.
23(a) Consent of McDermott, Will & Emery (included in its opinion
filed as Exhibit 5).
23(b) Consent of Deloitte & Touche LLP.
24* Power of Attorney.
25 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of SunTrust Bank, as Trustee, on Form
T-1, relating to the 10% Senior Subordinated Notes due 2008.
99.1 Letter of Transmittal.
99.2 Notice of Guaranteed Delivery.
99.3 Letters to Brokers, Dealers, Commercial banks, Trust
Companies and Other Nominees.
II-1
99.4 Letter to Clients.
99.5 Tax Guidelines.
- ---------------------
*previously filed.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business
day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to
the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject
of and included in the registration statement when it became effective.
-2-
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment No. 1 to Form S-4 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Delray Beach, Florida, on this 10th day of
September, 2001.
OFFICE DEPOT, INC.
By: /s/ David C. Fannin
------------------------------------------------
Name: David C. Fannin
Title: Executive Vice President, General Counsel
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 10th day of September, 2001.
Signature Title
--------- -----
/s/ *__________________________ Chief Executive Officer and member of the Board
M. Bruce Nelson of Directors (a Principal Executive Officer)
/s/ *__________________________ President, North American Retail Stores
Jerry Colley (a Principal Executive Officer)
/s/ *__________________________ President, Business Services Group
Robert J. Keller (a Principal Executive Officer)
/s/ *__________________________ President, European Operations
Rolf Van Kaldekerken (a Principal Executive Officer)
/s/ *__________________________ Senior Vice President, Finance and Controller
Charles Brown (Principal Financial Officer and Controller)
/s/ *__________________________ Chairman of the Board of Directors
David I. Fuente
/s/ *__________________________ Vice Chairman of the Board of Directors
Irwin Helford
/s/ *__________________________ Director
Lee A. Ault III
-3-
/s/ *__________________________ Director
Neil A. Austrian
/s/ *__________________________ Director
Cynthia R. Cohen
/s/ *__________________________ Director
W. Scott Hedrick
/s/ *_________________________________ Director
James L. Heskett
/s/ *_________________________________ Director
Michael J. Myers
/s/ *_________________________________ Director
Frank P. Scruggs, Jr.
/s/ *_________________________________ Director
Peter J. Solomon
* By: /s/ David C. Fannin
---------------------------------------------
Name: David C. Fannin
Title: Executive Vice President, General Counsel
and Secretary
Pursuant to a power of attorney
EXECUTION COPY
- --------------------------------------------------------------------------------
OFFICE DEPOT, INC.
10% SENIOR SUBORDINATED NOTES DUE 2008
----------------------------
INDENTURE
Dated as of July 2, 2001
----------------------------
SunTrust Bank
Trustee
----------------------------
- --------------------------------------------------------------------------------
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1).......................................... 7.10
(a)(2)........................................ 7.10
(a)(3)........................................ N.A.
(a)(4)........................................ N.A.
(a)(5)........................................ 7.10
(b)........................................... 7.10
(c)........................................... N.A.
311(a)............................................. 7.11
(b)........................................... 7.11
(c)........................................... N.A.
312(a)............................................. 2.05
(b)........................................... 12.03
(c)........................................... 12.03
313(a)............................................. 7.06
(b)(1)........................................ 10.03
(b)(2)........................................ 7.07
(c)........................................... 7.06,12.02
(d)........................................... 7.06
314(a)............................................. 4.03,12.02
(b)........................................... N.A.
(c)(1)........................................ 12.04
(c)(2)........................................ 12.04
(c)(3)........................................ N.A.
(d)........................................... N.A.
(e)........................................... 12.05
(f)........................................... N.A.
315(a)............................................. 7.01
(b)........................................... 7.05,12.02
(c)........................................... 7.01
(d)........................................... 7.01
(e)........................................... 6.11
316(a) (last sentence)............................. 2.09
(a)(1)(A)..................................... 6.05
(a)(1)(B)..................................... 6.04
(a)(2)........................................ N.A.
(b)........................................... 6.07
(c)........................................... 2.12
317(a)(1).......................................... 6.08
(a)(2)........................................ 6.09
(b)........................................... 2.04
318(a)............................................. 12.01
(b)........................................... N.A.
(c)........................................... 12.01
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE 1.
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..........19
Section 1.04. Rules of Construction......................................19
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating............................................20
Section 2.02. Execution and Authentication...............................20
Section 2.03. Registrar and Paying Agent.................................21
Section 2.04. Paying Agent to Hold Money in Trust........................21
Section 2.05. Holder Lists...............................................21
Section 2.06. Transfer and Exchange......................................21
Section 2.07. Replacement Notes..........................................32
Section 2.08. Outstanding Notes..........................................32
Section 2.09. Treasury Notes.............................................32
Section 2.10. Temporary Notes............................................32
Section 2.11. Cancellation...............................................33
Section 2.12. Defaulted Interest.........................................33
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.........................................33
Section 3.02. Selection of Notes to Be Redeemed..........................33
Section 3.03. Notice of Redemption.......................................34
Section 3.04. Effect of Notice of Redemption.............................35
Section 3.05. Deposit of Redemption Price................................35
Section 3.06. Notes Redeemed in Part.....................................35
Section 3.07. Optional Redemption........................................35
Section 3.08. Mandatory Redemption.......................................35
Section 3.09. Offer to Purchase by Application of Excess Proceeds........36
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes...........................................37
Section 4.02. Maintenance of Office or Agency............................37
Section 4.03. Reports....................................................38
Section 4.04. Compliance Certificate.....................................38
Section 4.05. Taxes......................................................39
Section 4.06. Stay, Extension and Usury Laws.............................39
Section 4.07. Restricted Payments........................................39
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries...............................................41
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.42
i
Section 4.10. Asset Sales................................................44
Section 4.11. Transactions with Affiliates...............................45
Section 4.12. Liens......................................................45
Section 4.13. Corporate Existence........................................46
Section 4.14. Offer to Repurchase Upon Change of Control.................46
Section 4.15. Anti-Layering..............................................47
Section 4.16. Payments for Consent.......................................47
Section 4.17. Designation of Restricted and Unrestricted Subsidiaries....47
Section 4.18. Changes in Covenants when Notes Rated Investment Grade.....48
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets...................48
Section 5.02. Successor Corporation Substituted..........................49
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default..........................................49
Section 6.02. Acceleration...............................................50
Section 6.03. Other Remedies.............................................51
Section 6.04. Waiver of Past Defaults....................................51
Section 6.05. Control by Majority........................................51
Section 6.06. Limitation on Suits........................................52
Section 6.07. Rights of Holders of Notes to Receive Payment..............52
Section 6.08. Collection Suit by Trustee.................................52
Section 6.09. Trustee May File Proofs of Claim...........................52
Section 6.10. Priorities.................................................53
Section 6.11. Undertaking for Costs......................................53
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee..........................................53
Section 7.02. Rights of Trustee..........................................54
Section 7.03. Individual Rights of Trustee...............................55
Section 7.04. Trustee's Disclaimer.......................................55
Section 7.05. Notice of Defaults.........................................55
Section 7.06. Reports by Trustee to Holders of the Notes.................55
Section 7.07. Compensation and Indemnity.................................56
Section 7.08. Replacement of Trustee.....................................56
Section 7.09. Successor Trustee by Merger, etc...........................57
Section 7.10. Eligibility; Disqualification..............................57
Section 7.11. Preferential Collection of Claims Against Company..........58
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance...58
Section 8.02. Legal Defeasance and Discharge.............................58
Section 8.03. Covenant Defeasance........................................58
Section 8.04. Conditions to Legal or Covenant Defeasance.................59
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions..................... 60
ii
Section 8.06. Repayment to Company.......................................60
Section 8.07. Reinstatement..............................................60
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes........................61
Section 9.02. With Consent of Holders of Notes...........................61
Section 9.03. Compliance with Trust Indenture Act........................63
Section 9.04. Revocation and Effect of Consents..........................63
Section 9.05. Notation on or Exchange of Notes...........................63
Section 9.06. Trustee to Sign Amendments, etc............................63
ARTICLE 10.
SUBORDINATION
Section 10.01. Agreement to Subordinate................................63
Section 10.02. Certain Definitions.....................................63
Section 10.03. Liquidation; Dissolution; Bankruptcy....................64
Section 10.04. Default on Designated Senior Debt.......................65
Section 10.05. Acceleration of Permitted Junior Securities.............65
Section 10.06. When Distribution Must Be Paid Over.....................65
Section 10.07. Notice by Company.......................................66
Section 10.08. Subrogation.............................................66
Section 10.09. Relative Rights.........................................66
Section 10.10. Subordination May Not Be Impaired by Company............67
Section 10.11. Distribution or Notice to Representative................67
Section 10.12. Rights of Trustee and Paying Agent......................67
Section 10.13. Authorization to Effect Subordination...................67
Section 10.14. Amendments..............................................67
ARTICLE 11.
satisfaction and discharge
Section 11.01. Satisfaction and Discharge..............................68
Section 11.02. Application of Trust Money..............................68
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls............................69
Section 12.02. Notices.................................................69
Section 12.03. Communication by Holders of Notes with Other Holders
of Notes................................................70
Section 12.04. Certificate and Opinion as to Conditions Precedent......70
Section 12.05. Statements Required in Certificate or Opinion...........70
Section 12.06. Rules by Trustee and Agents.............................71
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders..............................71
Section 12.08. Governing Law...........................................71
Section 12.09. No Adverse Interpretation of Other Agreements...........71
Section 12.10. Successors..............................................71
Section 12.11. Severability............................................71
Section 12.12. Counterpart Originals...................................71
Section 12.13. Table of Contents, Headings, etc........................72
iii
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
iv
INDENTURE dated as of July 2, 2001 between Office Depot, Inc., a
Delaware corporation (the "Company"), and SunTrust Bank, as trustee (the
"Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 10% Series A
Senior Subordinated Notes due 2008 (the "Series A Notes") and the 10% Series B
Senior Subordinated Notes due 2008 (the "Series B Notes" and, together with the
Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a Global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such other Person
is merged with or into or became a Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(ii) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"Adjusted Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 50 basis points.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings. No Person (other than the Company or any
Subsidiary of the Company) in whom a Receivables Subsidiary makes an Investment
in connection with a Qualified Receivables Transaction will be deemed to be an
Affiliate of the Company or any of its Subsidiaries solely by reason of such
Investment. "Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Clearstream that apply to such transfer or
exchange.
1
"Asset Sale" means:
(i) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales of inventory in the ordinary course of
business; provided that the sale, conveyance or other disposition of
all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole will be governed by the provisions of
Section 4.14 hereof and/or Section 5.01 hereof and not by the
provisions of Section 4.10 hereof; and
(ii) the issuance of Equity Interests in any of the Company's Restricted
Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries.
Notwithstanding the preceding, none of the following items shall be
deemed to be Asset Sales:
(i) any single transaction or series of related transactions that involves
assets having a fair market value of less than $10.0 million;
(ii) a transfer of assets between or among the Company and its Subsidiaries;
(iii) an issuance of Equity Interests by a Subsidiary to the Company or to
another Subsidiary;
(iv) the sale or lease of equipment, inventory, accounts receivable or other
assets in the ordinary course of business;
(v) the sale or other disposition of cash or Cash Equivalents;
(vi) sales of accounts receivable and related assets of the type specified
in the definition of "Qualified Receivables Transaction" to a
Receivables Subsidiary for the fair market value thereof, including
cash in an amount at least equal to 75% of the book value thereof as
determined in accordance with GAAP, it being understood that, for the
purposes of this clause (vi), Notes received in exchange for the
transfer of accounts receivable and related assets shall be deemed cash
if the Receivables Subsidiary or other payor is required to repay said
Notes as soon as practicable from available cash collections less
amounts required to be established as reserves pursuant to contractual
agreements with entities that are not Affiliates of the Company entered
into as part of a Qualified Receivables Transaction;
(vii) transfers of accounts receivable and related assets of the type
specified in the definition of "Qualified Receivables Transaction" (or
a fractional undivided interest therein) by a Receivables Subsidiary in
a Qualified Receivables Transaction;
(viii) sale of assets deemed to occur in sale/lease back transactions in an
amount not to exceed $175 million; or
(ix) a Restricted Payment or Permitted Investment that is permitted by
Section 4.07 hereof.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
2
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" have a corresponding meaning.
"Board of Directors" means:
(i) with respect to a corporation, the Board of Directors of the
corporation;
(ii) with respect to a partnership, the Board of Directors of the general
partner of the partnership; and
(iii) with respect to any other Person, the board or committee of such Person
serving a similar function.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(iii) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(iv) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means:
(i) United States dollars;
(ii) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality of the United
States government (provided that the full faith and credit of the
United States is pledged in support of those securities) having
maturities of not more than six months from the date of acquisition;
(iii) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding six months and overnight bank deposits,
in each case, with any domestic commercial bank having capital and
surplus in excess of $500.0 million and a Thomson Bank Watch Rating of
"B" or better;
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the
qualifications specified in clause (iii) above;
3
(v) commercial paper having the highest rating obtainable from Moody's or
S&P and in each case maturing within six months after the date of
acquisition; and
(vi) money market funds at least 90% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (i) through (v) of this
definition.
"Change of Control" means the occurrence of any of the following:
(i) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the properties or
assets of the Company and its Restricted Subsidiaries taken as a whole
to any "person" (as that term is used in Section 13(d)(3) of the
Exchange Act);
(ii) the adoption of a plan relating to the liquidation or dissolution of
the Company;
(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above), becomes the Beneficial Owner, directly or indirectly,
of more than 50% of the Voting Stock of the Company, measured by voting
power rather than number of shares; or
(iv) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors.
"Clearstream" means Clearstream Banking S.A.
"Company" means Office Depot, Inc., and any and all successors thereto.
"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if
the Trustee obtains fewer than three such Reference Treasury Dealer Quotations,
the average of all such Quotations.
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus:
(i) an amount equal to any extraordinary loss plus any net loss realized by
such Person or any of its Restricted Subsidiaries in connection with an
Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; plus
4
(ii) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; plus
(iii) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers' acceptance financings, and
net of the effect of all payments made or received pursuant to Hedging
Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income; plus
(iv) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period)
of such Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash expenses
were deducted in computing such Consolidated Net Income; minus
(v) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business,
in each case, on a consolidated basis and determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(i) the Net Income (but not loss) of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions
paid in cash to the specified Person or a Restricted Subsidiary of the
Person;
(ii) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders;
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded;
(iv) the cumulative effect of a change in accounting principles shall be
excluded;
(v) charges taken by the Company in connection with the restructuring of
its operations in an amount not to exceed $260.7 million shall be
excluded; and
(vi) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded (except to the extent distributed to the Company or one of its
Restricted Subsidiaries).
5
"Consolidated Net Worth" means, with respect to any specified Person as
of any date, the sum of:
(i) the consolidated equity of the common stockholders of such Person and
its consolidated Subsidiaries as of such date; plus
(ii) the respective amounts reported on such Person's balance sheet as of
such date with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of
net earnings in respect of the year of such declaration and payment,
but only to the extent of any cash received by such Person upon
issuance of such preferred stock.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who:
(i) was a member of such Board of Directors on the date of this Indenture;
or
(ii) was nominated for election or elected to such Board of Directors with
the approval of a majority of the Continuing Directors who were members
of such Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facilities" means one or more debt facilities or commercial
paper facilities, in each case with banks or other institutional lenders
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the Notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
6
solely because the holders of the Capital Stock have the right to require the
Company to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale shall not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Company may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 4.07 hereof.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock) and beneficial interests
and trusts created by a Receivables Subsidiary.
"Euroclear" means Euroclear Bank S.A./N.V., as operator of the
Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Credit Facilities" means (1) the $255 million, 364-Day
Revolving Credit Agreement dated May 10, 2001 among the Company, Bank One, N.A.,
BNP Paribas, Citibank, N.A., First Union National Bank, Fleet National Bank, The
Royal Bank of Scotland, SunTrust Bank and Wells Fargo Bank, N.A.; and (2) the
$300 million, five-year, Revolving Credit and Line of Credit Agreement dated
February 20, 1998 among the Company, SunTrust Bank and other lenders.
"Existing Indebtedness" means the aggregate principal amount of
Indebtedness of the Company and its Restricted Subsidiaries (other than
Indebtedness under Credit Facilities) in existence on the date of this
Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(i) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including,
without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations; plus
(ii) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon;
plus
7
(iv) the product of (a) all dividends, whether paid or accrued and whether
or not in cash, on any series of preferred stock of such Person or any
of its Restricted Subsidiaries, other than dividends on Equity
Interests payable solely in Equity Interests of the Company (other than
Disqualified Stock) or to the Company or a Restricted Subsidiary of the
Company, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with
GAAP.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person and its Restricted Subsidiaries for any period, the ratio of the
Consolidated Cash Flow of such Person for such period to the Fixed Charges of
such Person for such period. In the event that the specified Person or any of
its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or
redeems any Indebtedness (other than ordinary working capital borrowings) or
issues, repurchases or redeems preferred stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being calculated and on
or prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio will be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
(i) acquisitions that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date will be given pro forma effect
as if they had occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be
calculated on a pro forma basis in accordance with Regulation S-X under
the Securities Act, but without giving effect to clause (iii) of the
proviso set forth in the definition of Consolidated Net Income;
(ii) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, will be excluded; and
(iii) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges
shall not be obligations of the specified Person or any of its
Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
8
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:
(i) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(ii) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates, foreign currency translation
and commodity prices.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the Global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(i) in respect of borrowed money;
(ii) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof);
(iii) in respect of banker's acceptances;
(iv) representing Capital Lease Obligations;
(v) representing the balance deferred and unpaid of the purchase price of
any property, except any such balance that constitutes an accrued
expense or trade payable; or
(vi) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person.
9
The amount of any Indebtedness outstanding as of any date will be:
(i) the accreted value of the Indebtedness, in the case of any Indebtedness
issued with original issue discount; and
(ii) the principal amount of the Indebtedness, together with any interest on
the Indebtedness that is more than 30 days past due, in the case of any
other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent Investment Banker" means the Reference Treasury Dealers
appointed by the Company.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company will be deemed to have made an Investment
on the date of any such sale or disposition equal to the fair market value of
the Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of Section 4.07 hereof. The
acquisition by the Company or any Subsidiary of the Company of a Person that
holds an Investment in a third Person will be deemed to be an Investment by the
Company or such Subsidiary in such third Person in an amount equal to the fair
market value of the Investment held by the acquired Person in such third Person
in an amount determined as provided in the final paragraph of Section 4.07
hereof
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and, except in connection with any Qualified Receivables
Transaction, any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
10
"LYONS" means the Liquid Yield Option Notes due 2007 issued by the
Company in 1992.
"Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(i) any gain (but not loss), together with any related provision for taxes
on such gain (but not loss), realized in connection with: (a) any Asset
Sale; or (b) the disposition of any securities by such Person or any of
its Restricted Subsidiaries or the extinguishment of any Indebtedness
of such Person or any of its Restricted Subsidiaries; and
(ii) any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result of the Asset Sale, taxes paid or
payable as a result of the Asset Sale, in each case, after taking into account
any available tax credits or deductions and any tax sharing arrangements, and
amounts required to be applied to the repayment of Indebtedness, other than
Indebtedness under a Credit Facility, secured by a Lien on the asset or assets
that were the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted Subsidiaries
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (b) is
directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;
(2) no default with respect to which (including any rights that the holders
of the Indebtedness may have to take enforcement action against an
Unrestricted Subsidiary) would permit upon notice, lapse of time or
both any holder of any other Indebtedness of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment of the Indebtedness to be accelerated or payable
prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of
its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
111
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).
"Permitted Business" means any business that derives a majority of its
revenues from the business engaged in by the Company and its Restricted
Subsidiaries on the date of original issuance of the Notes and/or activities
that are reasonably similar, ancillary or related to, or a reasonable extension,
development or expansion of, the businesses in which the Company and its
Restricted Subsidiaries are engaged on the date of original issuance of the
Notes.
"Permitted Investments" means:
(i) any Investment in the Company or in a Restricted Subsidiary of the
Company;
(ii) any Investment in Cash Equivalents;
(iii) any Investment by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the\
Company; or
(b) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets
to, or is liquidated into, the Company or a Restricted Subsidiary of
the Company;
(iv) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof;
(v) any acquisition of assets to the extent in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company;
(vi) any Investments received in compromise of obligations of such persons
incurred in the ordinary course of trade creditors or customers that
were incurred in the ordinary course of business, including pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy
or insolvency of any trade creditor or customer;
(vii) Hedging Obligations;
12
(viii) the acquisition by a Receivables Subsidiary in connection with a
Qualified Receivables Transaction of Equity Interests of a trust or
other Person established by such Receivables Subsidiary to effect such
Qualified Receivables Transaction; and any other Investment by the
Company or a Subsidiary of the Company in a Receivables Subsidiary or
any Investment by a Receivables Subsidiary in any other Person in
connection with a Qualified Receivables Transaction, provided that such
other Investment is in the form of a note or other instrument that the
Receivables Subsidiary or other Person is required to repay as soon as
practicable from available cash collections less amounts required to be
established as reserves pursuant to contractual agreements with
entities that are not Affiliates of the Company entered into as part of
a Qualified Receivables Transaction; and
(ix) other Investments in any Person having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (ix) that are at the
time outstanding not to exceed $50.0 million.
"Permitted Liens" means any of the following:
(i) Liens in favor of the Company;
(ii) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Restricted
Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or
consolidated with the Company or the Restricted Subsidiary;
(iii) Liens on property existing at the time of acquisition of the property
by the Company or any Restricted Subsidiary of the Company, provided
that such Liens were in existence prior to the contemplation of such
acquisition;
(iv) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(v) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (iv) of the second paragraph of Section 4.09 hereof
covering only the assets acquired with such Indebtedness;
(vi) Liens existing on the date of this Indenture;
(vii) Liens on all Senior Debt;
(viii) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as is required
in conformity with GAAP has been made therefor;
(ix) Liens on assets of the Company or a Receivables Subsidiary incurred in
connection with a Qualified Receivables Transaction;
(x) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse
Debt of Unrestricted Subsidiaries; and
13
(xi) Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that
do not exceed $25.0 million at any one time outstanding.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount
(or accreted value, if applicable) of the Indebtedness extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest on the Indebtedness and the amount of all expenses and
premiums incurred in connection therewith) (the "Original Principal
Amount"); provided, however, if the Indebtedness exceeds the Original
Principal Amount, the Permitted Refinancing Indebtedness shall be
limited to the Original Principal Amount;
(ii) such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded;
(iii) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of
payment to, the Notes on terms at least as favorable to the Holders of
Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(iv) such Indebtedness is incurred either by the Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Receivables Transaction" means any transaction or series of
transactions entered into by the Company or any of its Subsidiaries pursuant to
which the Company or any of its Subsidiaries sells, conveys or otherwise
transfers to (i) a Receivables Subsidiary (in the case of a transfer by the
Company or any of its Subsidiaries) and (ii) any other Person (in the case of a
transfer by a Receivables Subsidiary), or grants a security interest in, any
accounts receivable (whether now existing or arising in the future) of the
Company or any of its Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
14
"Receivables Subsidiary" means a Subsidiary of the Company which
engages in no activities other than in connection with the financing of accounts
receivable and which is designated by the Board of Directors of the Company (as
provided below) as a Receivables Subsidiary (a) no portion of the Indebtedness
or any other Obligations (contingent or otherwise) of which (i) is guaranteed by
the Company or any Subsidiary of the Company (excluding guarantees of
Obligations (other than the principal of, and interest on, Indebtedness)
pursuant to representations, warranties, covenants and indemnities entered into
in the ordinary course of business in connection with a Qualified Receivables
Transaction), (ii) is recourse to or obligates the Company or any Subsidiary of
the Company in any way other than pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction or (iii) subjects any
property or asset of the Company or any Subsidiary of the Company (other than
accounts receivable and related assets as provided in the definition of
"Qualified Receivables Transaction"), directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to representations,
warranties, covenants and indemnities entered into in the ordinary course of
business in connection with a Qualified Receivables Transaction, (b) with which
neither the Company nor any Subsidiary of the Company has any material contract,
agreement, arrangement or understanding other than on terms customary for
securitization of receivables and (c) with which neither the Company nor any
Subsidiary of the Company has any obligation to maintain or preserve such
Subsidiary's financial condition or cause such Subsidiary to achieve certain
levels of operating results. Any such designation by the Board of Directors of
the Company shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the resolution of the Board of Directors of the Company giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions.
"Reference Treasury Dealer" means Goldman, Sachs & Co. and its
successors; provided, however, that if Goldman, Sachs & Co. shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average as determined by
the Trustee, of the bid and asked prices of the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement, dated as of July 2, 2001, by and among the Company and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Remaining Scheduled Payments" means, with respect to each Note to be
redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due after the related redemption date but for such
redemption; provided, however, that if such redemption date is not an interest
payment date with respect to such Note, the amount of the next succeeding
scheduled interest payment thereon shall be reduced by the amount of interest
accrued thereon to such redemption date.
15
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Special Interest" means all the special interest then owing pursuant
to Section 2 of the Registration Rights Agreement.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(i) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees of the corporation,
association or other business entity is at the time owned or
controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person (or a combination thereof); and
16
(ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are that Person or one or more
Subsidiaries of that Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note substantially
in the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:
(i) has no Indebtedness other than Non-Recourse Debt;
(ii) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the
terms of any such agreement, contract, arrangement or understanding are
no less favorable to the Company or such Restricted Subsidiary than
those that might be obtained at the time from Persons who are not
Affiliates of the Company;
(iii) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or
preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results;
(iv) is guaranteeing or otherwise providing credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries; and
(v) has at least one director on its Board of Directors that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant. The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
17
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (1) such
Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period and (2) no Default or Event of Default would be in existence
following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(i) the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect of the Indebtedness, by (b) the number of years (calculated to
the nearest one-twelfth) that shall elapse between such date and the
making of such payment; by
(ii) the then outstanding principal amount of such Indebtedness.
"Yen Credit Facility" means that certain credit facility dated July 1,
1994, by and among Office Depot Japan Ltd., Industrial Bank of Japan, Ltd.,
Union Bank of California, N.A. Tokyo Branch and the Fuji Bank.
Section 1.02. Other Definitions.
Defined in
Term Section
---- -------
"Affiliate Transaction"................................... 4.11
"Asset Sale Offer"........................................ 3.09
"Authentication Order".................................... 2.02
"Change of Control Offer"................................. 4.14
"Change of Control Payment"............................... 4.14
"Change of Control Payment Date".......................... 4.14
"Covenant Defeasance"..................................... 8.03
"DTC" .................................................... 2.03
"Designated Senior Debt" ................................. 10.02
"Event of Default"........................................ 6.01
"Excess Proceeds"......................................... 4.10
"incur"................................................... 4.09
"Legal Defeasance"........................................ 8.02
"Moody's" ................................................ 4.18
"Offer Amount"............................................ 3.09
"Offer Period"............................................ 3.09
"Paying Agent"............................................ 2.03
"Payment Default" ........................................ 6.01
"Payment Blockage Notice" ................................ 10.04
18
Defined in
Term Section
---- -------
"Permitted Debt".......................................... 4.09
"Permitted Junior Securities" ............................ 10.02
"Purchase Date"........................................... 3.09
"Rating Event Date" ...................................... 4.18
"Registrar"............................................... 2.03
"Representative" ......................................... 10.02
"Restricted Payments"..................................... 4.07
"Senior Debt" ............................................ 10.02
"S&P"..................................................... 4.18
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:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
19
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto but without the Global Note Legend thereon and without
the "Schedule of Exchanges of Interests in the Global Note" attached thereto.
Each Global Note shall represent such of the outstanding Notes as shall be
specified therein and each shall provide that it shall represent the aggregate
principal amount of outstanding Notes from time to time endorsed thereon and
that the aggregate principal amount of outstanding Notes represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges
and redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
(c) Euroclear and Clearstream Procedures Applicable. The provisions of
the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of
Clearstream" and "Customer Handbook" of Clearstream shall be applicable to
transfers of beneficial interests in the Regulation S Global Notes that are held
by Participants through Euroclear or Clearstream.
Section 2.02. Execution and Authentication.
An Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer (an "Authentication Order"), authenticate Notes for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
20
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Special Interest, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
21
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a); however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend;
provided, however, that prior to the expiration of the Restricted
Period, transfers of beneficial interests in the Regulation S Global
Note may not be made to a U.S. Person or for the account or benefit of
a U.S. Person (other than an Initial Purchaser). Beneficial interests
in any Unrestricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above,
the transferor of such beneficial interest must deliver to the
Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited
with such increase or (B) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary
to the Registrar containing information regarding the Person in whose
name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above. Upon consummation of an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
22
satisfied upon receipt by the Registrar of the instructions contained
in the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of
the requirements for transfer or exchange of beneficial interests in
Global Notes contained in this Indenture and the Notes or otherwise
applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Note(s) pursuant to Section
2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form
of a beneficial interest in the 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form
of a beneficial interest in the Regulation S Global Note, then
the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transferee will take delivery in the form
of a beneficial interest in the IAI Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications and certificates and
Opinion of Counsel required by item (3) thereof, if
applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may be
exchanged by any Holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3)
a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such beneficial
interest in a Restricted Global Note proposes to
exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(a)
thereof; or
23
(2) if the Holder of such beneficial
interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any Holder of a beneficial interest in
a Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such Holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the Securities
Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred
to a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a)
thereof;
(E) if such beneficial interest is being transferred
to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities
24
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred
to the Company or any of its Subsidiaries, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in
such name or names and in such authorized denomination or denominations
as the Holder of such beneficial interest shall instruct the Registrar
through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes
to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear
the Private Placement Legend and shall be subject to all restrictions
on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A Holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder of such beneficial interest, in the
case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such beneficial
interest in a Restricted Global Note proposes to
exchange such beneficial interest for a Definitive
Note that does not bear the Private Placement Legend,
a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the Holder of such beneficial
interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a
25
Definitive Note that does not bear the Private
Placement Legend, a certificate from such Holder in
the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any Holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant
to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant
to this Section 2.06(c)(iii) shall be registered in such name or names
and in such authorized denomination or denominations as the Holder of
such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes
to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
26
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of
the Securities Act other than those listed in subparagraphs
(B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, in the case
of clause (B) above, the 144A Global Note, in the case of clause (C)
above, the Regulation S Global Note, and in all other cases, the IAI
Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes
proposes to exchange such Notes for a beneficial
interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c)
thereof; or
(2) if the Holder of such Definitive Notes
proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4)
thereof;
27
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the
subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the
Definitive Notes and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note at any time. Upon receipt of a request for
such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B),
(ii)(D) or (iii) above at a time when an Unrestricted Global Note has
not yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the
Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of Definitive
Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Note if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903
or Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
28
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted
Definitive Notes proposes to exchange such Notes for
an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(d) thereof;
or
(2) if the Holder of such Restricted
Definitive Notes proposes to transfer such Notes to a
Person who shall take delivery thereof in the form of
an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests, an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such
exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
29
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below,
each Global Note and each Definitive Note (and all Notes
issued in exchange therefor or substitution thereof) shall
bear the legend in substantially the following form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
to this Section 2.06 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF OFFICE DEPOT, INC."
30
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a Holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.14
and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such registration
of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending
at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part or (C) to register the transfer of or to exchange a Note between a
record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
31
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes 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 considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
32
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provision of Section 3.07 hereof, it shall furnish to the Trustee, at
least 30 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
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The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) 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 Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Notwithstanding the foregoing, a redemption notice may be mailed more
than 60 days prior to the redemption date if the notice is issued in connection
with a defeasance of the Notes or satisfaction and discharge of this Indenture.
