UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Explanatory Note:
As previously disclosed, Party City Holdco Inc. (the “Company”) and certain of its subsidiaries (together with the Company, the “Debtors”) filed voluntary petitions (collectively, the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). On August 31, 2023, the Company filed the Fourth Amended Joint Chapter 11 Plan of Reorganization of Party City Holdco Inc. and Its Debtor Affiliates [Docket No. 1672] (including all exhibits and supplements thereto, the “Plan”).
On September 6, 2023, the Bankruptcy Court entered an order, Docket No. 1711, confirming the Plan (the “Confirmation Order”). The Plan and Confirmation Order were previously filed as Exhibits 99.1 and 2.1, respectively, to the Company’s Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 6, 2023, and are hereby incorporated by reference as Exhibits 2.1 and 99.1 to this Current Report on Form 8-K (this “Current Report”).
On October 12, 2023 (the “Effective Date”), the Plan became effective in accordance with its terms and the Debtors emerged from the Chapter 11 Cases. On the Effective Date, in connection with the effectiveness of, and pursuant to the terms of, the Plan and the Confirmation Order, the Company’s common stock outstanding immediately before the Effective Date was canceled and is of no further force or effect, and the new organizational documents of the Company became effective, authorizing the issuance of shares of common stock representing 100% of the equity interests in the Company (the “New PCHI Shares”). In accordance with the foregoing, on the Effective Date, the Company, as reorganized on the Effective Date in accordance with the Plan, issued the New PCHI Shares and the Second Lien PIK Toggle Notes (as defined below) (collectively, the “New Securities”). The New Securities issued pursuant to the Plan, including the New Securities issued upon the exercise of the Subscription Rights (as defined in the Backstop Agreement (as defined below)) in connection with the Rights Offering (as defined below), all New Securities issued to the Commitment Parties (as defined below) in respect of their commitments under the Backstop Agreement and in connection with the Rights Offering was issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) provided by section 1145 of the Bankruptcy Code and, to the extent such exemption was unavailable, was issued in reliance on the exemption provided by section 4(a)(2) under the Securities Act or another applicable exemption.
Information regarding the assets and liabilities of the Company and its subsidiaries that was filed with the Bankruptcy Court may be found at https://cases.ra.kroll.com/PCHI/Home DocketInfo?DocAttribute=7474&DocAttrName=SCHEDULESSOFA_Q&MenuID=19344&AttributeName=Schedules%20%26%20SOFA and is incorporated herein by reference.
Item 1.01 - Entry into a Material Definitive Agreement
ABL Facility and Intercreditor Agreement
On the Effective Date, pursuant to the terms of the Plan, the Company and certain of its subsidiaries entered into an ABL credit agreement (the “ABL Credit Agreement”), by and among the Company, as a parent guarantor, Party City Holdings Inc., a Delaware corporation, as the parent borrower (the “Parent Borrower”), Party City Corporation, a Delaware corporation, and each other subsidiary of the Borrowers party thereto as a subsidiary borrower from time to time (collectively with the Parent Borrower, the “Borrowers”), PC Intermediate Holdings, Inc. a Delaware corporation, as a parent guarantor (“Holdings”), the other subsidiaries of the Borrowers party thereto from time to time as subsidiary guarantors, the lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (in such capacities, the “ABL Agent”). The ABL Credit Agreement provides for a $545 million senior secured asset-based revolving loan facility (with a $60 million sublimit for the issuance of letters of credit thereunder) (the “ABL Revolving Facility” and the loans outstanding thereunder, the “ABL Revolving Loans”) and a $17,110,500.00 senior secured asset-based first-in last-out loan facility (the “FILO Facility” and the loans outstanding thereunder, the “FILO Loans”; the FILO Facility together with the ABL Revolving Facility, the “ABL Facility”). The ABL Facility is scheduled to mature on October 12, 2028.
All obligations of the Borrowers under the ABL Credit Agreement, certain banking services obligations and certain hedging obligations are unconditionally guaranteed, on a joint and several basis, by the Borrowers, Holdings, the Company, and the material domestic direct and indirect restricted subsidiaries of the Company, subject to certain exceptions and limitations described in the ABL Credit Agreement (each a “Loan Party” and collectively, the “Loan Parties”). All such obligations, including the guarantees of the ABL Facility, are secured by (i) first priority liens on substantially all assets of the Loan Parties, and (ii) the equity interests in the Loan Parties other than the Company, in each case, subject to certain exceptions and limitations described in the ABL Credit Agreement.
The ABL Revolving Loans and the FILO Loans bear interest at a rate per annum equal to the applicable margin plus, at the Borrowers’ option, either: (i) an adjusted term SOFR rate, subject to a floor of 0.00% or (ii) a base rate, subject to a floor of 0.00%, determined as the greatest of (x) the prime loan rate as published in The Wall Street Journal, (y) the federal funds effective rate plus 1⁄2 of 1.00%, and (z) adjusted term SOFR rate for a one-month tenor plus 1.00%. The margin applicable to the loans bearing interest based on the adjusted term SOFR rate equals to: (i) with respect to the ABL Revolving Loans, 4.00% and (ii) with respect to the FILO Loans, 6.00%. The margin applicable to the loans bearing interest based on the base rate equals to: (i) with respect to the ABL Revolving Loans, 3.00% and (ii) with respect to the FILO Loans, 5.00%. The applicable margins are subject to certain specified increases on March 31, 2024 and June 30, 2024 if the Parent Borrower has, as of such date, not yet delivered to the ABL Agent an audited consolidated balance sheet of the Company and its subsidiaries as of the end of the fiscal year ended December 31, 2022. The Borrowers are required to pay interest on overdue principal or interest at the rate equal to 2.00% per annum in excess of the applicable interest rate under the ABL Facility to the extent lawful.
Outstanding loans under the ABL Credit Agreement are subject to an intercreditor agreement by and among the ABL Agent, as the First Priority Representative for the First Priority Secured Parties and Wilmington Savings Fund Society, FSB, as the Second Priority Representative for the Second Priority Secured Parties (in each case, as defined therein) (the “Intercreditor Agreement”). The Intercreditor Agreement provides, among other things, that the liens securing the obligations under the Second Lien PIK Toggle Notes (as defined below) rank junior in priority to the liens securing the obligations under the ABL Credit Agreement.
The Borrowers are required to pay a quarterly commitment fee to each ABL Revolving Lender (as defined in the ABL Credit Agreement), which accrues at a rate per annum equal to 0.50% on the average daily unused portion of such ABL Revolving Lender’s commitments under the ABL Revolving Facility. The Borrowers are also required to pay participation fees and fronting fees with respect to letters of credit participation and issuance.
Borrowings under the ABL Credit Agreement may be used to (i) refinance indebtedness under the prepetition asset-based revolving credit facility and (ii) finance the working capital needs and other general corporate purposes of the Parent Borrower and its subsidiaries. Availability of borrowings of ABL Revolving Loans under the ABL Credit Agreement is subject to the satisfaction of certain conditions, including, after giving effect to any such borrowings, aggregate credit exposure of lenders under the ABL Credit Agreement not exceeding the lesser of the aggregate unblocked commitments and the borrowing base at such time. Borrowings of the FILO Loans are only available on the Effective Date and if repaid or prepaid may not be reborrowed.
Mandatory prepayment of loans under the ABL Credit Agreement is required if the aggregate credit exposure of lenders under the ABL Credit Agreement exceeds the borrowing base at such time. Such a mandatory prepayment would be applied to eliminate the availability shortfall as follows: first, to prepay the ABL Revolving Loans or cash collateralize, backstop or replace letters of credit under the ABL Facility; and second, to prepay the FILO Loans. The loans under the ABL Facility may be voluntarily prepaid without premium or penalty, other than customary breakage costs. Voluntary prepayments of loans under the ABL Credit Agreement are applied to satisfy FILO Loan obligations only after other outstanding loan obligations and letter of credit reimbursement obligations under the ABL Credit Agreement are satisfied. Voluntary prepayments of FILO Loans are additionally subject to the satisfaction of the Payment Conditions discussed below.
The ABL Credit Agreement requires the Borrowers to maintain, at all times, Excess Unadjusted Availability (as defined in the ABL Credit Agreement) of at least the greater of (i) 10.0% of the Total Line Cap (as defined in the ABL Credit Agreement) and (ii) $46 million.
The ABL Credit Agreement contains negative covenants that limit, among other things, the Borrowers’ ability and the ability of their restricted subsidiaries to: (i) incur, assume or guarantee additional indebtedness; (ii) create, incur or assume liens; (iii) make investments; (iv) merge or consolidate with or into any other person or undergo certain other fundamental changes; (v) transfer or sell assets; (vi) pay dividends or distributions on capital stock or redeem or repurchase capital stock; (vii) enter into transactions with certain affiliates; (viii) repay or redeem certain indebtedness; (ix) sell stock of its subsidiaries; or (x) enter into certain burdensome agreements. These negative covenants are subject to a number of important limitations and exceptions. The Borrowers and their restricted subsidiaries can make certain acquisitions, restrictive payments, payments of certain indebtedness and investments if, after giving pro forma effect to such transactions, the “Payment Conditions” (as defined in the ABL Credit Agreement) are met, which include, among other things: (i) 90-Day Excess Availability and Excess Availability (each as defined in the ABL Credit Agreement) are equal to or greater than the greater of (x) 25.0% of the Total Line Cap and (y) $120 million and (ii) the Fixed Charge Coverage Ratio (as defined in the ABL Credit Agreement) is at least 1.00 to 1.00.
Additionally, the ABL Credit Agreement contains other covenants, representations and warranties and events of default that are customary for a financing of this type. Events of default include, among other things, nonpayment of principal or interest, breach of covenants, breach of representations and warranties, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, failure of a collateral document to create an effective security interest in collateral, bankruptcy and insolvency events, cross-default to other material indebtedness, and a change of control. The occurrence of any event of default under the ABL Credit Agreement would permit all obligations under the ABL Facility to be declared due and payable immediately and all commitments thereunder to be terminated.
The foregoing descriptions of the ABL Credit Agreement and the Intercreditor Agreement are qualified in their entirety by the full text of the ABL Credit Agreement and the Intercreditor Agreement which are attached as Exhibits 10.1 and 10.2, respectively, to this Current Report and are incorporated herein by reference.
Second Lien PIK Toggle Notes Indenture
On the Effective Date, the Issuers issued an aggregate principal amount of $232,394,231 of Second Lien PIK Toggle Notes. The Second Lien PIK Toggle Notes are scheduled to mature on January 11, 2029. Interest on the Second Lien PIK Toggle Notes accrues, at a rate of 12.00% per annum, payable, at the Company’s option, either in cash or by increasing the amount of the Second Lien PIK Toggle Notes outstanding (“PIK Interest”). The Company shall pay interest quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing February 15, 2024. Interest on the Second Lien PIK Toggle Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Effective Date. Interest is computed on the basis of a 360-day year of twelve 30-day months. The Company is required to pay interest on overdue installments of interest or premium, if any, without regard to any applicable grace period, at the rate equal to the then applicable interest rate on the Second Lien PIK Toggle Notes to the extent lawful.
As previously reported, on September 1, 2023, the Debtors entered into a backstop commitment agreement (as amended, supplemented or modified from time to time, together with all exhibits and schedules thereto, the “Backstop Agreement”) with the commitment parties thereto (collectively, the “Commitment Parties”). On the Effective Date, pursuant to the Backstop Agreement and in accordance with the Plan, the Company consummated the rights offering (the “Rights Offering”) of an investment package consisting of, in aggregate, $75,000,000 (a portion of the $232,394,231 in aggregate principal amount issued on the Effective Date in aggregate principal amount of the Company’s 12.00% Senior Secured Second Lien PIK Toggle Notes due 2029 (the “Second Lien PIK Toggle Notes”) and 3,634,614 New PCHI Shares at the aggregate purchase price of $75,000,000.
The Second Lien PIK Toggle Notes were issued pursuant to that certain indenture, dated as of the Effective Date (the “Second Lien PIK Toggle Notes Indenture”), by and among the Company, the guarantors party thereto and Wilmington Savings Fund Society, FSB, as trustee, collateral agent, paying agent and registrar.
The Second Lien PIK Toggle Notes are jointly and severally irrevocably and unconditionally guaranteed on a senior secured basis by certain subsidiaries of the Company, including all “Loan Parties” (other than the Company) under
the ABL Credit Agreement. The Second Lien PIK Toggle Notes and such guarantees are secured by second priority liens on the assets subject to liens securing the ABL Facility, including the equity interests of each guarantor of the Second Lien PIK Toggle Notes, all assets owned by the Company as of the Effective Date or acquired thereafter, certain assets related thereto, and substantially all other assets of the Company and such guarantors, in each case, subject to certain exceptions and limitations. The outstanding Second Lien PIK Toggle Notes are subject to the Intercreditor Agreement. The following is a brief description of the material provisions of the Second Lien PIK Toggle Notes Indenture and the Second Lien PIK Toggle Notes.
On or after April 11, 2025, the Company may redeem all of the Second Lien PIK Toggle Notes at 100% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The Company may also redeem the Second Lien PIK Toggle Notes, in whole or in part, at any time and from time to time prior to April 11, 2025 at a redemption price equal to 100% of the principal amount, plus the Applicable Premium (as defined in the Second Lien PIK Toggle Notes Indenture), plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. Notwithstanding the foregoing, if a Change of Control (as defined in the Second Lien PIK Toggle Notes Indenture) occurs, then, within 60 days of such Change of Control, the Company must offer to purchase all outstanding Second Lien PIK Toggle Notes at a redemption price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase.
The Second Lien PIK Toggle Notes Indenture contains covenants that limit, among other things, the ability of the Company and certain of its subsidiaries to: (i) incur, assume or guarantee additional indebtedness; (ii) pay dividends or distributions on capital stock or redeem or repurchase capital stock; (iii) make investments; (iv) repay or redeem junior debt; (v) sell stock of its subsidiaries; (vi) transfer or sell assets; (vii) create, incur or assume liens; or (viii) enter into transactions with certain affiliates. These covenants are subject to a number of important limitations and exceptions.
The Second Lien PIK Toggle Notes Indenture also provides for certain customary events of default, including, among other things, nonpayment of principal or interest, breach of covenants, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, failure of a security document to create an effective security interest in collateral, bankruptcy and insolvency events, and cross acceleration, which would permit the principal, premium, if any, interest and other monetary obligations on all the then outstanding Second Lien PIK Toggle Notes to be declared due and payable immediately.
The foregoing descriptions of the Second Lien PIK Toggle Notes Indenture and the Second Lien PIK Toggle Notes are qualified in their entirety by the full text of the Second Lien PIK Toggle Notes Indenture, including the form of Global Note attached thereto, which is attached as Exhibit 4.1 to this Current Report and is incorporated herein by reference.
Registration Rights Agreement
On the Effective Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain parties who received New PCHI Shares under the Plan (“RRA Shareholders”). Pursuant to the Registration Rights Agreement, following the completion of an initial public offering (as defined in the Registration Rights Agreement, an “IPO”), the Company will file a shelf registration statement promptly, no later than a date that is 30 days following the later of the IPO and the date of the expiration of the lockup agreement with the underwriters in such IPO. However, the Company is not required to file the shelf registration statement unless RRA Shareholders request the inclusion of Registrable Securities (as defined in the Registration Rights Agreement) constituting at least 25% of all Registrable Securities.
The RRA Shareholders also have demand registration rights, provided that such RRA Shareholders request the inclusion of Registrable Securities constituting at least 25% of all Registrable Securities or the gross proceeds of the offering are expected to be at least $50 million, and customary piggyback registration rights.
The Company will generally pay all registration expenses in connection with its obligations under the Registration Rights Agreement, regardless of whether a registration statement is filed or becomes effective. The registration rights granted in the Registration Rights Agreement are subject to customary indemnification and contribution provisions, as well as customary restrictions such as blackout periods.
The foregoing description of the Registration Rights Agreement is not complete and is qualified in its entirety by reference to the Registration Rights Agreement, which is filed as Exhibit 10.3 to this Current Report and is incorporated by reference herein.
Stockholders’ Agreement
On the Effective Date, the Company entered into a stockholders agreement (the “Stockholders Agreement”) with holders of common stock of the Company (the “Stockholders”), pursuant to which each of the Stockholders agreed to certain restrictions on the transfer of the common stock of the Company and the Company agreed (i) to provide to certain Stockholders the right to designate directors of the Board, subject to certain limitations, (ii) to certain limitations and obligations on its operations without Stockholder approval and (iii) to provide certain information to the Stockholders. Pursuant to the Plan, each holder of common stock of the Company on the Effective Date was deemed to be a party to, and bound by, the Stockholders Agreement, regardless of whether such holder executed a signature page thereto.
The foregoing description of the Stockholders Agreement is not complete and is qualified in its entirety by reference to the Stockholders Agreement, which is filed as Exhibit 10.4 to this Current Report and is incorporated by reference herein.
Item 1.02 - Termination of a Material Definitive Agreement
Equity Interests
On the Effective Date, all interests in the Company that existed immediately prior to the Effective Date were cancelled, and the Company issued or caused to be issued the New PCHI Shares in accordance with the terms of the Plan. Pursuant to the Plan, each holder of an Allowed Secured Notes Claim (as defined in the Plan) received, among other things, its pro rata share of 100% of the New PCHI Shares, subject to dilution by the New PCHI Shares issued as DIP Reorganized Securities (as defined in the Plan), the New PCHI Shares issued in connection with the Rights Offering (including in partial satisfaction of the Backstop Commitment Premium (as defined in the Plan)), and the MIP Equity Pool (as defined in the Plan).
Debt Securities and Agreements
Except for the purpose of evidencing a right to a distribution under the Plan or as otherwise provided in the Plan, on the Effective Date, the obligations of the Debtors under the Prepetition ABL Facility (as defined in the Plan), the Secured Notes Indentures (as defined in the Plan), the Unsecured Notes Indentures (as defined the Plan), stock certificates, book entries, and any other certificate, share, note, bond, indenture, purchase right, option, warrant, or other instrument or document, directly or indirectly, evidencing or creating any indebtedness or obligation of or ownership interest in the Debtors giving rise to any claim or interest (except such certificates, notes or other instruments or documents evidencing indebtedness or obligations of, or interests in, the Debtors that are specifically reinstated pursuant to the Plan) were cancelled, and the duties and obligations of all parties thereto were deemed satisfied in full, canceled, released, discharged, and of no force or effect.
Claims Treatment Under the Plan
In accordance with the Plan, holders of claims against and interests in the Debtors received (or shall receive, as soon as reasonably practicable following the date such holder’s claim or interest becomes an Allowed Claim or Interest (each as defined in the Plan)) the following treatment (capitalized terms used but not defined in this section have the meanings ascribed to them in the Plan):
| · | Prepetition ABL Revolver Claims. Each holder of an Allowed Prepetition ABL Revolver Claim voted to accept the Plan and elected to participate in the ABL Exit Facility, and the ABL Exit Facility Trigger occurred, such that (i) each such holder’s Allowed Prepetition ABL Revolver Claims was deemed repaid and refinanced in full by such holder’s extension and receipt of its Pro Rata share of ABL Revolving Credit Loans and (ii) such holder assumed a commitment with respect to the ABL Exit Facility equal to its (or its predecessor in interest’s) commitment under the Prepetition ABL Facility immediately prior to the Petition Date. |
| · | Prepetition ABL FILO Claims. Each holder of an Allowed Prepetition ABL FILO Claim voted to accept the Plan and elected to participate in its Pro Rata share of the ABL Exit Facility, and the ABL Exit Facility Trigger occurred, such that each such holder’s Allowed Prepetition ABL FILO Claims was deemed repaid and refinanced in full by such holder’s extension and receipt of its Pro Rata share of ABL FILO Loans. |
| · | Secured Notes Claims. Each holder of an Allowed Secured Notes Claim received (i) its Pro Rata share of the New PCHI Shares issued on the Effective Date on account of the Allowed Secured Notes Claims, representing 100% of the New PCHI Shares outstanding on the Effective Date, subject to dilution by the New PCHI Shares issued as DIP Reorganized Securities, the New PCHI Shares issued in connection with the Rights Offering (including in partial satisfaction of the Backstop Commitment Premium), and the MIP Equity Pool and (ii) subscription rights to purchase up to its Pro Rata share of the securities comprising the Investment Package for an aggregate purchase price of $75.0 million offered in the Rights Offering in accordance with the Rights Offering Procedures. |
| · | General Unsecured Claims. Each holder of an Allowed General Unsecured Claim received its Pro Rata share of the GUC Recovery Pool. |
| · | Interests in the Company. Holders of Interests in the Company, including the Company’s common stock prior to emergence, received no recovery or distribution on account of such Interests, and upon emergence from Chapter 11, all such Interests in the Company were canceled, released, extinguished, and discharged, and are of no further force or effect. |
Item 2.03 - Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
On the Effective Date, the Company and certain of its subsidiaries, as applicable, entered into certain direct financial obligations under each of the ABL Credit Agreement and Second Lien PIK Toggle Notes Indenture (and the Second Lien PIK Toggle Notes). The descriptions of each of the ABL Credit Agreement and the Second Lien PIK Toggle Notes Indenture (and the Second Lien PIK Toggle Notes) set forth in Item 1.01 of this Current Report are incorporated herein by reference.
Item 3.02 - Unregistered Sales of Equity Securities
Unregistered Sales of Equity Securities
On the Effective Date, pursuant to the Plan:
| · | 36,879 New PCHI Shares were issued pro rata to holders of Secured Notes Claims in partial exchange for the cancellation of the Secured Notes (as defined in the Plan); |
| · | 3,516,079 New PCHI Shares were issued to holders of Secured Notes Claims (or their designees) in exchange for exercising Subscription Rights under the Rights Offering; |
| · | 118,535 New PCHI Shares were issued to certain holders of Secured Notes Claims that purchased in connection with their Backstop Commitments (as defined in the Backstop Agreement), the New PCHI Shares that were offered in the Rights Offering and not properly subscribed for; |
| · | 363,462 New PCHI Shares were issued to certain holders of Secured Notes Claims in exchange for providing $75.0 million of Backstop Commitments to the Debtors in connection with the Rights Offering; and |
| · | 9,339,564 New PCHI Shares were issued to holders of Allowed DIP Claims on account of such holders’ DIP Loans (each as defined in the Plan). |
As of the Effective Date, 13,374,519 New PCHI Shares were issued and outstanding, of which 118,535 New PCHI Shares were issued in transactions not involving an underwriter pursuant to and in accordance with an exemption from registration under the Securities Act. For further information, see the Explanatory Note and Item 1.01 of this Current Report, which are incorporated herein by reference.
Item 3.03 - Material Modifications to Rights of Security Holders
Except as otherwise provided in the Plan and related documentation, all notes, equity, agreements, instruments, certificates and other documents evidencing any claim against or interest in the Debtors (except such certificates, notes or other instruments or documents evidencing indebtedness or obligations of, or interests in, the Debtors that are specifically reinstated pursuant to the Plan) were cancelled on the Effective Date and the obligations of the Debtors thereunder or in any way related thereto were released and discharged. The securities cancelled on the Effective Date include all of the Secured Notes Claims (as defined in the Plan), all of the Unsecured Notes Claims (as defined in the Plan), and Interests. For further information, see the Explanatory Note and Items 1.02 and 5.03 of this Current Report, which are incorporated herein by reference.
Item 5.01 - Changes in Control of Registrant
On the Effective Date, all of the Prepetition ABL Claims (as defined in the Plan), Secured Notes Claims (as defined in the Plan), Unsecured Notes Claims (as defined in the Plan) and Interests (as defined in the Plan) were cancelled. In respect of the cancellation of the Secured Notes Claims and pursuant to the Plan and related documentation, 100% of the New PCHI Shares were issued to holders of the Secured Notes Claims (including for properly subscribed Subscription Rights in connection with the Rights Offering), the Commitment Parties, and the DIP Backstop Lenders (as defined in the Plan). For further information, see Items 1.01, 1.02, 3.02 and 5.02 of this Current Report, which are incorporated herein by reference.
Item 5.02 - Departure of Directors; Election of Directors; Compensatory Arrangements of Certain Officers and Directors
Departure of Officers
On the Effective Date, Mr. Brad Weston provided notice of his intention to resign as Chief Executive Officer (“CEO”) of the Company, effective November 3, 2023. Mr. Sean Thompson, the Company’s current President & Chief Commercial Officer, is expected to assume the role of Interim CEO upon the effectiveness of Mr. Weston’s resignation.
Departure of Directors
In accordance with the Plan, Norman S. Matthews, Joel A. Alsfine, Steven Collins, James Conroy, William S. Creekmuir, Sarah Dodds-Brown, Jennifer Fleiss, John A. Frascotti, and Michelle Millstone-Shroff resigned from the board of directors of the Company (the “Board”) on the Effective Date. There were no known disagreements between such directors and the Company which led to their respective resignations from the Board.
Appointment of Directors
As of the Effective Date, the Board consists of the following five directors who were appointed: Neal Goldman, Robert Hull, Mark King, Anthony Truesdale, and Bradley Weston (the Company’s Chief Executive Officer). The appointments were made pursuant to the terms of the Confirmation Order. Mr. Robert Hull was appointed to serve as Chairman of the Board. Additionally, the Board will have an Audit Committee and Compensation Committee.
There are no other arrangements or understandings between the directors of the Board and any other persons pursuant to which he or she was appointed as a member of the Board. None of the directors of the Board have any family relationship with any director or executive officer of the Company. There is no relationship between any director of the Board and the Company that would require disclosure pursuant to Item 404(a) of Regulation S-K.
Indemnification Agreements
The Company’s COI (as defined below) provides that it will indemnify, to the fullest extent authorized or permitted by applicable law, each of its directors and officers against any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, because of their status as one of its directors or officers. The Board has approved a form of indemnification agreement to be entered into with each person who serves as one of the Company’s directors or officers from time to time in order to provide for, among other things, such indemnification (subject to certain limitations) as well as the advancement of all expenses incurred by the director or executive officer in connection with a legal proceeding arising out of their service to the Company, in each case to the extent permitted by applicable law.
On or around the Effective Date, the Company entered into its standard form of indemnification agreement with each person serving as one of its directors and officers. The Company expects each person who joins the Company as a new director or officer after the Effective Date to enter into the standard form of indemnification agreement promptly after commencing service with the Company. The Company will also maintain reasonable directors and officer’s liability insurance covering each member of the Board and the Company’s officers.
The foregoing description of the Company’s form of indemnification agreement is qualified in its entirety by reference to the full text of form of indemnification agreement, which is filed as Exhibit 10.5 to this Current Report and is incorporated by reference herein.
Item 5.03 - Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
After the Effective Date, in accordance with the Plan, the Company will file the Third Amended and Restated Certificate of Incorporation (the “COI”) with the Delaware Secretary of State.
Pursuant to the COI, the authorized capital stock of the Company consists of 300,000,000 New PCHI Shares, par value $0.01 per share, and 15,000,000 shares of preferred stock, par value $0.01 per share (“New PCHI Preferred Shares”).
Each holder of New PCHI Shares, as such, shall be entitled to one vote for each New PCHI Share held of record by such holder on all matters on which stockholders generally are entitled to vote. Except as otherwise required by law or provided in the COI, at any annual or special meeting of stockholders, the New PCHI Shares shall have the right to vote on all matters properly submitted to a vote of the stockholders.
Subject to the rights of any then-outstanding series of New PCHI Shares, the holders of New PCHI Shares may receive dividends as and if declared by the Board in accordance with applicable law. Subject to the rights and preferences of any then-outstanding series of New PCHI Preferred Shares, will share ratably in all dividends payable in cash, stock or otherwise and other distributions.
Preferred Stock
New PCHI Preferred Shares may be issued in one or more series from time to time, with each such series to consist of such number of shares and to have such powers, designations, preferences and relative, participating, optional or
other rights, and the qualifications, limitations or restrictions thereof, if any, as shall be stated in the resolution or resolutions providing for the issuance of such series adopted by the Board.
It is not possible to state the actual effect of the issuance of any New PCHI Preferred Shares upon the rights of New PCHI Shares until the Board determines the specific rights of the holders of any series of New PCHI Preferred Shares. However, these effects might include:
| · | restricting dividends on the New PCHI Shares; | |
| · | diluting the voting power of the New PCHI Shares; | |
| · | impairing the liquidation rights of the New PCHI Shares; and | |
| · | delaying or preventing a change of control of the Company. |
Anti-Takeover Provisions
Some provisions of Delaware law, the COI and the Bylaws summarized below could make certain change of control transactions more difficult, including acquisitions of the Company by means of a tender offer, proxy contest or otherwise, as well as removal of the incumbent directors. These provisions may have the effect of preventing changes in management. It is possible that these provisions would make it more difficult to accomplish or deter transactions that a stockholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the New PCHI Shares.
Number, Election and Removal of Directors
As of the Effective Date, the Board will consist of five members. At each annual meeting of stockholders of the Company beginning with the first annual meeting of stockholders following the Effective Date, the successors of directors will be elected to hold office for a term expiring at the next annual meeting of stockholders. Each director will hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal.
Subject to the rights of any then-outstanding series of New PCHI Preferred Shares, the Board or any individual director may be removed from office at any time, with or without cause, in any manner allowed by applicable law and the provisions of the Stockholders Agreement.
Calling of Special Meeting of Stockholders
The COI and the Stockholders Agreement provide that special meetings of stockholders may be called at any time by either (i) the Board pursuant to a resolution adopted by a majority of the total number of directors or (ii) the stockholders of the Company holding not less than a majority of the voting power of the outstanding shares of capital stock of the Company entitled to vote, in each case on at least 72 hours’ prior written notice (which includes e-mail).
Amendments to the Bylaws
The Bylaws may be altered, amended or repealed by the Board. Subject to the provisions of the Stockholders Agreement, the Bylaws may also be altered, amended or repealed by the affirmative vote of at least a majority of the voting power of all of the then outstanding shares of voting stock of the Company entitled to vote generally in the election of directors.
Other Limitations on Stockholder Actions
Advance notice is required for stockholders to nominate directors or to submit proposals for consideration at meetings of stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to the Secretary of the Company prior to the meeting at which the action is to be taken. Generally, to be timely, notice of stockholder proposals relating to an annual meeting must be received at the principal executive offices not less than 90 days nor more than 120 days prior to the date of the one-year anniversary of the immediately preceding annual meeting of stockholders. The Bylaws specify in detail the requirements as to form and content of
all stockholder notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting. The Bylaws also describe certain criteria for when stockholder-requested meetings need not be held.
Newly Created Directorships and Vacancies on the Board
Subject to the provisions of the Stockholders Agreement and the rights of any then-outstanding series of New PCHI Preferred Shares, any vacancies on the Board or newly created directorships resulting from any increase in the number of directors will be filled by the vote of a majority of the directors then in office, even though less than a quorum, or by a sole remaining director, except that any vacancy created by the removal of a director by the stockholders for cause shall only be filled, in addition to any other vote otherwise required by law, by vote of a majority of the outstanding shares of common stock.
Authorized but Unissued Shares
Under Delaware law, the Company’s authorized but unissued New PCHI Shares are available for future issuance without stockholder approval. The Company may use these additional New PCHI Shares for a variety of corporate purposes, including future public offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued New PCHI Shares could render more difficult or discourage an attempt to obtain control of the Company by means of a proxy contest, tender offer, merger or otherwise.