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Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes.
(b) The Notes may be redeemed, in whole or in part, at any time at the
option of the Company upon not less than 30 nor more than 60 days prior notice
mailed by first-class mail to each Holder's registered address, at a redemption
price equal to the greater of (i) 100% of the principal amount thereof or (ii)
as determined by an Independent Investment Banker, the sum of the present values
of the Remaining Scheduled Payments discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate, plus, in each case, accrued and unpaid interest and
Special Interest, if any, to the date of redemption.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
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Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may elect to have Notes purchased in integral multiples of $1,000
only;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
36
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company, shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Special Interest, if any, in the same manner on the dates and in the amounts set
forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Special Interest (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
37
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report on thereon by the Company's certified
independent accountants; and (ii) all current reports that would be required to
be filed with the SEC on Form 8-K if the Company were required to file such
reports, in each case, within the time periods specified in the SEC's rules and
regulations.
(b) In addition, following consummation of the Exchange Offer, whether
or not required by the rules and regulations of the SEC, the Company shall file
a copy of all such information and reports with the SEC for public availability
within the time periods specified in the SEC's rules and regulations (unless the
SEC will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. The Company shall at
all times comply with TIA ss. 314(a). In addition, the Company has agreed that,
for so long as any Notes remain outstanding, it shall furnish to the Holders and
to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d) (4) under the
Securities Act.
(c) If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and in Management's Discussion and Analysis of Financial Condition and
Results of Operations, of the financial condition and results of operations of
the Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
38
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may 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 covenants that it shall not, by resort to any such law, 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 has
been enacted.
Section 4.07. Restricted Payments.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including, without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
39
retire for value any Indebtedness that is subordinated to the Notes, except a
payment of interest or principal at the Stated Maturity thereof; or (iv) make
any Restricted Investment (all such payments and other actions set forth in
these clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence of such Restricted Payment;
and
(ii) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period,
have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section
4.09(i); and
(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the date of this Indenture (excluding
Restricted Payments permitted by clauses (ii), (iii) and (iv) of
Section 4.07(b)), is less than the sum, without duplication, of:
(A) 50% of the Consolidated Net Income of the Company
for the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing after the
date of this Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus
(B) 100% of the aggregate net cash proceeds received
by the Company since the date of this Indenture as a
contribution to its common equity capital or from the issue or
sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of convertible
or exchangeable Disqualified Stock or convertible or
exchangeable debt securities of the Company that have been
converted into or exchanged for such Equity Interests (other
than Equity Interests (or Disqualified Stock or debt
securities) sold to a Subsidiary of the Company), plus
(C) to the extent that any Restricted Investment that
was made after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (i) the
cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (ii) the
initial amount of such Restricted Investment.
(b) So long as no Default has occurred and is continuing or would be
caused thereby, the preceding provisions shall not prohibit (i) the payment of
any dividend within 60 days after the date of declaration of the dividend, if at
the date of declaration the dividend payment would have complied with the
provisions of this Indenture, (ii) the redemption, repurchase, retirement,
defeasance or other acquisition of any subordinated Indebtedness of the Company
or of any Equity Interests of the Company in exchange for, or out of the net
cash proceeds of the substantially concurrent sale (other than to a Subsidiary
of the Company) of, Equity Interests of the Company (other than Disqualified
Stock); provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (iii)(B) of the preceding paragraph, (iii) the
defeasance, redemption, repurchase or other acquisition of subordinated
Indebtedness of the Company with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness, (iv) the payment of any dividend by a
Restricted Subsidiary of the Company to the holders of its Equity Interests on a
40
pro rata basis, (v) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company or any Restricted
Subsidiary of the Company held by any member of the Company's (or any of its
Restricted Subsidiaries') management pursuant to any management equity
subscription agreement, stock option agreement or similar agreement; provided
that the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $15.0 million in any twelve-month
period; (vi) repayment of LYONS; or (vii) other Restricted Payments in an amount
not to exceed $50.0 million.
(c) The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be valued
by this Section 4.07 shall be determined by the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee. The Board of
Directors' determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $25.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock to the Company or any of its Restricted Subsidiaries, or with
respect to any other interest or participation in, or measured by, its profits,
or pay any Indebtedness owed to the Company or any of its Restricted
Subsidiaries, (ii) make loans or advances to the Company or any of its
Restricted Subsidiaries; or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries.
However, the preceding restrictions shall not apply to encumbrances or
restrictions existing under or by reason of: (i) agreements governing Existing
Indebtedness and Credit Facilities as in effect on the date of this Indenture
and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of those agreements,
provided that the amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacement or refinancings are no more restrictive,
taken as a whole, with respect to such dividend and other payment restrictions
than those contained in those agreements on the date of this Indenture, (ii)
this Indenture and the Notes, (iii) applicable law, (iv) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness or Capital Stock was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (v) customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices, (vi) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions on
that property of the nature described in clause (iii) of the preceding
paragraph, (vii) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary pending
its sale or other disposition, (viii) Permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being
refinanced, (ix) Liens securing Indebtedness otherwise permitted to be incurred
41
under the provisions of Section 4.12 hereof that limit the right of the debtor
to dispose of the assets subject to such Liens, (x) provisions with respect to
the disposition or distribution of assets or property in joint venture
agreements, assets sale agreements, stock sale agreements and other similar
agreements entered into in the ordinary course of business, (xi) Indebtedness or
other contractual requirements of a Receivables Subsidiary in connection with a
Qualified Receivables Transaction, provided that such restrictions apply only to
such Receivables Subsidiary or the receivables which are subject to the
Qualified Receivables Transaction and (xii) restrictions on cash or other
deposits or net worth imposed by customers under contracts entered into in the
ordinary course of business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue Disqualified
Stock, if the Fixed Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least 2.0 to 1,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The first paragraph of this Section 4.09 shall not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company of additional Indebtedness
and letters of credit under Credit Facilities in an aggregate principal
amount at any one time outstanding under this clause (i) (with letters
of credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Restricted Subsidiaries
thereunder) not to exceed $600.0 million;
(ii) the incurrence by the Company and its Restricted
Subsidiaries of the Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness
represented by the Notes to be issued on the date of this Indenture and
the Exchange Notes to be issued pursuant to the Registration Rights
Agreement;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case,
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of the Company or such Restricted
Subsidiary, in an aggregate principal amount, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (iv), not to exceed
$100.0 million at any time outstanding;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted
by this Indenture to be incurred under the first paragraph of this
42
Section 4.09 or clauses (ii), (iii), (iv), (v), (ix) or (xii) of this
paragraph;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated
to the prior payment in full in cash of all Obligations with
respect to the Notes and
(B) (a) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by
a Person other than the Company or a Restricted Subsidiary of
the Company and (b) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a
Restricted Subsidiary of the Company; shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the
Company or such Restricted Subsidiary, as the case may be,
that was not permitted by this clause (vi);
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose
of fixing or hedging interest rate risk with respect to any floating
rate Indebtedness that is permitted by the terms of this Indenture to
be outstanding or Hedging Obligations with respect to foreign currency
translations;
(viii) the incurrence by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt; provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Company that was not
permitted by this clause (viii);
(ix) the incurrence by the Company's Subsidiaries of
Indebtedness of up to 10.4 billion yen under the Yen Credit Facility
and the Guarantee of such Indebtedness by the Company;
(x) the guarantee by the Company of Indebtedness of a
Restricted Subsidiary of the Company that was permitted to be incurred
by another provision of this Section 4.09;
(xi) the incurrence by a Receivables Subsidiary of
Indebtedness in a Qualified Receivables Transaction that is without
recourse to the Company or to any other Subsidiary of the Company or
their assets (other than such Receivables Subsidiary and its assets
and, as to the Company or any Subsidiary of the Company, other than
pursuant to representations, warranties, covenants and indemnities
customary for such transactions) and is not guaranteed by any such
Person; and
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(xii), not to exceed $175.0 million.
The accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an
43
issuance of Disqualified Stock for purposes of this covenant; provided, in each
such case, that the amount thereof is included in Fixed Charges of the Company
as accrued.
For purposes of determining compliance with this Section 4.09 in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (i) through (xii)
above, or is entitled to be incurred pursuant to the first paragraph of this
Section 4.09, the Company shall be permitted to classify such item of
Indebtedness on the date of its incurrence, or later reclassify all or a portion
of such item of Indebtedness, in any manner that complies with this Section
4.09. Indebtedness under Credit Facilities outstanding on the date on which
Notes are first issued and authenticated under this Indenture shall be deemed to
have been incurred on such date in reliance on the exception provided by clause
(i) of the definition of Permitted Debt.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
the Asset Sale at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of, (ii) the fair market value is
determined by the Company's Board of Directors and evidenced by a resolution of
the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee and (iii) at least 75% of the consideration received in the Asset Sale
by the Company or such Restricted Subsidiary is in the form of cash. For
purposes of this provision (iii), each of the following shall be deemed to be
cash:
(A) any liabilities, as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet, of the
Company or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms
subordinated to the Notes) that are assumed by the transferee
of any such assets and such transferee expressly releases the
Company or such Restricted Subsidiary from further liability;
(B) any securities, notes or other obligations
received by the Company or any such Restricted Subsidiary from
such transferee that are delivered within 20 days of the sale,
subject to ordinary settlement periods, converted by the
Company or such Restricted Subsidiary into cash, to the extent
of the cash received in that conversion; and
(C) any payment of Senior Debt secured by the assets
sold in the Asset Sale.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply those Net Proceeds at its option (i) to repay Senior
Debt, (ii) to acquire all or substantially all of the assets of, or a majority
of the Voting Stock of, another Permitted Business, (iii) to make a capital
expenditure or (iv) to acquire other long-term assets that are used or useful in
a Permitted Business.
Pending the final application of any Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest the Net
Proceeds in any manner that is not prohibited by this Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph shall constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $25.0 million, the Company shall
make an Asset Sale Offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
44
Notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100%
of principal amount plus accrued and unpaid interest and Special Interest, if
any, to the date of purchase, and shall be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
those Excess Proceeds for any purpose not otherwise prohibited by this
Indenture. If the aggregate principal amount of Notes and other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to occur any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (an "Affiliate
Transaction"), other than Affiliate Transactions on terms that are not
materially less favorable than those that might reasonably have been obtained in
a comparable transaction at such time on an arm's-length basis from a Person
that is not an Affiliate of the Company or such Restricted Subsidiary; provided,
however, that for an Affiliate Transaction with an aggregate value of $25.0
million or more, at the Company's option, either:
(i) a majority of the disinterested members of the Board of
Directors of the Company shall determine in good faith that such
Affiliate Transaction is on terms that are not materially less
favorable than those that might reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a
Person that is not an Affiliate of the Company; or
(ii) the Board of Directors of the Company or any such
Restricted Subsidiary to such Affiliate Transaction shall obtain an
opinion from a nationally recognized investment banking, appraisal or
accounting firm that such Affiliate Transaction is on terms that are
not materially less favorable than those that might reasonably have
been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of the
Company.
The items that shall not be deemed to be Affiliate Transactions and,
therefore, shall not be subject to the provisions of the prior paragraph are (i)
any employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Restricted Subsidiary, (ii) transactions between
or among the Company and/or its Restricted Subsidiaries, (iii) transactions with
a Person that is an Affiliate of the Company solely because the Company owns an
Equity Interest in, or controls, such Person, (iv) payment of reasonable
directors fees to Persons who are not otherwise Affiliates of the Company, (v)
sales of Equity Interests (other than Disqualified Stock) to Affiliates of the
Company, (vi) transactions between or among the Company and/or its Restricted
Subsidiaries or transactions between a Receivables Subsidiary and any Person in
which the Receivables Subsidiary has an Investment or (vii) Restricted Payments
that are permitted by the provisions of Section 4.07 hereof.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of any
kind securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, except Permitted Liens.
45
Section 4.13. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
Section 4.14. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall make
an offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
a purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Special Interest thereon, if any, to the date of
purchase (the "Change of Control Payment"). Subject to the last paragraph in
subsection (b) herein, within 30 days following any Change of Control, the
Company shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control pursuant to this Section 4.14
and stating: (1) that the Change of Control Offer is being made pursuant to this
Section 4.14 and that all Notes tendered will be accepted for payment; (2) the
purchase price and the purchase date, which shall be no earlier than 30 Business
Days and no later than 60 Business Days from the date such notice is mailed (the
"Change of Control Payment Date"); (3) that any Note not tendered will continue
to accrue interest; (4) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Payment Date; (5) that Holders electing to have any Notes purchased pursuant to
a Change of Control Offer will be required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date; (6) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have the Notes purchased; and (7) that
Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof. The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of Notes in connection with a Change of Control. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of this Section 4.14, the Company shall comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations of this Section 4.14 by virtue of such conflict.
On the Change of Control Payment Date, the Company shall, to the extent
lawful:
(i) accept for payment all Notes or portions of Notes properly
tendered pursuant to the Change of Control Offer;
46
(ii) deposit with the Paying Agent an amount equal to the
Change of Control Payment in respect of all Notes or portions of Notes
properly tendered; and
(iii) deliver or cause to be delivered to the Trustee the
Notes properly accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions of Notes being
purchased by the Company.
(b) The Paying Agent shall promptly mail to each Holder of Notes
properly tendered the Change of Control Payment for such Notes, and the Trustee
shall promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided that each new Note shall be in a
principal amount of $1,000 or an integral multiple of $1,000.
(c) Prior to complying with any of the provisions of this Section 4.14,
but in any event within 90 days following a Change of Control, the Company shall
either repay all outstanding Senior Debt or obtain the requisite consents, if
any, under all agreements governing outstanding Senior Debt to permit the
repurchase of Notes required by this Section 4.14. The Company shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
(d) Notwithstanding anything to the contrary in this Section 4.14, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.14 and Section 3.09 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
Section 4.15. Anti-Layering.
The Company shall not incur, create, issue, assume, Guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt of the Company and senior in any respect in
right of payment to the Notes.
Section 4.16. Payments for Consent.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Notes
unless such consideration is offered to be paid and is paid to all Holders of
the Notes that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.
Section 4.17. Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary properly designated shall be deemed to
be an Investment made as of the time of the designation and shall reduce the
amount available for Restricted Payments under the first paragraph of Section
4.07 hereof or Permitted Investments, as determined by the Company. That
designation shall only be permitted if the Investment would be permitted at that
time and if the Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
47
Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a
Default.
Section 4.18. Changes in Covenants when Notes Rated Investment Grade
Following the first date upon which the Notes are rated Baa3 or better
by Moody's Investors Service, Inc. ("Moody's") and BBB- or better by Standard &
Poor's Ratings Group ("S&P") (or, in either case, if such person ceases to rate
the Notes for reasons outside of the control of the Company, the equivalent
investment grade credit rating from any other "nationally recognized statistical
rating organization" (within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the
Exchange Act) selected by the Company as a replacement agency) and neither
Moody's nor S&P attaches any "negative outlook" or "negative credit watch" to
such rating of the Notes (the "Rating Event Date") (and provided no Event of
Default or event that with notice or the passage of time would constitute an
Event of Default shall exist on the Rating Event Date), Sections 4.07, 4,08,
4.09, 4.10, 4.11, 4.14 and 4.17 hereof, and clause (a)(D) of Section 5.01 hereof
shall no longer be applicable to the Notes.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
(a) The Company shall not, directly or indirectly: (i) consolidate or
merge with or into another Person (whether or not the Company is the surviving
corporation); or (ii) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person, unless:
(A) either: (1) the Company is the surviving
corporation; or (2) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state of the
United States or the District of Columbia;
(B) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, conveyance or
other disposition shall have been made assumes all the
obligations of the Company under the Notes, this Indenture and
the Registration Rights Agreement pursuant to agreements
reasonably satisfactory to the Trustee;
(C) immediately after such transaction, no Default or
Event of Default exists; and
(D) the Company or the Person formed by or surviving
any such consolidation or merger (if other than the Company),
or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made (1) shall have
Consolidated Net Worth immediately after the transaction equal
to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction, and (2) shall, on the
date of such transaction after giving pro forma effect thereto
and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test
set forth in the first paragraph of Section 4.09 hereof.
48
(b) In addition, the Company shall not, directly or indirectly, lease
all or substantially all of its properties or assets, in one or more related
transactions, to any other Person. The provisions of this Section 5.01 shall not
be applicable to a sale, assignment, transfer, conveyance or other disposition
of assets between or among the Company and any of its Restricted Subsidiaries.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale, assignment,
transfer, conveyance or other disposition of all of the Company's assets that
meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Special Interest with respect to, the Notes and such default continues for a
period of 30 days, whether or not prohibited by Article 10 hereof;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise, whether or not prohibited by Article 10 hereof;
(c) the Company or any of its Subsidiaries fails to comply with any of
the provisions of Section 4.07, 4.09, 4.10, 4.14 or 5.01 hereof;
(d) the Company or any of its Subsidiaries fails to observe or perform
any other covenant, representation, warranty or other agreement in this
Indenture or the Notes for 60 days after notice to the Company by the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding voting as a single class;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries)
whether such Indebtedness or Guarantee now exists, or is created after the date
of this Indenture, if such default is (i) caused by a failure to pay principal
of, or interest or premium, if any, on such Indebtedness prior to the expiration
of the grace period provided in such Indebtedness on the date of such default (a
"Payment Default"); or (ii) results in the acceleration of such Indebtedness
prior to its express maturity; and, in each case, the principal amount of such
49
Indebtedness, together with the principal amount of any other such Indebtedness
the maturity of which has been so accelerated, aggregates $35 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Subsidiaries and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60 days,
provided that the aggregate of all such undischarged judgments exceeds $35.0
million;
(g) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary
case;
(ii) appoints a custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon any such declaration, the Notes shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (g) or
(h) of Section 6.01 hereof occurs with respect to the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Notes shall be due
and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
50
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to the optional
redemption provisions of this Indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes.
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, premium, Special
Interest, if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default if it determines that withholding Notes
is in the Holders' interest, unless such Default or Event of Default relates to
the payment of principal, premium, Special Interest, if any or interest on the
Notes.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note 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. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Special Interest, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
51
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Special Interest,
if any, and interest on the Note, on or after the respective due dates expressed
in the Note (including in connection with an offer to purchase), 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 specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Special Interest, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
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any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the Trustee
and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Special Interest, if any, and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal,
premium and Special Interest, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due 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 of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
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(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) 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, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, 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) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) 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. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon 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 or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the written advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
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(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(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 unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that 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 Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
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 Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
55
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. 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 promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. 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 shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
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(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of 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 Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
57
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to 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 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, Special Interest, if any, and interest on such Notes
when such payments are due, (b) the Company's obligations with respect to such
Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (d) this Article Eight. Subject to compliance with this
Article Eight, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.14, 4.15, 4.16 and 4.17, hereof and Section 5.01(a)(D) hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
58
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as shall be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium and Special Interest, if any, and
interest on the outstanding Notes on the stated date for payment thereof or on
the applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes shall not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and shall be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes shall not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and shall 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;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which shall be used to defease the Notes pursuant to this Article Eight
concurrently with such incurrence);
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
59
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
60
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 4.14 hereof)
and the Notes with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding voting as a single class
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes voting as a single class (including consents obtained
in connection with a tender offer or exchange offer for, or purchase of, the
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Notes. Section 2.08 hereof shall determine which Notes are considered to be
"outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the
Notes, except as provided above with respect to Section 4.14 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of,
premium or Special Interest, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of, or interest or premium or Special Interest, if any, on the
Notes; or
(g) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
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Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.
Section 10.02. Certain Definitions.
"Designated Senior Debt" means (i) any Indebtedness outstanding under
the Existing Credit Facilities and (ii) after payment in full of all Obligations
under the Existing Credit Facilities, any other Senior Debt permitted under this
63
Indenture the principal amount of which is $25.0 million or more and that has
been designated by the Company as "Designated Senior Debt."
"Permitted Junior Securities" means (i) Equity Interests in the Company
or (ii) debt securities that are subordinated to all Senior Debt and any debt
securities issued in exchange for Senior Debt to substantially the same extent
as, or to a greater extent than, the Notes are subordinated to Senior Debt under
this Indenture.
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Debt.
"Senior Debt" means:
(i) all Indebtedness of the Company outstanding under Credit Facilities and
all Hedging Obligations with respect thereto;
(ii) any other Indebtedness of the Company permitted to be incurred under
the terms of this Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with
or subordinated in right of payment to the Notes; and
(iii) all Obligations with respect to the items listed in the preceding
clauses (i) and (ii).
Notwithstanding anything to the contrary in the preceding, Senior Debt
shall not include:
(i) any liability for federal, state, local or other taxes owed or owing by
the Company;
(ii) any intercompany Indebtedness of the Company or any of its Subsidiaries
to the Company or any of its Affiliates;
(iii) any trade payables; or
(iv) the portion of any Indebtedness that is incurred in violation of this
Indenture.
Section 10.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:
(i) holders of Senior Debt shall be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Debt) before Holders of the
Notes shall be entitled to receive any payment with respect to the
Notes (except that Holders may receive (A) Permitted Junior Securities
and (B) payments and other distributions made from any defeasance trust
created pursuant to Section 8.01 hereof); and
(ii) until all Obligations with respect to Senior Debt (as
provided in clause (i) above) are paid in full, any distribution to
which Holders would be entitled but for this Article 10 shall be made
to holders of Senior Debt (except that Holders of Notes may receive (A)
Permitted Junior Securities and (B) payments and other distributions
64
made from any defeasance trust created pursuant to Section 8.01
hereof), as their interests may appear.
Section 10.04. Default on Designated Senior Debt.
(a) The Company may not make any payment or distribution to the Trustee
or any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (A) Permitted Junior Securities and (B) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof) until
all principal and other Obligations with respect to the Senior Debt have been
paid in full if:
(i) a default in the payment of any principal or other
Obligations with respect to Designated Senior Debt occurs and is
continuing beyond any applicable grace period in the agreement,
indenture or other document governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated
Senior Debt occurs and is continuing that then permits holders of the
Designated Senior Debt to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a
Person who may give it pursuant to Section 10.12 hereof. If the Trustee
receives any such Payment Blockage Notice, no subsequent Payment
Blockage Notice shall be effective for purposes of this Section unless
and until (A) at least 360 days shall have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice and (B)
all scheduled payments of principal, premium, if any, and interest on
the Permitted Junior Securities that have come due have been paid in
full in cash. No nonpayment default that existed or was continuing on
the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
(b) The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(i) the date upon which the default referred to in clause (i)
or (ii) of Section 10.04(a) hereof is cured or waived, or
(ii) in the case of a default referred to in clause (ii) of
Section 10.04(a) hereof, 179 days pass after notice is received if the
maturity of such Designated Senior Debt has not been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 10.05. Acceleration of Permitted Junior Securities.
If payment of the Permitted Junior Securities Securities is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Debt of the acceleration.
Section 10.06. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.04 hereof, such payment shall be held by the Trustee or such Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Debt as their interests may appear or their
65
Representative under this Indenture or other agreement (if any) pursuant to
which Senior Debt may have been issued, as their respective interests may
appear, for application to the payment of all Obligations with respect to Senior
Debt remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
Section 10.07. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 10.
Section 10.08. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of Holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
Section 10.09. Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and
Holders of Senior Debt. Nothing in this Indenture shall:
(i) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to holders
of Senior Debt; or
(iii) prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
66
Section 10.10. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
Section 10.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Section 10.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
Section 10.13. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
Section 10.14. Amendments.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt.
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ARTICLE 11.
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge.
This Indenture shall be discharged and shall cease to be of further
effect as to all Notes issued hereunder, when:
(1) either:
(a) all Notes that have been authenticated (except lost, stolen or
destroyed Notes that have been replaced or paid and Notes for
whose payment money has theretofore been deposited in trust
and thereafter repaid to the Company) have been delivered to
the Trustee for cancellation; or
(b) all Notes that have not been delivered to the Trustee for
cancellation have become due and payable by reason of the
making of a notice of redemption or otherwise or shall become
due and payable within one year and the Company has
irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust solely for the benefit of the
Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as shall
be sufficient without consideration of any reinvestment of
interest, to pay and discharge the entire indebtedness on the
Notes not delivered to the Trustee for cancellation for
principal, premium and Special Interest, if any, and accrued
interest to the date of maturity or redemption;
(2) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit or shall occur as a result of such deposit and
such deposit shall not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company
is a party or by which the Company is bound;
(3) the Company has paid or caused to be paid all sums payable by it under
this Indenture; and
(4) the Company has delivered irrevocable instructions to the Trustee under
this Indenture to apply the deposited money toward the payment of the
Notes at maturity or the redemption date, as the case may be.
In addition, the Company must deliver an Officers' Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if
money shall have been deposited with the Trustee pursuant to subclause (b) of
clause (1) of this Section, the provisions of Section 11.02 and Section 8.06
shall survive.
Section 11.02. Application of Trust Money.
Subject to the provisions of Section 8.06, all money deposited with the
Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal, premium, Special Interest, if any, and interest for whose
68
payment such money has been deposited with the Trustee; but such money need not
be segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 11.01 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 Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 11.01; provided
that if the Company has made any payment of principal of, premium, Special
Interest, if any, or interest on any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, FL 33445
Telecopier No.: (561) 438-4464
Attention: David Fannin, Esq., General Counsel
With a copy to:
McDermott, Will & Emory
227 West Monroe St.
Chicago, IL 60606
Telecopier No.: (312) 984-7700
Attention: Scott N. Gierke, Esq.
If to the Trustee:
SunTrust Bank
Corporate Trust Division
777 Brickell Avenue
Miami, FL 33131
Telecopier No.: (305) 579-7017
Attention: Bond Administration
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
69
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(c) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(d) 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;
70
(e) a statement that, in the opinion of such Person, he or she 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
satisfied; and
(f) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
Section 12.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES, 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 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.10. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 12.11. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 12.12. Counterpart 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.
71
Section 12.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
72
SIGNATURES
Dated as of July 2, 2001
Office Depot, Inc.
By:
-------------------------------------------
Name:
Title:
Attest:
- ---------------------------------
Name:
Title:
SunTrust Bank
By:
--------------------------------------------
Name:
Title:
Attest:
- ---------------------------------
Authorized Signatory
Date:
73
EXHIBIT A
- --------------------------------------------------------------------------------
CUSIP/CINS ____________
10% Senior Subordinated Notes due 2008
No. 1 $____________
OFFICE DEPOT, INC.
promises to pay to Cede & Co. or registered assigns, the principal sum of ______
Dollars on July 15, 2008.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 1
Dated: July 2, 2001
OFFICE DEPOT, INC.
By:
-------------------------------------------
Name:
Title:
This is one of the Notes referred to
in the within-mentioned Indenture:
SUNTRUST BANK,
as Trustee
By:
--------------------------------------------
Authorized Signatory
- --------------------------------------------------------------------------------
A-1
10% Senior Subordinated Notes due 2008
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Office Depot, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 10%
per annum from July 2, 2001 until maturity and shall pay the Special Interest
payable pursuant to Section 2 of the Registration Rights Agreement referred to
below. The Company shall pay interest and Special Interest semi-annually in
arrears on January 15 and July 15 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be January 15, 2002. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Special Interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest shall be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes
(except defaulted interest) and Special Interest to the Persons who are
registered Holders of Notes at the close of business on the January 1 or July 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. The Notes
shall be payable as to principal, premium and Special Interest, if any, and
interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest and Special Interest may be made by check mailed to
the Holders at their addresses set forth in the register of Holders, and
provided that payment by wire transfer of immediately available funds shall be
required with respect to principal of and interest, premium and Special Interest
on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, SunTrust Bank, the Trustee
under the Indenture, shall act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of July 2, 2001 ("Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling. The
A-2
Notes are obligations of the Company limited to $250.0 million in aggregate
principal amount, plus amounts, if any, issued to pay Special Interest on
outstanding Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) The Notes are not be redeemable at the option of the Company except
as set forth in the following paragraph.
(b) The Notes may be redeemed, in whole or in part, at any time at the
option of the Company upon not less than 30 nor more than 60 days prior notice
mailed by first-class mail to each Holder's registered address, at a redemption
price equal to the greater of (i) 100% of the principal amount thereof or (ii)
as determined by an Independent Investment Banker, the sum of the present values
of the Remaining Scheduled Payments discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate, plus, in each case, accrued and unpaid interest and
Special Interest, if any, to the date of redemption.
(c) Unless the Company defaults in payment of the redemption price, on
and after the redemption date, interest will cease to accrue on the Notes or
portion thereof called for redemption.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION HOLDER.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Special Interest thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within
5 days of each date on which the aggregate amount of Excess Proceeds exceeds
$25.0 million, the Company shall commence an offer to all Holders of Notes (an
"Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Special Interest thereon, if
any, to the date fixed for the closing of such offer in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Subsidiary) may use such deficiency for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase shall receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
A-3
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes voting as a single class, and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes voting
as a single class. Without the consent of any Holder of a Note, the Indenture or
the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest or Special Interest on the Notes;
(ii) default in payment when due of principal of or premium, if any, on the
Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company to comply with Section 4.07, 4.09, 4.10, 4.14 or 5.01 of the
Indenture; (iv) failure by the Company for 60 days after notice to the Company
by the Trustee or the Holders of at least 25% in principal amount of the Notes
then outstanding voting as a single class to comply with certain other
agreements in the Indenture or the Notes; (v) default under certain other
agreements relating to Indebtedness of the Company which default results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; and (vii) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes shall become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
A-4
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of July 2, 2001, between the Company and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
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 Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, FL 33445
Attention: General Counsel
A-5
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
---------------------------------
(Insert assignee's legal name)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: _______________
Your Signature:
---------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*: _________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-6
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box
below:
Section 4.10 Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:
$---------------
Date: _______________
Your Signature:
------------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.:
----------------------------------------------
Signature Guarantee*: _________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-7
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
Principal Amount of
Amount of decrease this Global Note Signature of
in Principal Amount Amount of increase in following such authorized officer
of Principal Amount of decrease of Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
---------------- ---------------- ---------------- ------------- ---------
A-8
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, FL 33445
Attention: General Counsel
Re: 10% Senior Subordinated Notes due 2008
--------------------------------------
Reference is hereby made to the Indenture, dated as of July 2, 2001
(the "Indenture"), between Office Depot, Inc., as issuer (the "Company"), and
SunTrust Bank, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
___________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. / / CHECK IF TRANSFEREE SHALL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The 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, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note 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 Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
shall be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. / / CHECK IF TRANSFEREE SHALL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
shall be subject to the restrictions on Transfer enumerated in the Private
B-1
Placement Legend printed on the Regulation S Global Note and/or the Definitive
Note and in the Indenture and the Securities Act.
3. / / CHECK AND COMPLETE IF TRANSFEREE SHALL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) / / such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) / / such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) / / such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in
compliance with the prospectus delivery requirements of the Securities
Act;
or
(d) / / such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or
Rule 904, and the Transferor hereby further certifies that it has not
engaged in any general solicitation within the meaning of Regulation D
under the Securities Act and the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global
Note or Restricted Definitive Notes and the requirements of the
exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount
of Notes at the time of transfer of less than $250,000, an Opinion of
Counsel provided by the Transferor or the Transferee (a copy of which
the Transferor has attached to this certification), to the effect that
such Transfer is in compliance with the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of
the Indenture, the transferred beneficial interest or Definitive Note
shall be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the IAI Global Note and/or the
Definitive Notes and in the Indenture and the Securities Act.
4. / / CHECK IF TRANSFEREE SHALL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) / / CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note shall no longer be subject to the restrictions on transfer enumerated in
B-2
the Private Placement Legend printed on the Restricted Global Notes, on
Restricted Definitive Notes and in the Indenture.
(b) / / CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note shall no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) / / CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note shall not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-------------------------------------------
[Insert Name of Transferor]
By:
----------------------------------------
Name:
Title:
Dated: _______________________
B-3
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) / / a beneficial interest in the:
(i) / / 144A Global Note (CUSIP _________), or
(ii) / / Regulation S Global Note (CUSIP
_________), or
(iii) / / IAI Global Note (CUSIP _________); or
(b) / / a Restricted Definitive Note.
2. After the Transfer the Transferee shall hold:
[CHECK ONE]
(a) / / a beneficial interest in the:
(i) / / 144A Global Note (CUSIP _________), or
(ii) / / Regulation S Global Note (CUSIP
_________), or
(iii) / / IAI Global Note (CUSIP _________); or
(iv) / / Unrestricted Global Note (CUSIP
_________); or
(b) / / a Restricted Definitive Note; or
(c) / / an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, FL 33445
Attention: General Counsel
Re: 10% Senior Subordinated Notes due 2008
--------------------------------------
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of July 2, 2001
(the "Indenture"), between Office Depot, Inc., as issuer (the "Company"), and
SunTrust Bank, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
__________________________, (the "Owner") owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $____________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
C-1
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued shall continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] 144A Global Note, Regulation S Global Note, IAI Global Note with an
equal principal amount, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued shall be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the relevant Restricted Global Note and in
the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
----------------------------------------
[Insert Name of Transferor]
By:
---------------------------------
Name:
Title:
Dated: ______________________
C-2
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, FL 33445
Attention: General Counsel
Re: 10 % Senior Subordinated Notes due 2008
---------------------------------------
Reference is hereby made to the Indenture, dated as of July 2, 2001
(the "Indenture"), between Office Depot, Inc., as issuer (the "Company"), and
SunTrust Bank, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) / / a beneficial interest in a Global Note, or
(b) / / a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we shall do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we shall be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
shall bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased
by us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
--------------------------------------------------
[Insert Name of Accredited Investor]
By:
-----------------------------------------------
Name:
Title:
Dated: _____________________
D-2
Execution Version
OFFICE DEPOT, INC.
10% SENIOR SUBORDINATED NOTES DUE 2008
--------------
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
------------------------------------------
July 2, 2001
Goldman, Sachs & Co.,
Banc One Capital Markets, Inc.
BNP Paribas Securities Corp.
Fleet Securities, Inc.
SunTrust Equitable Securities Corporation
As representatives of the several Purchasers
named in Schedule I to the Purchase Agreement
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Office Depot, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to the Purchasers (as defined herein) upon the terms set forth in
the Purchase Agreement (as defined herein) its 10% Senior Subordinated Notes due
2008. As an inducement to the Purchasers to enter into the Purchase Agreement
and in satisfaction of a condition to the obligations of the Purchasers
thereunder, the Company agrees with the Purchasers for the benefit of holders
(as defined herein) from time to time of the Registrable Securities (as defined
herein) as follows:
1. Certain Definitions. For purposes of this Exchange and Registration
Rights Agreement, the following terms shall have the following respective
meanings:
"Base Interest" shall mean the interest that would otherwise accrue on
the Securities under the terms thereof and the Indenture, without giving
effect to the provisions of this Agreement.
The term "broker-dealer" shall mean any broker or dealer registered
with the Commission under the Exchange Act.
"Closing Date" shall mean the date on which the Securities are
initially issued.
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
Exchange Act or the Securities Act, whichever is the relevant statute for
the particular purpose.
"Effective Time," in the case of (i) an Exchange Registration, shall
mean the time and date as of which the Commission declares the Exchange
Registration Statement effective or as of which the Exchange Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall
mean the time and date as of which the Commission declares the Shelf
Registration Statement effective or as of which the Shelf Registration
Statement otherwise becomes effective.
"Electing Holder" shall mean any holder of Registrable Securities that
has returned a completed and signed Notice and Questionnaire to the Company
in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor thereto, as the same shall be amended from time to time.
"Exchange Offer" shall have the meaning assigned thereto in Section
2(a) hereof.
"Exchange Registration" shall have the meaning assigned thereto in
Section 3(c) hereof.
"Exchange Registration Statement" shall have the meaning assigned
thereto in Section 2(a) hereof.
"Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.
The term "holder" shall mean each of the Purchasers and other persons
who acquire Registrable Securities from time to time (including any
successors or assigns), in each case for so long as such person owns any
Registrable Securities.
"Indenture" shall mean the Indenture, dated as of July 2, 2001, between
the Company and SunTrust Bank, N.A. as Trustee, as the same shall be
amended from time to time.
"Notice and Questionnaire" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Exhibit A
hereto.
The term "person" shall mean a corporation, association, partnership,
organization, business, individual, government or political subdivision
thereof or governmental agency.
"Purchase Agreement" shall mean the Purchase Agreement, dated as of
June 27, 2001, between the Purchasers and the Company relating to the
Securities.
"Purchasers" shall mean the Purchasers named in Schedule I to the
Purchase Agreement.
"Registrable Securities" shall mean the Securities; provided, however,
that a Security shall cease to be a Registrable Security when (i) in the
circumstances contemplated by Section 2(a) hereof, the Security has been
exchanged for an Exchange Security in an Exchange Offer as contemplated in
Section 2(a) hereof (provided that any Exchange Security that, pursuant to
the last two sentences of Section 2(a), is included in a prospectus for use
in connection with resales by broker-dealers shall be deemed to be a
Registrable Security with respect to Sections 5, 6 and 9 until resale of
such Registrable Security has been effected within the 120-day period
referred to in Section 2(a)); (ii) in the circumstances contemplated by
Section 2(b) hereof, a Shelf Registration Statement registering such
Security under the Securities Act has been declared or becomes effective
and such Security has been sold or otherwise transferred by the holder
thereof pursuant to and in a manner contemplated by such effective Shelf
Registration Statement; (iii) such Security is sold pursuant to Rule 144
under circumstances in which any legend borne by such Security relating to
2
restrictions on transferability thereof, under the Securities Act or
otherwise, is removed by the Company or pursuant to the Indenture; (iv)
such Security is eligible to be sold pursuant to paragraph (k) of Rule 144;
or (v) such Security shall cease to be outstanding.
"Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
"Resale Period" shall have the meaning assigned thereto in Section 2(a)
hereof.
"Restricted Holder" shall mean (i) a holder that is an affiliate of the
Company within the meaning of Rule 405, (ii) a holder who acquires Exchange
Securities outside the ordinary course of such holder's business, (iii) a
holder who has arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing Exchange
Securities and (iv) a holder that is a broker-dealer, but only with respect
to Exchange Securities received by such broker-dealer pursuant to an
Exchange Offer in exchange for Registrable Securities acquired by the
broker-dealer directly from the Company.
"Rule 144," "Rule 405" and "Rule 415" shall mean, in each case, such
rule promulgated under the Securities Act (or any successor provision), as
the same may be amended from time to time.
"Securities" shall mean, collectively, the 10% Senior Subordinated
Notes due 2008 of the Company to be issued and sold to the Purchasers, and
securities issued in exchange therefor or in lieu thereof pursuant to the
Indenture.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor thereto, as the same may be amended from time to time.
"Shelf Registration" shall have the meaning assigned thereto in Section
2(b) hereof.
"Shelf Registration Statement" shall have the meaning assigned thereto
in Section 2(b) hereof.
"Special Interest" shall have the meaning assigned thereto in Section
2(c) hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same may be amended from time to time.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Exchange and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Exchange and
Registration Rights Agreement as a whole and not to any particular Section or
other subdivision.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company agrees to
file under the Securities Act, as soon as practicable, but no later than 90
days after the Closing Date, a registration statement relating to an offer
to exchange (such registration statement, the "Exchange Registration
3
Statement", and such offer, the "Exchange Offer") any and all of the
Securities for a like aggregate principal amount of debt securities issued
by the Company, which debt securities are substantially identical to the
Securities (and are entitled to the benefits of a trust indenture which is
substantially identical to the Indenture or is the Indenture and which has
been qualified under the Trust Indenture Act), except that they have been
registered pursuant to an effective registration statement under the
Securities Act and do not contain provisions for the additional interest
contemplated in Section 2(c) below (such new debt securities hereinafter
called "Exchange Securities"). The Company agrees to use its best efforts
to cause the Exchange Registration Statement to become effective under the
Securities Act as soon as practicable, but no later than 180 days after the
Closing Date. The Exchange Offer will be registered under the Securities
Act on the appropriate form and will comply with all applicable tender
offer rules and regulations under the Exchange Act. The Company further
agrees to use its best efforts to commence and complete the Exchange Offer
promptly, but no later than 45 days after such registration statement has
become effective, hold the Exchange Offer open for at least 30 days and
exchange Exchange Securities for all Registrable Securities that have been
properly tendered and not withdrawn on or prior to the expiration of the
Exchange Offer. The Exchange Offer will be deemed to have been "completed"
only if the debt securities received by holders other than Restricted
Holders in the Exchange Offer for Registrable Securities are, upon receipt,
transferable by each such holder without restriction under the Securities
Act and the Exchange Act and without material restrictions under the blue
sky or securities laws of a substantial majority of the States of the
United States of America. The Exchange Offer shall be deemed to have been
completed upon the earlier to occur of (i) the Company having exchanged the
Exchange Securities for all outstanding Registrable Securities pursuant to
the Exchange Offer and (ii) the Company having exchanged, pursuant to the
Exchange Offer, Exchange Securities for all Registrable Securities that
have been properly tendered and not withdrawn before the expiration of the
Exchange Offer, which shall be on a date that is at least 30 days following
the commencement of the Exchange Offer. The Company agrees (x) to include
in the Exchange Registration Statement a prospectus for use in any resales
by any holder of Exchange Securities that is a broker-dealer and (y) to
keep such Exchange Registration Statement effective for a period (the
"Resale Period") beginning when Exchange Securities are first issued in the
Exchange Offer and ending upon the earlier of the expiration of the 180th
day after the Exchange Offer has been completed or such time as such
broker-dealers no longer own any Registrable Securities. With respect to
such Exchange Registration Statement, such holders shall have the benefit
of the rights of indemnification and contribution set forth in Sections
6(a), (c), (d) and (e) hereof.
(b) If (i) on or prior to the time the Exchange Offer is completed
existing Commission interpretations are changed such that the debt
securities received by holders other than Restricted Holders in the
Exchange Offer for Registrable Securities are not or would not be, upon
receipt, transferable by each such holder without restriction under the
Securities Act, (ii) the Exchange Offer has not been completed within 225
days following the Closing Date or (iii) the Exchange Offer is not
available to any holder of the Securities, the Company shall, in lieu of
(or, in the case of clause (iii), in addition to) conducting the Exchange
Offer contemplated by Section 2(a), file under the Securities Act as soon
as practicable, but no later than the later of 90 days after the time such
obligation to file arises, a "shelf" registration statement providing for
the registration of, and the sale on a continuous or delayed basis by the
holders of, all of the Registrable Securities, pursuant to Rule 415 or any
similar rule that may be adopted by the Commission (such filing, the "Shelf
Registration" and such registration statement, the "Shelf Registration
Statement"). The Company agrees to use its best efforts (x) to cause the
4
Shelf Registration Statement to become or be declared effective no later
than 180 days after such Shelf Registration Statement is filed and to keep
such Shelf Registration Statement continuously effective for a period
ending on the earlier of the second anniversary of the Effective Time or
such time as there are no longer any Registrable Securities outstanding,
provided, however, that no holder shall be entitled to be named as a
selling securityholder in the Shelf Registration Statement or to use the
prospectus forming a part thereof for resales of Registrable Securities
unless such holder is an Electing Holder, and (y) after the Effective Time
of the Shelf Registration Statement, promptly upon the request of any
holder of Registrable Securities that is not then an Electing Holder, to
take any action reasonably necessary to enable such holder to use the
prospectus forming a part thereof for resales of Registrable Securities,
including, without limitation, any action necessary to identify such holder
as a selling securityholder in the Shelf Registration Statement, provided,
however, that nothing in this Clause (y) shall relieve any such holder of
the obligation to return a completed and signed Notice and Questionnaire to
the Company in accordance with Section 3(d)(iii) hereof. The Company
further agrees to supplement or make amendments to the Shelf Registration
Statement, as and when required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or rules and regulations
thereunder for shelf registration, and the Company agrees to furnish to
each Electing Holder copies of any such supplement or amendment prior to
its being used or promptly following its filing with the Commission.
(c) In the event that (i) the Company has not filed the Exchange
Registration Statement or Shelf Registration Statement on or before the
date on which such registration statement is required to be filed pursuant
to Section 2(a) or 2(b), respectively, or (ii) such Exchange Registration
Statement or Shelf Registration Statement has not become effective or been
declared effective by the Commission on or before the date on which such
registration statement is required to become or be declared effective
pursuant to Section 2(a) or 2(b), respectively, or (iii) the Exchange Offer
has not been completed within 45 days after the initial effective date of
the Exchange Registration Statement relating to the Exchange Offer (if the
Exchange Offer is then required to be made) or (iv) any Exchange
Registration Statement or Shelf Registration Statement required by Section
2(a) or 2(b) hereof is filed and declared effective but shall thereafter
either be withdrawn by the Company or shall become subject to an effective
stop order issued pursuant to Section 8(d) of the Securities Act suspending
the effectiveness of such registration statement (except as specifically
permitted herein) without being succeeded immediately by an additional
registration statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default" and each
period during which a Registration Default has occurred and is continuing,
a "Registration Default Period"), then, as liquidated damages for such
Registration Default, subject to the provisions of Section 9(b), special
interest ("Special Interest"), in addition to the Base Interest, shall
accrue at a per annum rate of 0.25% for the first 90 days of the
Registration Default Period, at a per annum rate of 0.50% for the second 90
days of the Registration Default Period, at a per annum rate of 0.75% for
the third 90 days of the Registration Default Period and at a per annum
rate of 1.0% thereafter for the remaining portion of the Registration
Default Period.
(d) The Company shall take all actions necessary or advisable to be
taken by it to ensure that the transactions contemplated herein are
effected as so contemplated.
(e) Any reference herein to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time and any reference herein
5
to to any post-effective amendment to a registration statement as of any
time shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time.
(f) The Company may suspend the use of the Prospectus for a period not
to exceed 30 days in any 60-day period or an aggregate of 60 days in any
12-month period if the Board of Directors of the Company shall have
determined in good faith that because of valid business reasons (not
including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, pending corporate developments and
similar events, it is in the best interests of the Company to suspend such
use, and prior to suspending such use the Company provides the holders with
written notice of such suspension, which notice need not specify the nature
of the event giving rise to such suspension.
3. Registration Procedures.
If the Company files a registration statement pursuant to Section 2(a)
or Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or the Shelf
Registration, as the case may be, the Company shall qualify the Indenture
under the Trust Indenture Act of 1939.
(b) In the event that such qualification would require the appointment
of a new trustee under the Indenture, the Company shall appoint a new
trustee thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Company's obligations with respect to the
registration of Exchange Securities as contemplated by Section 2(a) (the
"Exchange Registration"), if applicable, the Company shall, as soon as
practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as practicable
but no later than 90 days after the Closing Date, an Exchange
Registration Statement on any form which may be utilized by the Company
and which shall permit the Exchange Offer and resales of Exchange
Securities by broker-dealers during the Resale Period to be effected as
contemplated by Section 2(a), and use its best efforts to cause such
Exchange Registration Statement to become effective as soon as
practicable thereafter, but no later than 180 days after the Closing
Date;
(ii) as soon as practicable prepare and file with the Commission
such amendments and supplements to such Exchange Registration Statement
and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such Exchange Registration Statement for
the periods and purposes contemplated in Section 2(a) hereof and as may
be required by the applicable rules and regulations of the Commission
and the instructions applicable to the form of such Exchange
Registration Statement, and promptly provide each broker-dealer holding
Exchange Securities with such number of copies of the prospectus
included therein (as then amended or supplemented), in conformity in
all material respects with the requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the Commission
thereunder, as such broker-dealer reasonably may request prior to the
expiration of the Resale Period, for use in connection with resales of
Exchange Securities;
6
(iii) promptly give written notice to each broker-dealer that has
requested or received copies of the prospectus included in such
registration statement, and confirm such advice in writing, (A) when
such Exchange Registration Statement or the prospectus included therein
or any prospectus amendment or supplement or post-effective amendment
has been filed, and, with respect to such Exchange Registration
Statement or any post-effective amendment, when the same has become
effective, (B) of any comments by the Commission and by the blue sky or
securities commissioner or regulator of any state with respect thereto
or any request by the Commission for amendments or supplements to such
Exchange Registration Statement or prospectus or for additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of such Exchange Registration Statement or
the initiation or threatening of any proceedings for that purpose, (D)
if at any time the representations and warranties of the Company
contemplated by Section 5 cease to be true and correct in all material
respects, (E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Exchange
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (F) at any time
during the Resale Period when a prospectus is required to be delivered
under the Securities Act, that such Exchange Registration Statement,
prospectus, prospectus amendment or supplement or post-effective
amendment does not conform in all material respects to the applicable
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder or contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading;
(iv) in the event that the Company would be required, pursuant to
Section 3(e)(iii)(F) above, to notify any broker-dealers holding
Exchange Securities, without delay prepare and furnish to each such
holder a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to purchasers of such Exchange
Securities during the Resale Period, such prospectus shall conform in
all material respects to the applicable requirements of the Securities
Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
(v) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such Exchange Registration Statement or
any post-effective amendment thereto at the earliest practicable date;
(vi) use its best efforts to (A) register or qualify the Exchange
Securities under the securities laws or blue sky laws of such
jurisdictions as are contemplated by Section 2(a) no later than the
commencement of the Exchange Offer, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
until the expiration of the Resale Period and (C) take any and all
other actions as may be reasonably necessary or advisable to enable
each broker-dealer holding Exchange Securities to consummate the
disposition thereof in such jurisdictions; provided, however, that the
Company shall not be required for any such purpose to (1) qualify as a
7
foreign corporation in any jurisdiction wherein it would not otherwise
be required to qualify but for the requirements of this Section
3(c)(vi), (2) consent to general service of process in any such
jurisdiction or (3) make any changes to its certificate of
incorporation or by-laws or any agreement between it and its
stockholders;
(vii) use its best efforts to obtain the consent or approval of
each governmental agency or authority, whether federal, state or local,
which may be required to effect the Exchange Registration, the Exchange
Offer and the offering and sale of Exchange Securities by
broker-dealers during the Resale Period;
(viii) provide a CUSIP number for all Exchange Securities, not
later than the applicable Effective Time;
(ix) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as soon
as practicable but no later than eighteen months after the effective
date of such Exchange Registration Statement, an earning statement of
the Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158
thereunder).
(d) In connection with the Company's obligations with respect to the
Shelf Registration, if applicable, the Company shall, as soon as
practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as practicable
but in any case within the time periods specified in Section 2(b), a
Shelf Registration Statement on any form which may be utilized by the
Company and which shall register all of the Registrable Securities for
resale by the holders thereof in accordance with such method or methods
of disposition as may be specified by such of the holders as, from time
to time, may be Electing Holders and use its best efforts to cause such
Shelf Registration Statement to become effective as soon as practicable
but in any case within the time periods specified in Section 2(b);
(ii) not less than 30 calendar days prior to the Effective Time of
the Shelf Registration Statement, mail the Notice and Questionnaire to
the holders of Registrable Securities; no holder shall be entitled to
be named as a selling securityholder in the Shelf Registration
Statement as of the Effective Time, and no holder shall be entitled to
use the prospectus forming a part thereof for resales of Registrable
Securities at any time, unless such holder has returned a completed and
signed Notice and Questionnaire to the Company by the deadline for
response set forth therein; provided, however, holders of Registrable
Securities shall have at least 28 calendar days from the date on which
the Notice and Questionnaire is first mailed to such holders to return
a completed and signed Notice and Questionnaire to the Company;
(iii) after the Effective Time of the Shelf Registration Statement,
upon the request of any holder of Registrable Securities that is not
then an Electing Holder, promptly send a Notice and Questionnaire to
such holder; provided that the Company shall not be required to take
any action to name such holder as a selling securityholder in the Shelf
Registration Statement or to enable such holder to use the prospectus
forming a part thereof for resales of Registrable Securities until such
holder has returned a completed and signed Notice and Questionnaire to
the Company;
8
(iv) as soon as practicable prepare and file with the Commission
such amendments and supplements to such Shelf Registration Statement
and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such Shelf Registration Statement for the
period specified in Section 2(b) hereof and as may be required by the
applicable rules and regulations of the Commission and the instructions
applicable to the form of such Shelf Registration Statement, and
furnish to the Electing Holders copies of any such supplement or
amendment simultaneously with or prior to its being used or filed with
the Commission;
(v) comply with the provisions of the Securities Act with respect
to the disposition of all of the Registrable Securities covered by such
Shelf Registration Statement in accordance with the intended methods of
disposition by the Electing Holders provided for in such Shelf
Registration Statement;
(vi) provide (A) the Electing Holders, (B) the underwriters (which
term, for purposes of this Exchange and Registration Rights Agreement,
shall include a person deemed to be an underwriter within the meaning
of Section 2(a)(11) of the Securities Act), if any, thereof, (C) any
sales or placement agent therefor, (D) counsel for any such underwriter
or agent and (E) not more than one counsel for all the Electing Holders
the opportunity to participate in the preparation of such Shelf
Registration Statement, each prospectus included therein or filed with
the Commission and each amendment or supplement thereto;
(vii) for a reasonable period prior to the filing of such Shelf
Registration Statement, and throughout the period specified in Section
2(b), make available at reasonable times at the Company's principal
place of business or such other reasonable place for inspection by the
persons referred to in Section 3(d)(vi) who shall certify to the
Company that they have a current intention to sell the Registrable
Securities pursuant to the Shelf Registration such financial and other
information and books and records of the Company, and cause the
officers, employees, counsel and independent certified public
accountants of the Company to respond to such inquiries, as shall be
reasonably necessary, in the judgment of the respective counsel
referred to in such Section, to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act; provided,
however, that each such party shall be required to maintain in
confidence and not to disclose to any other person any information or
records reasonably designated by the Company as being confidential,
until such time as (A) such information becomes a matter of public
record (whether by virtue of its inclusion in such registration
statement or otherwise), or (B) such person shall be required so to
disclose such information pursuant to a subpoena or order of any court
or other governmental agency or body having jurisdiction over the
matter (subject to the requirements of such order, and only after such
person shall have given the Company prompt prior written notice of such
requirement), or (C) such information is required to be set forth in
such Shelf Registration Statement or the prospectus included therein or
in an amendment to such Shelf Registration Statement or an amendment or
supplement to such prospectus in order that such Shelf Registration
Statement, prospectus, amendment or supplement, as the case may be,
complies with applicable requirements of the federal securities laws
and the rules and regulations of the Commission and does not contain an
untrue statement of a material fact or omit to state therein a material
9
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading;
(viii) promptly notify each of the Electing Holders, any sales or
placement agent therefor and any underwriter thereof (which
notification may be made through any managing underwriter that is a
representative of such underwriter for such purpose) and confirm such
advice in writing, (A) when such Shelf Registration Statement or the
prospectus included therein or any prospectus amendment or supplement
or post-effective amendment has been filed, and, with respect to such
Shelf Registration Statement or any post-effective amendment, when the
same has become effective, (B) of any comments by the Commission and by
the blue sky or securities commissioner or regulator of any state with
respect thereto or any request by the Commission for amendments or
supplements to such Shelf Registration Statement or prospectus or for
additional information, (C) of the issuance by the Commission of any
stop order suspending the effectiveness of such Shelf Registration
Statement or the initiation or threatening of any proceedings for that
purpose, (D) if at any time the representations and warranties of the
Company contemplated by Section 3(d)(xvii) or Section 5 cease to be
true and correct in all material respects, (E) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose, or (F) if at any time when a prospectus is required to be
delivered under the Securities Act, that such Shelf Registration
Statement, prospectus, prospectus amendment or supplement or
post-effective amendment does not conform in all material respects to
the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which
they were made, not misleading;
(ix) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
(x) if requested by any managing underwriter or underwriters, any
placement or sales agent or any Electing Holder, promptly incorporate
in a prospectus supplement or post-effective amendment such information
as is required by the applicable rules and regulations of the
Commission and as such managing underwriter or underwriters, such agent
or such Electing Holder specifies should be included therein relating
to the terms of the sale of such Registrable Securities, including
information with respect to the principal amount of Registrable
Securities being sold by such Electing Holder or agent or to any
underwriters, the name and description of such Electing Holder, agent
or underwriter, the offering price of such Registrable Securities and
any discount, commission or other compensation payable in respect
thereof, the purchase price being paid therefor by such underwriters
and with respect to any other terms of the offering of the Registrable
Securities to be sold by such Electing Holder or agent or to such
underwriters; and make all required filings of such prospectus
supplement or post-effective amendment promptly after notification of
the matters to be incorporated in such prospectus supplement or
post-effective amendment;
10
(xi) furnish to each Electing Holder, each placement or sales
agent, if any, therefor, each underwriter, if any, thereof and the
respective counsel referred to in Section 3(d)(vi) an executed copy
(or, in the case of an Electing Holder, a conformed copy) of such Shelf
Registration Statement, each such amendment and supplement thereto (in
each case including all exhibits thereto (in the case of an Electing
Holder of Registrable Securities, upon request) and documents
incorporated by reference therein) and such number of copies of such
Shelf Registration Statement (excluding exhibits thereto and documents
incorporated by reference therein unless specifically so requested by
such Electing Holder, agent or underwriter, as the case may be) and of
the prospectus included in such Shelf Registration Statement (including
each preliminary prospectus and any summary prospectus), in conformity
in all material respects with the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder, and such other documents, as
such Electing Holder, agent, if any, and underwriter, if any, may
reasonably request in order to facilitate the offering and disposition
of the Registrable Securities owned by such Electing Holder, offered or
sold by such agent or underwritten by such underwriter and to permit
such Electing Holder, agent and underwriter to satisfy the prospectus
delivery requirements of the Securities Act; and the Company hereby
consents to the use of such prospectus (including such preliminary and
summary prospectus) and any amendment or supplement thereto by each
such Electing Holder and by any such agent and underwriter, in each
case in the form most recently provided to such person by the Company,
in connection with the offering and sale of the Registrable Securities
covered by the prospectus (including such preliminary and summary
prospectus) or any supplement or amendment thereto;
(xii) use best efforts to (A) register or qualify the Registrable
Securities to be included in such Shelf Registration Statement under
such securities laws or blue sky laws of such jurisdictions as any
Electing Holder and each placement or sales agent, if any, therefor and
underwriter, if any, thereof shall reasonably request, (B) keep such
registrations or qualifications in effect and comply with such laws so
as to permit the continuance of offers, sales and dealings therein in
such jurisdictions during the period the Shelf Registration is required
to remain effective under Section 2(b) above and for so long as may be
necessary to enable any such Electing Holder, agent or underwriter to
complete its distribution of Securities pursuant to such Shelf
Registration Statement and (C) take any and all other actions as may be
reasonably necessary or advisable to enable each such Electing Holder,
agent, if any, and underwriter, if any, to consummate the disposition
in such jurisdictions of such Registrable Securities; provided,
however, that the Company shall not be required for any such purpose to
(1) qualify as a foreign corporation in any jurisdiction wherein it
would not otherwise be required to qualify but for the requirements of
this Section 3(d)(xii), (2) consent to general service of process in
any such jurisdiction or (3) make any changes to its certificate of
incorporation or by-laws or any agreement between it and its
stockholders;
(xiii) use its best efforts to obtain the consent or approval of
each governmental agency or authority, whether federal, state or local,
which may be required to effect the Shelf Registration or the offering
or sale in connection therewith or to enable the selling holder or
holders to offer, or to consummate the disposition of, their
Registrable Securities;
11
(xiv) unless any Registrable Securities shall be in book-entry only
form, cooperate with the Electing Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold, which
certificates, if so required by any securities exchange upon which any
Registrable Securities are listed, shall be penned, lithographed or
engraved, or produced by any combination of such methods, on steel
engraved borders, and which certificates shall not bear any restrictive
legends; and, in the case of an underwritten offering, enable such
Registrable Securities to be in such denominations and registered in
such names as the managing underwriters may request at least two
business days prior to any sale of the Registrable Securities;
(xv) provide a CUSIP number for all Registrable Securities, not
later than the applicable Effective Time;
(xvi) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, including customary provisions
relating to indemnification and contribution, and take such other
actions in connection therewith as any Electing Holders aggregating at
least 20% in aggregate principal amount of the Registrable Securities
at the time outstanding shall request in order to expedite or
facilitate the disposition of such Registrable Securities;
(xvii) whether or not an agreement of the type referred to in
Section 3(d)(xvi) hereof is entered into and whether or not any portion
of the offering contemplated by the Shelf Registration is an
underwritten offering or is made through a placement or sales agent or
any other entity, (A) make such representations and warranties to the
Electing Holders and the placement or sales agent, if any, therefor and
the underwriters, if any, thereof in form, substance and scope as are
customarily made in connection with an offering of debt securities
pursuant to any appropriate agreement or to a registration statement
filed on the form applicable to the Shelf Registration; (B) obtain an
opinion of counsel to the Company in customary form and covering such
matters, of the type customarily covered by such an opinion, as the
managing underwriters, if any, or as any Electing Holders of at least
20% in aggregate principal amount of the Registrable Securities at the
time outstanding may reasonably request, addressed to such Electing
Holder or Electing Holders and the placement or sales agent, if any,
therefor and the underwriters, if any, thereof and dated the effective
date of such Shelf Registration Statement (and if such Shelf
Registration Statement contemplates an underwritten offering of a part
or all of the Registrable Securities, dated the date of the closing
under the underwriting agreement relating thereto) (it being agreed
that the matters to be covered by such opinion shall include the due
incorporation and good standing of the Company and its subsidiaries;
the qualification of the Company and its subsidiaries to transact
business as foreign corporations; the due authorization, execution and
delivery of the relevant agreement of the type referred to in Section
3(d)(xvi) hereof; the due authorization, execution, authentication and
issuance, and the validity and enforceability, of the Securities; the
absence of material legal or governmental proceedings involving the
Company; the absence of a breach by the Company or any of its
subsidiaries of, or a default under, material agreements binding upon
the Company or any subsidiary of the Company; the absence of
governmental approvals required to be obtained in connection with the
Shelf Registration, the offering and sale of the Registrable
Securities, this Exchange and Registration Rights Agreement or any
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agreement of the type referred to in Section 3(d)(xvi) hereof, except
such approvals as may be required under state securities or blue sky
laws; the material compliance as to form of such Shelf Registration
Statement and any documents incorporated by reference therein and of
the Indenture with the requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder, respectively; and, as of the date of the opinion and of the
Shelf Registration Statement or most recent post-effective amendment
thereto, as the case may be, the absence from such Shelf Registration
Statement and the prospectus included therein, as then amended or
supplemented, and from the documents incorporated by reference therein
(in each case other than the financial statements and other financial
information contained therein) of an untrue statement of a material
fact or the omission to state therein a material fact necessary to make
the statements therein not misleading (in the case of such documents,
in the light of the circumstances existing at the time that such
documents were filed with the Commission under the Exchange Act)); (C)
obtain a "cold comfort" letter or letters from the independent
certified public accountants of the Company addressed to the selling
Electing Holders, the placement or sales agent, if any, therefor or the
underwriters, if any, thereof, dated (i) the effective date of such
Shelf Registration Statement and (ii) the effective date of any
prospectus supplement to the prospectus included in such Shelf
Registration Statement or post-effective amendment to such Shelf
Registration Statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of the
latest such statements included in such prospectus (and, if such Shelf
Registration Statement contemplates an underwritten offering pursuant
to any prospectus supplement to the prospectus included in such Shelf
Registration Statement or post-effective amendment to such Shelf
Registration Statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of the
latest such statements included in such prospectus, dated the date of
the closing under the underwriting agreement relating thereto), such
letter or letters to be in customary form and covering such matters of
the type customarily covered by letters of such type; (D) deliver such
documents and certificates, including officers' certificates, as may be
reasonably requested by any Electing Holders of at least 20% in
aggregate principal amount of the Registrable Securities at the time
outstanding or the placement or sales agent, if any, therefor and the
managing underwriters, if any, thereof to evidence the accuracy of the
representations and warranties made pursuant to clause (A) above or
those contained in Section 5(a) hereof and the compliance with or
satisfaction of any agreements or conditions contained in the
underwriting agreement or other agreement entered into by the Company;
and (E) undertake such obligations relating to expense reimbursement,
indemnification and contribution as are provided in Section 6 hereof;
(xviii) notify in writing each holder of Registrable Securities of
any proposal by the Company to amend or waive any provision of this
Exchange and Registration Rights Agreement pursuant to Section 9(h)
hereof and of any amendment or waiver effected pursuant thereto, each
of which notices shall contain the text of the amendment or waiver
proposed or effected, as the case may be;
(xix) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate
as a member of an underwriting syndicate or selling group or "assist in
the distribution" (within the meaning of the Conduct Rules (the
13
"Conduct Rules) of the National Association of Securities Dealers, Inc.