Exclusive Forum
The COI provides that, the Court of Chancery of the State of Delaware (the “Court of Chancery”) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer other employee of the Company to the Company or to the Company’s stockholders, (iii) any action asserting a claim against the Company arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”) or the Bylaws or the COI (as either may be amended from time to time), (iv) any action, asserting a claim against the Company governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.
This summary is qualified in its entirety by reference to the full text of the COI and the Bylaws, which are attached hereto as Exhibits 3.1 and 3.2, respectively, and incorporated by reference herein.
Item 7.01 – Regulation FD Disclosure
On October 12, 2023, the Company issued a press release announcing the Emergence. A copy of the press release is attached as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated herein by reference.
Forward-Looking Statements
This Form 8-K includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements in this Form 8-K can be identified by the use of forward-looking terms such as “believes,” “expects,” “projects,” “forecasts,” “may,” “will,” “estimates,” “should,” “would,” “anticipates,” “plans” or other comparable terms. Forward-looking statements speak only as of the date they are made and, except for the Company’s ongoing obligations under the U.S. federal securities laws, the Company does not undertake any obligation to publicly update any forward-looking statement, whether to reflect actual results of operations; changes in financial condition; changes in results of operations and liquidity, changes in general U.S. or international economic or industry conditions; changes in estimates, expectations or assumptions; or other circumstances, conditions, developments or events arising after the date of this Form 8-K. You should not rely on forward-looking statements as predictions of future events. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of certain risks and other factors including but not limited to the risk factors set forth in the Company’s Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q filed with the SEC. The Company therefore cautions readers against relying on these forward-looking statements. All forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the foregoing cautionary statements.
Item 9.01 - Financial Statements and Exhibits
(d) Exhibits.
The following exhibits are filed in accordance with the provisions of Item 601 of Regulation S-K:
| * | Certain of the exhibits and schedules to these exhibits have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish copies of any of the omitted exhibits and schedules to the SEC upon its request. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PARTY CITY HOLDCO INC. | |||
| Date: October 12, 2023 | By: |
/s/ Ian Heller |
|
| Name: | Ian Heller | ||
| Title: | Senior Vice-President & General Counsel | ||
EXHIBIT 3.1
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PARTY CITY HOLDCO INC.
Party City Holdco Inc., a Delaware corporation (the “Corporation”), hereby certifies that this Amended and Restated Certificate of Incorporation has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”) and that:
A. The name of the Corporation is: Party City Holdco Inc.
B. The original Certificate of Incorporation of the Corporation was filed with the Secretary of the State of Delaware on May 31, 2012 under the name PC Topco Holdings, Inc., amended on November 25, 2013 and amended on April 2, 2015 (as amended, the “Original Certificate of Incorporation”).
C. The Amended and Restated Certificate of incorporation (the “Amended and. Restated Certificate of Incorporation”) was filed on April 21, 2015, which amended and restated the Original Certificate of Incorporation.
D. The Second Amended and Restated Certificate of Incorporation (the “Second Amended and Restated Certificate of Incorporation”) was filed on June 6, 2019, which amended and restated the Amended and Restated Certificate of Incorporation.
E. This Third Amended and Restated Certificate of Incorporation (the “Third Amended and Restated Certificate of Incorporation”) amends and restates the Second Amended and Restated Certificate of Incorporation.
F. The Certificate of Incorporation of the Corporation upon the filing of this Third Amended and Restated Certificate of Incorporation, shall read in its entirety as follows:
ARTICLE I
NAME
The name of the corporation is Party City Holdco Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the Corporation’s registered office in the State of Delaware is 3411 Silverside Road Tatnall Building #104, Wilmington, DE 19810. The name of the Corporation’s registered agent at such address is United Agent Group Inc.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
ARTICLE IV
CAPITALIZATION
(a) Authorized Shares. The total number of shares of stock which the Corporation shall have authority to issue is 315,000,000, consisting of 300,000,000 shares of Common Stock, par value $0.01 per share (“Common Stock”) and 15,000,000 shares of Preferred Stock, par value $0.01 per share (“Preferred Stock”).
(b) Common Stock. Subject to the powers, preferences and rights of any Preferred Stock, including any series thereof, having any preference or priority over, or rights superior to, the Common Stock and except as otherwise provided by law and this Article IV, the holders of the Common Stock shall have and possess all powers and voting and other rights pertaining to the stock of the Corporation.
(i) Voting. Each holder of Common Stock shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote; provided, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Third Amended and Restated Certificate of Incorporation (including, but not limited to, any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Third Amended and Restated Certificate of Incorporation (including, but not limited to, any certificate of designations relating to any series of Preferred Stock) or pursuant to the DGCL. There shall be no cumulative voting.
(ii) Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the board of directors of the Corporation (the “Board of Directors”) and subject to any preferential dividend rights of any then outstanding Preferred Stock. Except as otherwise provided by the DGCL or this Third Amended and Restated Certificate of Incorporation, the holders of record of Common Stock shall share ratably in all dividends payable in cash, stock or otherwise and other distributions.
(iii) No Preemptive Rights. Except as otherwise set forth in the Stockholders Agreement, the holders of the Common Stock shall have no preemptive rights to subscribe for any shares of any class of stock of the Corporation whether now or hereafter authorized.
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(iv) No Conversion Rights. The Common Stock shall not be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same class of the Corporation’s capital stock.
(v) Liquidation Rights. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential rights of any then outstanding Preferred Stock. A merger or consolidation of the Corporation with or into any other corporation or other entity or a sale or conveyance of all or any part of the assets of the Corporation, in any such case which shall not in fact result in the liquidation of the Corporation and the distribution of assets to its stockholders, shall not be deemed to be a voluntary or involuntary liquidation or dissolution or winding up of the Corporation within the meaning of this Article IV(b)(v).
(c) Preferred Stock. Shares of Preferred Stock may be issued in one or more series, from time to time, with each such series to consist of such number of shares and to have such voting powers relative to other classes or series of Preferred Stock, if any, or Common Stock, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issuance of such series adopted by the Board of Directors, and the Board of Directors is hereby expressly vested with the authority, to the full extent now or hereafter provided by applicable law, to adopt any such resolution or resolutions. Except as otherwise provided in this Third Amended and Restated Certificate of Incorporation, no vote of the holders of the Preferred Stock or Common Stock shall be a prerequisite to the designation or issuance of any shares of any series of the Preferred Stock authorized by and complying with the conditions of this Third Amended and Restated Certificate of Incorporation, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Corporation. Any shares of Preferred Stock that are redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law or this Third Amended and Restated Certificate of Incorporation. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly provided in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors.
(d) No Class Vote On Changes In Authorized Number of Shares Of Preferred Stock. Subject to the special rights of the holders of any series of Preferred Stock pursuant to the terms of this Third Amended and Restated Certificate of Incorporation, any certificate of designations or any resolution or resolutions providing for the issuance of such series of stock adopted by the Board of Directors, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL.
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(e) Non-Voting Equity Securities. Pursuant to Section 1123(a)(6) of Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”), the Corporation will not issue non-voting equity securities (which shall not be deemed to include any warrants or options or similar interests to purchase equity of the Corporation); provided, however, that this provision (i) will have no further force or effect beyond that required under Section 1123 of the Bankruptcy Code, (ii) will have such force and effect, if any, only for so long as such section is in effect and applicable to the Corporation or any of its wholly owned subsidiaries and (iii) in all events may be amended or eliminated in accordance with applicable law as from time to time in effect.
ARTICLE V
BOARD OF DIRECTORS
(a) Number of Directors, Vacancies and Newly Created Directorships. The number of directors constituting the Board of Directors shall be not fewer than three (3) and not more than fifteen (15), each of whom shall be a natural person. Subject to the provisions set forth in the Stockholders Agreement, all elections of directors shall be determined by a plurality of the votes cast by stockholders entitled to vote in such elections, the number of directors initially shall be five (5) and, subject to the special rights of the holders of any series of Preferred Stock to elect directors, the precise number of directors shall be fixed exclusively pursuant to a resolution adopted by the Board of Directors. Subject to the provisions set forth in the Stockholders Agreement, vacancies and newly-created directorships shall be filled exclusively pursuant to a vote of a majority of the directors then in office, although less than a quorum, or by the sole remaining director, except that any vacancy created by the removal of a director by the stockholders for cause shall only be filled, in addition to any other vote otherwise required by law, by vote of a majority of the outstanding shares of Common Stock. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office, and a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next election of the directors, subject to the election and qualification of his or her successor and to his or her earlier death, resignation or removal.
(b) Term. Subject to the special rights of the holders of any class or series of stock to elect directors, and subject to the provisions set forth in the Stockholders Agreement, each director shall be elected annually for terms expiring at the next annual meeting of stockholders until his or her earlier death, resignation or removal.
(c) Removal. Subject to the provisions of the Stockholders Agreement and the rights of the holders of any series of Preferred Stock to elect directors, any director of the Corporation may be removed with or without cause in any manner allowed by applicable law and the provisions of the Stockholders Agreement.
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ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION AND
ADVANCEMENT OF EXPENSES
(a) Limitation of Liability. To the fullest extent that the DGCL or any other law of the State of Delaware (as they exist on the date hereof or as they may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to limit or eliminate the liability of directors and officers further than such law permitted the Corporation prior to such amendment)) permits the limitation or elimination of the liability of directors and officers, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except for liability (i) for any breach of the director’s or officer’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve international misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, (iv) for any transaction from which the director or officer derived an improper personal benefit, or (v) with respect to an officer only, in any action by or in the right of the Corporation. No amendment to, or modification or repeal of, this Article VI shall adversely affect any right or protection of a director or officer of the Corporation existing hereunder with respect to any state of facts existing or act or omission occurring, or any cause of action, suit or claim that, but for this Article VI, would accrue or arise, prior to such amendment, modification or repeal. If the DGCL is amended after this Amended and Restated Certificate of Incorporation is filed with the Secretary of State of the State of Delaware to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
(b) Indemnification. Subject to the provisions of the Stockholders Agreement, the Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation prior to such amendment), any person (an “Indemnitee”) who was or is made, or is threatened to be made, a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or an officer of the Corporation or, while a director or an officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, member, trustee or agent of another corporation or of a partnership, joint venture, trust, nonprofit entity or other enterprise (including, but not limited to, service with respect to employee benefit plans) (any such entity, an “Other Entity”), against all liability and loss suffered (including, but not limited to, expenses (including, but not limited to, attorneys’ fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee in connection with such Proceeding). Notwithstanding the preceding sentence, the Corporation shall be required to indemnify an Indemnitee in connection with a Proceeding (or part thereof) commenced by such Indemnitee only if the commencement of
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such Proceeding (or part thereof) by the Indemnitee was authorized by the Board of Directors or the Proceeding (or part thereof) relates to the enforcement of the Corporation’s obligations under this Article VI(b).
(c) Advancement of Expenses. The Corporation may to the extent permitted by applicable law and subject to the provisions of the Stockholders Agreement pay the expenses (including, but not limited to attorneys’ fees and expenses) incurred by an Indemnitee in defending any proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Indemnitee to repay all amounts advanced if it should be ultimately determined that the Indemnitee is not entitled to be indemnified under the Stockholders Agreement, this Article VI or otherwise.
(d) Claims. If a claim for indemnification (following the final disposition of such proceeding) under this Article VI is not paid in full within sixty days after a written claim therefor by the Indemnitee has been received by the Corporation, the Indemnitee may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the Indemnitee is not entitled to the requested indemnification under applicable law.
(e) Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, trustee, employee, member, trustee or agent of the Corporation, or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of an Other Entity, against any liability asserted against the person and incurred by the person in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VI.
(f) Non-Exclusivity of Rights. The rights conferred on any Indemnitee by this Article VI are not exclusive of other rights arising under any bylaw, agreement, vote of directors or stockholders or otherwise, and shall inure to the benefit of the heirs and legal representatives of such Indemnitee.
(g) Amounts Received from an Other Entity. Subject to Article VI(h), the Corporation’s obligation, if any, to indemnify any Indemnitee who was or is serving at the Corporation’s request as a director, officer, employee or agent of an Other Entity shall be reduced by any amount such Indemnitee may collect as indemnification or advancement of expenses from such Other Entity.
(h) Indemnification Priority. As between the Corporation and any other person (other than an entity directly or indirectly controlled by the Corporation) who provide indemnification and advancement of expenses to the Indemnitees for their service to, or on behalf of, the Corporation (collectively, the “Secondary Indemnitors”) (i) the Corporation shall be the full indemnitor of first resort in respect of indemnification or advancement of expenses in connection with any Jointly Indemnifiable Claims (as defined below), pursuant
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to and in accordance with the terms of this Article VI, irrespective of any right of indemnification, advancement of expenses or other right of recovery any Indemnitee may have from any Secondary Indemnitor (i.e., the Corporation’s obligations to such Indemnitees are primary and any obligation of any Secondary Indemnitor to advance expenses or to provide indemnification for the same loss or liability incurred by such Indemnitees is secondary to the Corporation’s obligations), (ii) the Corporation shall be required to advance the full amount of expenses incurred by any such Indemnitee and shall be liable for the full amount of all liability and loss suffered by such Indemnitee (including, but not limited to, expenses (including, but not limited to, attorneys’ fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee in connection with such Proceeding), without regard to any rights any such Indemnitee may have against any Secondary Indemnitor, and (iii) the Corporation irrevocably waives, relinquishes and releases each Secondary Indemnitor from any and all claims against such Secondary Indemnitor for contribution, subrogation or any other recovery of any kind in respect thereof The Corporation shall indemnify each Secondary Indemnitor directly for any amounts that such Secondary Indemnitor pays as indemnification or advancement on behalf of any such Indemnitee and for which such Indemnitee may be entitled to indemnification from the Corporation in connection with Jointly Indemnifiable Claims. No right of indemnification, advancement of expenses or other right of recovery that an Indemnitee may have from any Secondary Indemnitor shall reduce or otherwise alter the rights of the Indemnitee or the obligations of the Corporation hereunder. No advancement or payment by any Secondary Indemnitor on behalf of any such Indemnitee with respect to any claim for which such Indemnitee has sought indemnification from the Corporation shall affect the foregoing and the Secondary Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Indemnitee against the Corporation. Each Indemnitee shall execute all papers reasonably required and shall do all things that may be reasonably necessary to secure the rights of such Indemnitee’s Secondary Indemnitors under this Article VI(h), including the execution of such documents as may be necessary to enable the Secondary Indemnitors effectively to bring suit to enforce such rights, including in the right of the Corporation. Each of the Secondary Indemnitors shall be third-party beneficiaries with respect to this Article VI(h), entitled to enforce this Article VI(h). As used in this Article VI(h), the term “Jointly Indemnifiable Claims” shall be broadly construed and shall include, without limitation, any action, suit, proceeding or other matter for which an Indemnitee shall be entitled to indemnification or advancement of expenses from both a Secondary Indemnitor and the Corporation, whether pursuant to Delaware law, any agreement or certificate of incorporation, bylaws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership or comparable organizational documents of the Corporation or the Secondary Indemnitors, as applicable.
(i) Amendment or Repeal. Any right to indemnification of any Indemnitee arising hereunder shall not be eliminated or impaired by an amendment to or repeal of this Article VI after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit, proceeding or other matter for which indemnification or advancement of expenses is sought.
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(j) Other Indemnification and Advancement of Expenses. This Article VI shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Indemnitees when and as authorized by appropriate corporate action.