("NASD") or any successor thereto, as amended from time to time)
thereof, whether as a holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, assist such broker-dealer in complying
with the requirements of such Conduct Rules, including by (A) if such
Conduct Rules shall so require, engaging a "qualified independent
underwriter" (as defined in such Conduct Rules) to participate in the
preparation of the Shelf Registration Statement relating to such
Registrable Securities, to exercise usual standards of due diligence in
respect thereto and, if any portion of the offering contemplated by
such Shelf Registration Statement is an underwritten offering or is
made through a placement or sales agent, to recommend the yield of such
Registrable Securities, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters
provided in Section 6 hereof (or to such other customary extent as may
be requested by such underwriter), and (C) providing such information
to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Conduct Rules; and
(xx) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as soon
as practicable but in any event not later than eighteen months after
the effective date of such Shelf Registration Statement, an earning
statement of the Company and its subsidiaries complying with Section
11(a) of the Securities Act (including, at the option of the Company,
Rule 158 thereunder).
(e) In the event that the Company would be required, pursuant to
Section 3(d)(viii)(F) above, to notify the Electing Holders, the placement
or sales agent, if any, therefor and the managing underwriters, if any,
thereof, the Company shall without delay prepare and furnish to each of the
Electing Holders, to each placement or sales agent, if any, and to each
such underwriter, if any, a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to purchasers of
Registrable Securities, such prospectus shall conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder
and shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were
made, not misleading. Each Electing Holder agrees that upon receipt of any
notice from the Company pursuant to Section 3(d)(viii)(F) hereof, such
Electing Holder shall forthwith discontinue the disposition of Registrable
Securities pursuant to the Shelf Registration Statement applicable to such
Registrable Securities until such Electing Holder shall have received
copies of such amended or supplemented prospectus, and if so directed by
the Company, such Electing Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in
such Electing Holder's possession of the prospectus covering such
Registrable Securities at the time of receipt of such notice.
(f) In the event of a Shelf Registration, in addition to the
information required to be provided by each Electing Holder in its Notice
Questionnaire, the Company may require such Electing Holder to furnish to
the Company such additional information regarding such Electing Holder and
such Electing Holder's intended method of distribution of Registrable
Securities as may be required in order to comply with the Securities Act.
Each such Electing Holder agrees to notify the Company as promptly as
practicable of any inaccuracy or change in information previously furnished
14
by such Electing Holder to the Company or of the occurrence of any event in
either case as a result of which any prospectus relating to such Shelf
Registration contains or would contain an untrue statement of a material
fact regarding such Electing Holder or such Electing Holder's intended
method of disposition of such Registrable Securities or omits to state any
material fact regarding such Electing Holder or such Electing Holder's
intended method of disposition of such Registrable Securities required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, and promptly to
furnish to the Company any additional information required to correct and
update any previously furnished information or required so that such
prospectus shall not contain, with respect to such Electing Holder or the
disposition of such Registrable Securities, an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing.
(g) Until the expiration of two years after the Closing Date, the
Company will not, and will not permit any of its "affiliates" (as defined
in Rule 144) to, resell any of the Securities that have been reacquired by
any of them except pursuant to an effective registration statement under
the Securities Act.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including fees and
disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review, (b) all fees and expenses
in connection with the qualification of the Securities for offering and sale
under the State securities and blue sky laws referred to in Section 3(d)(xii)
hereof and determination of their eligibility for investment under the laws of
such jurisdictions as any managing underwriters or the Electing Holders may
designate, including any fees and disbursements of counsel for the Electing
Holders or underwriters in connection with such qualification and determination,
(c) all expenses relating to the preparation, printing, production, distribution
and reproduction of each registration statement required to be filed hereunder,
each prospectus included therein or prepared for distribution pursuant hereto,
each amendment or supplement to the foregoing, the expenses of preparing the
Securities for delivery and the expenses of printing or producing any
underwriting agreements, agreements among underwriters, selling agreements and
blue sky or legal investment memoranda and all other documents in connection
with the offering, sale or delivery of Securities to be disposed of (including
certificates representing the Securities), (d) messenger, telephone and delivery
expenses relating to the offering, sale or delivery of Securities and the
preparation of documents referred in clause (c) above, (e) fees and expenses of
the Trustee under the Indenture, any agent of the Trustee and any counsel for
the Trustee and of any collateral agent or custodian, (f) internal expenses
(including all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), (g) fees, disbursements and expenses of
counsel and independent certified public accountants of the Company (including
the expenses of any opinions or "cold comfort" letters required by or incident
to such performance and compliance), (h) fees, disbursements and expenses of any
"qualified independent underwriter" engaged pursuant to Section 3(d)(xix)
hereof, (i) fees, disbursements and expenses of one counsel for the Electing
Holders retained in connection with a Shelf Registration, as selected by the
Electing Holders of at least a majority in aggregate principal amount of the
Registrable Securities held by Electing Holders (which counsel shall be
reasonably satisfactory to the Company), (j) any fees charged by securities
rating services for rating the Securities, and (k) fees, expenses and
15
disbursements of any other persons, including special experts, retained by the
Company in connection with such registration (collectively, the "Registration
Expenses"). To the extent that any Registration Expenses are incurred, assumed
or paid by any holder of Registrable Securities or any placement or sales agent
therefor or underwriter thereof, the Company shall reimburse such person for the
full amount of the Registration Expenses so incurred, assumed or paid promptly
after receipt of a request therefor. Notwithstanding the foregoing, the holders
of the Registrable Securities being registered shall pay all agency fees and
commissions and underwriting discounts and commissions attributable to the sale
of such Registrable Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly), other
than the counsel and experts specifically referred to above.
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, each Purchaser
and each of the holders from time to time of Registrable Securities that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section 3(d) or Section 3(c) hereof and
any further amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission, as
the case may be, and, in the case of an underwritten offering of
Registrable Securities, at the time of the closing under the underwriting
agreement relating thereto, will conform in all material respects to the
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at all times subsequent to the Effective Time when a
prospectus would be required to be delivered under the Securities Act,
other than from (i) such time as a notice has been given to holders of
Registrable Securities pursuant to Section 3(d)(viii)(F) or Section
3(c)(iii)(F) hereof until (ii) such time as the Company furnishes an
amended or supplemented prospectus pursuant to Section 3(e) or Section
3(c)(iv) hereof, each such registration statement, and each prospectus
(including any summary prospectus) contained therein or furnished pursuant
to Section 3(d) or Section 3(c) hereof, as then amended or supplemented,
will conform in all material respects to the requirements of the Securities
Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by a holder of Registrable Securities
expressly for use therein.
(b) Any documents incorporated by reference in any prospectus referred
to in Section 5(a) hereof, when they become or became effective or are or
were filed with the Commission, as the case may be, will conform or
conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and none of such documents will
contain or contained an untrue statement of a material fact or will omit or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
16
writing to the Company by a holder of Registrable Securities expressly for
use therein.
(c) The compliance by the Company with all of the provisions of this
Exchange and Registration Rights Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any subsidiary of the Company is a
party or by which the Company or any subsidiary of the Company is bound or
to which any of the property or assets of the Company or any subsidiary of
the Company is subject, nor will such action result in any violation of the
provisions of the certificate of incorporation, as amended, or the by-laws
of the Company or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any
subsidiary of the Company or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by this
Exchange and Registration Rights Agreement, except the registration under
the Securities Act of the Securities, qualification of the Indenture under
the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under State securities
or blue sky laws in connection with the offering and distribution of the
Securities.
(d) This Exchange and Registration Rights Agreement has been duly
authorized, executed and delivered by the Company.
6. Indemnification.
(a) Indemnification by the Company. The Company will indemnify and hold
harmless each of the holders of Registrable Securities included in an
Exchange Registration Statement, each of the Electing Holders of
Registrable Securities included in a Shelf Registration Statement and each
person who participates as a placement or sales agent or as an underwriter
in any offering or sale of such Registrable Securities against any losses,
claims, damages or liabilities, joint or several, to which such holder,
agent or underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Exchange Registration Statement or Shelf Registration Statement, as the
case may be, under which such Registrable Securities were registered under
the Securities Act, or any preliminary, final or summary prospectus
contained therein or furnished by the Company to any such holder, Electing
Holder, agent or underwriter, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse such holder, such
Electing Holder, such agent and such underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable to any such person in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration
statement, or preliminary, final or summary prospectus, or amendment or
supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by such person expressly for use
therein.
17
(b) Indemnification by the Holders and any Agents and Underwriters. The
Company may require, as a condition to including any Registrable Securities
in any registration statement filed pursuant to Section 2(b) hereof and to
entering into any underwriting agreement with respect thereto, that the
Company shall have received an undertaking reasonably satisfactory to it
from the Electing Holder of such Registrable Securities and from each
underwriter named in any such underwriting agreement, severally and not
jointly, to (i) indemnify and hold harmless the Company, and all other
holders of Registrable Securities, against any losses, claims, damages or
liabilities to which the Company or such other holders of Registrable
Securities may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in such registration
statement, or any preliminary, final or summary prospectus contained
therein or furnished by the Company to any such Electing Holder, agent or
underwriter, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Electing Holder or underwriter
expressly for use therein, and (ii) reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that no such Electing Holder shall be required
to undertake liability to any person under this Section 6(b) for any
amounts in excess of the dollar amount of the proceeds to be received by
such Electing Holder from the sale of such Electing Holder's Registrable
Securities pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the
commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of or contemplated by this Section 6, notify
such indemnifying party in writing of the commencement of such action; but
the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under the indemnification provisions of or contemplated by Section 6(a) or
6(b) hereof. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party for any
legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. Neither party
shall, without the written consent of the other party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an
unconditional release of the other party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of the
other party.
18
(d) Contribution. If for any reason the indemnification provisions
contemplated by Section 6(a) or Section 6(b) are unavailable to or
insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or by such indemnified
party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were determined by pro rata
allocation (even if the holders or any agents or underwriters or all of
them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in this Section 6(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 6(d),
no holder shall be required to contribute any amount in excess of the
amount by which the dollar amount of the proceeds received by such holder
from the sale of any Registrable Securities (after deducting any fees,
discounts and commissions applicable thereto) exceeds the amount of any
damages which such holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission,
and no underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The holders' and any underwriters'
obligations in this Section 6(d) to contribute shall be several in
proportion to the principal amount of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each officer, director and
partner of each holder, agent and underwriter and each person, if any, who
controls any holder, agent or underwriter within the meaning of the
Securities Act; and the obligations of the holders and any agents or
underwriters contemplated by this Section 6 shall be in addition to any
liability which the respective holder, agent or underwriter may otherwise
have and shall extend, upon the same terms and conditions, to each officer
and director of the Company (including any person who, with his consent, is
named in any registration statement as about to become a director of the
Company) and to each person, if any, who controls the Company within the
meaning of the Securities Act.
19
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities
covered by the Shelf Registration are to be sold pursuant to an
underwritten offering, the managing underwriter or underwriters thereof
shall be designated by Electing Holders holding at least a majority in
aggregate principal amount of the Registrable Securities to be included in
such offering, provided that such designated managing underwriter or
underwriters is or are reasonably acceptable to the Company.
(b) Participation by Holders. Each holder of Registrable Securities
hereby agrees with each other such holder that no such holder may
participate in any underwritten offering hereunder unless such holder (i)
agrees to sell such holder's Registrable Securities on the basis provided
in any underwriting arrangements approved by the persons entitled hereunder
to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements.
8. Rule 144.
The Company covenants to the holders of Registrable Securities that to
the extent it shall be required to do so under the Exchange Act, the Company
shall timely file the reports required to be filed by it under the Exchange Act
or the Securities Act (including the reports under Section 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder, and shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar or successor rule or regulation hereafter adopted
by the Commission. Upon the request of any holder of Registrable Securities in
connection with that holder's sale pursuant to Rule 144, the Company shall
deliver to such holder a written statement as to whether it has complied with
such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents, warrants,
covenants and agrees that it has not granted, and shall not grant,
registration rights with respect to Registrable Securities or any other
securities which would be inconsistent with the terms contained in this
Exchange and Registration Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if the Company fails to perform any of
its obligations hereunder and that the Purchasers and the holders from time
to time of the Registrable Securities may be irreparably harmed by any such
failure, and accordingly agree that the Purchasers and such holders, in
addition to any other remedy to which they may be entitled at law or in
equity, shall be entitled to compel specific performance of the obligations
of the Company under this Exchange and Registration Rights Agreement in
accordance with the terms and conditions of this Exchange and Registration
Rights Agreement, in any court of the United States or any State thereof
having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, if delivered personally or by
20
courier, or three days after being deposited in the mail (registered or
certified mail, postage prepaid, return receipt requested) as follows: If
to the Company, to it at 2200 Old Germantown Road, Delray Beach, Florida
33445, and if to a holder, to the address of such holder set forth in the
security register or other records of the Company, or to such other address
as the Company or any such holder may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this Exchange
and Registration Rights Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the parties hereto and the holders
from time to time of the Registrable Securities and the respective
successors and assigns of the parties hereto and such holders. In the event
that any transferee of any holder of Registrable Securities shall acquire
Registrable Securities, in any manner, whether by gift, bequest, purchase,
operation of law or otherwise, such transferee shall, without any further
writing or action of any kind, be deemed a beneficiary hereof for all
purposes and such Registrable Securities shall be held subject to all of
the terms of this Exchange and Registration Rights Agreement, and by taking
and holding such Registrable Securities such transferee shall be entitled
to receive the benefits of, and be conclusively deemed to have agreed to be
bound by all of the applicable terms and provisions of this Exchange and
Registration Rights Agreement. If the Company shall so request, any such
successor, assign or transferee shall agree in writing to acquire and hold
the Registrable Securities subject to all of the applicable terms hereof.
(e) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Exchange and
Registration Rights Agreement or made pursuant hereto shall remain in full
force and effect regardless of any investigation (or statement as to the
results thereof) made by or on behalf of any holder of Registrable
Securities, any director, officer or partner of such holder, any agent or
underwriter or any director, officer or partner thereof, or any controlling
person of any of the foregoing, and shall survive delivery of and payment
for the Registrable Securities pursuant to the Purchase Agreement and the
transfer and registration of Registrable Securities by such holder and the
consummation of an Exchange Offer.
(f) GOVERNING LAW. THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Exchange and Registration Rights Agreement are inserted
for convenience only, do not constitute a part of this Exchange and
Registration Rights Agreement and shall not affect in any way the meaning
or interpretation of this Exchange and Registration Rights Agreement.
(h) Entire Agreement; Amendments. This Exchange and Registration Rights
Agreement and the other writings referred to herein (including the
Indenture and the form of Securities) or delivered pursuant hereto which
form a part hereof contain the entire understanding of the parties with
respect to its subject matter. This Exchange and Registration Rights
Agreement supersedes all prior agreements and understandings between the
parties with respect to its subject matter. This Exchange and Registration
Rights Agreement may be amended and the observance of any term of this
Exchange and Registration Rights Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only
by a written instrument duly executed by the Company and the holders of at
least a majority in aggregate principal amount of the Registrable
21
Securities at the time outstanding. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any
amendment or waiver effected pursuant to this Section 9(h), whether or not
any notice, writing or marking indicating such amendment or waiver appears
on such Registrable Securities or is delivered to such holder.
(i) Inspection. For so long as this Exchange and Registration Rights
Agreement shall be in effect, upon written request to the Company, a copy
of this Exchange and Registration Rights Agreement and a complete list of
the names and addresses of all the holders of Registrable Securities shall
be mailed to any holder of Registrable Securities for proper purposes only
(which shall include any purpose related to the rights of the holders of
Registrable Securities under the Securities, the Indenture and this
Agreement).
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same
instrument.
22
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Representatives plus one
for each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers the Company. It is
understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
Office Depot, Inc.
By: ____________________________
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Banc One Capital Markets, Inc.
BNP Paribas Securities Corp.
Fleet Securities, Inc.
SunTrust Equitable Securities Corporation
By: _________________________________
(Goldman, Sachs & Co.)
23
Execution Version
EXHIBIT A
OFFICE DEPOT, INC.
INSTRUCTION TO DTC PARTICIPANTS
(Date of Mailing)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE]*
-----------------------------
The Depository Trust Company ("DTC") has identified you as a DTC Participant
through which beneficial interests in the Office Depot, Inc. (the "Company") 10%
Senior Subordinated Notes due 2008 (the "Securities") are held.
The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof. In order to have their
Securities included in the registration statement, beneficial owners must
complete and return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.
It is important that beneficial owners of the Securities receive a copy of the
enclosed materials as soon as possible as their rights to have the Securities
included in the registration statement depend upon their returning the Notice
and Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy of the
enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact Office Depot, Inc.,
2200 Old Germantown Road, Delray Beach, Florida 33445, (561) 438-4800.
- --------------------------
*Not less than 28 calendar days from date of mailing.
OFFICE DEPOT, INC.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
------------------------------------
(Date)
Reference is hereby made to the Exchange and Registration Rights Agreement (the
"Exchange and Registration Rights Agreement") between Office Depot, Inc. (the
"Company") and the Purchasers named therein. Pursuant to the Exchange and
Registration Rights Agreement, the Company has filed with the United States
Securities and Exchange Commission (the "Commission") a registration statement
on Form [__] (the "Shelf Registration Statement") for the registration and
resale under Rule 415 of the Securities Act of 1933, as amended (the "Securities
Act"), of the Company's 10% Senior Subordinated Notes due 2008 (the
"Securities"). A copy of the Exchange and Registration Rights Agreement is
attached hereto. All capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Exchange and Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined below) is entitled
to have the Registrable Securities beneficially owned by it included in the
Shelf Registration Statement. In order to have Registrable Securities included
in the Shelf Registration Statement, this Notice of Registration Statement and
Selling Securityholder Questionnaire ("Notice and Questionnaire") must be
completed, executed and delivered to the Company's counsel at the address set
forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]. Beneficial owners
of Registrable Securities who do not complete, execute and return this Notice
and Questionnaire by such date (i) will not be named as selling securityholders
in the Shelf Registration Statement and (ii) may not use the Prospectus forming
a part thereof for resales of Registrable Securities.
Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and related Prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Shelf Registration Statement and
related Prospectus.
The term "Registrable Securities" is defined in the Exchange and Registration
Rights Agreement.
A-2
ELECTION
The undersigned holder (the "Selling Securityholder") of Registrable Securities
hereby elects to include in the Shelf Registration Statement the Registrable
Securities beneficially owned by it and listed below in Item (3). The
undersigned, by signing and returning this Notice and Questionnaire, agrees to
be bound with respect to such Registrable Securities by the terms and conditions
of this Notice and Questionnaire and the Exchange and Registration Rights
Agreement, including, without limitation, Section 6 of the Exchange and
Registration Rights Agreement, as if the undersigned Selling Securityholder were
an original party thereto.
Upon any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and
as Exhibit B to the Exchange and Registration Rights Agreement.
The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
A-3
QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
--------------------------------------------------------------------
(b) FullLegal Name of Registered Holder (if not the same as in (a)
above) of Registrable Securities Listed in Item (3) below:
--------------------------------------------------------------------
(c) Full Legal Name of DTC Participant (if applicable and if not the
same as (b) above) Through Which Registrable Securities Listed in
Item (3) below are Held:
--------------------------------------------------------------------
(2) Address for Notices to Selling Securityholder:
---------------------------------------
---------------------------------------
---------------------------------------
Telephone:
---------------------------------------
Fax:
---------------------------------------
Contact Person:
---------------------------------------
(3) Beneficial Ownership of Securities:
Except as set forth below in this Item (3), the undersigned does not
beneficially own any Securities.
(a) Principal amount of Registrable Securities beneficially owned:
-----
CUSIP No(s). of such Registrable Securities:
-----------------------
(b) Principal amount of Securities other than Registrable Securities
beneficially owned:
---------------------------------------------------------------------
CUSIP No(s). of such other Securities:
-----------------------------
(c) Principal amount of Registrable Securities which the undersigned
wishes to be included in the Shelf Registration Statement:
---------------------------------------------------------------------
CUSIP No(s). of such Registrable Securities to be included in the
Shelf Registration Statement:
--------------------------------------
(4) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned Selling
Securityholder is not the beneficial or registered owner of any other
securities of the Company, other than the Securities listed above in
Item (3).
State any exceptions here:
A-4
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any
of its affiliates, officers, directors or principal equity holders
(5% or more) has held any position or office or has had any other
material relationship with the Company (or its predecessors or
affiliates) during the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder
intends to distribute the Registrable Securities listed above in Item
Item (3) only as follows (if at all): Such Registrable Securities may
be sold from time to time directly by the undersigned Selling
Securityholder or, alternatively, through underwriters,
broker-dealers or agents. Such Registrable Securities may be sold in
one or more transactions at fixed prices, at prevailing market prices
at the time of sale, at varying prices determined at the time of
sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions) (i) on
any national securities exchange or quotation service on which the
Registered Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise
than on such exchanges or services or in the over-the-counter market,
or (iv) through the writing of options. In connection with sales of
the Registrable Securities or otherwise, the Selling Securityholder
may enter into hedging transactions with broker-dealers, which may in
turn engage in short sales of the Registrable Securities in the
course of hedging the positions they assume. The Selling
Securityholder may also sell Registrable Securities short and deliver
Registrable Securities to close out such short positions, or loan or
pledge Registrable Securities to broker-dealers that in turn may sell
such securities.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the Exchange Act and the rules and regulations thereunder, particularly
Regulation M.
In the event that the Selling Securityholder transfers all or any portion of the
Registrable Securities listed in Item (3) above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure of the
information contained herein in its answers to Items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company in connection with the preparation of the
Shelf Registration Statement and related Prospectus.
A-5
In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and Registration Rights Agreement to provide such information as
may be required by law for inclusion in the Shelf Registration Statement, the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Exchange and Registration
Rights Agreement shall be made in writing, by hand-delivery, first-class mail,
or air courier guaranteeing overnight delivery as follows:
(i) To the Company:
David Fannin, Executive Vice President,
General Counsel and Secretary
Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, Florida 33445
(ii) With a copy to:
Scott N. Gierke, Esq.
McDermott, Will & Emery
227 West Monroe
Chicago, Illinois 60606
Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company's counsel, the terms of this Notice and Questionnaire,
and the representations and warranties contained herein, shall be binding on,
shall inure to the benefit of and shall be enforceable by the respective
successors, heirs, personal representatives, and assigns of the Company and the
Selling Securityholder (with respect to the Registrable Securities beneficially
owned by such Selling Securityholder and listed in Item (3) above. This
Agreement shall be governed in all respects by the laws of the State of New
York.
A-6
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
Dated:
----------------------------
--------------------------------------------------------------------------
Selling Securityholder
(Print/type full legal name of beneficial owner of Registrable Securities)
By:
-----------------------------------------------------------------------
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
Scott N. Gierke, Esq.
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
A-7
EXHIBIT B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
Sun Trust Bank
Office Depot, Inc.
c/o Sun Trust Bank
[Address of Sun Trust Bank]
Attention: Trust Officer
Re: Office Depot, Inc. (the "Company")
10% Senior Subordinated Notes due 2008
Dear Sirs:
Please be advised that has transferred $
--------------------------- ------------
aggregate principal amount of the above-referenced Notes pursuant to an
effective Registration Statement on Form [______] (File No. 333-_________)
filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus
dated ___________ or in supplements thereto, and that the aggregate principal
amount of the Notes transferred are the Notes listed in such Prospectus opposite
such owner's name.
Dated:
Very truly yours,
----------------------------
(Name)
By:
----------------------------
(Authorized Signature)
B-1
Exhibit 5
A Partnership Including Boston
Professional Corporations Chicago
227 West Monroe Street London
Chicago, IL 60606-5096 Los Angeles
312-372-2000 Miami
Facsimile 312- 984-7700 Moscow
http://www.mwe.com Orange County
New York
Silicon Valley
Vilnius
Washington, D.C.
MCDERMOTT, WILL & EMERY
August 15, 2001
Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, Florida 33445
Re: Office Depot Registration Statement on Form S-4
-----------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you in connection with the registration
statement on Form S-4 (the "REGISTRATION STATEMENT") filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"ACT"), for the registration of $250,000,000 aggregate principal amount of 10%
Senior Subordinated Notes due 2008 (the "NEW NOTES") of Office Depot, Inc., a
Delaware corporation (the "COMPANY"). The New Notes will be offered in exchange
(the "EXCHANGE") for the Company's outstanding 10% Senior Subordinated Notes due
2008 (the "OLD NOTES").
The New Notes will be issued in exchange for Old Notes pursuant to an
Indenture (the "INDENTURE") dated as of July 2, 2001 by and between the Company
and SunTrust Bank, national association, as Trustee (the "TRUSTEE"), and the
related Exchange and Registration Rights Agreement dated as of July 2, 2001
among the Company, Goldman, Sachs & Co., Banc One Capital Markets, Inc., BNP
Paribas Securities Corp., Fleet Securities, Inc. and SunTrust Equitable
Securities Corporation (the "REGISTRATION RIGHTS AGREEMENT").
We have examined the Registration Statement, the Indenture, the
Registration Rights Agreement, the form of the New Notes, and other documents we
have deemed necessary to enable us to express the opinion set forth below. In
addition, we have examined and relied, to the extent we deemed proper, on
certificates of officers of the Company as to factual matters, and on originals
or copies certified or otherwise identified to our satisfaction, of all
corporate records of the Company, instruments and certificates of public
officials and other persons that we deemed appropriate. In our examination, we
have assumed the authenticity of all documents submitted to us as originals, the
conformity to the original documents of all documents submitted to us as copies,
August 15, 2001
Page 2
the genuineness of all signatures on documents reviewed by us and the legal
capacity of natural persons. We have further assumed that the New Notes will be
duly executed and delivered in accordance with the authorizing resolutions of
the Board of Directors of the Company.
We express no opinion as to the applicability of, compliance with or
effect of, the law of any jurisdiction other than the federal laws of the United
States and the General Corporation Law of the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that the
New Notes, when duly executed, authenticated and delivered in accordance with
the terms of the Indenture and as contemplated by the Registration Statement,
will be valid and legally binding obligations of the Company, except that the
enforceability thereof may be limited by or subject to bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium or other similar
laws now or hereafter existing which affect the rights and remedies of creditors
generally and equitable principles of general applicability.
In rendering the opinion set forth above, we have assumed that the
execution and delivery by the Company of the Indenture and the New Notes do not
and will not violate, conflict with or constitute a default under any agreement
or instrument to which the Company or its properties is subject, except for
those agreements and instruments which have been identified to us by the Company
as being material to it and which were filed as exhibits to the Company's Annual
Report on Form 10-K for the year ended December 30, 2000.
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the Registration Statement and to the use of this opinion as an
exhibit to the Registration Statement. In giving this consent, we do not hereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ McDermott, Will and Emery
Exhibit 23(b) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Amendment No. 1 to Registration Statement No. 333-67620 on Form S-4 of Office Depot, Inc. of our reports dated February 15, 2001 appearing in and incorporated by reference in the Annual Report on Form 10-K of Office Depot, Inc. for the year ended December 30, 2000, and to the reference to us under the heading "Experts" in such Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche LLP Miami, Florida September 4, 2001
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
--------------------
FORM T-1
--------------------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
--------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(B)(2) [X]
--------------------
SUNTRUST BANK
(Exact name of trustee as specified in its charter)
GEORGIA
(Jurisdiction of incorporation or organization)
303 PEACHTREE STREET
30TH FLOOR
ATLANTA, GEORGIA 30308 58-0466330
(Address of principal executive (Zip Code) (I.R.S. employer identification no.)
offices) ____________________
HOLLY LEE ARENCIBIA
SUNTRUST BANK
777 BRICKELL AVENUE
MIAMI, FL 33131
(305) 579-7009
(Name, address and telephone number of agent for service)
--------------------
OFFICE DEPOT INC.
(Exact name of obligor as specified in its charter)
DELAWARE
(State or other jurisdiction of 59-2663954
incorporation or other organization) (IRS employer identification no.)
2200 Old Germantown Road
Delray Beach, FL 33445
(Address of principal executive offices) (Zip Code)
10% Senior Subordinated Notes due 2008
1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
Name and address of each examining or supervising authority to
which it is subject:
DEPARTMENT OF BANKING AND FINANCE,
STATE OF GEORGIA
ATLANTA, GEORGIA
FEDERAL RESERVE BANK OF ATLANTA
104 MARIETTA STREET, N.W.
ATLANTA, GEORGIA
FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C.
Whether it is authorized to exercise corporate trust powers:
YES.
2. AFFILIATIONS WITH OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
NONE.
3-12 NO RESPONSES ARE INCLUDE FOR ITEMS 3 THROUGH 12.
RESPONSES TO THOSE ITEMS ARE NOT REQUIRED BECAUSE, AS PROVIDED IN
GENERAL INSTRUCTION B, THE OBLIGOR IS NOT IN DEFAULT ON ANY SECURITIES
ISSUED UNDER INDENTURES UNDER WHICH SUNTRUST BANK IS A TRUSTEE.
13. DEFAULTS BY THE OBLIGOR.
(a) State whether there is or has been a default with respect to
the securities under this indenture. Explain the nature of any
such default
THERE IS NOT AND HAS NOT BEEN ANY SUCH DEFAULT UNDER THIS
INDENTURE.
(b) If the trustee is a trustee under another indenture under
which any other securities, or certificates of interest or
participation in any other securities, of the obligor are
-2-
outstanding, or is trustee for more than one outstanding
series of securities under the indenture, state whether there
has been a default under any such indenture or series,
identify the indenture or series affected, and explain the
nature of any such default.
THERE HAS NOT BEEN ANY SUCH DEFAULT.
14-15 NO RESPONSES ARE INCLUDED FOR ITEMS 14 AND 15.
RESPONSES TO THOSE ITEMS ARE NOT REQUIRED BECAUSE, AS PROVIDED IN
GENERAL INSTRUCTION B, THE OBLIGOR IS NOT IN DEFAULT ON ANY SECURITIES
ISSUED UNDER INDENTURES UNDER WHICH SUNTRUST BANK IS A TRUSTEE.
16. LIST OF EXHIBITS.
List below all exhibits filed as part of this statement of eligibility.
(1) A copy of the Articles of Amendment and Restated Articles of
Association of the trustee as now in effect.
(2) A copy of the certificate of authority of the trustee to
commence business (included in Exhibit 1).
(3) A copy of the authorization of the trustee to exercise
corporate trust powers (included in Exhibit 1).
(4) A copy of the existing by-laws of the trustee.
(5) Not applicable.
(6) The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939.
(7) A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority as of the close of business
on December 31, 2000.
(8) Not applicable.
(9) Not applicable.
-3-
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
trustee, SunTrust Bank, a banking corporation organized and existing under the
laws of the State of Georgia, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Miami and the State of Florida, on the ____ day
of September, 2001.
SUNTRUST BANK
By: /s/ Holly Lee Arencibia
---------------------------------
Holly Lee Arencibia
Vice President
PAGE 5
EXHIBIT 1 TO FORM T-1
ARTICLES OF ASSOCIATION
OF
SUNTRUST BANK
(Attached)
SECRETARY OF STATE DOCKET NUMBER : 002350060
CORPORATIONS DIVISION CONTROL NUMBER : J715952
315 WEST TOWER EFFECTIVE DATE : 08/18/2000
#2 MARTIN LUTHER KING, JR. DR. REFERENCE : 0077
ATLANTA, GEORGIA 30334-1530 PRINT DATE : 08/22/2000
FORM NUMBER : 101
MARGARET U. HODGSON
SUNTRUST BANKS, INC.
POST OFFICE BOX 4418, MAIL CODE 643
ATLANTA, GEORGIA 30302-4418
CERTIFICATE OF AMENDMENT
I, Cathy Cox, the Secretary of State and the Corporations Commissioner of the
State Georgia, do hereby certify under the seal of my office that articles of
amendment have been filed to amend certain articles of incorporation and that
the Department of Banking and Finance has filed a certificate of approval
authorizing the amendment of said articles for
SUNTRUST BANK
ATLANTA, FULTON COUNTY, GEORGIA
The required fees as provided by Title 14 of the Official Code of Georgia
Annotated have been paid.
THEREFORE, the Secretary of State hereby issues this certificate of amendment.
WITNESS my hand an official seal in the City of Atlanta and the State of Georgia
on the date set forth above.
[SEAL] /s/ Cathy Cox
Cathy Cox
Secretary of State
ARTICLES OF AMENDMENT AND
RESTATED ARTICLES OF INCORPORATION OF
SUNTRUST BANK
Pursuant to the Financial Institutions Code of Georgia, SunTrust Bank,
a Georgia banking corporation (the "Bank"), submits Articles of Amendment and
Restated Articles of Incorporation and shows as follows:
1.
The Bank was chartered by a special act of the General Assembly of
Georgia approved on September 21, 1891 with banking and trust powers.
2.
The Bank's main office is located at One Park Place, N.E., Atlanta,
Fulton County, Georgia, 30302.
3.
By a written consent and waiver of notice dated August 8, 2000, the
sole shareholder of the 4,320,000 shares of Common Stock then outstanding and
entitled to vote did authorize, approve and adopt these Articles of Amendment
and Restated Articles of Incorporation of the Bank, as submitted by a Resolution
of the Board of Directors, and as set forth in Paragraph 4 below. The Bank has
only one class of stock authorized, issued and outstanding.
4.
The Articles of Incorporation of the Bank shall be amended by changing
the address of the registered office in Article IV, authorizing the issuance of
preferred stock in Article VI, and by restating in their entirety the Articles
of Incorporation, as heretofore amended, and substituting therefor in all
respects, the Restated Articles of Incorporation as follows:
-1-
RESTATED
ARTICLES OF INCORPORATION
OF
SUNTRUST BANK
Article I
The name of the bank is SunTrust Bank (the "Bank").
Article II
The Bank is organized pursuant to the provisions of the Financial
Institutions Code of Georgia.
Article III
The Bank shall have perpetual duration.
Article IV
The principal place of business of the Bank is located in Atlanta,
Fulton County, Georgia, and the Bank may establish branches or agencies at other
places in Georgia or elsewhere. The address of the main office of the Bank is
303 Peachtree Street, N.E., Atlanta, Fulton County, Georgia 30308.
Article V
The purposes for which the Bank is organized are to act as a bank and
as a trust company and to enjoy and be subject to the powers and restrictions of
a bank and a trust company under the laws of the State of Georgia, and to
conduct any other businesses, to exercise any powers, and to engage in any ether
activities not specifically prohibited to corporations organized to act as a
bank and as a trust company under the laws of the State of Georgia.
Article VI
Section 6.01. The aggregate number of common shares which the Bank has
authority to issue is 4,750,000, all of which are of one class only, each such
share having a par value of $5.00 (the "Common Stock") The Bank shall also have
authority to issue 15,000 shares of preferred stock, par value $1,000 per share
(the "Preferred Stock").
Section 6.02. Pursuant to the provisions of this Article VI, a series
of Preferred Stock, all designated as the Series A Non-Cumulative Preferred
Stock, consisting of 1,000 shares, is hereby established and authorized to be
issued, and in addition to such matters specified elsewhere in this Article VI,
such Series A Non-Cumulative Preferred Stock shall have the following powers,
-2-
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions:
(a) Designation and Amount. The shares of such series of
Preferred Stock shall be designated as the Series A Non-Cumulative
Preferred Stock ("Series A Preferred Stock"), and the number of shares
constituting the Series A Preferred Stock shall be 1,000. The
liquidation preference of the Series A Preferred Stock shall be
$100,000 per share ("Series A Liquidation Value").
(b) Maturity. The Series A Preferred Stock has no stated
maturity and will not be subject to any sinking fund or --------
mandatory redemption.
(c) Rank. The Series A Preferred Stock shall, with respect to
dividend rights and upon liquidation, dissolution and winding up of the
Bank, rank (i) senior to all classes and series of Common Stock of the
Bank and to all classes and series of equity securities of the Bank now
or hereafter authorized, issued or outstanding, which by their terms
expressly provide that they are junior to the Series A Preferred Stock
as to dividend distributions and distributions upon the liquidation,
dissolution or winding up of the Bank, or which do not specify their
rank (collectively with the Common Stock, the "Series A Junior
Securities"); (ii) on a parity with the Series B Preferred Stock and
each other class or series of equity securities issued by the Bank
after the date hereof, the terms of which specifically provide that
such class or series will rank on a parity with the Series A Preferred
Stock as to dividend distributions and distributions upon the
liquidation, dissolution or winding up of the Bank (collectively with
the Series B Preferred Stock, the "Series A Parity Securities"); and
(iii) junior to each other class or series of equity securities issued
by the Bank after the date hereof, the terms of which specifically
provide that such class or series will rank senior to the Series A
Preferred Stock as to dividend distributions and distributions upon the
liquidation, dissolution or winding up of the Bank (collectively, the
"Series A Senior Securities"), provided that any such Series A Senior
Securities and Series A Parity Securities issued after the date hereof
that are not approved by the holders of Series A Preferred Stock as
required by Section 6.02(i)(i)(D) hereof shall be deemed to be Series A
Junior Securities and not Series A. Senior Securities or Series A
Parity Securities, as the case may be.
(d) Dividends. Dividends are payable on the Series A Preferred
Stock as follows:
(i) The holders of shares of the Series A Preferred
Stock in preference to the Series A Junior Securities shall be
entitled to receive, out of funds legally available for that
purpose, and when, as, and if declared by the Board of
Directors of the Bank, preferential non-cumulative dividends
payable in cash at the annual rate of nine percent (9.00%) of
the Series A Liquidation Value (the "Series A Dividend Rate").
(ii) Dividends on the Series A Preferred Stock shall
be non-cumulative. Dividends not paid on any Series A Dividend
Payment Date shall not accumulate thereafter. Dividends shall
accumulate from the first day of any Series A Dividend Period
-3-
to but excluding the immediately succeeding Series A Dividend
Payment Date. Dividends, if and when declared, shall be
payable in arrears in cash on each Series A Dividend Payment
Date of each year with respect to the Series A Dividend Period
ending on the day immediately prior to such Series A Dividend
Payment Date at the Series A Dividend Rate to holders of
record at the close of business on the applicable Record Date,
commencing on March 31, 2001 with respect to any shares of
Series A referred Stock issued prior to that Series A Dividend
Payment Date; provided that dividends payable on the Series A
Preferred Stock on the initial Series A Dividend Payment Date
(and any dividend payable for a period less than a full
semiannual period) shall be prorated for the period and
computed on the basis of a 360-day year of twelve 30-day
months and the actual number of days in such Series A Dividend
Period; and provided, further, that dividends payable on the
Series A Preferred Stock on the initial Series A Dividend
Payment Date shall include any accumulated and unpaid
dividends on the Series B Non-Cumulative Exchangeable
Preferred Stock of the Corporation exchanged for the Series A
Preferred Stock as of the Exchange Date for the then current
dividend period. Dividends on such Series A Preferred Stock
shall be paid only in cash.
(iii) No dividends on shares of Series A Preferred
Stock shall be declared by the Board of Directors or paid or
set apart for payment by the Board of Directors or paid or set
apart for payment by the Bank at such time as the terms and
provisions of any agreement of the Bank, including any
agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides
that such declaration, payment or setting apart for payment
would constitute a breach thereof or a default thereunder, or
if such declaration or payment shall be restricted or
prohibited by law.
(iv) Holders of shares of Series A Preferred Stock
shall not be entitled to any dividends in excess of full
non-cumulative dividends declared, as herein provided, on the
shares of Series A Preferred Stock. No interest, or sum of
money in lieu of interest, shall be payable in respect of any
dividend payment on the shares of Series A Preferred Stock
that may be in arrears.
(v) (A) So long as any shares of Series A Preferred
Stock are outstanding, no dividends shall be declared, paid or
set aside for payment or other distribution upon any Series A
Junior Securities (other than dividends or distributions paid
in shares of, or options, warrants or rights to subscribe for
or purchase shares of, Series A Junior Securities and other
than as provided in clause (B) below), nor shall any shares of
any Series A Junior Securities or any Series A Parity
Securities be redeemed, purchased or otherwise acquired for
any consideration (or any moneys be paid to or set aside or
made available for a sinking fund for the redemption of any
shares of any such stock) by the Bank (except by conversion
into or exchange for shares of, or options, warrants or rights
to subscribe for or purchase, Series A Junior Securities)
whenever, in each case, full non-cumulative dividends on all
-4-
outstanding shares of the Series A Preferred Stock for the
related Series A Dividend Period shall not have been declared
and paid, when due, for the two consecutive Series A Dividend
Periods terminating on or immediately prior to the date of
payment in respect of such dividend, distribution, redemption,
purchase or acquisition.
(B) When dividends for any dividend period are not
paid in full, as provided in clause (A) above, on the shares
of the Series A Preferred Stock or any Series A Parity
Securities, dividends may be declared and paid on any such
shares for any dividend period therefor, but only if such
dividends are declared and paid pro rata so that the amount of
dividends declared and paid per share on the shares of the
Series A Preferred Stock and any Series A Parity Securities,
in all cases shall bear to each other the same ratio that the
amount of unpaid dividends per share on the shares of the
Series A Preferred Stock for such Series A Dividend Period and
such Series A Parity Securities for the corresponding dividend
period bear to each other.
(e) Liquidation Preference.
(i) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Bank, the holders of shares of Series A Preferred Stock then
outstanding shall be entitled to be paid out of the assets of
the Bank available for distribution to its stockholders an
amount in cash equal to the Series A Liquidation Value for
each share outstanding, plus an amount in cash equal to all
accumulated and unpaid dividends thereon for the then current
Series A Dividend Period, whether or not earned or declared,
before any payment shall be made or any assets distributed to
the holders of Series A Junior Securities. If the assets of
the Bank are not sufficient to pay in full the liquidation
payments payable to the holders of outstanding shares of the
Series A Preferred Stock and any Series A Parity Securities,
then the holders of all such shares shall share ratably in
such distribution of assets in accordance with the amount
which would be payable on such distribution if the amounts to
which the holders of outstanding shares of Series A Preferred
Stock and the holders of outstanding shares of such Series A
Parity Securities are entitled were paid in full. After
payment of the full amount of the liquidation preference, plus
any accumulated and unpaid dividends for the then current
Series A Dividend Period, to which holders of Series A
Preferred Stock are entitled, holders of Series A Preferred
Stock will have no right or claim to any remaining assets of
the Bank.
(ii) For the purpose of this Section 6.02(e), neither
the voluntary sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of
all or substantially all of the property or assets of the
Bank, nor the consolidation or merger of the Bank, shall be
deemed to be a voluntary or involuntary liquidation,
dissolution or winding up of the Bank, unless such voluntary
-5-
sale, conveyance, exchange or transfer shall be in connection
with a plan of liquidation, dissolution or winding up of the
Bank.
(f) Redemption. The Series A Preferred Stock is not redeemable
prior to March 31, 2021. On or after such date, the Series A Preferred
Stock shall be redeemable, in whole or in part, at the option of the
Bank, but only with the prior written approval of the Federal Reserve
and, if such approval is then required under any applicable law, rule,
guideline or policy, with the prior written approval of the Georgia
Department of Banking and Finance, for cash out of any source of funds
legally available, at a redemption price equal to 100% of the Series A
Liquidation Value per share plus unpaid dividends thereon accumulated
since the immediately preceding Series A Dividend Payment Date (the
"Series A Redemption Price"). Any date of such redemption is referred
to as the "Series A Redemption Date." If fewer than all the outstanding
shares of Series A Preferred Stock are to be redeemed, the Bank will
select those to be redeemed by lot or pro rata or by any other method
as may be determined by the Board of Directors to be equitable.
(g) Procedure for Redemption.
(i) Upon redemption of the Series A Preferred Stock
pursuant to Section 6.02(f) hereof, notice of such redemption
(a "Series A Notice of Redemption") shall be mailed by
first-class mail, postage prepaid, not less than 30 days nor
more than 60 days prior to the Series A Redemption Date to the
holders of record of the shares to be redeemed at their
respective addresses as they shall appear in the records of
the Bank; provided, however, that failure to give such notice
or any defect therein or in the mailing thereof shall not
affect the validity of the proceeding for the redemption of
any shares so to be redeemed except as to the holder to whom
the Bank has failed to give such notice or except as to the
holder to whom notice was defective. Each such notice shall
state: (A) the Series A Redemption Date; (B) the Series A
Redemption Price; (C) the place or places where certificates
for such shares are to be surrendered for payment of the
Series A Redemption Price; and (D) the CUSIP number of the
shares being redeemed.
(ii) If a Series A Notice of Redemption shall have
been given as aforesaid and the Bank shall have deposited on
or before the Redemption Date a sum sufficient to redeem the
shares of Series A Preferred Stock as to which a Series A
Notice of Redemption has been given in trust with the Transfer
Agent with irrevocable instructions and authority to pay the
Series A Redemption Price to the holders thereof, or if no
such deposit is made, then upon the Series A Redemption Date
(unless the Bank shall default in making payment of the Series
A Redemption Price), all rights of the holders thereof as
stockholders of the Bank by reason of the ownership of such
shares (except their right to receive the Series A Redemption
Price thereof without interest) shall cease and terminate, and
such shares shall no longer be deemed outstanding for any
purpose. The Bank shall be entitled to receive, from time to
time, from the Transfer Agent the interest, if any, earned on
such moneys deposited with it, and the holders of any shares
so redeemed shall have no claim to any such interest. In case
-6-
the holder of any shares of Series A Preferred Stock so called
for redemption shall not claim the Series A Redemption Price
for its shares within six months after the related Series A
Redemption Date, the Transfer Agent shall, upon demand, pay
over to the Bank such amount remaining on deposit, and the
Transfer Agent shall thereupon be relieved of all
responsibility to the holder of such shares, and such holder
shall look only to the Bank for payment thereof.
(iii) Not later than 1:30 p.m., Eastern Standard
Time, on the Business Day immediately preceding the Series A
Redemption Date, the Bank shall irrevocably deposit with the
Transfer Agent sufficient funds for the payment of the Series
A Redemption Price for the shares to be redeemed on the Series
A Redemption Date and shall give the Transfer Agent
irrevocable instructions to apply such funds, and, if
applicable and so specified in the instructions, the income
and proceeds therefrom, to the payment of such Series A
Redemption Price. The Bank may direct the Transfer Agent to
invest any such available funds, provided that the proceeds of
any such investment will be available to the Transfer Agent in
Atlanta, Georgia at the opening of business on such Series A
Redemption Date.
(iv) Except as otherwise expressly set forth in this
Section 602(g), nothing contained in these Restated Articles
of Incorporation shall limit any legal right of the Bank to
purchase or otherwise acquire any shares of Series A Preferred
Stock at any price, whether higher or lower than the Series A
Redemption Price, in private negotiated transactions, the
over-the-counter market or otherwise.
(v) If the Bank shall not have funds legally
available for the redemption of all of the shares of Series A
Preferred Stock on any Series A Redemption Date, the Bank
shall redeem on the Series A Redemption Date only the number
of shares of Series A Preferred Stock as it shall have legally
available funds to redeem, as determined in an equitable
manner, and the remainder of the shares of Series A Preferred
Stock shall be redeemed, at the option of the Bank, on the
earliest practicable date next following the day on which the
Bank shall first have funds legally available for the
redemption of such shares.
(h) Reacquired Shares. Shares of the Series A Preferred Stock
that have been redeemed, purchased or otherwise acquired by the Bank
are not subject to reissuance or resale as shares of Series A Preferred
Stock and shall be held in treasury. Such shares shall revert to the
status of authorized but unissued shares of preferred stock,
undesignated as to series, until the Board of Directors of the Bank
shall designate them again for issuance as part of a series.
(i) Voting Rights. Holders of Series A Preferred Stock will
not have any voting rights, except as otherwise from time to time
required by law and except as follows:
(i) In addition to any vote or consent of
stockholders required by law, the approval of the holders of
two-thirds of the outstanding shares of Series A Preferred
-7-
Stock, voting as a class, shall be required for the Bank: (A)
to amend, alter or repeal any of the provisions of these
Restated Articles of Incorporation in any manner that would
alter or change the powers, preferences or special rights of
the shares of Series A Preferred Stock so as to materially and
adversely affect them, except as permitted in Section
6.02(j)(i)(A); (B) to authorize the merger, consolidation, or
reclassification of the Bank with or into another Person,
except as permitted in Section 6.02(j)(i)(B); (C) to dissolve,
liquidate or wind up the affairs of the Bank; and (D) to
authorize or issue, or obligate itself to authorize or issue,
any Series A Senior Securities or any Series A Parity
Securities unless, for purposes of this clause (D) only, the
Bank shall have received written notice from each of the
Rating Agencies, and delivered a copy of such written notice
to the Transfer Agent, confirming that any such issuance will
not result in a reduction of the rating assigned by any of
such Rating Agencies to the Series A Preferred Stock then
outstanding.
(ii) If at any time dividends on the Series A
Preferred Stock or any Series A Parity Securities shall not
have been declared and paid in an amount equal to three
semiannual dividends, whether consecutive or not, the number
of directors constituting the Board of Directors of the Bank
shall be increased by two and the holders of the Series A
Preferred Stock and any Series A Parity Securities with
similar voting rights, voting together as a single class,
shall be entitled to elect two additional persons to fill such
newly created directorships. The directors so elected shall
meet the qualifications set forth in the Bank's bylaws and any
applicable statutory or regulatory qualifications. At such
time as dividends for at least two consecutive Series A
Dividend Periods have been fully paid or set apart fox full
payment on the outstanding Series A Preferred Stock and any
Series A Parity Securities with similar voting rights, the
rights of such holders to vote for the election of directors
as provided in this Section 6.02(i)(ii) shall cease and such
directors shall no longer serve on the Board of Directors of
the Bank, subject to renewal from time to time in the event of
each and every subsequent default in the aggregate amount
equivalent of three full semiannual dividends.
During any period when the holders of the Series A
Preferred Stock and any Series A Parity Securities have the
right to vote as a class for directors as provided above, the
directors so elected by the holders of the Series A Preferred
Stock and any Series A Parity Securities with similar voting
rights shall continue in office until their successors shall
have been elected or until termination of the right of the
holders of the Series A Preferred Stock and any Series A
Parity Securities to vote as a class for directors. For
purposes of the foregoing, the holders of the Series A
Preferred Stock and any Series A Parity Securities shall vote
in proportion to their respective liquidation preference of
the shares of such stock held by them.
(iii) With respect to any right of the holders of
shares of Series A Preferred Stock to vote on any matter,
whether such right is created by this Section 6.02(i), by
-8-
applicable law or otherwise, no holder of any share of Series
A Preferred Stock shall be entitled to vote, and no share of
Series A Preferred Stock shall be deemed to be outstanding for
the purpose of voting or determining the number of shares
required to constitute a quorum, if prior to or concurrently
with a determination of shares entitled to vote or of shares
deemed outstanding for quorum purposes, as the case may be,
funds sufficient for the redemption of such shares are
irrevocably deposited with the Transfer Agent and a Series A
Notice of Redemption has been given by the Bank or an
affiliate thereof to the holders of the Series A Preferred
Stock.
(j) Covenants. So long as any shares of Series A Preferred
Stock are outstanding, the Bank covenants and agrees with and for the
benefit of the holders of shares of Series A Preferred Stock that:
(i) the Bank shall not, without the affirmative vote
or consent of holders of two-thirds of the number of shares of
Series A Preferred Stock then outstanding, voting as a
separate class:
(A) amend, alter or repeal any provisions of these
Restated Articles of Incorporation (existing prior to and at
the time of such vote) so as to materially and adversely
affect the rights, preferences, privileges or restrictions of
the holders of Series A Preferred Stock, except that this
subsection (A) shall not apply to steps taken by the Bank to
issue and the issuance of other preferred stock by the Bank;
or
(B) consolidate, merge, or reclassify with or into
any other Person, or permit any merger of another Person into
the Bank, or enter into a voluntary liquidation or voluntary
dissolution of the Bank or enter into a share exchange with
another Person, except that (1) the Bank may consolidate,
merge or reclassify with or into another Person or enter into
a share exchange with another Person if such other Person is a
consolidated subsidiary (in accordance with generally accepted
accounting principles) of SunTrust Banks, Inc., or (2) the
Bank may consolidate, merge, or reclassify with or into
another Person or enter into a share exchange with another
Person if (a) such other Person is a Depository Institution or
corporation organized under the laws of the United States or
of a state of the United States, (b) such other Person
expressly assumes all obligations and commitments of the Bank
pursuant to such consolidation, merger, reclassification or
share exchange, (c) the outstanding shares of Series A
Preferred Stock are exchanged for, reclassified as or
converted into shares of the surviving Depository Institution
or corporation which have preferences, limitations and
relative voting and other rights substantially identical to
those of the Series A Preferred Stock, (d) after giving effect
to such merger, consolidation, reclassification or share
exchange, no default, or event which with the giving of notice
or passage of time or both could become a default by the Bank
of its obligations under these Restated Articles of
Incorporation, shall have occurred and be continuing, and (e)
the Bank shall have received written notice from each of the
-9-
Rating Agencies, and delivered a copy of such written notice
to the Transfer Agent, confirming that such merger,
consolidation, reclassification or share exchange will not
result in a reduction of the rating assigned by any of such
Rating Agencies to the Series A Preferred Stock then
outstanding; provided that, for purposes of this subsection
(B)(2), the Bank shall have delivered to the Transfer Agent
and caused to be mailed to each holder of record of Series A
Preferred Stock, at least thirty days prior to any such
merger, consolidation, reclassification or share exchange
becoming effective, a notice describing such merger,
consolidation, reclassification or share exchange, together
with an Officers' Certificate and an Opinion of Counsel, each
stating that such merger, consolidation, reclassification or
share exchange complies with the requirements of these
Restated Articles of Incorporation and that all conditions
precedent herein provided for relating to such transaction
have been complied with.
(ii) the Bank will not issue additional shares of
Series A Senior Securities or Series A Parity Securities
unless the Bank shall have received written notice from each
of the Rating Agencies, and delivered a copy of such written
notice to the Transfer Agent, confirming that any such
issuance will not result in a reduction of the rating assigned
by any of such Rating Agencies to the Series A Preferred Stock
then outstanding.
Section 6.03. Pursuant to the provisions of this Article VI, a series
of Preferred Stock, all designated as the Series B Non-Cumulative Preferred
Stock, consisting 9,000 shares, is hereby established and authorized to be
issued, and in addition to such matters specified elsewhere in this Article VI,
such Series B Non-Cumulative Preferred Stock shall have the following powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions:
(a) Designation and Amount. The shares of such series of
Preferred Stock shall be designated as the Series B Non-Cumulative
Preferred Stock ("Series B Preferred Stock"), and the number of shares
constituting the Series B Preferred Stock shall be 9,000. The
liquidation preference of the Series B Preferred Stock shall be
$100,000 per share ("Series B Liquidation Value").
(b) Maturity. The Series B Preferred Stock has no stated
maturity and will not be subject to any sinking fund or --------
mandatory redemption.
(c) Rank. The Series B Preferred Stock shall, with respect to
dividend rights and upon liquidation, dissolution ---- and winding up
of the Bank, rank (i) senior to all classes and series of Common Stock
of the Bank and to all classes and series of equity securities of the
Bank now or hereafter authorized, issued or outstanding, which by their
terms expressly provide that they are junior to the Series B Preferred
Stock as to dividend distributions and distributions upon the
liquidation, dissolution or winding up of the Bank, or which do not
specify their rank (collectively with the Common Stock, the "Series B
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Junior Securities"); (ii) on a parity with the Series A Preferred Stock
and each other class or series of equity securities issued by the Bank
after the date hereof, the terms of which specifically provide that
such class or series will rank on a parity with the Series B Preferred
Stock as to dividend distributions and distributions upon the
liquidation, dissolution or winding up of the Bank (collectively with
the Series A Preferred Stock, the "Series B Parity Securities"); and
(iii) junior to each other class or series of equity securities issued
by the Bank after the date hereof, the terms of which specifically
provide that such class or series will rank senior to the Series B
Preferred Stock as to dividend distributions and distributions upon the
liquidation, dissolution or winding up of the Bank (collectively, the
"Series B Senior Securities"), provided that any such Series B Senior
Securities or Series B Parity Securities issued after the date hereof
that are not approved by the holders of Series B Preferred Stock as
required by Section 6.03(i)(i)(D) hereof shall be deemed to be Series B
Junior Securities and not Series B Senior Securities or Series B Parity
Securities, as the case may be.
(d) Dividends. Dividends are payable on the Series B Preferred
Stock as follows:
(i) The holders of shares of the Series B Preferred
Stock in preference to the Series B Junior Securities shall be
entitled to receive, out of funds legally available for that
purpose, and when, as, and if declared by the Board of
Directors of the Bank, preferential non-cumulative dividends
payable in cash in an amount determined by applying the annual
rate of LIBOR plus 200 basis points to the Series B
Liquidation Value (the "Series B Dividend Rate").
(ii) Dividends on the Series B Preferred Stock shall
be non-cumulative. Dividends not paid on any Series B Dividend
Payment Date shall not accumulate thereafter. Dividends shall
accumulate from the first day of any Series B Dividend Period
to but excluding the immediately succeeding Series B Dividend
Payment Date. Dividends, if and when declared, shall be
payable in arrears in cash on each Series B Dividend Payment
Date of each year with respect to the Series B Dividend Period
ending on the day immediately prior to such Series B Dividend
Payment Date at the Series B Dividend Rate per share to
holders of record at the close of business on the applicable
Record Date, commencing on the Exchange Date with respect to
any shares of Series B Preferred Stock issued prior to that
Series B Dividend Payment Date; provided that dividends
payable on the Series B Preferred Stock on the initial Series
B Dividend Payment Date (and any dividend payable for a period
less than a full quarterly period) shall be prorated for the
period and computed on the basis of a 360-day year and the
actual number of days in such Series B Dividend Period; and
provided, further, that dividends payable on the Series B
Preferred Stock on the initial Series B Dividend Payment Date
shall include any accumulated and unpaid dividends on the
Series C Non-Cumulative Exchangeable Preferred Stock of the
Corporation exchanged for the Series B Preferred Stock as of
the Exchange Date for the then current dividend period.
Dividends on such Series B Preferred Stock shall be paid only
in cash.
-11
(iii) No dividends on shares of Series B Preferred
Stock shall be declared by the Board of Directors or paid or
set apart for payment by the Board of Directors or paid or set
apart for payment by the Bank at such time as the terms and
provisions of any agreement of the Bank, including any
agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides
that such declaration, payment or setting apart for payment
would constitute a breach thereof or a default thereunder, or
if such declaration or payment shall be restricted or
prohibited by law.
(iv) Holders of shares of Series B Preferred Stock
shall not be entitled to any dividends in excess of full
non-cumulative dividends declared, as herein provided, on the
shares of Series B Preferred Stock. No interest, or sum of
money in lieu of interest, shall be payable in respect of any
dividend payment on the shares of Series B Preferred Stock
that may be in arrears.
(v) (A) So long as any shares of Series B Preferred
Stock are outstanding, no dividends shall be declared, paid or
set aside for payment or other distribution upon any Series B
Junior Securities (other than dividends or distributions paid
in shares of, or options, warrants or rights to subscribe for
or purchase shares of, Series B Junior Securities and other
than as provided in clause (B) below), nor shall any shares of
any Series B Junior Securities or any Series B Parity
Securities be redeemed, purchased or otherwise acquired for
any consideration (or any moneys be paid to or set aside or
made available for a sinking fund for the redemption of any
shares of any such stock) by the Bank (except by conversion
into or exchange for shares of, or options, warrants or rights
to subscribe for or purchase, Series B Junior Securities)
whenever, in each case, full non-cumulative dividends on all
outstanding shares of the Series B Preferred Stock for the
related Series B Dividend Period shall not have been declared
and paid, when due, for the four consecutive Series B Dividend
Periods terminating on or immediately prior to the date of
payment in respect of such dividend, distribution, redemption,
purchase or acquisition.
(B) When dividends for any dividend period are not
paid in full, as provided in clause (A) above, on the shares
of the Series B Preferred Stock or any Series B Parity
Securities, dividends may be declared and paid on any such
shares for any dividend period therefor, but only if such
dividends are declared and paid pro rata so that the amount of
dividends declared and paid per share on the shares of the
Series B Preferred Stock and any Series B Parity Securities,
in all cases shall bear to each other the same ratio that the
amount of unpaid dividends per share on the shares of the
Series B Preferred Stock for such Series B Dividend Period and
such Series B Parity Securities for the corresponding dividend
period bear to each other.
-12-
(e) Liquidation Preference.
(i) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Bank, the holders of shares of Series B Preferred Stock then
outstanding shall be entitled to be paid out of the assets of
the Bank available for distribution to its stockholders an
amount in cash equal to the Series B Liquidation Value for
each share outstanding, plus an amount in cash equal to all
accumulated and unpaid dividends thereon for the then current
Series B Dividend period, whether or not earned or declared,
before any payment shall be made or any assets distributed to
the holders of Series B Junior Securities. If the assets of
the Bank are not sufficient to pay in full the liquidation
payments payable to the holders of outstanding shares of the
Series B Preferred Stock and any Series B Parity Securities,
then the holders of all such shares shall share ratably in
such distribution of assets in accordance with the amount
which would be payable on such distribution if the amounts to
which the holders of outstanding shares of Series B Preferred
Stock and the holders of outstanding shares of such Series B
Parity Securities are entitled were paid in full. After
payment of the full amount of the liquidation preference, plus
any accumulated and unpaid dividends for the then current
Series B Dividend Period, to which holders of Series B
Preferred Stock are entitled, holders of Series B Preferred
Stock will have no right or claim to any remaining assets of
the Bank.