(k) Reliance. Indemnitees who after the date of the adoption of this Article VI become or remain an Indemnitee described in Article VI(b) will be conclusively presumed to have relied on the rights contained in this Article VI in entering into or continuing the service. The rights to indemnification conferred in this Article VI will apply to claims made against any Indemnitee described in Article VI(b) arising out of acts or omissions that occurred or occur either before or after the adoption of this Article VI in respect of service as a director or officer of the corporation or other service described in Article VI(b).
ARTICLE VII
ACTION BY CONSENT: SPECIAL MEETINGS OF STOCKHOLDERS
(a) Action by Written Consent. Except as otherwise provided for or fixed by or pursuant to the provisions of this Third Amended and Restated Certificate of Incorporation or any resolution or resolutions of the Board of Directors providing for the issuance of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation may be effected only at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.
(b) Special Meetings of Stockholders. Subject to the provisions of the Stockholders Agreement and the rights of the holders of any series of Preferred Stock, and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called at any time only by either (a) the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors or (b) the stockholders of the Corporation holding not less than a majority of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote, in each case on at least 72 hours’ prior written notice (which includes e-mail).
(c) Election of Directors, by Written Ballot. Election of directors need not be by written ballot.
ARTICLE VIII
AMENDMENTS TO THE THIRD AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION AND BYLAWS
(a) Bylaws. In furtherance and not in limitation of the powers conferred by law, but subject to the provisions of the Stockholders Agreement, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation subject to the power of the stockholders of the Corporation to alter, amend or repeal the Bylaws; provided, that with respect to the powers of stockholders to make, alter, amend or repeal the Bylaws, in addition to any other vote otherwise required by law, the affirmative vote
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of the holders of at least a majority of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote on the subject matter shall be required to make, alter amend or repeal the Bylaws of the Corporation.
(b) Amendments to the Third Amended and Restated Certificate of Incorporation. Notwithstanding any other provision of this Third Amended and Restated Certificate of Incorporation, but subject to the provisions of the Stockholders Agreement and notwithstanding that a lesser percentage may be permitted from time to time by applicable law, no provision of this Third Amended and Restated Certificate of Incorporation may be altered, amended or repealed in any respect, nor may any provision or bylaw inconsistent therewith be adopted, unless in addition to any other vote required by this Third Amended and Restated Certificate of Incorporation or otherwise required by law, such alteration, amendment, repeal or adoption is approved by, in addition to any other vote otherwise required by law, the affirmative vote of the holders of at least a majority of the voting power of the outstanding shares of capital stock entitled to vote on the subject matter.
ARTICLE IX
BUSINESS COMBINATIONS
(a) Section 203 of the DGCL. The Corporation hereby expressly elects not to be governed by Section 203 of the DGCL.
(b) Interested Stockholder Transactions. Notwithstanding any other provision in this Third Amended and Restated Certificate of Incorporation to the contrary, the Corporation shall not engage in any Business Combination (as defined below) with any Interested Stockholder (as defined hereinafter) for a period of three years following the time that such stockholder became an Interested Stockholder, unless:
| (1) | prior to such time the Board of Directors approved either the Business Combination or the transaction which resulted in such stockholder becoming an interested Stockholder; |
| (2) | upon consummation of the transaction which resulted in such stockholder becoming an Interested Stockholder, such stockholder owned at least eighty-five percent (85%) of the Voting Stock (as defined below) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the Voting Stock outstanding (but not the outstanding Voting Stock owned by such stockholder) those shares owned (i) by Persons (as defined below) who are directors and also officers of the Corporation and (ii) employee stock plans of the Corporation in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
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| (3) | at or subsequent to such time the Business Combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least sixty-six and two-thirds percent (662/3%) of the outstanding Voting Stock which is not owned by such stockholder. |
(c) Exceptions to Prohibition on Interested Stockholder Transactions. The restrictions contained in this Article IX shall not apply if:
| (1) | a stockholder becomes an Interested Stockholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder ceases to be an Interested Stockholder; and (ii) would not, at any time within the three-year period immediately prior to a Business Combination between the Corporation and such stockholder, have been an Interested Stockholder but for the inadvertent acquisition of ownership; or |
| (2) | the Business Combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i) constitutes one of the transactions described in the second sentence of this Article IX(c)(2); (ii) is with or by a Person who either was not an Interested Stockholder during the previous three years or who became an Interested Stockholder with the approval of the Board of Directors; and (iii) is approved or not opposed by a majority of the directors then in office (but not less than one) who were directors prior to any Person becoming an Interested Stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to (x) a merger or consolidation of the Corporation (except for a merger in respect of which, pursuant to §251(f) of the DGCL, no vote of the stockholders of the Corporation is required); (y) a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation (other than to any direct or indirect wholly-owned subsidiary or to the Corporation) having an aggregate market value equal to fifty percent (50%) or more of either that aggregate market value of all of the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock (as defined hereinafter) of the Corporation; or (z) a proposed tender or exchange offer for fifty percent (50%) or more of the outstanding Voting Stock of the Corporation. The Corporation shall give not less than 20 days’ notice to all Interested Stockholders prior to the consummation of any of the transactions |
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described in clause (x) or (y) of the second sentence of this Article IX(c)(2).
(d) Definitions. As used in this Article IX only, and unless otherwise provided by the express terms of this Article IX, the following terms shall have the meanings ascribed to them as set forth in paragraph (d) of this Article IX:
| (1) | “Associate,” when used to indicate a relationship with any Person, means: (i) any corporation, partnership, unincorporated association or other entity of which such Person is a director, officer or partner or is, directly or indirectly, the owner of twenty percent (20%) or more of any class of Voting Stock; (ii) any trust or other estate in which such Person has at least a twenty percent (20%) beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same residence as such Person; |
| (2) | “Business Combination” means: |
| i | any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation with (A) the Interested Stockholder, or (B) with any Person if the merger or consolidation is caused by the Interested Stockholder and as a result of such merger or consolidation paragraph (b) of this Article IX is not applicable to the surviving entity; |
| ii | any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the Interested Stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to ten percent (10%) or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock of the Corporation; or |
| iii | any transaction or series of transactions which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of ten percent (10%) or more of any class or series of Stock of the Corporation or of such subsidiary to the Interested Stockholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for |
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or convertible into Stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the Interested Stockholder became such; (B) pursuant to a merger under § 251(g) or § 253 of the DGCL; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into Stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of Stock of the Corporation subsequent to the time the Interested Stockholder became such; or (D) pursuant to an exchange offer by the Corporation to purchase Stock made on the same terms to all holders of such Stock;
| (3) | “Interested Stockholder” means any Person (other than the Corporation and any direct or indirect majority-owned subsidiary of the Corporation) that is the owner of fifteen percent (15%) or more of the outstanding Voting Stock of the Corporation, or is an Affiliate or Associate of the Corporation and was the owner of fifteen percent (15%) or more of the outstanding Voting Stock of the Corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such Person is an Interested Stockholder, and the Affiliates and Associates of such Person. Notwithstanding anything in this Article IX to the contrary, the term “Interested Stockholder” shall not include: (i) investment funds affiliated with Thomas H. Lee Partners, L.P. or their respective Affiliates or Associates; (ii) any Person who would otherwise be an Interested Stockholder because of a transfer, sale, assignment, conveyance, hypothecation, encumbrance, or other disposition of five percent (5%) or more of the outstanding Voting Stock of the Corporation (in one transaction or a series of transactions) by any party specified in the immediately preceding clause (i) to such Person; provided, however, that such Person was not an Interested Stockholder prior to such transfer, sale, assignment, conveyance, hypothecation, encumbrance, or other disposition; or (iii) any Person whose ownership of shares in excess of the fifteen percent (15%) limitation set forth herein is the result of action taken solely by the Corporation, provided, that, for purposes of this clause (iii), such Person shall be an Interested Stockholder if thereafter such Person acquires additional shares of Voting Stock of the Corporation, except as a result of further action by the Corporation not caused, directly or indirectly, by such Person; |
| (4) | “Owner,” including the terms “own” and “owned,” when used with respect to any Stock, means a Person that individually or with or through any of its affiliates or associates beneficially owns such Stock, directly or indirectly; or has (i) the right to acquire such Stock |
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(whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the owner of Stock tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered Stock is accepted for purchase or exchange; or (ii) the right to vote such Stock pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the owner of any Stock because of such Person’s right to vote such Stock if the agreement, arrangement or understanding to vote such Stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more Persons; or (iii) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in (ii) of this Article IX (d)(4), or disposing of such Stock with any other Person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such Stock; provided, that, for the purpose of determining whether a Person is an Interested Stockholder, the Voting Stock of the Corporation deemed to be outstanding shall include Stock deemed to be owned by the Person through application of this definition of “owned” but shall not include any other unissued Stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise;
| (5) | “Person” means any individual, corporation, partnership, unincorporated association or other entity; |
| (6) | “Stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest; and |
| (7) | “Voting Stock” means, with respect to any corporation, Stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. Every reference to a percentage of Voting Stock shall refer to such percentage of the votes of such Voting Stock. |
ARTICLE X
RENOUNCEMENT OF CORPORATE OPPORTUNITY
(a) Scope. Subject to the provisions of the Stockholders Agreement, the provisions of this Article X are set forth to define, to the extent permitted by applicable law
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and the Stockholders Agreement, the duties of Exempted Persons (as defined below) to the Corporation with respect to certain classes or categories of business opportunities. “Exempted Persons” means the stockholders of the Corporation and their respective Affiliates (other than the Corporation and its subsidiaries) and all of their respective partners, principals, directors, officers, members, managers and/or employees, including any of the foregoing who serve as officers, directors or employees of the Corporation or any of its subsidiaries.
(b) Competition and Allocation of Corporate Opportunities. The Exempted Persons shall not have any fiduciary duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Corporation or any of its subsidiaries. To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its subsidiaries, renounces any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to the Exempted Persons, even if the opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and each such Exempted Person shall have no duty to communicate or offer such business opportunity to the Corporation and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or any of its subsidiaries for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such Exempted Person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries.
(c) Certain Matters Deemed Not Corporate Opportunities. In addition to and notwithstanding the foregoing provisions of this Article X, a corporate opportunity shall not be deemed to belong to the Corporation if it is a business opportunity that the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy.
(d) Amendment of this Article. No amendment or repeal of this Article X shall apply to or have any effect on the liability or alleged liability of any Exempted Person for or with respect to any activities or opportunities of which such Exempted Person becomes aware prior to such amendment or repeal.
ARTICLE XI
EXCLUSIVE JURISDICTION OF CERTAIN ACTIONS
The Court of Chancery of the State of Delaware shall, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against
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the Corporation arising pursuant to any provision of the DGCL or the Corporation’s Third Amended and Restated Certificate of Incorporation or bylaws or (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XI.
ARTICLE XII
SEVERABILITY
If any provision or provisions of this Third Amended and Restated Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Third Amended and Restated Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Third Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Third Amended and Restated Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Third Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
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EXHIBIT 3.2
SECOND AMENDED AND RESTATED BYLAWS
OF
PARTY CITY HOLDCO INC.
SECTION 1 — STOCKHOLDERS
Section 1.1 Annual Meeting. An annual meeting of the stockholders of Party City Holdco Inc. (the “Corporation”) for the election of directors to succeed those whose term expire and for the transaction of such other business as may properly come before the meeting shall be held at the place, if any, within or without the State of Delaware, on the date and at the time that the board of directors of the Corporation (the “Board of Directors”) shall each year fix. Unless stated otherwise in the notice of the annual meeting of the stockholders of the Corporation, such annual meeting shall be at the principal office of the Corporation.
Section 1.2 Advance Notice of Nominations and Proposals of Business.
(a) Nominations of persons for election to the Board of Directors and proposals for business to be transacted by the stockholders at an annual meeting of stockholders may be made (i) pursuant to the Corporation’s notice with respect to such meeting (or any supplement thereto), (ii) by or at the direction of the Board of Directors or any committee thereof or (iii) by any stockholder of record of the Corporation who (A) was a stockholder of record at the time of the giving of the notice contemplated in Section 1.2(b), (B) is entitled to vote at such meeting and (C) has complied with the notice procedures set forth in this Section 1.2. Subject to Section 1.2(i) and except as otherwise required by law, clause (iii) of this Section 1.2(a) shall be the exclusive means for a stockholder to make nominations or propose other business (other than matters properly brought pursuant to applicable provisions of federal law, including the Securities Exchange Act of 1934 (as amended from time to time, the “Act”) and the rules and regulations of the Securities and Exchange Commission thereunder) before an annual meeting of stockholders.
(b) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of Section 1.2(a), (i) the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation with the information contemplated by Section 1.2(c), and (ii) the business must be a proper matter for stockholder action under the Delaware General Corporation Law (the “DGCL”). The notice requirements of this Section 1.2 shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified the Corporation of his, her or its intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Act and such stockholder’s proposal has been included in a proxy statement prepared by the Corporation to solicit proxies for such annual meeting.
(c) To be timely, a stockholder’s notice must be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation a date (i) not less than 90 nor more than 120 days prior to the anniversary date of the prior year’s annual meeting or (ii) if there was no annual meeting in the prior year or if the date of the current year’s annual meeting is more than 30 days before or after the anniversary date of the prior year’s annual meeting, on or before 10 days after the day on which the date of the current year’s annual meeting is first disclosed in a public announcement. In no event shall any adjournment or postponement of
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an annual meeting or the announcement thereof commence a new time period for the delivery of such notice. Such notice from a stockholder must include (i) as to each nominee that the stockholder proposes for election or reelection as a director, (A) all information relating to such nominee that would be required to be disclosed in solicitations of proxies for the election of such nominee as a director pursuant to Regulation 14A under the Act and such nominee’s written consent to serve as a director if elected, and (B) a description of all direct and indirect compensation and other material monetary arrangements, agreements or understandings during the past three years, and any other material relationship, if any, between or concerning such stockholder and its respective affiliates or associates, or others with whom they are acting in concert, on the one hand, and the proposed nominee, and his or her respective affiliates or associates, on the other hand; (ii) as to each proposal that the stockholder seeks to bring before the meeting, a brief description of such proposal, the reasons for making the proposal at the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws of the Corporation, the language of the proposed amendment) and any material interest that the stockholder has in the proposal; (iii) (A) the name and address of the stockholder giving the notice and the Stockholder Associated Person (as defined below), if any, on whose behalf the nomination or proposal is made, (B) the class (and, if applicable, series) and number of shares of stock of the Corporation that are, directly or indirectly, owned beneficially or of record by the stockholder or any Stockholder Associated Person, (C) a description of any option, warrant, convertible security, stock appreciation right or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class (or, if applicable, series) of shares of stock of the Corporation or with a value derived in whole or in part from the value of any class (or, if applicable, series) of shares of stock of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (each, a “Derivative Instrument”) directly or indirectly owned beneficially or of record by such stockholder or any Stockholder Associated Person and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of stock of the Corporation of the stockholder or any Stockholder Associated Person, (D) any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder or any Stockholder Associated Person has a right to vote any securities of the Corporation, (E) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or any Stockholder Associated Person is a general partner or beneficially owns an interest in a general partner, (F) any performance-related fees (other than an asset-based fee) that such stockholder or any Stockholder Associated Person is entitled to based on any increase or decrease in the value of the shares of stock of the Corporation or Derivative Instruments, (G) any other information relating to such stockholder and Stockholder Associated Person, if any, required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Act, (H) a representation that the stockholder is a holder of record of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (I) a certification as to whether or not the stockholder and all Stockholder Associated Persons have complied with all applicable federal, state and other legal requirements in connection with the stockholder’s and each Stockholder Associated Person’s acquisition of shares of capital stock or other securities of the
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Corporation and the stockholder’s and each Stockholder Associated Person’s acts or omissions as a stockholder (or beneficial owner of securities) of the Corporation and (J) whether either the stockholder intends to deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of the Corporation’s voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Corporation’s voting shares reasonably believed by such stockholder to be sufficient to elect such nominee or nominees or otherwise to solicit proxies or votes from stockholders in support of such proposal or nomination. For purposes of these bylaws, a “Stockholder Associated Person” of any stockholder means (i) any “affiliate” or “associate” (as those terms are defined in Rule 12b-2 under the Act) of such stockholder, (ii) any beneficial owner of any capital stock or other securities of the Corporation owned of record or beneficially by such stockholder, (iii) any person directly or indirectly controlling, controlled by or under common control with any such Stockholder Associated Person referred to in clause (i) or (ii) above, and (iv) any person acting in concert in respect of any matter involving the Corporation or its securities with either such stockholder or any beneficial owner of any capital stock or other securities of the Corporation owned of record or beneficially by such stockholder; “beneficial ownership” shall be determined in accordance with Rule 13d-3 promulgated under the Act; and “control” means the power to direct or cause the direction of the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and “controlled” and “controlling” have meanings correlative to the foregoing. In addition, in order for a nomination to be properly brought before an annual or special meeting by a stockholder pursuant to clause (iii) of Section 1.2(a), any nominee proposed by a stockholder shall complete a questionnaire, in a form provided by the Corporation, and deliver a signed copy of such completed questionnaire to the Corporation within 10 days of the date that the Corporation makes available to the stockholder seeking to make such nomination or such nominee the form of such questionnaire. The Corporation may require any proposed nominee to furnish such other information as may be reasonably requested by the Corporation to determine the eligibility of the proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of the nominee. The information required to be included in a notice pursuant to this Section 1.2(c) shall be provided as of the date of such notice and shall be supplemented by the stockholder not later than 10 days after the record date for the determination of stockholders entitled to notice of the meeting to disclose any changes to such information as of the record date. The information required to be included in a notice pursuant to this Section 1.2(c) shall not include any ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is directed to prepare and submit the notice required by this Section 1.2(c) on behalf of a beneficial owner of the shares held of record by such broker, dealer, commercial bank, trust company or other nominee and who is not otherwise affiliated or associated with such beneficial owner.
(d) Subject to the certificate of incorporation of the Corporation (the “Certificate of Incorporation”), Section 1.2(i) and applicable law, only persons nominated in accordance with procedures stated in this Section 1.2 shall be eligible for election as and to serve as a member of the Board of Directors and the only business that shall be conducted at an annual meeting of stockholders is the business that has been brought before the meeting in accordance with the procedures set forth in this Section 1.2. The chairman of the meeting shall have the power and the duty to determine whether a nomination or any proposal has been made according to the
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procedures stated in this Section 1.2 and, if any nomination or proposal does not comply with this Section 1.2, unless otherwise required by law, the nomination or proposal shall be disregarded.
(e) For purposes of this Section 1.2, “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable news service or in a document publicly filed or furnished by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Act.
(f) Notwithstanding the foregoing provisions of this Section 1.2, a stockholder shall also comply with (i) that certain Stockholders Agreement, dated as of __, 2023, by and among the Corporation and the stockholders party thereto (as amended, modified or supplemented from time to time in accordance with the terms thereof, the “Stockholders Agreement”) and (ii) all applicable requirements of the Act and the rules and regulations thereunder with respect to matters set forth in this Section 1.2. Nothing in this Section 1.2 shall affect any rights, if any, of stockholders to request inclusion of nominations or proposals in the Corporation’s proxy statement pursuant to applicable provisions of federal law, including the Act.
(g) Notwithstanding the foregoing provisions of this Section 1.2, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business or does not provide the information required by Section 1.2(c), including any required supplement thereto, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 1.2, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
(h) Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or any committee thereof or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 1.2 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this Section 1.2. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (b) of this Section 1.2 shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the close of business on the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which
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public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(i) All provisions of this Section 1.2 are subject to, and nothing in this Section 1.2 shall in any way limit the exercise, or the method or timing of the exercise of, the rights of any person granted by the Corporation to nominate directors, which rights may be exercised without compliance with the provisions of this Section 1.2.
Section 1.3 Special Meetings; Notice.
Special meetings of the stockholders of the Corporation may be called only in the manner set forth in the Certificate of Incorporation. Notice of every special meeting of the stockholders of the Corporation shall state the purpose(s) of such meeting. Except as otherwise required by law or section 1.2(h), the business conducted at a special meeting of stockholders of the Corporation shall be limited exclusively to the business set forth in the Corporation’s notice of meeting, and the individual or group calling such meeting shall have exclusive authority to determine the business included in such notice.
Section 1.4 Notice of Meetings.
Notice of the place, if any, date and time of all meetings of stockholders of the Corporation, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for the stockholders entitled to notice of the meeting) and the means of remote communications, if any, by which stockholders and proxy holders may be deemed present and vote at such meeting, and, in the case of all special meetings of stockholders, the purpose(s) of the meeting, shall be given, not less than 10 nor more than 60 days before the date on which such meeting is to be held, to each stockholder entitled to notice of the meeting.
The Corporation may postpone or cancel any previously called annual or special meeting of stockholders of the Corporation by making a public announcement (as defined in Section 1.2(e)) of such postponement or cancellation prior to the meeting. When a previously called annual or special meeting is postponed to another time, date or place, if any, notice of the place (if any), date and time of the postponed meeting, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for the stockholders entitled to notice of the meeting) and the means of remote communications, if any, by which stockholders and proxy holders may be deemed present and vote at such postponed meeting, shall be given in conformity with this Section 1.4 unless such meeting is postponed not more than 60 days after initial notice of the meeting was provided in conformity with this Section 1.4.
When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, thereof and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; however, if the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, notice of the place,
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if any, date and time of the adjourned meeting and the means of remote communication, if any, by which stockholders and proxy holders may be deemed present and vote at such adjourned meeting, shall be given in conformity herewith to each stockholder of record entitled to vote at such adjourned meeting. At any adjourned meeting, any business may be transacted that may have been transacted at the original meeting.
Section 1.5 Quorum.
At any meeting of the stockholders, the holders of shares of stock of the Corporation entitled to cast a majority of the total votes entitled to be cast by the holders of all outstanding capital stock of the Corporation, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number is required by applicable law or the Certificate of Incorporation. If a separate vote by one or more classes or series is required, the holders of shares entitled to cast a majority of the total votes entitled to be cast by the holders of the shares of the class or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the meeting to another place, if any, date and time.
Section 1.6 Organization.
The Chairman of the Board of Directors or, in his or her absence, the person whom the Board of Directors designates or, in the absence of that person or the failure of the Board of Directors to designate a person, the Chief Executive Officer of the Corporation or, in his or her absence, the person chosen by the holders of a majority of the shares of capital stock entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders of the Corporation and act as chairman of the meeting. In the absence of the Secretary of the Corporation, the secretary of the meeting shall be the person the chairman appoints.
Section 1.7 Conduct of Business.
The chairman of any meeting of stockholders of the Corporation shall determine the order of business and the rules of procedure for the conduct of such meeting, including the manner of voting and the conduct of discussion as he or she determines to be in order. The chairman shall have the power to adjourn the meeting to another place, if any, date and time. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of the meeting shall have the right and authority to convene and (for any or no reason) to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the
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chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The chairman of the meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a nomination or matter of business was not properly brought before the meeting and if such chairman should so determine, such chairman shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 1.8 Proxies; Inspectors.
(a) At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by applicable law.
(b) Prior to a meeting of the stockholders of the Corporation, the Corporation shall appoint one or more inspectors to act at a meeting of stockholders of the Corporation and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting may, and to the extent required by applicable law, shall, appoint one or more inspectors to act at the meeting. Each inspector, before beginning the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of inspectors. The inspectors shall have the duties prescribed by applicable law.
Section 1.9 Voting.
Except as otherwise required by the rules or regulations of any stock exchange on which any capital stock of the Corporation may be listed or pursuant to any law or regulation applicable to the Corporation or its securities or by the Certificate of Incorporation, the Stockholders Agreement or these bylaws, all matters other than the election of directors shall be determined by a majority of the votes cast on the matter affirmatively or negatively. Subject to the provisions of the Stockholders Agreement, all elections of directors shall be determined by a plurality of the votes cast.
Section 1.10 Stock List.
A complete list of stockholders of the Corporation entitled to vote at any meeting of stockholders of the Corporation, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in the name of such stockholder, shall be open to the examination of any such stockholder, for any purpose germane to a meeting of the stockholders of the Corporation, for a period of at least 10 days before the meeting (i) on a reasonably accessible electronic network, provided that the information required
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to gain access to such list is provided with the notice of the meeting or (ii) during ordinary business hours at the principal place of business of the Corporation; provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the 10th day before such meeting date.
The stock list shall also be open to the examination of any such stockholder during the entire meeting. The Corporation may look to this list as the sole evidence of the identity of the stockholders entitled to vote at a meeting and the number of shares held by each stockholder.
Section 1.11 Written Consent.
Except as otherwise provided in the Certificate of Incorporation, any action required or permitted to be taken by the stockholders of the Corporation may be taken without a meeting, if consent to such action is delivered in writing or via electronic transmission by such number of stockholders that would be required if such action were voted on at a meeting of the stockholders. Such written consent or a record of such electronic transmission shall be filed with the records of the Corporation.
SECTION 2 — BOARD OF DIRECTORS
Section 2.1 Qualifications of Directors.
The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authorities these bylaws expressly confer upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not prohibited by the DGCL or by the Certificate of Incorporation, the Stockholders Agreement or by these bylaws required to be exercised or done by the stockholders. Directors need not be stockholders to be qualified for election or service as a director of the Corporation.
Section 2.2 Removal; Resignation.
Subject to the provisions of the Stockholders Agreement, any director may be removed with or without cause in any manner allowed by applicable law and the provisions of the Stockholders Agreement. Any director may resign at any time upon notice given in writing, including by electronic transmission, to the Corporation.
Section 2.3 Regular Meetings.
Regular meetings of the Board of Directors shall be held at the place (if any), on the date and at the time as shall have been established by the Board of Directors and publicized among all directors. A notice of a regular meeting, the date of which has been so publicized, shall not be required.
Section 2.4 Special Meetings.
Subject to the provisions of the Stockholders Agreement, special meetings of the Board of Directors may be called at any time by either (i) the Board of Directors or (ii) the stockholders of
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the Corporation holding not less than a majority of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote, in each case on the date and at the time as they shall fix. Written notice (including by means of electronic transmission) of the place, if any, date and time of each special meeting shall be given to each director thereof not less than seventy-two hours before the meeting. Any and all business may be transacted at a special meeting of the Board of Directors.
Section 2.5 Quorum.
Subject to the provisions of the Stockholders Agreement, (i) at any meeting of the Board of Directors, a majority of the total number of directors then in office shall constitute a quorum for all purposes and (ii) if a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, if any, date or time, without further notice or waiver thereof.
Section 2.6 Participation in Meetings By Conference Telephone or Other Communications Equipment.
Members of the Board of Directors, or of any committee thereof, may participate in a meeting of the Board of Directors or committee thereof by means of conference telephone or other communications equipment by means of which all directors participating in the meeting can hear each other director, and such participation shall constitute presence in person at the meeting.
Section 2.7 Conduct of Business.
At any meeting of the Board of Directors, business shall be transacted in the order and manner that the Board of Directors may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided in the Certificate of Incorporation, the Stockholders Agreement or these bylaws or required by applicable law. Subject to the provisions of the Stockholders Agreement, the Board of Directors or any committee thereof may take action without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings, or electronic transmission or electronic transmissions, are filed with the minutes of proceedings of the Board of Directors or any committee thereof. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 2.8 Compensation of Directors.
Subject to the provisions of the Stockholders Agreement, the Board of Directors shall be authorized to fix the compensation of directors. The directors of the Corporation shall be paid their expenses, if any, of attendance at each meeting of the Board of Directors and shall be reimbursed a fixed sum for attendance at each meeting of the Board of Directors, paid an annual retainer or paid other compensation, including equity compensation, as directors of the Corporation. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of committees may have their expenses, if any, of attendance of each meeting of such committee reimbursed and may be paid compensation for attending committee meetings or being a member of a committee.
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SECTION 3 — COMMITTEES
Section 3.1 Committees of the Board of Directors.
The Board of Directors may designate committees of the Board of Directors, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board of Directors and shall, for those committees, subject to the provisions of the Stockholders Agreement, appoint a director or directors to serve as the member or members, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of any member of any committee and any alternate member in his or her place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. All provisions of this Section 3.1 are subject to, and nothing in this Section 3.1 shall in any way limit the exercise or method or timing of the exercise of, the rights of any person granted by the Corporation with respect to the existence, duties, composition or conduct of any committee of the Board of Directors.
SECTION 4 — OFFICERS
Section 4.1 Generally.
The officers of the Corporation shall consist of a Chief Executive Officer, a President, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurer, a Chief Financial Officer and other officers as may from time to time be appointed by the Board of Directors. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any number of offices may be held by the same person. The compensation of officers appointed by the Board of Directors shall be determined from time to time by the Board of Directors or a committee thereof or by the officers as may be designated by resolution of the Board of Directors.
Section 4.2 President.
Unless otherwise determined by the Board of Directors, the President shall be the Chief Executive Officer of the Corporation. Subject to the provisions of these bylaws and to the direction of the Board of Directors, he or she shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers that are commonly incident to the office of chief executive or which are delegated to him or her by the Board of Directors. He or she shall have the power to sign all stock certificates, contracts and other instruments of the Corporation that are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the Corporation.
Section 4.3 Vice President.
Each Vice President shall have the powers and duties delegated to him or her by the Board of Directors or the President. One Vice President may be designated by the Board of Directors to perform the duties and exercise the powers of the President in the event of the President’s absence or disability.
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Section 4.4 Secretary and Assistant Secretaries.
The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings of the stockholders and the Board of Directors. He or she shall have charge of the corporate books and shall perform other duties as the Board of Directors may from time to time prescribe.
Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or, if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary.
Section 4.5 Chief Financial Officer, Treasurer and Assistant Treasurers.
The Chief Financial Officer shall keep or cause to be kept the books of account of the Corporation in a thorough and proper manner and shall render statements of the financial affairs of the Corporation in such form and as often as required by the Board of Directors or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the Corporation. The Chief Financial Officer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. The President may direct the Treasurer or any Assistant Treasurer to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.
Section 4.6 Delegation of Authority.
The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.
Section 4.7 Removal.
The Board of Directors may remove any officer of the Corporation at any time, with or without cause.
Section 4.8 Action with Respect to Securities of Other Companies.
Unless otherwise directed by the Board of Directors, the President, or any officer of the Corporation authorized by the President, shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders or equityholders of, or with respect to any action of, stockholders or equityholders of any other entity in which the Corporation may hold securities and otherwise to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of securities in such other entity.
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SECTION 5 — STOCK
Section 5.1 Certificates of Stock.
Shares of the capital stock of the Corporation may be certificated or uncertificated, as provided in the DGCL. Stock certificates shall be signed by, or in the name of the Corporation by, (i) the Chairman of the Board (if any) or the Vice Chairman of the Board (if any), the President or a Vice President, and (ii) the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, or the Chief Financial Officer certifying the number of shares owned by such stockholder. Any signatures on a certificate may be by facsimile.
Section 5.2 Transfers of Stock.
Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation (within or without the State of Delaware) or by transfer agents designated to transfer shares of the stock of the Corporation.
Section 5.3 Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to regulations as the Board of Directors may establish concerning proof of the loss, theft or destruction and concerning the giving of a satisfactory bond or indemnity.
Section 5.4 Regulations.
The issue, transfer, conversion and registration of certificates of stock of the Corporation shall be governed by other regulations as the Board of Directors may establish.
Section 5.5 Record Date.