(ii) For the purpose of this Section 6.03(e), neither
the voluntary sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of
all or substantially all of the property or assets of the
Bank, nor the consolidation or merger of the Bank, shall be
deemed to be a voluntary or involuntary liquidation,
dissolution or winding up of the Bank, unless such voluntary
sale, conveyance, exchange or transfer shall be in connection
with a plan of liquidation, dissolution or winding up of the
Bank.
(f) Redemption. The Series B Preferred Stock is not redeemable
prior to March 31, 2011. On March 31, 2011 and on each Series B
Dividend Payment Date thereafter, the Series B Preferred Stock shall be
redeemable, in whole or in part, at the option of the Bank, but with
the prior written approval of the Federal Reserve and, if approval is
then required under any applicable law, rule, guideline or policy, the
Georgia Department of Banking and Finance, for cash out of any source
of funds legally available, at a redemption price equal to 100% of the
Series B Liquidation Value per share plus unpaid dividends thereon
accumulated since the immediately preceding Series B Dividend Payment
Date (the "Series B Redemption Price"). Any date of such redemption is
referred to as the "Series B Redemption Date." If fewer than all the
outstanding shares of Series B Preferred Stock are to be redeemed, the
Bank will select those to be redeemed by lot or pro rata or by any
other method as may be determined by the Board of Directors to be
equitable.
-13-
(g) Procedure for Redemption.
(i) Upon redemption of the Series B Preferred Stock
pursuant to Section 6.03(f) hereof, notice of such redemption
(a "Series B Notice of Redemption") shall be mailed by
first-class mail, postage prepaid, not less than 30 days nor
more than 60 days prior to the Series B Redemption Date to the
holders of record of the shares to be redeemed at their
respective addresses as they shall appear in the records of
the Bank; provided, however, that failure to give such notice
or any defect therein or in the mailing thereof shall not
affect the validity of the proceeding for the redemption of
any shares so to be redeemed except as to the holder to whom
the Bank has failed to give such notice or except as to the
holder to whom notice was defective. Each such notice shall
state: (A) the Series B Redemption Date; (B) the Series B
Redemption Price; (C) the place or places where certificates
for such shares are to be surrendered for payment of the
Series B Redemption Price; and (D) the CUSIP number of the
shares being redeemed.
(ii) if a Series B Notice of Redemption shall have
been given as aforesaid and the Bank shall have deposited on
or before the Redemption Date a sum sufficient to redeem the
shares of Series B Preferred Stock as to which a Series B
Notice of Redemption has been given in oust with the Transfer
Agent with irrevocable instructions and authority to pay the
Series B Redemption Price to the holders thereof, or if no
such deposit is made, then upon the Series B Redemption Date
(unless the Bank shall default in making payment of the Series
B Redemption Price), all rights of the holders thereof as
stockholders of the Bank by reason of the ownership of such
shares (except their right to receive the Series B Redemption
Price thereof without interest) shall cease and terminate, and
such shares shall no longer be deemed outstanding for any
purpose. The Bank shall be entitled to receive, from time to
time, from the Transfer Agent the interest, if any, earned on
such moneys deposited with it, and the holders of any shares
so redeemed shall have no claim to any such interest. In case
the holder of any shares of Series B Preferred Stock so called
for redemption shall not claim the Series B Redemption Price
for its shares within six months after the related Series B
Redemption Date, the Transfer Agent shall, upon demand, pay
over to the Bank such amount remaining on deposit, and the
Transfer Agent shall thereupon be relieved of all
responsibility to the holder of such shares, and such holder
shall look only to the Bank for payment thereof.
(iii) Not later than 1:30 p.m., Eastern Standard
Time, on the Business Day immediately preceding the Series B
Redemption Date, the Bank shall irrevocably deposit with the
Transfer Agent sufficient funds for the payment of the Series
B Redemption Price for the shares to be redeemed on the Series
B Redemption Date and shall give the Transfer Agent
irrevocable instructions to apply such funds, and, if
applicable and so specified in the instructions, the income
and proceeds therefrom, to the payment of such Series B
Redemption Price. The Bank may direct the Transfer Agent to
invest any such available funds, provided that the proceeds of
-14-
any such investment will be available to the Transfer Agent in
Atlanta, Georgia at the opening of business on such Series B
Redemption Date.
(iv) Except as otherwise expressly set forth in this
Section 6.03(g), nothing contained in these Restated Articles
of Incorporation shall limit any legal right of the Bank to
purchase or otherwise acquire any shares of Series B Preferred
Stock at any price, whether higher or lower than the Series B
Redemption Price, in private negotiated transactions, the
over-the-counter market or otherwise.
(v) If the Bank shall not have funds legally
available for the redemption of all of the shares of Series B
Preferred Stock on any Series B Redemption Date, the Bank
shall redeem on the Series B Redemption Date only the number
of shares of Series B Preferred Stock as it shall have regally
available funds to redeem, as determined in an equitable
manner, and the remainder of the shares of Series B Preferred
Stock shall be redeemed, at the option of the Bank, on the
earliest practicable date next following the day on which the
Bank shall first have funds legally available for the
redemption of such shares.
(h) Reacquired Shares. Shares of the Series B Preferred Stock
that have been redeemed, purchased or otherwise acquired by the Bank
are not subject to reissuance or resale as shares of Series B Preferred
Stock and shall be held in treasury. Such shares shall revert to the
status of authorized but unissued shares of preferred stock,
undesignated as to series, until the Board of Directors of the Bank
shall designate them again for issuance as part of a series.
(i) Voting Rights. Holders of Series B Preferred Stock will
not have any voting rights, except as otherwise from time to time
required by law and except as follows:
(i) In addition to any vote or consent of
stockholders required by law, the approval of the holders of
two-thirds of the outstanding shares of Series B Preferred
Stock, voting as a class, shall be required for the Bank: (A)
to amend, alter or repeal any of the provisions of these
Restated Articles of Incorporation in any manner that would
alter or change the powers, preferences or special rights of
the shares of Series B Preferred Stock so as to materially and
adversely affect them, except as permitted in Section
6.03(j)(i)(A); (B) to authorize the merger, consolidation, or
reclassification of the Bank with or into another Person,
except as permitted in Section 6.03(j)(i)(B); (C) to dissolve,
liquidate or wind up the affairs of the Bank; and (D) to
authorize or issue, or obligate itself to authorize or issue,
any Series B Senior Securities or Series B Parity Securities,
unless, for purposes of this clause (D), the Bank shall have
received written notice from each of the Rating Agencies, and
delivered a copy of such written notice to the Transfer Agent,
confirming that any such issuance of Series B Parity
Securities will not result in a reduction of the rating
assigned by any of such Rating Agencies to the Series B
Preferred Stock then outstanding.
-15-
(ii) If at any time dividends on the Series B
Preferred Stock or any Series B Parity Securities shall not
have been declared and paid in an amount equal to six
quarterly dividends, whether consecutive or not, the number of
directors constituting the Board of Directors of the Bank
shall be increased by two and the holders of the Series B
Preferred Stock and any Series B Parity Securities with
similar voting rights, voting together as a single class,
shall be entitled to elect two additional persons to fill such
newly created directorships. The directors so elected shall
meet the qualifications set forth in the Bank's bylaws and any
applicable statutory or regulatory qualifications. At such
time as dividends for at least four consecutive Series B
Dividend Periods have been fully paid or set apart for full
payment on the outstanding Series B Preferred Stock and any
Series B Parity Securities with similar voting rights, the
rights of such holders to vote for the election of directors
as provided in this Section 6.03(i)(ii) shall cease and such
directors shall no longer serve on the Board of Directors of
the Bank, subject to renewal from time to time upon the same
terms and conditions in the event of each and every subsequent
default in the aggregate amount equivalent of six full
quarterly dividends.
During any period when the holders of the Series B
Preferred Stock and any Series B Parity Securities have the
right to vote as a class for directors as provided above, the
directors so elected by the holders of the Series B Preferred
Stock and any Series B Parity Securities with similar voting
rights shall continue in office until their successors shall
have been elected or until termination of the right of the
holders of the Series B Preferred Stock and any Series B
Parity Securities to vote as a class for directors. For
purposes of the foregoing, the holders of the Series B
Preferred Stock and any Series B Parity Securities shall vote
in proportion to their respective liquidation preference of
the shares of such stock held by them.
(iii) With respect to any right of the holders of
shares of Series B Preferred Stock to vote on any matter,
whether such right is created by this Section 6.03(i), by
applicable law or otherwise, no holder of any share of Series
B Preferred Stock shall be entitled to vote, and no share of
Series B Preferred Stock shall be deemed to be outstanding for
the purpose of voting or determining the number of shares
required to constitute a quorum, if prior to or concurrently
with a determination of shares entitled to vote or of shares
deemed outstanding for quorum purposes, as the case may be,
funds sufficient for the redemption of such shares are
irrevocably deposited with the Transfer Agent and a Series B
Notice of Redemption has been given by the Bank or an
affiliate thereof to the holders of the Series B Preferred
Stock.
(j) Covenants. So long as any shares of Series B Preferred
Stock are outstanding, the Bank covenants and agrees with and for the
benefit of the holders of shares of Series B Preferred Stock that:
-16-
(i) the Bank shall not, without the affirmative vote
or consent of holders of two-thirds of the number of shares
.of Series B Preferred Stock then outstanding, voting as a
separate class:
(A) amend, alter or repeal any provisions of these
Restated Articles of Incorporation (existing prior to and at
the time of such vote) so as to materially and adversely
affect the rights, preferences, privileges or restrictions of
the holders of Series B Preferred Stock, except that this
subsection (A) shall not apply to steps taken by the Bank to
issue and the issuance of other preferred stock by the Bank;
or
(B) consolidate, merge, or reclassify with or into
any other Person, or permit any merger of another Person into
the Bank, or enter into a voluntary liquidation or voluntary
dissolution of the Bank or enter into a share exchange with
another Person, except that (1) the Bank may consolidate,
merge or reclassify with or into another Person or enter into
a share exchange with another Person if such other Person is a
consolidated subsidiary (in accordance with generally accepted
accounting principles) of SunTrust Banks, Inc., or (2) the
Bank may consolidate, merge, or reclassify with or into
another Person or enter into a share exchange with another
Person if (a) such other Person is a Depository Institution or
corporation organized under the laws of the United States or a
state of the United States, (b) such other Person expressly
assumes all obligations and commitments of the Bank pursuant
to such consolidation, merger, reclassification or share
exchange, (c) the outstanding shares of Series B Preferred
Stock are exchanged for, reclassified as or converted into
shares of the surviving Depository Institution or corporation
which have preferences, limitations and relative voting and
other rights substantially identical to those of the Series B
Preferred Stock, (d) after giving effect to such merger,
consolidation, reclassification or share exchange, no default,
or event which with the giving of notice or passage of time or
both could become a default by the Bank of its obligations
under these Restated Articles of Incorporation, shall have
occurred and be continuing, and (e) the Bank shall have
received written notice from each of the Rating Agencies, and
delivered a copy of such written notice to the Transfer Agent,
confirming that such merger, consolidation, reclassification
or share exchange will not result in a reduction of the rating
assigned by any of such Rating Agencies to the Series B
Preferred Stock then outstanding; provided that, for purposes
of this subsection (B)(2), the Bank shall have delivered to
the Transfer Agent and caused to be mailed to each holder of
record of Series B Preferred Stock, at least thirty days prior
to any such merger, consolidation, reclassification or share
exchange becoming effective, a notice describing such merger,
consolidation, reclassification or share exchange, together
with an Officers' Certificate and an Opinion of Counsel, each
stating that such merger, consolidation, reclassification or
share exchange complies with the requirements of these
Restated Articles of Incorporation and that all conditions
precedent herein provided for relating to such transaction
have been complied with.
-17-
(ii) The Bank covenants and agrees with and for the
benefit of the holders of shares of Series B Preferred Stock
that the Bank will not issue additional shares of Series B
Senior Securities or Series B Parity Securities unless the
Bank shall have received written notice from each of the
Rating Agencies, and delivered a copy of such written notice
to the Transfer Agent, confirming that any such issuance will
not result in a reduction of the rating assigned by any of
such Rating Agencies to the Series B Preferred Stock then
outstanding.
Section 6.04. Definitions. For the purpose of Sections 6.02 and 6.03
hereof, the following terms shall have the meanings indicated:
"Business Day" means a day on which the New York Stock
Exchange is open for trading and which is not a day on which banking
institutions in The City of New York or Atlanta, Georgia are authorized
or required by law or executive order to close.
"Calculation Agent" means any Person authorized by the Bank to
determine the Series B Dividend Rate, which initially shall be the
Bank.
"Corporation" means SunTrust Real Estate Investment
Corporation, a Virginia corporation, or any successor thereto.
"Depository Institution" has the meaning given to such term in
12 U.S.C.ss. 1813(c)(i), or any successor thereto.
"Determination Date" means, with respect to any Series B
Dividend Period, the date that is two London Business Days prior to the
first day of such Series B Dividend Period.
"Dividend Payment Date" means, as the context requires, a
Series A Dividend Payment Date or a Series B Dividend Payment Date.
"Exchange Date" means any date on which the Series B
Non-Cumulative Exchangeable Preferred Stock of the Corporation is
exchanged for the Series A Preferred Stock or any date on which the
Series C Non-Cumulative Exchangeable Preferred Stock of the Corporation
is exchanged for the Series B Preferred Stock
"Federal Reserve" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
"Issue Date" means, with respect to the Series A Preferred
Stock, the first date on which shares of Series A Preferred Stock are
issued and with respect to the Series B Preferred Stock, the first date
on which shares of the Series B Preferred Stock are issued.
"LIBOR" means, with respect to a Series B Dividend Period
relating to a Series B Dividend Payment Date (in the following order of
priority):
-18-
(i) the rate (expressed as a percentage per annum)
for Eurodollar deposits having a three-month maturity that
appears on Telerate Page 3750 as of 11:00 a.m. (London time)
on the related Determination Date;
(ii) if such rate does not appear on Telerate Page
3750 as of 11:00 a.m. (London time) on the related
Determination Date, LIBOR will be the arithmetic mean (if
necessary rounded upwards to the nearest whole multiple of
.00001%) of the rates (expressed as percentages per annum) for
Eurodollar deposits having a three-month maturity that appear
on Reuters Monitor Money Rates Page LIBO ("Reuters Page LIBO")
as of 11:00 a.m. (London time) on such Determination Date;
(iii) if such rate does not appear on Reuters Page
LIBO as of 11:00 a.m. (London time) on the related
Determination Date, the Calculation Agent will request the
principal London offices of four leading banks in the London
interbank market of the Bank's selection to provide such
banks' offered quotations (expressed as percentages per annum)
to prime banks in the London interbank market for Eurodollar
deposits having a three-month maturity as of 11:00 a.m.
(London time) on such Determination Date. If at least two
quotations are provided, LIBOR will be the arithmetic mean (if
necessary rounded upwards to the nearest whole multiple of
.00001 %) of such quotations;
(iv) if fewer than two such quotations are provided
as requested in clause (iii) above, the Calculation Agent will
request four major New York City banks of the Bank's selection
to provide such banks' offered quotations (expressed as
percentages per annum) to leading European banks for loans in
Eurodollars as of 11.00 a.m. (London time) on such
Determination Date. If at least two such quotations are
provided, LIBOR will be the arithmetic mean (if necessary
rounded upwards to the nearest whole multiple of .00001%) of
such quotations; and
(v) if fewer than two such quotations are provided as
requested in clause (iv) above, LIBOR will be LIBOR determined
with respect to the Series B Dividend Period immediately
preceding such current Series B Dividend Period.
If the rate for Eurodollar deposits having a
three-month maturity that initially appears on Telerate Page
3750 or Reuters Page LIBO, as the case may be, as of I 1:00
a.m. (London time) on the related Determination Date is
superseded on Telerate Page 3750 or Reuters Page LIBO, as the
case may be, by a corrected rate before 12:00 noon (London
time) on such Determination Date, the corrected rate as so
substituted on the applicable page will be the applicable
LIBOR for such Determination Date.
-19-
"London Business Day" means any day, other than a Saturday or
Sunday, on which commercial banks and foreign exchange markets are open
for business, including dealings in foreign exchange and foreign
currency deposits, in London.
"Moody's" means Moody's Investors Service, Inc., or its
successor, so long as such agency (or successor) is in the business of
rating securities of the type of the Series A Preferred Stock or the
Series B Preferred Stock.
"Officer's Certificate" means a certificate signed by the
President, any Vice President, the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Bank.
"Opinion of Counsel" means a written opinion of counsel, who
may be in-house counsel for the Bank.
"Person" means any individual, firm, Depository institution or
other entity and shall include any successor (by merger or otherwise)
of such entity.
"Rating Agencies" means Moody's (and any successor thereto),
Standard & Poor's (and any successor thereto) and any other nationally
recognized statistical rating organizations assigning, at the Bank's
request, ratings to the shares of Series A Preferred Stock or Series B
Preferred Stock.
"Record Date" means the 15th day of the month in which the
applicable Dividend Payment Date falls for dividends declared by the
Board of Directors.
"Series A Dividend Payment Date" means each March 31 and
September 30 of each year.
"Series A Dividend Period" is the period from a Series A
Dividend Payment Date to, but excluding, the next succeeding Series A
Dividend Payment Date; provided, however, that the initial Series A
Dividend Period is the period from the Issue Date of the Series B
Preferred Stock to the next succeeding Series A Dividend Payment Date.
"Series A Dividend Rate" has the meaning set forth in Section
6.02(d)(i) hereof.
"Series A Junior Securities" has the meaning set forth in
Section 6.02(c) hereof.
"Series A Liquidation Value" has the meaning set forth in
Section 6.02(a) hereof.
"Series A Notice of Redemption" has the meaning set forth in
Section 6.02(g)(i) hereof.
"Series A Parity Securities" has the meaning set forth in
Section 6.02(c) hereof.
-20-
"Series A Preferred Stock" has the meaning set forth in
Section 6.02(a) hereof.
"Series A Redemption Date" has the meaning set forth in
Section 6.02(f) hereof.
"Series A Redemption Price" has the meaning set forth in
Section 6.02(f) hereof.
"Series A Senior Securities" has the meaning set forth in
Section 6.02(c) hereof
"Series B Dividend Payment Date" means each March 31, June 30,
September 30 and December 31 of each year.
"Series B Dividend Period" is the period from a Series B
Dividend Payment Date to, but excluding, the-next succeeding Series B
Dividend Payment Date; provided, however, that the initial Series B
Dividend Period is the period from the Issue Date of the Series B
Preferred Stock to the next succeeding Series B Dividend Payment Date.
"Series B Dividend Rate" has the meaning set forth in Section
6.03(d)(i) hereof.
"Series B Junior Securities" has the meaning set forth in
Section 6.03(c) hereof.
"Series B Liquidation Value" has the meaning set forth in
Section 6.03(a) hereof.
"Series B Notice of Redemption" has the meaning set forth in
Section 6.03(g)(i) hereof.
"Series B Parity Securities" has the meaning set forth in
Section 6.03(c) hereof.
"Series B Preferred Stock" has the meaning set forth in
Section 6.03(a) hereof.
"Series B Redemption Date" has the meaning set forth in
Section 6.03(f) hereof
"Series B Redemption Price" has the meaning set forth in
Section 6.03(f) hereof,
"Series B Senior Securities" has the meaning set forth in
Section 6.03(c) hereof,
"Standard & Poor's" means Standard & Poor's Ratings Group, a
division of the McGraw-Hill Companies, Inc. or its successor, so long
as such agency (or successor) is in the business of rating securities
of the type of the Series A Preferred Stock or the Series B Preferred
Stock.
"Transfer Agent" means a bank or trust company as may be
appointed from time to time by the Board of Directors of the Bank, or a
committee thereof, to act as transfer agent, paying agent and registrar
of the Series A Preferred Stock and the Series B Preferred Stock.
-21-
Section 6.05. Authority is hereby expressly granted to the Board of
Directors from time to time to issue additional Preferred Stock, for such
consideration and on such terms as it may determine, as Preferred Stock of one
or more series and in connection with the creation of any such series to fix by
the resolution or resolutions providing for the issue of shares thereof the
designation, powers and relative participating, optional, or other special
rights of such series, and the qualifications, limitations, or restrictions
thereof.
Article VII
No stockholder shall have any preemptive right to subscribe for or to
purchase any shares or other securities issued by the Bank.
Article VIII
The number of directors shall be not less than eleven nor more than
twenty-five, which number shall be fixed as provided by law.
Article IX
Section 9.01. No director of the Bank shall be personally liable to the
shareholders of the Bank for monetary damages for breach of his duty of care or
other duty as a director, provided that this provision shall eliminate or limit
the liability of a director only to the maximum extent permitted from time to
time by the Financial Institutions Code of Georgia or any successor law or laws-
Section 9.02. Any repeal or modification of clause (a) of this Article
IX by the shareholders of the Bank shall not adversely affect any right or
protection of a director of the Bank existing at the time of such repeal or
modification.
-22-
IN WITNESS WHEREOF, SunTrust Bank has caused these Restated Articles of
Incorporation to be executed and its corporate seal to be affixed and has caused
the foregoing to be attested, all by its duly authorized officers on this 8th
day of August, 2000.
SUNTRUST BANK
By: /s/ L. Phillip Humann
---------------------------------------
Name: L. Phillip Humann
Title: Chairman of the Board, President and Chief
Executive Officer
By: /s/ John W. Spiegel
---------------------------------------
Name: John W. Spiegel
Title: Executive Vice President and Chief Financial
Officer
(SEAL)
Attest: /s/ Raymond D. Fortin
---------------------------
Name: Raymond D. Fortin
Title: Corporate Secretary
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EXHIBIT 2 TO FORM T-1
CERTIFICATE OF AUTHORITY
OF
SUNTRUST BANK TO COMMENCE BUSINESS
(Included in Exhibit 1)
EXHIBIT 3 TO FORM T-1
AUTHORIZATION
OF
SUNTRUST BANK TO EXERCISE
CORPORATE TRUST POWERS
(Included in Exhibit 1)
EXHIBIT 4 TO FORM T-1
BY-LAWS
OF
SUNTRUST BANK
(Attached)
SUNTRUST BANK
BYLAWS
(As Amended and Restated February 13, 2001)
ARTICLE I
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholder for the
election of Directors and for the transaction of such other business as may
properly come before the meeting shall be held at such place, on such date and
at such time as the Board of Directors may by resolution provide,. If the Board
of Directors fails to provide such date and time, the meeting shall be held at
the Bank's headquarters at 10:00 AM local time on the third Tuesday in April of
each year, or, if that date is a legal holiday, on the next succeeding business
day. The Board of Directors may specify by resolution prior to any special
meeting of the shareholder that such meeting shall be in lieu of the annual
meeting.
SECTION 2. SPECIAL MEETING; CALL OF MEETINGS. Special meetings of the
shareholder may be called at any time by the Chairman of the Board, the
President, or the Board itself, and shall be held at such place as is stated in
the notice.
ARTICLE II
DIRECTORS
SECTION 1. BOARD OF DIRECTORS. The Board of Directors shall manage the business
and affairs of the Bank and may exercise all of the powers of the Bank, subject
to whatever restrictions are imposed by law.
SECTION 2. COMPOSITION OF THE BOARD. The Board of Directors of the Bank shall
consist of not less than ten (10) nor more than twenty (20) natural persons, the
exact number to be set from time to time by the Board of Directors. In the
absence of the Board setting the number of Directors, the number shall be
sixteen (16). Each Director, unless he or she dies, resigns, retires or is
removed from office, shall hold office until the next annual meeting of the
shareholder, and may be reelected for successive terms.
SECTION 3. ELECTION OF DIRECTORS. Nominations fox election to the Board of
Directors may be made by the Board, or by the Bank's shareholder. Nominations
shall specify the class of Directors to which each person is nominated.
SECTION 4. VACANCIES. Vacancies resulting from retirement, resignation, removal
from office (with or without cause), death or an increase in the number of
Directors comprising the Board, shall be filled by the Board of Directors. Any
Director so elected shall hold office until the next annual meeting of the
shareholder. No decrease in the number of Directors constituting the Board of
Directors shall shorten the term of any incumbent Director.
SECTION 5. RETIREMENT. Each Director serving as an officer of the Bank or any of
its affiliates shall cease to be a Director on the date of the first to occur of
(a) his or her 65th birthday, or (b) the date of his or her termination,
resignation or retirement of employment. Each Director who is not an officer of
the Bank or any of its affiliates shall cease to be a Director at the end of his
or her term that coincides with or follows his or her 70th birthday.
SECTION 6. REMOVAL. Any or all Directors may be removed from office at any time
with or without cause, by the affirmative vote of the shareholder.
SECTION 7. RESIGNATIONS. Any Director may resign at any time by giving written
notice to the Chairman of the Board, the President or the Corporate Secretary.
Such resignation shall take effect when delivered unless the notice specifies a
later effective date, and the acceptance of the resignation shall not be
necessary to make it effective, unless otherwise stated in the resignation.
ARTICLE III
ACTION OF THE BOARD OP DIRECTORS; COMMITTEES
SECTION 1. QUORUM; VOTE REQUIREMENT. A majority of the Directors holding office
shall constitute a quorum for the transaction of the Board's business. If a
quorum is present, a vote of a majority of the Directors present at such time
shall be the act of the Board of Directors, unless a greater vote is required by
law, the Articles of Incorporation or these Bylaws.
SECTION 2. EXECUTIVE COMMITTEE. An Executive Committee, consisting of not less
than four (4) Directors, is hereby established. The members of the Executive
Committee shall be elected by the Board at its meeting immediately following the
annual shareholder's meeting, or at such other time as the Board determines to
be appropriate. The Executive Committee shall have and may exercise all the
authority of the Board as permitted by law. In addition, the Executive Committee
shall serve as the Nominating Committee and shall have the power to recommend
candidates for election to the Board and consider other issues related to the
size and composition of the Board. The Board shall elect the Chairman of the
Executive Committee, who shall be entitled to preside at all meetings of the
Executive Committee and perform such other duties as may be designated by the
Committee.
SECTION 3. AUDIT COMMITTEE. An Audit Committee, consisting of not less than four
(4) Directors, is hereby established. No director who is an officer of the Bank
or any affiliate shall be a member of the Audit Committee. The members of the
Audit Committee shall be elected by the Board at its meeting immediately
following the annual shareholder's meeting, or at such other time as the Board
determines to be appropriate. The Audit Committee shall require that an audit of
the books and records of the affairs of the Bank be made at such time or times
as the members of the Audit Committee choose, and shall review the scope of the
audit and approve of any non-audit services to be performed for the Bank by the
independent accountants. The Audit Committee shall also review examination
reports by the independent accountants and regulatory agencies; review credit
issues, loan policies and procedures, the classification of loans and the
adequacy of the allowance for loan losses; monitor the credit process review
function; review the Bank's CRA policy, plans and performance; review internal
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programs to assure compliance with laws and regulations and the adequacy of
internal controls, and exercise oversight for the Bank's fiduciary actions and
duties. The Board shall elect the Chairman of the Audit Committee who shall be
entitled to preside at all meetings of the Committee and perform such other
duties as may be designated by the Committee.
SECTION 4. OTHER COMMITTEES. The Board of Directors may designate one or more
other committees, each consisting of one or more Directors, and each of which,
to the extent permitted by law and provided in the resolution establishing such
committee, shall have and may exercise all authority of the Board of Directors.
SECTION 5. COMMITTEE MEETINGS. Regular meetings of each committee, of which no
notice is necessary, shall be held at such times and places as fixed, from time
to time, by resolution adopted by the committee. Special meetings of any
committee may be called at any time by the Chairman of the Board or the
(resident, by the Chairman of such committee or by two members of the committee.
Notice of any special meeting of any committee may be given in the manner
provided in the Bylaws for giving notice of a special meeting of the Board of
Directors. However, notice of any special meeting deed not be given to any
member of the committee who is present at the meeting or who, before or after
the meeting, waives notice in writing (including telegram, cablegram, facsimile,
or radiogram). Any regular or special meeting of any committee shall be a legal
meeting, without any notice being given, of all the members are present. A
majority of the members of any committee shall constitute a quorum for the
transaction of business, and the act of a majority of those present at any
meeting at which a quorum is present shall be the act of the committee.
SECTION 6. COMMITTEE RECORDS. Each committee shall keep a record of its acts and
proceedings and shall report them from time to time to the Board of Directors.
SECTION 7. ALTERNATE MEMBERS; VACANCIES. The Board of Directors may designate
one or more Directors as alternate members of any committee, to act in the place
and stead of one or more members who are absent from such committee. The Board
of Directors may fill any vacancy or vacancies occurring in any committee.
SECTION 8. PLACE, TIME, NOTICE AND CALL OF DIRECTORS' MEETINGS. The annual
meeting of the Board of Directors shall be held each year immediately following
the annual meeting of the shareholder or at such other time and place as the
Chairman of the Board may designate. Regular meetings of the Board of Directors
shall be held at such times and places as the Board of Directors may determine
from time to time. Regular meetings of the Board of Directors may be held
without notice. Special meetings of the Board of Directors shall be held upon
notice of the date, time and place of the meeting as given to each Director
orally, by telephone or in person, or in writing, by personal delivery or by
mail, telegram, facsimile, or cablegram. Notice of special meetings shall be
given no later than the day before the meeting, except that notice of a special
meeting need not be given to any Director who signs and delivers to the Bank,
either before or after the meeting, a waiver of notice. Attendance of a Director
at a Board meeting shall constitute a waiver of notice of that meeting, as well
as a waiver of any and all objections to the place of the meeting, the time of
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the meeting, or the manner in which it has been called or convened, except when
a Director states, at the beginning of the meeting (or promptly upon his or her
arrival), any such objection or objections to the transaction of business and
thereafter does not vote for ox assent to action taken at the meeting. The
business to be transacted at, and the purpose of, any regular or special meeting
of the Board of Directors need not be specified in the notice or waiver of
notice of the meeting unless required by law or these Bylaws.
A majority of the Directors present, whether or not a quorum exists, may adjourn
any meeting of the Board of Directors to another time and place. No notice of
any adjourned meeting need be given. Meetings of the Board of Directors way be
called by the Chairman of the Board, the President or any two Directors.
SECTION 9. ACTION BY DIRECTORS WITHOUT A MEETING; PARTICIPATION IN MEETING BY
TELEPHONE. Except as limited by law, any action to be taken at a meeting of the
Board, or by any committee of the Board, may be taken without a meeting if
written consent, setting forth the action so taken, shall be signed by all the
members of the Board or such Committee and shall be filed with the minutes of
the proceedings of the Board or such committee. Such written consent shall have
the same force and effect as a unanimous vote of the Board or such committee and
any document executed on behalf of the Corporation may recite that the action
was duly taken at a meeting of the Board or such committee.
Participation at Board and committee meetings may occur by conference telephone
or similar communication equipment so long as all persons participating in the
meeting can hear and speak to one other, and such participation shall constitute
personal presence at the meeting.
SECTION 10. DIRECTORS' COMPENSATION. The Board of Directors shall have authority
to determine, from time to time, the amount of compensation paid to its members
for attendance at meetings of, or services on, the Board or any committee
thereof. The Board shall also have the power to reimburse Directors for
reasonable expenses of attendance at Directors' meetings and committee meetings.
ARTICLE IV
OFFICERS
SECTION 1. EXECUTIVE STRUCTURE. The Board of Directors shall elect a Chairman of
the Board, President, Chief Financial Officer, Corporate Secretary and
Treasurer, and may elect one or more Vice Chairmen and Executive Vice Presidents
as the Board of Directors may deem necessary. The Board of Directors shall
designate a Chief Executive Officer from among these officers. The Chief
Executive Officer shall designate duties of each designated officer and may
appoint assistant officers, to assist one or more of the designated officers in
discharging their duties. Titles of the assistant officers will be designated by
the Chief Executive Officer as he or she deems appropriate. The Chief Executive
Officer may also appoint other officers and may delegate the authority to
appoint officers to other officers of the Bank. The local or regional boards or
the local or regional chief executive officers or their designees may appoint
officers of SunTrust Bank. Each officer elected by the Board and each officer
appointed by the Chief Executive Officer or his ox her designee shall serve
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until the next annual meeting of the Board, or until he or she earlier resigns,
retires, dies or is removed from office. Any two or more offices may be held by
the same person.