(a) In order for the Corporation to determine the stockholders of the Corporation entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may, except as otherwise required by applicable law, fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date shall not be more than 60 nor less than 10 days before the date of any meeting of stockholders. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders of the Corporation shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
(b) A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders of the Corporation shall apply to any postponement or adjournment of the meeting, provided, that the Board of Directors may fix a new record date for determination of the stockholders entitled to vote at a postponed or adjourned meeting, and in such case shall also fix the record date of the stockholders entitled to notice of such postponed or
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adjourned meeting at the same or on an earlier date as that fixed for determination of the stockholders entitled to vote at the postponed or adjourned meeting.
(c) In order that the Corporation may determine the stockholders of the Corporation entitled to consent to corporate action in writing without a meeting (until such time as stockholders are no longer permitted to act by written consent pursuant to the Certificate of Incorporation), the Board of Directors may fix a record date, which date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request that the Board of Directors fix a record date. The Board of Directors shall promptly, but in any event no later than 10 days after the date on which such a request is received, adopt a resolution fixing the record date (unless the Board of Directors has previously fixed a record date pursuant to the first sentence hereof). If no record date has been fixed by the Board of Directors pursuant to the first sentence hereof or otherwise within 10 days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, where no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered agent in Delaware, its principal place of business or to any officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are reported. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be the close of business on the date on which the Board of Directors adopts the resolution taking the prior action.
(d) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which shall not be more than sixty (60) days prior to such other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
SECTION 6 — NOTICES
Section 6.1 Notices.
Except as otherwise provided herein or permitted by applicable law, notices to stockholders shall be in writing and delivered personally or mailed to the stockholders at their addresses appearing on the books of the Corporation. If mailed, notice to a stockholder of the Corporation shall be deemed given when deposited in the mail, postage prepaid, directed to a stockholder at such stockholder’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to
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stockholders of the Corporation may be given by electronic transmission in the manner provided in Section 232 of the DGCL.
Section 6.2 Waivers.
A written waiver of any notice, signed by a stockholder or director, or a waiver by electronic transmission by such person or entity, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person or entity. Neither the business nor the purpose of any meeting need be specified in the waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
SECTION 7— MISCELLANEOUS
Section 7.1 Corporate Seal.
The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.
Section 7.2 Reliance upon Books, Reports, and Records.
Each director and each member of any committee designated by the Board of Directors shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books and records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers, agents or employees, or committees of the Board of Directors so designated, or by any other person or entity as to matters which such director or committee member reasonably believes are within such other person’s or entity’s professional or expert competence and that has been selected with reasonable care by or on behalf of the Corporation.
Section 7.3 Fiscal Year.
The fiscal year of the Corporation shall be as fixed by the Board of Directors. If the Board of Directors makes no determination to the contrary, the fiscal year of the Corporation shall be the twelve months ending with December 31, in each year.
Section 7.4 Time Periods.
In applying any provision of these bylaws that requires that an act be done or not be done a specified number of days before an event or that an act be done during a specified number of days before an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.
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Section 7.5 Conflicts.
In the event of any conflict between the terms and provisions of these bylaws and those contained in the Stockholders Agreement, the terms and provisions of the Stockholders Agreement shall govern.
SECTION 8 — AMENDMENTS
These bylaws may be altered, amended or repealed in accordance with the Certificate of Incorporation and the DGCL.
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EXHIBIT 4.1
Execution Version
Party City Holdco Inc.
as Issuer
The Guarantors Party Hereto From Time to Time,
as Guarantors,
Wilmington Savings Fund Society, FSB,
as Trustee, Collateral Trustee, Paying Agent and Registrar
12.00% Senior Secured Second Lien PIK Toggle Notes due 2029
INDENTURE
Dated as of October 12, 2023
TABLE OF CONTENTS
Page
| Article 1 | ||
| Definitions and Incorporation by Reference | ||
| Section 1.01. | Definitions | 1 |
| Section 1.02. | Other Definitions | 39 |
| Section 1.03. | Rules of Construction | 40 |
| Section 1.04. | Acts of Holders | 41 |
| Section 1.05. | Pro Forma Basis | 43 |
| Section 1.06. | Limited Condition Acquisitions | 45 |
| Article 2 | ||
| The Securities | ||
| Section 2.01. | Amount of Securities | 46 |
| Section 2.02. | Form and Dating; Terms | 47 |
| Section 2.03. | Execution and Authentication | 48 |
| Section 2.04. | Registrar and Paying Agent | 49 |
| Section 2.05. | Paying Agent to Hold Money in Trust | 50 |
| Section 2.06. | Holder Lists | 50 |
| Section 2.07. | Transfer and Exchange | 50 |
| Section 2.08. | Replacement Securities | 51 |
| Section 2.09. | Outstanding Securities | 52 |
| Section 2.10. | Temporary Securities | 52 |
| Section 2.11. | Cancellation | 52 |
| Section 2.12. | Defaulted Interest | 52 |
| Section 2.13. | CUSIP Numbers, ISINs, etc | 53 |
| Section 2.14. | Calculation of Principal Amount of Securities | 53 |
| Section 2.15. | Tax Treatment | 53 |
| Article 3 | ||
| Redemption | ||
| Section 3.01. | Redemption | 54 |
| Section 3.02. | Applicability of Article | 54 |
| Section 3.03. | Notices to Trustee | 54 |
| Section 3.04. | Selection of Securities to Be Redeemed | 54 |
| Section 3.05. | Notice of Optional Redemption | 55 |
| Section 3.06. | Effect of Notice of Redemption | 56 |
| Section 3.07. | Deposit of Redemption Price | 57 |
| Section 3.08. | Securities Redeemed in Part | 57 |
| Section 3.09. | Optional Redemption | 57 |
| i |
| Article 4 | ||
| Covenants | ||
| Section 4.01. | Payment of Securities | 58 |
| Section 4.02. | Reports and Other Information | 58 |
| Section 4.03. | Indebtedness | 62 |
| Section 4.04. | Liens | 69 |
| Section 4.05. | No Further Negative Pledges | 69 |
| Section 4.06. | Restricted Payments; Certain Payments of Indebtedness | 70 |
| Section 4.07. | Restrictions on Subsidiary Distributions | 74 |
| Section 4.08. | Investments | 76 |
| Section 4.09. | Asset Sales | 79 |
| Section 4.10. | Sales and Lease-Backs | 85 |
| Section 4.11. | Transactions with Affiliates | 85 |
| Section 4.12. | Amendments of or Waivers with Respect to Certain Indebtedness | 87 |
| Section 4.13. | Fiscal Year | 87 |
| Section 4.14. | Change of Control | 87 |
| Section 4.15. | Post-Closing Items | 90 |
| Section 4.16. | Compliance Certificate | 91 |
| Section 4.17. | Limitation on Guarantees of Indebtedness by Restricted Subsidiaries | 91 |
| Section 4.18. | Further Instruments and Acts | 92 |
| Section 4.19. | Permitted Activities of Parent Companies | 92 |
| Article 5 | ||
| Successor Company | ||
| Section 5.01. | Merger, Consolidation or Sale of All or Substantially All Assets | 94 |
| Section 5.02. | Successor Corporation Substituted | 96 |
| Article 6 | ||
| Defaults and Remedies | ||
| Section 6.01. | Events of Default | 96 |
| Section 6.02. | Acceleration | 99 |
| Section 6.03. | Other Remedies | 100 |
| Section 6.04. | Waiver of Past Defaults | 101 |
| Section 6.05. | Control by Majority | 101 |
| Section 6.06. | Limitation on Suits | 101 |
| Section 6.07. | Rights of the Holders to Receive Payment | 102 |
| Section 6.08. | Collection Suit by Trustee | 102 |
| Section 6.09. | Trustee May File Proofs of Claim | 102 |
| Section 6.10. | Priorities | 102 |
| Section 6.11. | Undertaking for Costs | 103 |
| Section 6.12. | Waiver of Stay or Extension Laws | 103 |
| ii |
| Article 7 | ||
| Trustee | ||
| Section 7.01. | Duties of Trustee | 103 |
| Section 7.02. | Rights of Trustee | 105 |
| Section 7.03. | Individual Rights of Trustee | 108 |
| Section 7.04. | Trustee’s Disclaimer | 109 |
| Section 7.05. | Notice of Defaults | 109 |
| Section 7.06. | Compensation and Indemnity | 109 |
| Section 7.07. | Replacement of Trustee or Collateral Trustee | 110 |
| Section 7.08. | Successor Trustee or Collateral Trustee by Merger | 112 |
| Section 7.09. | Eligibility; Disqualification | 112 |
| Section 7.10. | Preferential Collection of Claims Against the Issuer | 112 |
| Article 8 | ||
| Discharge of Indenture; Defeasance | ||
| Section 8.01. | Discharge of Liability on Securities; Defeasance | 113 |
| Section 8.02. | Conditions to Defeasance | 114 |
| Section 8.03. | Application of Trust Money | 116 |
| Section 8.04. | Repayment to Issuer | 116 |
| Section 8.05. | Indemnity for Government Securities | 116 |
| Section 8.06. | Reinstatement | 116 |
| Article 9 | ||
| Amendments and Waivers | ||
| Section 9.01. | Without Consent of the Holders | 117 |
| Section 9.02. | With Consent of the Holders | 118 |
| Section 9.03. | Revocation and Effect of Consents and Waivers | 120 |
| Section 9.04. | Notation on or Exchange of Securities | 121 |
| Section 9.05. | Trustee to Sign Amendments | 121 |
| Section 9.06. | Payment for Consent | 121 |
| Section 9.07. | Additional Voting Terms; Calculation of Principal Amount | 122 |
| Article 10 | ||
| Guarantees | ||
| Section 10.01. | Guarantees | 122 |
| Section 10.02. | Limitation on Liability | 123 |
| Section 10.03. | Successors and Assigns | 125 |
| Section 10.04. | No Waiver | 125 |
| Section 10.05. | Modification | 125 |
| Section 10.06. | Execution of Supplemental Indenture for Future Guarantors | 125 |
| Section 10.07. | Evidence of Guarantee | 125 |
| Section 10.08. | Benefits Acknowledged | 126 |
| iii |
| Article 11 | ||
| Security | ||
| Section 11.01. | Security Interests | 126 |
| Section 11.02. | Intercreditor Agreements | 127 |
| Section 11.03. | Further Assurances | 127 |
| Section 11.04. | Impairment of Security Interests | 127 |
| Section 11.05. | Maintenance of Collateral; Collateral Trustee Obligations | 127 |
| Section 11.06. | Release of Liens in Respect of the Obligations | 128 |
| Section 11.07. | The Collateral Trustee | 130 |
| Section 11.08. | Co-Collateral Trustee | 130 |
| Section 11.09. | New Guarantors; After-Acquired Property | 130 |
| Section 11.10. | Reserved | 131 |
| Article 12 | ||
| Miscellaneous | ||
| Section 12.01. | Notices | 131 |
| Section 12.02. | Certificate and Opinion as to Conditions Precedent | 132 |
| Section 12.03. | Statements Required in Certificate or Opinion | 133 |
| Section 12.04. | When Securities Disregarded | 133 |
| Section 12.05. | Rules by Trustee, Paying Agent and Registrar | 133 |
| Section 12.06. | Legal Holidays | 133 |
| Section 12.07. | GOVERNING LAW; WAIVER OF JURY TRIAL | 134 |
| Section 12.08. | No Recourse Against Others | 134 |
| Section 12.09. | Successors | 134 |
| Section 12.10. | Multiple Originals | 134 |
| Section 12.11. | Table of Contents; Headings | 134 |
| Section 12.12. | Indenture Controls | 134 |
| Section 12.13. | Severability | 134 |
| Section 12.14. | Force Majeure | 135 |
| Section 12.15. | U.S.A. Patriot Act | 135 |
| Section 12.16. | No Adverse Interpretation of Other Agreements | 135 |
Schedule 1.01 |
— | Adjustments to Consolidated Adjusted EBITDA |
| Appendix A | — | Transfer Restrictions |
| Exhibits | ||
| Exhibit A | — | Form of Security |
| Exhibit B | — | Form of Transferee Letter of Representation |
| Exhibit C | — | Form of Supplemental Indenture |
| Exhibit D | — | Form of Security Agreement |
| Exhibit E | — | Form of Company Notification of PIK Interest Election |
| Exhibit F | — | Form of Company Notification and Direction to the Trustee Under Section 2.02 of the Indenture Regarding the Payment of PIK Interest |
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INDENTURE (the “Indenture”) dated as of October 12, 2023, among PARTY CITY HOLDCO INC., a Delaware corporation (the “Issuer” or the “Company”), the guarantors from time to time party hereto, and Wilmington Savings Fund Society, FSB, as trustee (together with its successors and assigns, in such capacity the “Trustee”), collateral agent (together with its successors and assigns, in such capacity, the “Collateral Trustee”), paying agent (in such capacity, the “Paying Agent”), and registrar (in such capacity, the “Registrar”) for the benefit of the Secured Parties.
WHEREAS, the Company and certain affiliated debtors filed the Fourth Amended Joint Plan of Reorganization of Party City Holdco, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code on July 31, 2023, which was confirmed by the United States Bankruptcy Court for the Southern District of Texas on September 6, 2023 (as may be amended, supplemented, or otherwise modified from time to time, including all exhibits, schedules, supplements, appendices, annexes, and attachments thereto, the “Plan”); and
WHEREAS, the Plan provides that the Company must issue the Original Securities (as defined below) on the terms and subject to the conditions of the Plan; and
WHEREAS, the Company, the Trustee and the Collateral Trustee are entering into this Indenture in furtherance of the aforesaid provisions of the Plan.
NOW THEREFORE, each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders (as defined below) of (a) $232,394,231 aggregate principal amount of the Issuer’s 12.00% Senior Secured Second Lien PIK Toggle Notes due 2029, issued pursuant to this Indenture (as defined below) on the Issue Date (the “Original Securities”), (b) any Additional Securities (as defined herein) that may be issued after the Issue Date in the form of Exhibit A, and (c) any PIK Securities (as defined herein) that may be issued in connection with the payment of interest or as otherwise set forth herein, in the form of Exhibit A, (all such securities in clauses (a), (b) and (c) being referred to collectively as the “Securities”). The Original Securities and any Additional Securities (as defined herein) and PIK Securities (as defined herein) shall constitute a single series hereunder. Subject to the conditions and compliance with the covenants set forth herein, the Issuer may issue an unlimited aggregate principal amount of Additional Securities.
Article
1
Definitions and Incorporation by Reference
Section 1.01. Definitions.
“ABL Administrative Agent” means JPMorgan Chase Bank, N.A. (and any successor or thereto named in accordance with the terms of the ABL Credit Agreement)
“ABL Collateral Documents” means, collectively, the Pledge and Security Agreement, the ABL Mortgages, short-form intellectual property security agreements,
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and any other documents granting a Lien upon the Collateral as security for payment of the ABL Obligations.
“ABL Credit Agreement” means the ABL credit agreement, dated as of October 12, 2023, among Parent Borrower, as parent borrower under the ABL Facility, the other borrowers party thereto, the Subsidiaries of the borrowers party thereto from time to time, the Issuer, PC Intermediate, the ABL Lenders, the ABL Administrative Agent, as administrative agent and collateral agent, and the other agents party thereto, as amended, restated, amended and restated, supplemented, waived, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified in whole or in part from time to time. For the avoidance of doubt, in no event shall “ABL Credit Agreement” refer to more than one ABL credit agreement (as amended, restated, amended and restated, supplemented, waived, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified).
“ABL Facility” means (1) the credit facilities provided under the ABL Credit Agreement, including one or more debt facilities or other financing arrangements (including, without limitation indentures) providing for revolving credit loans, term loans, letters of credit, notes, debt securities or other indebtedness for borrowed money that replace or refinance such credit facility, including any such replacement or refinancing facility or indenture that increases or decreases the amount permitted to be borrowed thereunder or alters the maturity thereof and whether by the same or any other agent, lender or group of lenders, and any amendments, supplements, modifications, extensions, renewals, restatements, amendments and restatements or refundings thereof or any such indentures or credit facilities that replace or refinance such credit facility and (2) whether or not the ABL Credit Agreement referred to in clause (1) remains outstanding, if designated by the Issuer to be included in the definition of “ABL Facility,” one or more (i) debt facilities or commercial paper facilities, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrower from lenders against such receivables) or letters of credit, (ii) debt securities, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances) or (iii) instruments or agreements evidencing any other Indebtedness, in each case, with the same or different arrangements, agents, lenders, borrowers or issuer and, in each case, as amended, restated, amended and restated, supplemented, waived, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified in whole or in part from time to time.
“ABL Facility Documents” means the ABL Credit Agreement, any promissory notes issued pursuant to the ABL Credit Agreement in accordance with its terms, any related letters of credit or letter of credit applications, the ABL Collateral Documents and the ABL Intercreditor Agreement. Any reference in this Indenture or any other Notes Document to an ABL Facility Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto.
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“ABL Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of October 12, 2023, by and among the ABL Administrative Agent, the Collateral Trustee, and, from time to time, any other representative or agent of each class of the secured parties party thereto, and the Issuer and the Guarantors from time to time party thereto, as such agreement may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance therewith and with the terms of this Indenture.
“ABL Lender” means a lender from time to time under the ABL Credit Agreement.
“ABL Mortgages” means any mortgage, deed of trust or other agreement which conveys or evidences a Lien in favor of the administrative agent named in the ABL Credit Agreement on owned real property of a loan party (as defined in the ABL Credit Agreement).
“ABL Obligations” has the meaning assigned to “Obligations” in the ABL Credit Agreement.
“ABL Payoff Date” means the date on or as of which the ABL Obligations under the ABL Credit Agreement (in accordance with its terms as of the Issue Date) have been paid in full, renewed and/or extended, refunded, replaced, restructured, repaid, or refinanced).
“Account” has the meaning assigned to such term in the Security Agreement.
“ACH” means automated clearing house transfers.
“Additional Securities” means additional Securities issued from time to time under this Indenture in accordance with Section 2.01, it being understood that any Securities issued in replacement of any Original Securities pursuant to Section 2.08 shall not be Additional Securities.
“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” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.
“Anagram Issuers” means Anagram Holdings, LLC, a Delaware limited liability company, and Anagram International, Inc., a Minnesota corporation.
“Appendix” means Appendix A hereto.
“Applicable Premium” means, with respect to any Security on any redemption date, the greater of:
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(1) 1.0% of the principal amount of such Security; and
(2) the excess, if any, of:
(a) the present value at such redemption date of (i) the redemption price of such Security at January 11, 2029, plus (ii) all required remaining scheduled interest payments due on such Security through January 11, 2029 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over
(b) the then outstanding principal amount of such Security,
as calculated by the Issuer or on behalf of the Issuer by such Person as the Issuer shall designate; provided that such calculation shall not be a duty or an obligation of the Trustee, Collateral Trustee, Paying Agent or Registrar.
“Banking Services” means each and any of the following bank services provided to any Notes Party (a) under any arrangement that is in effect on the Issue Date between any Notes Party and a counterparty that is the ABL Administrative Agent or an ABL Lender or an Affiliate of such Persons as of the Issue Date or (b) under any arrangement that is entered into after the Issue Date by any Notes Party with any counterparty that is the administrative agent under the ABL Credit Agreement or an ABL Lender or an Affiliate of such Persons at the time such arrangement is entered into: (i) commercial credit cards, (ii) stored value cards, (iii) purchasing cards and (iv) treasury management services (including, without limitation, controlled disbursement, ACH transactions, return items and interstate depository network services).
“Banking Services Obligations” of the Notes Parties means any and all obligations of the Notes Parties, whether absolute or contingent and however and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), in connection with Banking Services, in each case, that has been designated to the Trustee in writing by the Issuer as being a Banking Services Obligation for the purposes of the Notes Documents.
“Bankruptcy Code” means title 11 of the United States Code, as amended.
“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or foreign law for relief of debtors.
“Borrowing Base” shall mean, as of any date, the sum of (i) 95% of the face amount of the credit card receivables of the Issuer and the Guarantors as of the end of the most recent fiscal quarter preceding such date, (ii) 97.5% of the book value of the inventory of the Issuer and the Guarantors as of the end of the most recent fiscal quarter preceding
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such date and (iii) 95% of the face amount of the trade receivables of the Issuer and the Guarantors as of the end of the most recent fiscal quarter preceding such date, in each case calculated on a consolidated basis in accordance with GAAP (calculated on a Pro Forma Basis to give effect to any Investment, acquisition, disposition, mergers, consolidations and discontinued operation, in each case with such pro forma adjustments as are consistent with the pro forma adjustment provisions set forth in Section 1.05).
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Chicago are authorized or required by law to remain closed.
“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.
“Capital Markets Indebtedness” means any Indebtedness consisting of bonds, debentures, notes or other similar debt securities issued in (a) a public offering registered under the Securities Act, (b) a private placement to institutional investors that is resold in accordance with Rule 144A or Regulation S under the Securities Act, whether or not it includes registration rights entitling the holders of such debt securities to registration thereof with the SEC or (c) a private placement to multiple institutional investors. For the avoidance of doubt, the term “Capital Markets Indebtedness” does not include any Indebtedness under commercial bank facilities, Indebtedness incurred in connection with a Sale and Lease-Back Transaction, Indebtedness incurred in the ordinary course of business of the Issuer or any of its Restricted Subsidiaries or recourse transfer of any financial asset or any other type of Indebtedness incurred in a manner not customarily viewed as a “securities offering.”
“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing, but excluding for the avoidance of doubt any Indebtedness convertible into or exchangeable for any of the foregoing.
“Captive Insurance Subsidiary” means any Subsidiary of the Parent Borrower that is subject to regulation as an insurance company (or any Subsidiary thereof).
“Cash” means money, currency or a credit balance in any demand or Deposit Account.
“Cash Equivalents” means, as at any date of determination, (a) readily marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States government or (ii) issued by any agency of the United States, the obligations of which are backed by the full faith and credit of the United
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States, in each case maturing within one year after such date; (b) readily marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-2 from S&P or at least P-2 from Moody’s; (c) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (d) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any commercial bank organized under the laws of the United States or any state thereof or the District of Columbia that has a capital surplus of not less than $500,000,000 (each commercial bank referred to herein as a “Cash Equivalent Bank”); (e) shares of any money market mutual fund (i) whose investment guidelines restrict 95% of such fund’s investments to the types of investments referred to in clauses (a) and (b) above, (ii) has net assets of not less than $250,000,000, and (iii) has the highest rating obtainable from either S&P or Moody’s; and (f) with respect to Foreign Subsidiaries, investments of the types described in clause (d) above issued by a Cash Equivalent Bank or any commercial bank of recognized international standing chartered in the country where such Foreign Subsidiary is domiciled having unimpaired capital and surplus of at least $500,000,000. In the case of Investments by any Foreign Subsidiary that is a Subsidiary or Investments made in a country outside the United States, Cash and Cash Equivalents shall also include (x) investments of the type and maturity described in clauses (a) through (e) above of foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies and (y) other short-term investments utilized by Foreign Subsidiaries that are Subsidiaries in accordance with normal investment practices for cash management in investments analogous to the foregoing investments described in clauses (a) through (e) of the first sentence of this definition of “Cash Equivalents”.
“Change of Control” means the occurrence of any of the following after the Issue Date:
(1) the sale, lease or transfer, in one or a series of related transactions (other than by way of merger or consolidation), of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries, taken as a whole, to any Person; or
(2) the Issuer becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by (A) any Person or (B) Persons that are together (1) a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), or (2) are acting, for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), as a group, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of more than 50% of the total voting power of the Voting Stock of the Issuer or any of its direct or indirect Parent Companies holding directly or indirectly 100% of the total voting power of the Voting Stock of the Issuer, other than in connection with any transaction or
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transactions in which the Issuer shall become a Wholly-Owned Subsidiary of a Parent Company. Notwithstanding the preceding or any provision of Section 13d-3 of the Exchange Act, (i) a Person or group shall not be deemed to beneficially own Voting Stock subject to a stock or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Voting Stock in connection with the transactions contemplated by such agreement and (ii) a Person or group will not be deemed to beneficially own the Voting Stock of another Person as a result of its ownership of Voting Stock or other securities of such other Person’s parent entity (or related contractual rights) unless it owns more than 50% of the total voting power of the Voting Stock entitled to vote for the election of directors of such parent entity having a majority of the aggregate votes on the board of directors (or similar body) of such parent entity.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” has the meaning set forth in Article 2 of the Security Agreement.
“Collateral Access Agreement” has the meaning assigned to such term in the Security Agreement.
“Collateral Trustee” has the meaning set forth in the preamble.
“Company” or “Issuer” means Party City Holdco Inc., a Delaware corporation.
“Consolidated Adjusted EBITDA” means, for any period, an amount determined for the Issuer and its Restricted Subsidiaries on a consolidated basis equal to the total of (a) Consolidated Net Income for such period plus (b) the sum, without duplication, of (to the extent deducted in calculating Consolidated Net Income, other than in respect of clauses (xii) and (xiv)), the amounts of (provided that, in no event shall revenue synergies be added-back to Consolidated Net Income in calculating Consolidated Adjusted EBITDA hereunder):
(i) consolidated interest expense (including (A) fees and expenses paid to the Trustee, Collateral Trustee, Paying Agent and Registrar (including any successor(s)) in connection with its services hereunder, (B) other bank, administrative agency (or trustee) and financing fees, (C) costs of surety bonds in connection with financing activities and (D) commissions, discounts and other fees and charges owed with respect to letters of credit, bankers’ acceptance or any similar facilities or financing and hedging agreements);
(ii) taxes paid and provisions for taxes based on income, profits or capital of the Issuer and its Restricted Subsidiaries, including, in each case federal, state, provincial, local, foreign, unitary, franchise, excise, property, withholding and similar taxes, including any penalties and interest;
(iii) Consolidated Depreciation and Amortization Expense for such period;
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(iv) other non-Cash charges; provided that if any such non-Cash charge represents an accrual or reserve for potential Cash items in any future period, (A) the Issuer may determine not to add back such non-Cash charge in the current period and (B) to the extent the Issuer does decide to add back such non-Cash charge, the Cash payment in respect thereof in such future period shall be subtracted from Consolidated Adjusted EBITDA in the period in which such payment is made;
(v) (A) Transaction Costs and (B) transaction fees, costs and expenses incurred (1) in connection with the consummation of any transaction (or any transaction proposed and not consummated) permitted under this Indenture, including the issuance of Capital Stock, Investments, acquisitions, dispositions, recapitalizations, mergers, option buyouts or the incurrence or repayment of Indebtedness or similar transactions, (2) in connection with an underwritten public offering or (3) to the extent reimbursable by third parties pursuant to indemnification provisions or similar agreements or insurance; provided that, in respect of any fees, costs and expenses incurred pursuant to clause (3) above, the Issuer in good faith expects to receive reimbursement for such fees, costs and expenses within the next four Fiscal Quarters (it being understood that to the extent not actually received within such Fiscal Quarters, such reimbursement amounts shall be deducted in calculating Consolidated Adjusted EBITDA for such Fiscal Quarters);
(vi) the amount of any expense or deduction associated with any Restricted Subsidiary attributable to non-controlling interests or minority interests of third parties;
(vii) [reserved];
(viii) the amount of any one-time restructuring charge or reserve, including in connection with (A) acquisitions permitted hereunder after the Issue Date and (B) the consolidation or closing of facilities, stores or distribution centers during such period;
(ix) earn-out obligations incurred in connection with any Permitted Acquisition or other Investment permitted pursuant to Section 4.08 and paid or accrued during such period and on similar acquisitions and Investments completed prior to the Issue Date;
(x) pro forma “run rate” cost savings, product margin synergies (including increased share of shelf), operating expense reductions and product cost (including sourcing) and other synergies (net of the amount of actual amounts realized) reasonably identifiable and factually supportable (in the good faith determination of the Issuer) related to and projected by the Issuer in good faith to result from actions taken or with respect to which substantial steps have been taken or are expected to be taken (in the good faith determination of the Issuer) within 18 months after the occurrence of, (A) the Transactions and (B) after the
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Issue Date, permitted asset sales, acquisitions, Investments, dispositions, operating improvements, restructurings, cost saving initiatives and certain other similar initiatives and specified transactions; provided that the aggregate amount of such costs savings, operating expense reductions and synergies under this clause (x) (other than in connection with any mergers, business combinations, acquisitions or divestures) shall not exceed, together with any amounts added back pursuant to clause (xi) and pursuant to any pro forma adjustment in accordance with Section 1.05, 25.0% of Consolidated Adjusted EBITDA in any four-Fiscal Quarter period (calculated before giving effect to any such add-backs and adjustments);
(xi) costs, charges, accruals, reserves or expenses attributable to the undertaking and/or implementation of cost savings initiatives, operating expense reductions, integration, transition, facilities opening and pre-opening, business optimization and other restructuring costs, charges, accruals, reserves and expenses (including, without limitation, inventory optimization programs, software development costs and costs related to the closure or consolidation of facilities, stores or distribution centers (without duplication of amounts in clause (ix) above) and curtailments, costs related to entry into new markets, consulting fees, signing costs, retention or completion bonuses, relocation expenses, severance payments, modifications to pension and post-retirement employee benefit plans, new systems design and implementation costs and project startup costs); provided that the aggregate amount of any such costs, charges, accruals, reserves or expenses under this clause (xi) (other than any applicable adjustments set forth in Schedule 1.01 and other than in connection with any mergers, business combinations, acquisitions or divestures) shall not exceed, together with any amounts added back pursuant to clause (x) and pursuant to any pro forma adjustment in accordance with Section 1.05, 25.0% of Consolidated Adjusted EBITDA in any four-Fiscal Quarter period (calculated before giving effect to any such add-backs and adjustments);
(xii) business interruption insurance in an amount representing the earnings for the applicable period that such proceeds are intended to replace (whether or not received so long as the Issuer in good faith expects to receive the same within the next four Fiscal Quarters (it being understood that to the extent not actually received within such Fiscal Quarters, such proceeds shall be deducted in calculating Consolidated Adjusted EBITDA for such Fiscal Quarters));
(xiii) unrealized net losses in the fair market value of any arrangements under Hedge Agreements;
(xiv) Cash actually received (or any netting arrangements resulting in reduced Cash expenditures) during such period, and not included in Consolidated Net Income in any period, to the extent that the non-Cash gain relating to such Cash receipt or netting arrangement was deducted in the calculation of Consolidated Adjusted EBITDA pursuant to clause (c)(i) below for any previous period and not added back; and
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(xv) any non-cash adjustments and charges resulting from the application of fresh start accounting such as the loss of deferred gross profit related to inventory purchased prior to emergence, and amortization of lease incentives no longer allowed post emergence under fresh start accounting;
minus (c) to the extent such amounts increase Consolidated Net Income:
(i) other non-Cash items (excluding any such non-Cash item to the extent it represents the reversal of an accrual or reserve for a potential Cash item in any prior period);
(ii) unrealized net gains in the fair market value of any arrangements under Hedge Agreements; and
(iii) the amount added back to Consolidated Adjusted EBITDA pursuant to clause (b)(xii) above to the extent such business interruption proceeds were not received within the time period required by such clause.