SECTION 2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the
most senior officer of the Bank and all other officers and agents of the Bank
shall be subject to his or her direction. He or she shall be accountable to the
Board of Directors for the fulfillment of his or her duties and responsibilities
and, in the performance and exercise of all such duties, responsibilities and
powers, he or she shall be subject to the supervision and direction of, and any
limitations imposed by, the Board of Directors. The Chief Executive Officer
shall be responsible for interpretation and implementation of the policies of
the Bank as determined and specified from time to time by the Board of
Directors, and shall be responsible for the general management and direction of
the business and affairs of the Bank. For the purpose of Fulfilling his or her
duties and responsibilities and subject to these Bylaws and the direction of the
Board, the Chief Executive Officer shall have plenary authorities and powers,
including general executive powers, the authority to delegate and assign duties,
responsibilities and authorities, and, in the name of the Bank and on its
behalf, the authority to negotiate and make any agreements, waivers or
commitments that do not require the express approval of the Board.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman shall be a member of the Board of
Directors and shall be entitled to preside at all meetings of the Board.
SECTION 4. PRESIDENT. The President shall have such powers and perform such
duties as may be assigned by the Board of Directors, the Chairman of the Board
or the Chief Executive Officer.
SECTION 5. VICE CHAIRMAN. Any Vice Chairman elected shall have such duties and
authority as may be conferred upon him by the Board or delegated to him by the
Chief Executive Officer.
SECTION 6. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall have the
care, custody, control and handling of the funds and assets of the Bank, and
shall render a statement of the assets, liabilities and operations of the Bank
to the Board at its regular meetings.
SECTION 7. TREASURER. The Treasurer shall perform such duties as may be assigned
to him or her and shall report to the Chief Financial Officer or, in the absence
of the Chief Financial Officer, to the President.
SECTION 8. CORPORATE SECRETARY. Due notice of all meetings of the shareholder
and Directors shall be given by the Corporate Secretary or the person or persons
calling such meeting. The Corporate Secretary shall report the proceedings of
all meetings in a book of minutes and shall perform all the duties pertaining to
his or her office, including authentication of corporate documents, and shall
have custody of the Seal of the Bank. Each Assistant Corporate Secretary
appointed by the Chief Executive Officer or his or her designee may perform all
duties of the Corporate Secretary.
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SECTION 9. BANK OFFICERS. Each officer, employee and agent of the Bank shall
have the duties and authority conferred upon him or her by the Board of
Directors or delegated to him or her by the Chief Executive Officer, or his or
her designee.
SECTION 10. REMOVAL OF OFFICERS. Any officer maybe removed by the Board of
Directors with or without cause whenever, in its judgment, the best interests of
the Bank will be served thereby. In addition, an officer of the Bank shall cease
to be an officer upon ceasing to be an employee of the Bank or its affiliates.
ARTICLE V
STOCK
SECTION 1. STOCK CERTIFICATES. The shares of stock of the Bank shall be
represented by certificates in such form as may be approved by the Board of
Directors, which certificates shall be issued to the shareholder of the Bank and
shall be signed by the Chairman of the Board, or the President, together with
the Corporate Secretary or an Assistant Secretary of the Bank; and which shall
be sealed with the seal of the Bank. The described signatures on any certificate
may be a facsimile signature if the certificate is countersigned by a transfer
agent or registrar other than the Bank itself or an employee of the Bank. No
share certificates shall be issued until consideration for the shares
represented thereby has been fully paid. If any officer who has signed or whose
facsimile signature has been placed upon a certificate ceases to be such officer
before such certificate is issued, it may be issued by the Bank with the same
effect as if he or she was such officer at the date of issue.
SECTION 2. TRANSFER OF STOCK. Shares of stock of the Bank shall be transferred
on the books of the Bank only upon surrender to the Bank of the certificate or
certificates representing the shares to be transferred, accompanied by an
assignment in writing of such shares, properly executed by the shareholder of
record or his or her duly authorized attorney-in-fact, and after payment of all
taxes due upon the transfer. The Bank may refuse any requested transfer until
furnished evidence satisfactory to it that such transfer is proper. Upon the
surrender of a certificate for transfer of stock, such certificate shall be
marked on its face "Canceled". The Board of Directors may make such additional
rules concerning the issuance, transfer and registration of stock and
requirements regarding the establishment of lost, destroyed or wrongfully taken
stock certificates (including any requirement of an indemnity bond prior to
issuance of any replacement certificate and provision for appointment of a
transfer agent and a registrar) as it deems appropriate.
SECTION 3. REGISTERED SHAREHOLDER. The Bank may deem and treat the holder of
record of any stock as the absolute owner thereof for all purposes and shall not
be required to take any notice of any right or claim of right of any other
person.
SECTION 4. RECORD DATE. For the purpose of determining the shareholder entitled
to notice of, or to vote at, any meeting of shareholder or any adjournment
thereof, or untitled to receive payment of any dividend, or in order to make a
determination of the shareholder for any other purpose, the Board of Directors
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may fix, in advance, a date as the record date for determination of the
shareholder.
ARTICLE VI
DEPOSITORIES, SIGNATURES AND SEAL
SECTION 1. DEPOSITORIES. All funds of the Bank shall be deposited in the name of
the Bank in such bank, banks, or other financial institutions as the Board of
Directors may from time to time designate and shall be drawn out on checks,
drafts or other orders signed on behalf of the Back by such person or persons as
the Board, its Executive Committee or the Chief Executive Officer may, from time
to time, direct.
SECTION 2. SEAL. The seal of the Bank shall be in such form as the Board of
Directors may, from time to time, direct. Unless otherwise directed by the Board
of Directors, the official seal of the Bank shall be as follows:
If the seal is affixed to a document, the signature of the Corporate Secretary
or his or her designee shall attest to the seal. The seal and its attestation
may be lithographed or otherwise printed on any document and shall have, to the
extent permitted by law, the same force and effect as if it has been affixed and
attested manually.
SECTION 3. EXECUTION, OF INSTRUMENTS. All bills, notes, checks, and other
instruments for the payment of money, all agreements, indentures, mortgages,
deeds, conveyances, transfers, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, proxies and other instruments or documents may
be signed, executed, acknowledged, verified, delivered, or accepted on behalf of
the Bank by the Chairman of the Board, the President, any Vice Chairman,
Executive Vice President, Senior Vice President or Vice President, the Secretary
or the Treasurer. Any such instrument may also be signed, executed,
acknowledged, verified, delivered or accepted on behalf of the Bank in such
manner and by such other officers, employees or agents of the Bank as the Board
of Directors, Executive Committee or Chief Executive Officer may, from time to
time, direct.
ARTICLE VII
INDEMNIFICATION OF OFFICERS, DIRECTORS, AND EMPLOYEES
SECTION 1. DEFINITIONS. The following terms are defined, for purposes of this
Article, as:
(A) "Bank" includes any domestic or foreign predecessor entity of this Bank in
merger or other transaction in which the predecessor's existence ceased upon
consummation of the transaction.
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(B) "Director" means an individual who is or was a director of the Bank or an
individual who, while a director of the Bank, is or was serving at the Bank's
request as director, officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint venture, trust, employee
benefit plan, or other entity. A Director is considered to be serving an
employee benefit plan at the Bank's request if his or her duties to the Bank
also impose duties on, or otherwise involve services by, him or her to the plan
or to participants in or beneficiaries of the plan. Director includes, unless
the context requires otherwise, the estate or personal representative of a
Director.
(C) "Disinterested Director" means a Director who, at the time of a vote
referred to in Section 3(C) or a vote or selection referred to in Section 4(B),
4(C) or 7(A) is not: (i) a party to the proceedings; or (ii) an individual who
is a party to a proceeding having a familial, financial, professional, or
employment relationship with the Director whose indemnification or advance for
expenses is the subject of the decision being made with respect to the
proceeding, which relationship would, in the circumstances, reasonably be
expected to exert an influence on the Director's judgement when voting on the
decision being made.
(D) "Employee" means an individual who is or was an employee of the Bank or an
individual who, while an employee of the Bank, is or was serving at the Bank's
request as a director, officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint venture, gust, employee
benefit plan, or other enterprise. An Employee is considered to be serving an
employee benefit plan at the Bank's request if his or her duties to the Bank
also imposes duties on, or otherwise involves services by, him or her to the
plan or to participants in or beneficiaries of the plan. Employee includes,
unless the context requires otherwise, the estate or personal representative of
an Employee.
(E) "Expenses" includes counsel fees.
(F) "Liability" means the obligation to pay a judgment, settlement, penalty, one
(including an excise tax assessed with respect to an employee benefit plan), or
reasonable expenses incurred with respect to a proceeding.
(G) "Officer" means an individual who is or was art officer of the Bank,
including an assistant officer, or an individual who, while an officer of the
Bank, is or was serving at the Bank's request as a director, officer, partner,
trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other entity. An
Officer is considered to be serving an employee benefit plan at the Bank's
request if his or her duties to the Bank also impose duties on, or otherwise
involve services by, him or her to the plan or to participants in or
beneficiaries of the plan. Officer includes, unless the context requires
otherwise, the estate or personal representative of an Officer.
(H) "Official Capacity" means: (i) when used with respect to a director, the
office of a director in a corporation; and (ii) when used with respect to an
officer, the office in a corporation held by the officer. Official Capacity does
not include service for any other domestic or foreign corporation or any
partnership, joint venture, trust, employee benefit plan, or other entity.
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(I) "Party" means an individual who was, is, or is threatened to be made, a
named defendant or respondent in a proceeding.
(J) "Proceeding" means any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative and whether formal or informal.
Section 2. BASIC INDEMNIFICATION ARRANGEMENT. (A) Except as provided in
subsections 2(D) and 2(E) below and, if required by Section 4 below, upon a
determination pursuant to Section 4 in the specific case that such
indemnification is permissible in the circumstances under this subsection
because the individual has met the standard of conduct set forth in this
subsection (A), the Bank shall indemnify an individual who is made a party to a
proceeding because he or she is or was a Director or Officer against liability
incurred by him or her in the proceeding if he or she conducted himself or
herself in good faith and, in the case of conduct in his ox her official
capacity, he or she reasonably believed such conduct was in the best interest of
the Bank, or in all other cases, he or sloe reasonably believed such conduct was
at least not opposed to the best interests of the Bank and, in the case of any
criminal proceeding, he or she bad no reasonable cause to believe the conduct
was unlawful.
(B) A person's conduct with respect to an employee benefit plan for a purpose he
or she believes in good faith to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirement of
subsection 2(A) above.
(C) The termination of a proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, is not, of
itself, determinative that the proposed indemnitee did not meet the standard of
conduct set forth in subsection 2(A) above.
(D) The Bank shall not indemnify a person under this Article (i) in connection
with a proceeding by or in the right of the Bank, except for reasonable expenses
incurred in connection with the proceeding if it is determined that such person
has met the relevant standard of conduct under this Section, or (ii) with
respect to conduct for which such person was adjudged liable on the basis that
personal benefit was improperly received by him or her, whether or not involving
action in his official capacity.
SECTION 3. ADVANCES FOR EXPENSES. (A) The Bank may advance funds to pay for or
reimburse the reasonable expenses incurred by a Director or Officer who is a
party to a proceeding because he or she is a Director or Officer in advance of
final disposition of the proceeding if (i) such person furnishes the Bank a
written affirmation of his or her good faith belief that he or she has met the
relevant standard of conduct set forth in subsection 2(A) above or that the
proceeding involves conduct for which liability has been eliminated under the
Bank's Articles of Incorporation; and (ii) such person furnishes the Bank a
written undertaking meeting the qualifications set forth below in subsection
3(B), executed personally or on his or her behalf, to repay any funds advanced
if it is ultimately determined that he or she is not entitled to any
indemnification under this Article or otherwise.
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(B) The undertaking required by subsection 3(A)(ii) above must be an unlimited
general obligation of the Director or Officer but need not be secured and shall
be accepted without reference to financial ability to make repayment.
(C) Authorizations under this Section shall be made: (i) by the Board of
Directors (a) when there are two or more Disinterested Directors, by a majority
vote of all Disinterested Directors (a majority of whom shall for such purpose
constitute a quorum) or by a majority of the members of a committee of two or
more Disinterested Directors appointed by such a vote; or (b) when there are
fewer than two Disinterested Directors, by a majority of the Directors present
in a meeting in which Directors who do not qualify as Disinterested Directors
may participate; or (ii) by the shareholder.
SECTION 4. AUTHORIZATION OF AND DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(A) The Bank shall not indemnify a Director or Officer under Section 2 above
unless authorized thereunder and a determination has been made for a specific
proceeding that indemnification of such person is permissible in the
circumstances because he or she has met the relevant standard of conduct set
forth in subsection 2(A) above; provided, however, that regardless of the result
or absence of any such determination, to the extent that a Director or Officer
has been wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he or she was a party because he or she is or was a Director
or Officer, the Bank shall indemnify such person against reasonable expenses
incurred by him or her in connection therewith.
(B) The determination referred to in subsection 4(A) above shall be made (i) if
there are two or more Disinterested Directors, by a majority vote of all the
Disinterested Directors (a majority of whom shall for such purpose constitute a
quorum) or by a majority of the members of a committee of two or more
Disinterested Directors appointed by such a vote; (ii) by special legal counsel
(1) selected by the Board of Directors or its committee in the manner prescribed
in subdivision (i), or (2) if there are fewer than two Disinterested Directors,
selected by the Board of Directors (in which selection Directors who do not
qualify as Disinterested Directors may participate); or (iii) by the
shareholder; but shares owned by or voted under the control of a Director who at
the time does not qualify as a Disinterested Director may not be voted on the
determination.
(C) Authorization of indemnification or an obligation to indemnify, and
evaluation as to reasonableness of expenses of a Director or Officer in the
specific case shall be made in the same manner as the determination that
indemnification is permissible, as described in subsection 4(B) above, except
that if there ate fewer than two Disinterested Directors or if the determination
is made by special legal counsel, authorization of indemnification and
evaluation as to reasonableness of expenses shall be made by those entitled
under subsection 4(B)(ii)(2) above to select counsel.
(D) The Board of Directors, a committee thereof, or special legal counsel acting
pursuant to subsection (B) above or Section 5 below, shall act expeditiously
upon an application for indemnification or advances, and cooperate in the
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procedural steps requited to obtain a judicial determination under Section 5
below.
(E) The Bank may, by a provision in its Articles of Incorporation or Bylaws or
in a resolution adopted or a contract approved by its Board of Directors or
shareholder, obligate itself in advance of the act or omission giving rise to a
proceeding to provide indemnification or advance funds to pay for or reimburse
expenses consistent with this part. Any such obligatory provision shall be
deemed to satisfy the requirements referred to in Section 3(C) or Section 4(C).
SECTION 5. COURT-ORDERED INDEMNIFICATION AND ADVANCES FOR EXPENSES. A Director
or Officer who is a party to a proceeding because he or she is a Director or
Officer may apply for indemnification or advances for expenses to the court
conducting the proceeding or to another court of competent jurisdiction. After
receipt of an application and after giving any notice it considers necessary,
the count shall order indemnification or advances for expenses if it determines
that: (i) the Director is entitled to indemnification under this part; or (ii)
in view of all the relevant circumstances, it is fair and reasonable to
indemnify the Director or Officer or to advance expenses to the Director or
Officer, even if the Director or Officer has not met the relevant standard of
conduct set forth in subsection 2(A) above, failed to comply with Section 3, or
was adjudged liable in a proceeding referred to in subsections (i) or (ii) of
Section 2(D), but if the Director or Officer was adjudged so liable, the
indemnification shall be limited to reasonable expenses incurred in connection
with the proceeding, unless the Articles of Incorporation of the Bank or a
Bylaw, contract or resolution approved or ratified by the shareholder pursuant
to Section 7 below provides otherwise.
If the court determines that the Director or Officer is entitled to
indemnification or an advance for expenses, it may also order the Bank to pay
the Director's or Officer's reasonable expenses to obtain court-ordered
indemnification or advance for expenses.
SECTION 6. INDEMNIFICATION OF OFFICERS AND EMPLOYEES. (A) Unless the Bank's
Articles of Incorporation provide otherwise, the Bank shall indemnify and
advance expenses under this Article to an employee of the Bank who is not a
Director or Officer to the same extent, consistent with public policy, as to a
Director or Officer.
(B) The Bank may indemnify and advance expenses under this Article to an officer
of the Bank who is a party to a proceeding because he or she is an Officer of
the Bank: (i) to the same extent as a Director; and (ii) if he is not a
Director, to such further extent as may be provided by the Articles of
Incorporation, the Bylaws, a resolution of the Board of Directors, or contract
except for liability arising out of conduct that is enumerated in subsections
(A)(i) through (A)(iv) of Section 7. The provisions of this Section shall also
apply to an Officer who is also a director if the sole basis on which rte or she
is made a party to the proceeding is an act or omission solely as an Officer.
SECTION 7. SHAREHOLDER APPROVED INDEMNIFICATION. (A) If authorized by the
Articles of Incorporation or a Bylaw, contract or resolution approved ox
ratified by shareholder of the Bank, the Bank may indemnify or obligate itself
to indemnify a person made a party to a proceeding, including a proceeding
-11-
brought by or in the right of the Bank, without regard to the limitations in
other sections of this Article, but shares owned or voted under the control of a
Director who at the time does not qualify as a Disinterested Director with
respect to any existing or threatened proceeding that would be covered by the
authorization may not be voted on the authorization. The Bank shall not
indemnify a person under this Section 7 for any liability incurred in a
proceeding in which the person is adjudged liable to the Bank or is subjected to
injunctive relief in favor of the Bank: (i) for any appropriation, in violation
of his duties, of any business opportunity of the Bank; (ii) for acts or
omissions which involve intentional misconduct or a knowing violation of law;
(iii) for the types of liability set forth in Section 14-2-832 of the Georgia
Business Corporation Code; or (iv) for any transaction from which he or she
received an improper personal benefit.
(B) Where approved or authorized in the manager described in subsection 7(A)
above, the Bank may advance or reimburse expenses incurred in advance of final
disposition of the proceeding only if (i) the proposed indemnitee furnishes the
Bank a written affirmation of his good faith belief that his or her conduct does
not constitute behavior of the kind described in subsection 7(A)(i)-(iv) above;
and (ii) the proposed indemnitee furnishes the Bank a written undertaking,
executed personally, or on his or her behalf, to repay any advances if it is
ultimately determined that he or she is not entitled to indemnification.
SECTION 8. LIABILITY INSURANCE. The Bank may purchase and maintain insurance on
behalf of an individual who is a Director, Officer, Employee, or agent of the
Bank or who, while a director, officer, employee, or agent of the Bank, is or
was sewing at the request of the Bank as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other entity against liability
asserted against or incurred by him in that capacity or arising from his status
as a director, officer, employee, or agent, whether or not the Bank would have
power to indemnify him against the same liability under Section 2 or Section 3
above.
SECTION 9. WITNESS FEES. Nothing in this Article shall limit the Bank's power to
pay or reimburse expenses incurred by a person in connection with his appearance
as a witness in a proceeding at a time when he is not a party.
SECTION 10. REPORT TO SHAREHOLDERS. If the Bank indemnifies or advances expenses
to a Director in connection with a proceeding by or in the right of the Bank,
the Bank shall report the indemnification or advance, in writing, to the
shareholder.
SECTION 11. SEVERABILITY. In the event that any of the provisions of this
Article (including any provision within a single section, subsection, division
or sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions of this Article shall remain
enforceable to the fullest extent permitted by law.
SECTION 12. INDEMNIFICATION NOT EXCLUSIVE. The rights of indemnification
provided in this Article VII shall be in addition to any rights which any such
Director, Officer, Employee or other person may otherwise be entitled by
contract or as a matter of law.
-12-
ARTICLE VIII
AMENDMENTS OF BYLAWS
SECTION 1. AMENDMENTS. The Board of Directors shall have the power to alter,
amend or repeal the Bylaws or adopt new Bylaws, but any Bylaws adopted by the
Board of Directors may be altered, amended or repealed and new Bylaws adopted by
the shareholder. Action by the Directors with respect to the Bylaws shall be
taken by an affirmative vote of a majority of all of the Directors then elected
and serving, unless a greater vote is required by law, the Articles of
Incorporation or these Bylaws.
ARTICLE IX
EMERGENCY TRANSFER OF RESPONSIBILITY
SECTION 1. EMERGENCY DEFINED. In the event of a national emergency threatening
national security or a major disaster declared by the President of the United
States or the person performing his functions, which directly or severely
affects the operations of the Bank, the officers and employees of the Bank will
continue to conduct the affairs of the Bank under such guidance from the
Directors as may be available except as to matters which by law or regulation
require specific approval of the Board of Directors and subject to conformance
with any applicable laws, regulations, and governmental directives during the
emergency.
SECTION 2. OFFICERS PRO TEMPORE. The Board of Directors shall have the power, in
the absence or disability of any officer, or upon the refusal of any officer to
act as a result of said national emergency directly and severely affecting the
operations of the Bank, to delegate and prescribe such officer's powers and
duties to any other officer, or to any Director.
In the event of a national emergency or state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Bank by
its Directors and officers as contemplated by the Bylaws, any two or more
available members or alternate members of the then incumbent Executive Committee
shall constitute a quorum of such Committee for the full conduct and management
of the Bank in accordance with the provisions of Articles II and III of the
Bylaws. If two members or alternate members of the Executive Committee cannot be
expeditiously located, then three available Directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Bank until the then remaining Board can be convened. These
provisions shall be subject to implementation by resolutions of the Board of
Directors passed from time to time, and any provisions of the Bylaws (other than
this Section) and any resolutions which are contrary to the provisions of this
Section or the provisions of any such implementary resolutions shall be
suspended until it shall be determined by any such interim Executive Committee
acting under this Section that it shall be to the advantage of this Corporation,
to resume the conduct and management of its affairs and business under all of
the other provisions of these Bylaws.
SECTION 3. Officer Succession. If, in the event of a national emergency or
disaster which directly and severely affects the operations of the Bank, the
Chief Executive Officer cannot be located expeditiously or is unable to assume
-13-
or to continue normal duties, then the authority and duties of the office shall
be automatically assumed, without Board of Directors action, in order of title,
and subject only to willingness and ability to serve, by the Chairman of the
Board, President, Vice Chairman, Executive Vice President, Senior Vice
President, Vice President, Corporate Secretary or their successors in office at
the time of the emergency or disaster. Where two or more officers hold
equivalent titles and are willing and able to serve, seniority in title controls
initial appointment. If, in the same manner, the Corporate Secretary or
Treasurer cannot be located or is unable to assume or continue normal duties,
the responsibilities attached thereto shall, in like manner as described
immediately above, be assumed by any Executive Vice President, Senior Vice
President, or Vice President. Any officer assuming authority and position
hereunder shall continue to serve until the earlier of his resignation or the
elected officer or a more senior officer shall become available to perform the
duties of the position of Chief Executive Officer, Corporate Secretary, or
Treasurer.
SECTION 4. CERTIFICATION OF AUTHORITY. In the event of a national emergency or
disaster that directly and severely affects the operations of the Bank, anyone
dealing with the Bank shall accept a certification by the Corporate Secretary or
any three officers that a specified individual is acting as Chairman of the
Board, Chief Executive Officer, President, Corporate Secretary, or Treasurer, in
accordance with these Bylaws; and that anyone accepting such certification shall
continue to consider it in force until notified in writing of a change, such
notice of change to carry the signature of the Corporate Secretary or three
officers of the Bank.
SECTION 5. ALTERNATIVE LOCATIONS. In the event of a national emergency or
disaster which destroys, demolishes, or renders the Bank's offices or facilities
unserviceable, or which causes, or in the judgment of the Board of Directors or
the Executive Committee probably will cause, the occupancy or use thereof to be
a clear and imminent hazard to personal safety, the Bank shall temporarily lease
or acquire sufficient facilities to carry on its business as may be designated
by the Board of Directors, Any temporarily relocated place of business of this
Bank shall be returned to its legally authorized location as soon as practicable
and such temporary place of business shall then be discontinued.
SECTION 6. AMENDMENTS TO ARTICLE IX. At any meeting called in accordance with
Section 2 of this Article IX, the Board of Directors or Executive Committee, as
the case may be, may modify, amend or add to the provisions of this Article IX
so as to make any provision that may be practical or necessary for the
circumstances of the emergency.
-14-
EXHIBIT 5 TO FORM T-1
(INTENTIONALLY OMITTED. NOT APPLICABLE.)
EXHIBIT 6 TO FORM T-1
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, in connection with the proposed issuance of up to $250,000,000 of
the 10% Senior Subordinated Notes due 2008 of Office Depot, Inc., SunTrust Bank
hereby consents that reports of examinations by Federal, State, Territorial or
District Authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
Dated: September __, 2001
SUNTRUST BANK
By: /s/ Holly Lee Arencibia
------------------------------
Holly Lee Arencibia
Vice President
EXHIBIT 7 TO FORM T-1
REPORT OF CONDITION
(ATTACHED)
SUNTRUST BANK Call Date: 12/31/2000 State #: 130330 FFIEC 031
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 00867 RC-1
------------
ATLANTA, GA 30303 Transit #: 61000104 11
------------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 2000
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
C400 <-
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
---- ----------
a. Noninterest-bearing balances and currency and coin (1)------------------------------------- 0081 4,201,310 1.a
----------
b. Interest-bearing balances (2)-------------------------------------------------------------- 0071 18,044 1.b
----------
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)--------------------------------- 1754 0 2.a
----------
b. Available-for-sale securities (from Schedule RC-B, column D)------------------------------- 1773 16,421,141 2.b
----------
3. Federal funds sold and securities purchased under agreements to resell------------------------- 1350 1,691,018 3
----------
4. Loans and lease financing receivables: RCFD
---- ----------
a. Loans and leases, net of unearned income (from Schedule RC-C)--------- 2122 74,068,603 4.a
----------
b. LESS: Allowance for loan and lease losses---------------------------- 3123 857,387 4.b
----------
c. LESS: Allocated transfer risk reserve-------------------------------- 3128 0 4.c
----------
d. Loans and leases, net of unearned income, RCFD
---- ----------
allowance, and reserve (item 4.a minus 4.b and 4.c)---------------------------------------- 2125 73,211,216 4.d
----------
5. Trading assets (from Schedule RC-D)------------------------------------------------------------ 3545 160,174 5.
----------
6. Premises and fixed assets (including capitalized leases)--------------------------------------- 2145 1,320,362 6.
----------
7. Other real estate owned (from Schedule RC-M)--------------------------------------------------- 2150 38,828 7.
----------
8. Investments in unconsolidated subsidiaries and associates companies (from Schedule RC-M)------- 2130 0 8.
----------
9. Customers' liability to this bank on acceptances outstanding----------------------------------- 2155 181,584 9.
----------
10. Intangible assets (from Schedule RC-M)--------------------------------------------------------- 2143 598,192 10.
----------
11. Other assets (from Schedule RC-F)-------------------------------------------------------------- 2160 1,686,139 11.
----------
12. Total assets (sum of items 1 through 11)------------------------------------------------------- 2170 99,528,008 12
----------
- -----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
SUNTRUST BANK Call Date: 12/31/2000 State #: 130330 FFIEC 031
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 00867 RC-2
ATLANTA, GA 30303 Transit #: 61000104
-------------
Transmitted to EDS as 0112237 on 01/30/01 at 12:21:40 CST 12
-------------
SCHEDULE RC - CONTINUED
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
13. Deposits: RCON
a. In domestic offices (sum of totals A and C from Schedule RC-E, ---- ----------
part I)----------------------------------------------------------- RCON 2200 59,983,785 13.a
---- ---------- ----------
(1) Noninterest-bearing (1)-------------------------------------- 6631 9,408,546 13.a.1
----------
(2) Interest-bearing--------------------------------------------- 6636 50,575,239 13.a.2
---------- RCFN
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs ---- ----------
(from Schedule RC-E, part II)------------------------------------- RCFN 2200 9,813,349 13.b
---- ---------- ----------
(1) Noninterest bearing------------------------------------------ 6631 0 13.b1
----------
(2) Interest-bearing--------------------------------------------- 6636 9,813,349 RCFD 13.b2
---------- ---- ----------
14. Federal funds purchased and securities sold under agreements to repurchase-------------------- 2800 10,844,120 14
RCON ----------
---- ----------
15. a. Demand notes issued to the U.S. Treasury-------------------------------------------------- 2840 593,425 15.a
RCFD ----------
---- ----------
b. Trading liabilities (from Schedule RC-D--------------------------------------------------- 3548 0 15.b
----------
16. Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):
----------
a. With a remaining maturity of one year or less--------------------------------------------- 2232 1,594,961 16.a
----------
b. With a remaining maturity of more than one year through three years----------------------- A547 2,995,702 16.b
----------
c. With a remaining maturity of more than three years---------------------------------------- A548 1,187,905 16.c
----------
17. Not applicable
----------
18. Bank's liability on acceptances executed and outstanding-------------------------------------- 2920 181,584 18
----------
19. Subordinated notes and debentures(2)---------------------------------------------------------- 3200 1,068,000 19
----------
20. Other liabilities (from Schedule RC-G)-------------------------------------------------------- 2930 2,496,493 20
----------
21. Total liabilities (sum of items 13 through 20)------------------------------------------------ 2948 90,759,324 21
----------
22. Not applicable
EQUITY CAPITAL
----------
23. Perpetual preferred stock and related surplus------------------------------------------------- 3838 0 23
----------
24. Common stock---------------------------------------------------------------------------------- 3230 21,600 24
----------
25. Surplus (exclude all surplus related to preferred stock)-------------------------------------- 3839 2,505,472 25
----------
26. a. Undivided profits and capital reserves---------------------------------------------------- 3632 5,135,292 26.a
----------
b. Net unrealized holding gains (losses) on available-for-sale securities-------------------- 8434 1,106,320 26.b
----------
c. Accumulated net gains (losses) on cash flow hedges---------------------------------------- 4336 0 26.c
----------
27. Cumulative foreign currency translation adjustments------------------------------------------- 3284 0 27
----------
28. Total equity capital (sum of items 23 through 27)--------------------------------------------- 3210 8,768,684 28
----------
29. Total liabilities and equity capital (sum of items 21 and 28)--------------------------------- 3300 99,528,008 29
----------
MEMORANDUM
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the most RCFD NUMBER
comprehensive level of auditing work performed for the bank by independent external auditors as ---- ---------
of any date during 1999----------------------------------------------------------------------- 6724 N/A M.1
---------
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company (but external auditors
not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in accordance 8 = No external audit work
with generally auditing standards by a certified
public accounting firm (may be required by state chartering
authority)
- -----------------
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
(2) Includes limited-life preferred stock and related surplus.
EXHIBIT 8 TO FORM t-1
(INTENTIONALLY OMITTED. NOT APPLICABLE)
LETTER OF TRANSMITTAL
OFFICE DEPOT, INC.
Offer to Exchange
10% Senior Subordinated Notes due 2008
(which have been registered under the Securities Act of 1933)
for
10% Senior Subordinated Notes due 2008
(of which an aggregate principal amount of $250,000,000 is outstanding)
Pursuant to the Prospectus dated September __, 2001
The Exchange Agent for the Exchange Offer is:
SUNTRUST BANK
By Registered or Certified Mail: By Overnight Courier or by Hand Delivery:
SunTrust Bank SunTrust Bank
Corporate Trust Department Corporate Trust Department
Attention: Holly Arencibia Attention: Holly Arencibia
Reference: Office Depot Exchange Offer Reference: Office Depot Exchange Offer
777 Brickell Avenue 777 Brickell Avenue
Miami, Florida 33131 Miami, Florida 33131
Facsimile Transmission Number (for Eligible Institutions only):
(305) 579-7017
Telephone Number:
(305) 579-7009
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [Day, Date],
UNLESS EXTENDED (THE DATE AND TIME, AS IT MAY BE EXTENDED, HEREINAFTER THE
"EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
By execution of this Letter of Transmittal, the undersigned
acknowledges receipt of the prospectus dated [Date], 2001 (the "Prospectus") of
Office Depot, Inc., a Delaware corporation (the "Company"), which, together with
this letter of transmittal and the instructions hereto (the "Letter of
Transmittal"), constitutes the Company's offer (the "Exchange Offer") to
exchange $250,000,000 of its 10% Senior Subordinated Notes due 2008 (the "new
notes") for $250,000,000 principal amount of its outstanding 10% Senior
Subordinated Notes due 2008 (the "old notes") upon the terms and subject to the
conditions set forth in the Prospectus. The new notes will be registered in
accordance with the requirements of the Securities Act of 1933, as amended.
Tenders of old notes will be accepted only in authorized denominations of
$1,000.
All of the old notes are currently held in book-entry accounts at DTC
maintained by SunTrust Bank (the "Exchange Agent"), as trustee. To exchange
notes held in book-entry DTC accounts, this Letter of Transmittal need not be
manually executed; Instead, tenders of old notes must be effected in accordance
with the procedures mandated by DTC's Automated Tender Offer Program ("ATOP").
To tender old notes in this manner, the electronic instructions sent to DTC and
transmitted by DTC to the Exchange Agent (the "Agent's Message") must
contain an acknowledgement and agreement that the holder has received and agreed
to be bound by, and make all of the representations in, this Letter of
Transmittal and agrees that the Company may enforce this Letter of Transmittal
against the holder. In all other cases, where notes are not held in book-entry
form at DTC, a Letter of Transmittal must be manually executed and delivered to
the Exchange Agent in the manner set forth on the final page of this Letter of
Transmittal.
By crediting the old notes to the Exchange Agent's account at DTC and
by complying with the applicable ATOP procedures with respect to the tender of
the old notes, including transmission of an Agent's Message, the holder of old
notes acknowledges and agrees to be bound by the terms of this Letter of
Transmittal, and the participant in DTC confirms on behalf of itself and the
beneficial owner(s) of the old notes that all provisions of this Letter of
Transmittal are applicable to it and to the beneficial owner(s) as fully as if
the participant and each beneficial owner had provided the information required
herein and executed and transmitted this Letter of Transmittal to the Exchange
Agent.
Holders of old notes whose certificates for old notes are not
immediately available or who cannot deliver their certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date or
who cannot complete the procedures for book-entry transfer on a timely basis,
may tender their old notes according to the guaranteed deliver procedures
described in "The Exchange Offer - Procedures for Tendering" in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Any questions regarding the Exchange Offer should be addressed to, and
materials relating to the Exchange Offer may be obtained from, the Exchange
Agent.
Delivery of this Letter of Transmittal in a manner or to an address, or
transmission via telegram, telex or facsimile, other than as set forth above
will not constitute a valid delivery to the Exchange Agent.
2
Ladies and Gentlemen:
Subject to the terms of the Exchange Offer, the undersigned hereby
tenders to the Company the principal amount of old notes indicated below.
Subject to, and effective upon, the acceptance for exchange of the principal
amount of old notes tendered in accordance with this Letter of Transmittal, the
undersigned sells, assigns and transfers to, or upon the order of, the Company
all right, title and interest in and to the old notes tendered hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent its
agent and attorney-in-fact with respect to the old notes with full power of
substitution to (i) deliver certificates for the old notes to the Company, or
transfer ownership of the old notes on the account books maintained by DTC,
together, in any case, with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Company and (ii) present the old
notes for transfer on the books of the Company and receive all benefits and
otherwise exercise all rights of beneficial ownership of the old notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, exchange, sell, assign and transfer the old notes
tendered hereby and that the Company will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim or proxy when the same are
acquired by the Company. The undersigned also acknowledges that this Exchange
Offer is being made in reliance on an interpretation by the staff of the U.S.
Securities and Exchange Commission, as set forth in no-action letters to third
parties, that the new notes issued in exchange for the old notes pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by
holders thereof (other than any holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that (i) the new notes are acquired in the ordinary course of the
holders' business and (ii) the holders are not, do not intend to, and have no
arrangement with any person to participate in the distribution of the new notes.
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of new notes.
If the undersigned is a broker-dealer that will receive new notes for its own
account in exchange for old notes, the undersigned represents that the old notes
were acquired as a result of market-making activities and acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of the new notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The undersigned represents that (i) the new notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of the
person receiving the new notes, whether or not that person is the undersigned,
(ii) neither the undersigned holder of old notes nor any other person has an
arrangement or understanding with any person to participate in the distribution
of the new notes, (iii) if the undersigned is not a broker-dealer, or is a
broker-dealer but will not receive new notes for its own account in exchange for
old notes, neither the undersigned nor any other person is engaged in or intends
to participate in the distribution of new notes and (iv) neither the undersigned
nor any other person is an "affiliate" of the Company within the meaning of Rule
405 of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment and transfer of the old notes tendered
hereby.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered old notes when, as and if the Company has given
written notice thereof to the Exchange Agent. If any tendered old notes are not
accepted for exchange pursuant to the Exchange Offer for any reason or if old
notes are submitted for a greater principal amount than the holder desires to
exchange, the unaccepted or non-exchanged old notes will be
3
returned or, if applicable, credited by book-entry transfer to the account at
DTC from which they were tendered as promptly as practicable after the
expiration or termination of the Exchange Offer.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation under this Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, successors, and
assigns.
The undersigned understands that tenders of old notes pursuant to the
procedures described under the caption "The Exchange Offer-Procedures for
Tendering Old Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer.
4
The bracketed information is requested but is not required. All other
questions must be answered unless otherwise indicated. Only one offer may be
submitted by or on behalf of each beneficial owner of old notes.
[Name of Beneficial Owner:
-----------------------------------
Contact Person:
-----------------------------------
Address:
-----------------------------------
Telephone:
-----------------------------------
Facsimile: ]
------------------------------------
Principal Amount Tendered
Bond Description CUSIP ISIN Principal Principal Amount Certificate
---------------- ----- ---- Amount Owned Tendered Number(s)
------------ -------- ---------
10% Senior Subordinated
Notes due 2008 676220AC0 US676220AC07 __________ __________ __________
(Rule 144A notes)
10% Senior Subordinated
Notes due 2008 U67518AA5 USU67518AA54 __________ __________ __________
(Regulation S notes)
1. Company Name of Direct Participant in DTC signing:
---------------------
Contact Person:
---------------------
Address:
---------------------
Telephone:
---------------------
Facsimile:
---------------------
2. Name of Clearing System (Euroclear, Clearstream
Banking or DTC) where old notes are held
(if applicable):
---------------------
Account Number at Clearing System
where old notes are held:
---------------------
3. |_| Check here and fill in the name and address for delivery
if you are a broker-dealer and wish to receive 10 additional
copies of the Prospectus and 10 copies of any amendments or
supplements thereto.
Name:
-------------------------------------------
5
Address:
--------------------------------------------
4. |_| Check here if tendered old notes are being delivered by book-
entry transfer to the account maintained by the Exchange Agent
with DTC and complete the following:
Name of Tendering Institution:
---------------------------
DTC Account Number:
---------------------------
Transaction Code Number:
------------------------------------
5. |_| Check here if tendered notes are enclosed herewith.
6. |_| Check here and enclose a photocopy of the Notice of
Guaranteed Delivery if the tendered old notes are being
delivered pursuant to a Notice of Guaranteed Delivery
previously sent to the Exchange Agent, and complete the
following:
Name(s) of Registered Holder(s):
---------------------------
Window Ticket Number (if any):
---------------------------
Date of Execution of Notice of
Guaranteed Delivery:
---------------------------
Name of Eligible Institution
that Guaranteed Delivery:
---------------------------
6
PLEASE SIGN HERE
This Letter of Transmittal must be signed by the holder(s) of the old
notes exactly as its name(s) appears(s) on a security position listing it as the
owner of old notes. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, the person must set forth his or her full title below
under "Capacity" and submit evidence satisfactory to the Company of the person's
authority to so act. See Instruction 3 herein.
x Date:
------------------------------------------ ----------------------------
x Date:
------------------------------------------ ----------------------------
Signature(s) of Holder(s) or
Authorized Signatory
Name(s): Address:
---------------------------- -------------------------
(Please print) (including zip code or
postal code)
Capacity(ies): Telephone:
----------------------------- -----------------------
Taxpayer Identification No(s):
-----------------------
SIGNATURE GUARANTEE
Signature Guaranteed by an Eligible Institution:
------------------------------
Title:
---------------------------
Name of Firm:
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Dated:
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7
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Delivery of this Letter of Transmittal and Old Notes. The method of
delivery of this Letter of Transmittal, the tendered old notes, and all other
required documents to the Exchange Agent is at the election and risk of the
holders and, except as otherwise provided below, the delivery will be deemed
made only when actually received by the Exchange Agent or credited to the
Exchange Agent's account at DTC in the case of electronically delivered old
notes. Holders may request their respective brokers, dealers, commercial banks,
trust companies or nominees to effect tenders on their behalf. Certificates for
all physically tendered old notes, or book-entry confirmation, as the case may
be, as well as a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) or Agent's Message, and any other documents required by this
Letter, must be received by the Exchange Agent at the address set forth herein
on or prior to the Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedures set forth below. Instead of delivery by mail, we
recommend you use an overnight or hand delivery service. In all cases, you
should allow sufficient time to assure timely delivery. Do not send any Letter
of Transmittal or old notes to the Company.
Holders of old notes whose certificates for old notes are not
immediately available or who cannot deliver their certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date or
who cannot complete the procedures for book-entry transfer on a timely basis,
may tender their old notes according to the guaranteed delivery procedures
described in "The Exchange Offer - Procedures for Tendering" in the Prospectus.
Pursuant to those procedures, (i) the tender must be made through a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (any of the foregoing, an "Eligible Institution"), (ii) prior to the
Expiration Date, the Exchange Agent must receive from the Eligible Institution a
properly completed and duly executed Letter (or facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of old notes, the certificate number or numbers of the old
notes and the principal amount at maturity of the old notes tendered, stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange trading days after the Expiration Date, the Letter (or
facsimile thereof), together with the certificate or certificates representing
the old notes to be tendered in proper form for transfer, or book-entry
confirmation, as the case may be, and any other documents required by this
Letter, will be deposited by the Eligible Institution with the Exchange Agent,
and (iii) the properly completed and executed Letter (or facsimile thereof),
together with the certificate or certificates representing all tendered old
notes in proper form for transfer, or book-entry confirmation, as the case may
be, and all other documents required by this Letter are received by the Exchange
Agent within three New York Stock Exchange Trading Days after the Expiration
Date.
For the purposes of the Exchange Offer, the term "holder" includes any
participant in DTC named in a securities position listing as a holder of old
notes. Only a holder of record may tender old notes in the Exchange Offer. Any
beneficial owner of old notes who wishes to tender some or all of the old notes
should arrange with DTC, a DTC participant or the record owner of the old notes
to execute and deliver this Letter of Transmittal or to send an Agent's Message
effecting a book-entry transfer on his or her behalf.
2. Partial Tenders. If you are tendering less than all of the old notes
evidenced by a submitted certificate, you should fill in the aggregate principal
amount of old notes to be tendered in the box above entitled "Principal Amount
Tendered." Tenders of old notes will be accepted only in integral multiples of
$1,000. We will consider all of your old notes to have been tendered unless you
otherwise indicate in this box.
3. Withdrawal of Tendered Old Notes. A tender pursuant to the Exchange
Offer may be withdrawn prior to the Expiration Date. To be effective with
respect to the tender of old notes, a notice of withdrawal must: (i) be received
by the Exchange Agent before the Expiration Date; (ii) specify the name of the
person who deposited the old notes to be withdrawn; (iii) contain a description
of the old notes to be withdrawn, the certificate numbers shown on the
particular certificates evidencing the old notes and the principal amount at
maturity of the old notes represented by the certificates; and (iv) be signed by
the holder in the same manner as the original signature on this Letter
(including any required signature guarantee). The Exchange Agent will return the
properly withdrawn old notes promptly following receipt of the notice of
withdrawal. If old notes have been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at the book-entry transfer facility to be credited with the
withdrawn old notes or otherwise comply with the book-entry transfer facility's
procedures. All questions as to the validity of notices of withdrawal, including
the time of receipt, will be determined by the Company, and such determination
will be final and binding on all parties.
4. Signatures. If this Letter of Transmittal (or copy hereof) is signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
those persons should indicate the capacity in which they are signing, and unless
waived by the Company, those persons should submit evidence satisfactory to the
Company of their authority to act in the stated capacity together with this
Letter of Transmittal. If this Letter of Transmittal is signed by the registered
holder of the old notes tendered hereby, the signature must correspond exactly
with the name as written on the face of the certificates without alteration,
enlargement or any change whatsoever.
If any tendered old notes are owned of record by two or more joint
owners, all owners must sign this Letter.
If any tendered old notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder (which term, for
the purposes described herein, shall include the book-entry transfer facility
whose name appears on a security listing as the owner of the old notes) of the
old notes specified herein and tendered hereby, no endorsements of certificates
or separate bond powers are required. If, however, the new notes are to be
issued to a person other than the registered holder, then endorsements of any
certificates transferred hereby or separate bond powers are required, and in
that case, signatures on the certificate(s) must be guaranteed by an Eligible
Institution.
If this Letter is signed by a person other than the registered holder
or holders of any old notes specified therein, the certificate(s) must be
endorsed by the registered holder(s) or accompanied by separate written
instruments of transfer or endorsed in blank by the registered holder(s) in form
satisfactory to the Company and duly executed by the registered holder, in
either case signed exactly as the registered holder's or holders' name or names
appear(s) on the old notes.
5. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of old notes pursuant to the Exchange Offer, but will
not pay transfer taxes with respect to any other transfer.
6. Waiver of Conditions. The Company reserves the absolute right to
amend, waive, or modify specified conditions in the Exchange Offer in the case
of any old notes tendered.
7. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or old
notes will be resolved by the Company, whose determination will be final and
binding. The Company reserves the absolute right to reject any or all Letters of
Transmittal or tenders that are not in proper form or the acceptance of which
would, in the opinion of the Company's counsel, be unlawful.
The Company also reserves the absolute right to waive any irregularities or
conditions of tender as to the particular old notes covered by any Letter of
Transmittal or tendered pursuant to the Letter of Transmittal. None of the
Company, the Exchange Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any notification. The Company's interpretation of the terms
and conditions of the Exchange Offer shall be final and binding.
8. Backup Withholding. Federal income tax law generally requires that a
tendering holder whose old notes are accepted for exchange must provide the
Company (as payor) with the holder's correct Taxpayer Identification Number
("TIN") on Substitute Form W-9 below, or otherwise establish a basis for
exemption from backup withholding. If the holder is an individual, the TIN is
his or her social security number. If the Company is not provided with a TIN or
an adequate basis for an exemption, the tendering holder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, delivery to the
tendering holder of new notes may be subject to backup withholding in an amount
equal to 31% of all reportable payments made after the exchange.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of old notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that the holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has not been notified by the Internal Revenue Service that the holder is subject
to backup withholding as a result of a failure to report all interest and
dividends or (iii) the Internal Revenue Service has notified the holder that the
holder is no longer subject to backup withholding. If the tendering holder of
old notes is a non-resident alien or foreign entity not subject to backup
withholding, the holder must give the Company a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
old notes are in more than one name or are not in the name of the actual owner,
the holder should consult the W-9 Guidelines for information on which TIN to
report. If the holder does not have a TIN, the holder should consult the W-9
Guidelines for instructions on how to apply for a TIN, then check the box in
Part 2 of the Substitute Form W-9, write "Applied For" in lieu of the TIN and
complete the Certificate of Awaiting Taxpayer Identification Number. Note:
checking this box and writing "Applied For" on the form means that the holder
has already applied for a TIN or that the holder intends to apply for a TIN
within the near future. If the holder checks the box in Part 2 of the Substitute
Form W-9 and writes "Applied For" on that form, backup withholding at the rate
of 31% will nevertheless apply to all reportable payments made to the holder. If
the holder furnishes its TIN to the Company within 60 days, however, any amounts
so withheld shall be refunded to the holder.
Backup withholding is not an additional Federal income tax. Rather, the
Federal income tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
9. Incorporation of Letter of Transmittal. This Letter of Transmittal
shall be deemed to be incorporated by reference in any tender of old notes by
any DTC participant effected through procedures established by DTC and, by
virtue of the tender, the participant shall be deemed to have acknowledged and
accepted this Letter of Transmittal on behalf of itself and the beneficial
owners of any old notes tendered.
NOTICE OF GUARANTEED DELIVERY
OFFICE DEPOT, INC.
Offer to Exchange
10% Senior Subordinated Notes due 2008
(which have been registered under the Securities Act of 1933)
for
10% Senior Subordinated Notes due 2008
(of which an aggregate principal amount of $250,000,000 is outstanding)
Pursuant to the Prospectus Dated September ___, 2001
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON,
___________, ___________, 2001, UNLESS EXTENDED (THE DATE AND TIME, AS IT MAY BE
EXTENDED, HEREINAFTER THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery, or a form substantially equivalent
to this form, must be used to accept the Exchange Offer of Office Depot, Inc.
(the "Company") made pursuant to the prospectus dated September ___, 2001 (the
"Prospectus"), if certificates for old notes are not immediately available or if
the procedure for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach SunTrust Bank (the
"Exchange Agent") prior to 5:00 p.m., New York City time, on the Expiration
Date. The Notice of Guaranteed Delivery may be delivered by hand, transmitted by
facsimile transmission, sent by overnight courier or mailed to the Exchange
Agent.
The Exchange Agent for the Exchange Offer is:
SUNTRUST BANK
By Registered or Certified Mail: By Overnight Courier or by Hand Delivery:
SunTrust Bank SunTrust Bank
Corporate Trust Department Corporate Trust Department
Attention: Holly Arencibia Attention: Holly Arencibia
Reference: Office Depot Exchange Offer Reference: Office Depot Exchange Offer
777 Brickell Avenue 777 Brickell Avenue
Miami, Florida 33131 Miami, Florida 33131
Facsimile Transmission Number (for Eligible Institutions only):
(305) 579-7017
Telephone Number:
(305) 579-7009
Delivery of this Notice of Guaranteed Delivery to an address, or
transmission via facsimile to a number, other than as set forth above will not
constitute a valid delivery.
This Notice of Guaranteed Delivery may not be used to guarantee
signatures. If the instructions on any document to be delivered in connection
with the Exchange Offer require the signature thereon to be guaranteed by an
"Eligible Institution," the signature guarantee must appear in the applicable
space provided on the document.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus, the
undersigned hereby tenders to the Company the principal amount of old notes set
forth below pursuant to the guaranteed delivery procedure described in the
Prospectus under "The Exchange Offer-Guaranteed Delivery Procedures."
Principal Amount at Maturity of Old Notes Tendered:* $
--------------------------
Certificate Nos. (if available):
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Aggregate Principal Amount at Maturity of Old Notes Tendered: $
-----------------
If old notes will be delivered by book-entry transfer, provide account number.
Account Number:
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* Must be in denominations of principal amount at maturity of $1,000 and
any integral multiple thereof. See Instruction 2 in the Letter of
Transmittal.
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
Please Sign Here
X
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X
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Signatures(s) of Owner(s) or Authorized Signatory Date
Telephone Number (including area code):
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This Notice of Guaranteed Delivery must be signed by the holder(s) of
old notes as their name(s) appear(s) on certificates for old notes or on a
security position listing, or by person(s) authorized to become registered
holder(s) by endorsement and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, that person must set forth his or her full title below.
Please Print Name(s) and Address(es)
Name(s):
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- --------------------------------------------------------------------------------
Capacity:
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Address(es):
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- --------------------------------------------------------------------------------
GUARANTEE
The undersigned, a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States or an "Eligible Guarantor Institution" within the meaning of Rule 17Ad-15
under the Securities Exchange Act of 1934, hereby guarantees that the
certificates representing the principal amount of old notes tendered hereby in
proper form for transfer, or timely confirmation of a book-entry transfer of the
old notes into the Exchange Agent's account at DTC pursuant to the procedures
set forth in the Prospectus under "The Exchange Offer-Guaranteed Delivery
Procedures," together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof or Agent's Message in lieu thereof) and other
documents required by the Letter of Transmittal in respect to the old notes,
will be deposited with the Exchange Agent at the address set forth above, no
later than three New York Stock Exchange trading days after the Expiration Date.
Name of Firm:
---------------------------- ---------------------------------
Authorized Signature
Address: Name
--------------------------------- -----------------------------
Please Type or Print
- -----------------------------------------
Zip Code
Title:
---------------------------
Area Code and
Telephone Number: Dated:
------------------- ---------------------------
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES
FOR OLD NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
OFFICE DEPOT, INC.
Offer to Exchange
10% Senior Subordinated Notes due 2008
(which have been registered under the Securities Act of 1933)
for
10% Senior Subordinated Notes due 2008
(of which an aggregate principal amount of $250,000,000 is outstanding)
Pursuant to the Prospectus dated September ___, 2001
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [Day],
[Date], 2001, UNLESS EXTENDED (THE DATE AND TIME, AS IT MAY BE EXTENDED,
HEREINAFTER THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M.,
NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
September __, 2001
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We are enclosing herewith the documents identified below relating to
the offer (the "Exchange Offer") by Office Depot, Inc., a Delaware corporation
(the "Company"), to exchange $250,000,000 of its 10% Senior Subordinated Notes
due 2008 (the "new notes") for $250,000,000 aggregate principal amount of its
outstanding 10% Senior Subordinated Notes due 2008 (the "old notes") upon the
terms and subject to the conditions set forth in the Prospectus dated September
__, 2001 and the related Letter of Transmittal.
Enclosed herewith are copies of the following documents:
1. Prospectus;
2. Letter of Transmittal;
3. Instruction to Registered Holder from Beneficial Owner;
4. Letter that may be sent to your clients for whose account you hold
old notes registered in your name or the name of your nominee, to accompany the
instruction form referenced above, for obtaining the clients' instructions with
regard to the Exchange Offer;
5. Notice of Guaranteed Delivery; and
6. Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
We urge you to contact your clients promptly. Please note that the
Exchange Offer will expire at 5:00 p.m., New York City time, on September __,
2001 unless extended by the Company in its sole discretion.
The Exchange Offer is not conditioned upon any minimum number of old
notes being tendered.
Pursuant to the Letter of Transmittal, each holder of old notes will
represent to the Company that (i) any new notes acquired pursuant to the
Exchange Offer will be obtained in the ordinary course of business of the person
receiving the new notes, whether or not the person is the holder, (ii) neither
the holder of old notes nor any other person has an arrangement or understanding
with any person to participate in the distribution of the new notes, (iii) if
the holder is not a broker-dealer, or is a broker-dealer but will not receive
new notes for its own account in exchange for old notes, neither the holder nor
any other person is engaged in or intends to participate in the distribution of
new notes and (iv) neither the holder nor any other person is an "affiliate" of
the Company within the meaning of Rule 405 of the Securities Act of 1933, as
amended (the "Securities Act") or, if the holder is an affiliate, that the
holder will comply with the registration and prospectus delivery requirements of
the Securities Act to the extent applicable. By so acknowledging that it will
deliver and by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of new notes, the undersigned is
not deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The enclosed Instruction to Registered Holder from Beneficial Owner
contains an authorization by the beneficial owner of the old notes for you to
make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer
or to any other persons (other than SunTrust Bank, a Georgia banking corporation
(the "Exchange Agent") for the Exchange Offer) in connection with the
solicitation of tenders of old notes pursuant to the Exchange Offer. The Company
will pay all transfer taxes, if any, applicable to the exchange of old notes
pursuant to the Exchange Offer, on the transfer of old notes to it. The Company
will not pay any transfer taxes payable with respect to any transfer of notes,
other than for transfers to the Company pursuant to the Exchange Offer.
Any questions regarding the Exchange Offer should be addressed to, and
additional copies of the enclosed materials may be obtained from, the Exchange
Agent (telephone (305) 579-7009, attention: Holly Arencibia).
Very truly yours,
Office Depot, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY, THE EXCHANGE AGENT OR ANY OTHER
PERSON, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF THE COMPANY OR THE EXCHANGE AGENT IN CONNECTION WITH THE
EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED HEREIN.
-2-
OFFICE DEPOT, INC.
Offer to Exchange
10% Senior Subordinated Notes due 2008
(which have been registered under the Securities Act of 1933)
for
10% Senior Subordinated Notes due 2008
(of which an aggregate principal amount of $250,000,000 is outstanding)
Pursuant to the Prospectus dated September __, 2001
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [Day],
[Date], 2001, UNLESS EXTENDED (THE DATE AND TIME AS IT MAY BE EXTENDED,
HEREINAFTER THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M.,
NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
September __, 2001
To Our Clients:
Enclosed for your consideration is a prospectus dated September __,
2001 (the "Prospectus") and the related letter of transmittal (the "Letter of
Transmittal") relating to the offer (the "Exchange Offer") of Office Depot,
Inc., a Delaware corporation (the "Company"), to exchange $250,000,000 of its
10% Senior Subordinated Notes due 2008 (the "new notes") for $250,000,000
aggregate principal amount of its outstanding 10% Senior Subordinated Notes due
2008 (the "old notes") upon the terms and subject to the conditions described in
the Prospectus and the Letter of Transmittal.
This material is being forwarded to you as the beneficial owner of the
old notes carried by us in your account but not registered in your name. A
tender of the old notes may only be made by us as the holder of record and
pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to
tender on your behalf the old notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal. We urge you to read the Prospectus and Letter of Transmittal
carefully before instructing us to tender your old notes.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the old notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on September __, 2001, unless extended by the Company. Any
old notes tendered pursuant to the Exchange Offer may be withdrawn at any time
before the Expiration Date.
If you wish to have us tender your old notes, please so instruct us by
completing, executing and returning to us the enclosed instruction form. THE
LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE
USED DIRECTLY BY YOU TO TENDER OLD NOTES.
INSTRUCTION TO REGISTERED HOLDER FROM BENEFICIAL OWNER
To Registered Holder:
The undersigned hereby acknowledge(s) receipt of the prospectus dated
September __, 2001 (the "Prospectus") of Office Depot, Inc., a Delaware
corporation (the "Company"), and accompanying letter of transmittal (the "Letter
of Transmittal") that together constitute the Company's offer (the "Exchange
Offer") to exchange $250,000,000 of its 10% Senior Subordinated Notes due 2008
(the "new notes") for $250,000,000 aggregate principal amount of its outstanding
10% Senior Subordinated Notes due 2008 (the "old notes"). Capitalized terms used
but not defined have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder, as to the action to be
taken by you relating to the Exchange Offer with respect to the old notes held
by you for the account of the undersigned.
The aggregate face amount of the old notes held by you for the account
of the undersigned is (fill in amount):
$ of 10% Senior Subordinated Notes due 2008.*
--------------------------
With respect to the Exchange Offer, the undersigned hereby instructs
you (check the appropriate box):
|_| To TENDER the old notes held by you for the account of the
undersigned (insert principal amount of old notes to be tendered
(if any)):
$ of 10% Senior Subordinated Notes due 2008.
---------------------------
|_| NOT TO TENDER any old notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender old notes held by you for
the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) any
new notes acquired pursuant to the Exchange Offer will be obtained in the
ordinary course of business of the person receiving the new notes, whether or
not that person is the registered holder, (ii) neither the holder of old notes
nor any other person has an arrangement or understanding with any person to
participate in the distribution of new notes, (iii) if the holder is not a
broker-dealer, or is a broker-dealer but will not receive new notes for its own
account in exchange for old notes, neither the holder nor any other person is
engaged in or intends to participate in the distribution of new notes and (iv)
neither the holder nor any other person is an "affiliate" of the Company within
the meaning of Rule 405 of the Securities Act or, if the holder is an affiliate,
that holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable. By so acknowledging
that it will deliver and by delivering a prospectus meeting the requirements of
the Securities Act in connection with any resale of new notes, the undersigned
is not deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
* Unless otherwise indicated, signature(s) hereon by beneficial owner(s) shall
constitute an instruction to the nominee to tender all old notes of the
beneficial owner(s).
SIGN HERE
Name of beneficial owner(s) (please print):
Signature(s):
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Address:
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Telephone (with international dialing code):
Taxpayer Identification or Social Security/Employer Identification Number,
if applicable:
----------------------------------------------------------------
Date:
---------------------------------------------------------------------------
Account Number with Registered Holder:
------------------------------------
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF:
1. An individual's account The individual
2. Two or more individuals The actual owner of the account or, if
(joint account) combined funds, any one of the individuals(1)
3. Husband and wife (joint The actual owner of the account or, if joint
account) funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the minor is the only
account) contributor, the minor(1)
6. Account in the name of The ward, minor, or incompetent person(3)
guardian or committee for a
designated ward, minor or
incompetent person
7. (a) The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
(b) So-called trust account The actual owner(1)
that is not a legal or valid
trust under State law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity (Do not furnish the
pension trust identifying number of the personal
representative or trustee unless the legal
entity itself is not designated in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership The partnership
13. Association, club, or other The organization
tax-exempt organization
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF:
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a State or local government,
school district, or prison)
that receives agricultural
program payments
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security Number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. You may also enter your business name. You may
use your Social Security Number or Employer Identification Number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
OBTAINING A NUMBER
If you do not have a Taxpayer Identification Number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service or by calling 1
(800) TAX-FORM and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
o An organization exempt from tax under Section 501(a), or an
individual retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign
government, or any agency or instrumentality thereof.
o An international organization or any agency, or instrumentality
thereof.
Payees that may be exempt from backup withholding include:
o A corporation.
o A financial institution.
o A registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under Section 584(a).
o An exempt charitable remainder trust, or a non-exempt trust
described in Section 4947(a)(1).
o An entity registered at all times under the Investment Company Act
of 1940.
o A foreign central bank of issue.
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o A middleman known in the investment community as a nominee or who
is listed in the most recent publication of the American Society of
Corporate Secretaries, Inc., Nominee List.
o A futures commission merchant registered with the Commodity Futures
Trading Commission.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
o Payments to nonresident aliens subject to withholding under Section
1441.
o Payments to partnerships not engaged in a trade or business in the
U.S. and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not
paid in money.
o Payments made by certain foreign organizations.
o Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding
include the following:
o Payments of interest on obligations issued by individuals. Note:
You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business
and you have not provided your correct Taxpayer Identification
Number to the payer.
o Payments of tax-exempt interest (including exempt-interest
dividends under Section 852).
o Payments described in Section 6049(b)(5) to non-resident aliens.
o Payments on tax-free covenant bonds under Section 1451.
o Payments made by certain foreign organizations.
o Mortgage interest paid to you.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under Sections 6041, 6041A(a),
6045 and 6050A.
PRIVACY ACT NOTICE-Section 6109 requires most recipients of dividend, interest,
or other payments to give Taxpayer Identification numbers to payers who must
report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
Taxpayer Identification Number to a payer. Certain penalties may also apply.
PENALTIES
(1) Penalty For Failure to Furnish Taxpayer Identification Number. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Information with Respect to Withholding. If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
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