“Consolidated Capital Expenditures” means, for any period, the aggregate amount of all expenditures of the Issuer and its Restricted Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included as additions to property, plant and equipment in the consolidated statement of cash flows of the Issuer and its Restricted Subsidiaries. Notwithstanding the foregoing, Consolidated Capital Expenditures shall not include:
(a) the purchase price of property, plant or equipment or software in an amount equal to the proceeds of asset dispositions of fixed or capital assets that are not required to be applied to prepay ABL Obligations,
(b) expenditures made with tenant allowances received by the Issuer or any of its Restricted Subsidiaries from landlords in the ordinary course of business and subsequently capitalized,
(c) any amounts spent in connection with Investments permitted pursuant to Section 4.08 and expenditures made in connection with the Transactions,
(d) expenditures financed with the proceeds of an issuance of Capital Stock of the Issuer, or a capital contribution to the Issuer,
(e) expenditures that are accounted for as capital expenditures by the Issuer or any Restricted Subsidiary and that actually are paid for by a Person other than the Issuer or any Restricted Subsidiary to the extent neither the Issuer nor any Restricted Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such Person or any other Person (whether before, during or after such period),
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(f) any expenditures which are contractually required to be, and are, advanced or reimbursed to the Notes Parties in Cash by a third party (including landlords) during such period of calculation,
(g) the book value of any asset owned by the Issuer or any Restricted Subsidiary prior to or during such period to the extent that such book value is included as a capital expenditure during such period as a result of such Person reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period; provided that (i) any expenditure necessary in order to permit such asset to be reused shall be included as a capital expenditure during the period in which such expenditure actually is made and (ii) such book value shall have been included in capital expenditures when such asset was originally acquired,
(h) that portion of interest on Indebtedness incurred for capital expenditures which is paid in Cash and capitalized in accordance with GAAP,
(i) expenditures made in connection with the replacement, substitution, restoration, upgrade, development or repair of assets to the extent financed with (x) insurance or settlement proceeds paid on account of the loss of or damage to the assets being replaced, substituted, restored, upgraded, developed or repaired or (y) awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced, or
(j) in the event that any equipment is purchased simultaneously with the trade-in of existing equipment, the gross amount of the credit granted by the seller of such equipment for the equipment being traded in at such time.
“Consolidated Cash Interest Expense” means, for any period, Consolidated Interest Expense for such period, excluding (a) any amount not paid or payable currently in Cash, (b) amortization of deferred financing costs, (c) Transaction Costs otherwise included in Consolidated Interest Expense and (d) any annual agency fees with respect to any Indebtedness, in each case, to the extent included in Consolidated Interest Expense.
“Consolidated Depreciation and Amortization Expense” means, with respect to any Person, for any period, the total amount of depreciation and amortization expense, including the amortization of deferred financing fees and amortization of unrecognized prior service costs and actuarial gains and losses related to pensions and other post-employment benefits, of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP.
“Consolidated Interest Expense” means, for any period (a) total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of the Issuer and its Restricted Subsidiaries on a consolidated basis in accordance with GAAP with respect to all outstanding Indebtedness of the Issuer and its Restricted Subsidiaries, (i) including, (A) all commissions, discounts and other fees and charges owed with respect to Indebtedness of the Issuer and any of its Restricted Subsidiaries and (B) any commitment fees on the unused portion of commitments
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available under the ABL Facility and (ii) excluding (A) any costs associated with obtaining, or breakage costs in respect of, Hedge Agreements and (B) any fees and expenses associated with any permitted dispositions and asset sales, acquisitions and Investments, equity issuances or issuances of Indebtedness (in each case, whether or not consummated), less (c) any Cash interest income of the Issuer or any of its Restricted Subsidiaries actually received during such period. For the avoidance of doubt, Consolidated Interest Expense shall be net of payments made or received under interest rate Hedge Agreements.
“Consolidated Net Income” means, for any period, the net income (or loss) of the Issuer and its Restricted Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP; provided that there shall be excluded, without duplication,
(a) the income (or loss) of any Person (other than a Restricted Subsidiary of the Issuer) in which any other Person (other than the Issuer or any of its Restricted Subsidiaries) has a joint interest, except, with respect to any income, to the extent of the amount of dividends or distributions or other payments (including any ordinary course dividend, distribution or other payment) paid in Cash (or to the extent converted into Cash) to the Issuer or any of its Restricted Subsidiaries by such Person during such period,
(b) gains or losses (less all fees and expenses chargeable thereto) attributable to asset sales or dispositions (including asset retirement costs) or returned surplus assets of any Pension Plan outside of the ordinary course of business,
(c) gains or losses from (i) extraordinary items and (ii) nonrecurring or unusual items (including costs of and payments of legal settlements, fines, judgments or orders),
(d) any unrealized or realized net foreign currency translation or transaction gains or losses impacting net income (including currency re-measurements of Indebtedness and any net gains or losses resulting from Hedge Agreements for currency exchange risk associated with the above or any other currency related risk),
(e) any net gains, charges or losses with respect to (i) disposed, abandoned and discontinued operations (other than assets held for sale) and any accretion or accrual of discounted liabilities in connection with store closures or asset retirement obligations and (ii) facilities, stores or distribution centers that have been closed during such period,
(f) any net income or loss (less all fees and expenses or charges related thereto) attributable to the early extinguishment of Indebtedness,
(g) (i) any charges or expenses incurred pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, pension plan, any stock subscription or shareholder agreement or any distributor equity plan or agreement and (ii) any charges, costs, expenses, accruals or reserves in connection with the rollover, acceleration or payout of Capital Stock held by management of the Issuer or any of its Restricted Subsidiaries, in each case, to the extent
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that (in the case of any Cash charges, costs and expenses) such charges, costs or expenses are funded with net Cash proceeds contributed to the common equity of the Issuer as a capital contribution or as a result of the sale or issuance of Capital Stock (other than Disqualified Capital Stock) of the Issuer,
(h) accruals and reserves that are established within 12 months after the Issue Date that are so required to be established as a result of the Transactions in accordance with GAAP,
(i) any (A) write-off or amortization made in such period of deferred financing costs and premiums paid or other expenses incurred directly in connection with any early extinguishment of Indebtedness or (B) good will or other asset impairment charges, write-offs or write-downs, and
(j) (i) effects of adjustments (including, without limitation, the effects of such adjustments pushed down to the Issuer and its Restricted Subsidiaries) in such Person’s consolidated financial statements pursuant to GAAP (including in the inventory, property and equipment, software, goodwill, intangible assets, in-process research and development, deferred revenue and debt line items thereof) resulting from the application of recapitalization accounting or purchase accounting, as the case may be, in relation to the Transactions or any consummated acquisition or the amortization or write-off of any amounts thereof and (ii) the cumulative effect of changes in accounting principles.
“Consolidated Total Assets” means, at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption “total assets” (or any like caption) on a consolidated balance sheet of the Issuer and its Restricted Subsidiaries at such date.
“Consolidated Total Debt” means, as at any date of determination, the aggregate principal amount of all funded Indebtedness described in clauses (a), (b), (c), (d) and (f) (with respect to amounts drawn and not reimbursed for a period in excess of five Business Days) of the definition of “Indebtedness” of the Issuer and its Restricted Subsidiaries.
“Cost” means cost determined according to the accounting policies used in the preparation of the Issuer’s most recent audited financial statements prior to the Issue Date (pursuant to which the average cost method of accounting is used for retail inventories and the FIFO method of accounting is being used for wholesale inventories) without regard to intercompany profit or increases for currency exchange rates.
“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; provided that any Default that results solely from the taking of an action that would have been permitted but for the continuation of a previous Default will be deemed to be cured if such previous Default is cured prior to becoming an Event of Default.
“Definitive Security” has the meaning set forth in Appendix A.
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“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.
“Depositary” means, with respect to the Securities issuable or issued in whole or in part in global form, the Person specified in Section 2.04 as the Depositary with respect to the Securities, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.
“Derivative Transaction” means (a) any interest-rate transaction, including any interest-rate swap, basis swap, forward rate agreement, interest rate option (including a cap collar and floor), and any other instrument linked to interest rates that gives rise to similar credit risks (including when-issued securities and forward deposits accepted), (b) any exchange-rate transaction, including any cross-currency interest-rate swap, any forward foreign-exchange contract, any currency option, and any other instrument linked to exchange rates that gives rise to similar credit risks, (c) any equity derivative transaction, including any equity-linked swap, any equity-linked option, any forward equity-linked contract, and any other instrument linked to equities that gives rise to similar credit risk and (d) any commodity (including precious metal) derivative transaction, including any commodity-linked swap, any commodity-linked option, any forward commodity-linked contract, and any other instrument linked to commodities that gives rise to similar credit risks; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Issuer or its Restricted Subsidiaries shall be a Derivative Transaction.
“Disqualified Capital Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is redeemable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely as a result of a change of control or asset sale) pursuant to a sinking fund obligation or otherwise or is redeemable at the option of the holder thereof (other than solely as a result of a change of control or asset sale), in whole or in part, in each case prior to the date 91 days after the earlier of the stated Maturity Date of the Securities or the date the Securities are no longer outstanding; provided, however, that if such Capital Stock is issued to any current or former employee or to any plan for the benefit of employees, directors, officers, members of management or consultants of the Issuer or its Restricted Subsidiaries or by any such plan to such employees, directors, officers, members of management or consultants, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by the Issuer or its Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s, director’s, officer’s, management member’s or consultant’s termination, death or disability.
“Disregarded Domestic Subsidiary” means any Restricted Subsidiary incorporated or organized under the laws of the United States, any State thereof or the District of Columbia that is treated as a disregarded entity for U.S. federal income tax purposes that holds directly, or indirectly through one or more disregarded entities, the
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equity and/or indebtedness treated as equity for U.S. federal income tax purposes, of one or more Foreign Subsidiaries or one or more FSHCO Subsidiaries.
“Domestic Subsidiaries” means all Restricted Subsidiaries incorporated or organized under the laws of the United States, any State thereof or the District of Columbia.
“DTC” or “Depository” means The Depository Trust Company.
“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.
“ERISA” means the Employment Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Excluded Asset Sale” means:
(a) sales or other dispositions among Notes Parties or sales or other dispositions among Restricted Subsidiaries that are not Notes Parties (upon voluntary liquidation or otherwise) (for the avoidance of doubt, any such sales or dispositions by a Notes Party to a Person that is not a Notes Party shall be treated as an Investment and shall be otherwise made in compliance with Section 4.08);
(b) (i) the liquidation or dissolution of any Restricted Subsidiary (so long as, in the case of the liquidation or dissolution of the Subsidiary Borrower (as defined in the ABL Credit Agreement), the Parent Borrower receives any assets of such entity) or change in form of entity of any Restricted Subsidiary if the Issuer determines in good faith that such liquidation, dissolution or change in form is in the best interests of the Issuer, is not materially disadvantageous to the Holders and one or more Restricted Subsidiaries receives any assets of such dissolved or liquidated Restricted Subsidiary and (ii) any merger, amalgamation, dissolution, liquidation or consolidation, the purpose of which is to effect a sale or disposition otherwise permitted under Section 4.09 (other than clause (a) or this clause (b)); provided, further, in the case of a change in the form of entity of any Restricted Subsidiary that is a Notes Party, the security interests in the Collateral shall remain in full force and effect and perfected to the same extent as prior to such change;
(c) (x) sales or leases of inventory or equipment in the ordinary course of business and (y) the leasing or subleasing of real property in the ordinary course of business;
(d) (x) disposals of surplus, obsolete, used or worn out property or other property that, in the reasonable judgment of the Parent Borrower, is no longer useful in its business and (y) any assets acquired in connection with the acquisition of another
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Person or a division or line of business of such Person which the Parent Borrower reasonably determines are surplus assets;
(e) sales of Cash Equivalents for the fair market value thereof;
(f) dispositions, mergers, amalgamations, consolidations or conveyances that constitute Investments permitted pursuant to Section 4.08 (other than Section 4.08(j)), Permitted Liens, Restricted Payments permitted by Section 4.06(a) and Sale and Lease-back Transactions permitted by Section 4.10;
(g) sales or other dispositions of any assets of any Restricted Subsidiary for fair market value; provided that with respect to sales or dispositions (other than any Store Exchange) in an aggregate amount in excess of $17,250,000 or, after the date that the audited financial statements have been received by the Trustee pursuant to Section 4.15(a), if greater, 0.8625% of the Consolidated Total Assets as of the last day of the last Test Period for which financial statements have been delivered pursuant to Section 4.02, at least 75.0% of the consideration for such sale or disposition shall consist of Cash or Cash Equivalents (provided that for purposes of the 75.0% Cash consideration requirement (w) the amount of any Indebtedness or other liabilities (other than Indebtedness or other liabilities that are subordinated to the Securities or that are owed to the Parent Borrower or a Restricted Subsidiary) of the Parent Borrower or any Restricted Subsidiary (as shown on such person’s most recent balance sheet or in the notes thereto) that are assumed by the transferee of any such assets and for which the Parent Borrower and the Restricted Subsidiaries shall have been validly released by all creditors in writing, (x) the amount of any trade-in value applied to the purchase price of any replacement assets acquired in connection with such sale or disposition and (y) any securities received by such Restricted Subsidiary from such transferee that are converted by such Restricted Subsidiary into Cash or Cash Equivalents (to the extent of the Cash or Cash Equivalents received) within 180 days following the closing of the applicable sale or disposition, in each case, shall be deemed to be Cash for purposes of this clause (g); provided, further, that (i) immediately prior to and after giving effect to such sale or disposition, no Event of Default shall have occurred that is continuing on the date on which the agreement governing such sale or disposition is executed and (ii) the Net Proceeds of such sale or disposition (including any “cash boot” arising in connection with a Store Exchange) shall be applied and/or reinvested as (and to the extent) required by Section 4.09;
(h) to the extent that (i) such property is exchanged for credit against the purchase price of substantially similar replacement property or (ii) the proceeds of such disposition are promptly applied to the purchase price of such replacement property;
(i) dispositions of Investments in joint ventures to the extent required by, or made pursuant to, buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
(j) sales, discounting or forgiveness of Accounts in the ordinary course of business or in connection with the collection or compromise thereof;
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(k) leases, subleases, licenses or sublicenses (including the provision of software under an open source license), in each case in the ordinary course of business and which (i) do not materially interfere with the business of the Issuer and the Restricted Subsidiaries or (ii) relate to closed stores;
(l) (i) termination of leases in the ordinary course of business, (ii) the expiration of any option agreement in respect of real or personal property and (iii) any surrender or waiver of contractual rights or the settlement, release or surrender of contractual rights or other litigation claims in the ordinary course of business;
(m) transfers of property subject to casualty, eminent domain or condemnation proceedings (including in lieu thereof);
(n) licenses for the conduct of licensed departments within the Notes Parties’ stores in the ordinary course of business;
(o) as long as no Event of Default then exists or would arise therefrom, bulk sales or other dispositions of the Notes Parties’ Inventory outside of the ordinary course of business in connection with store closings that are conducted on an arm’s-length basis; provided that such store closures and related Inventory dispositions shall not exceed, in any Fiscal Year 10.0% of the number of the Notes Parties’ stores as of the beginning of such Fiscal Year (net of store relocations (x) occurring substantially contemporaneously with, but in no event later than ten Business Days after, the related store closure date and (y) wherein a binding lease has been entered into for a new store opening prior to the related store closure date); provided, further, that all sales of Inventory in connection with store closings in a transaction or series of related transactions shall be in accordance with liquidation agreements and with professional liquidators under customary and commercially reasonable arrangements;
(p) sales of non-core assets acquired in connection with a Permitted Acquisition and sales of Real Estate Assets acquired in a Permitted Acquisition which, within 30 days of the date of the acquisition, are designated in writing to the Trustee as being held for sale and not for the continued operation of a store; provided that no Event of Default shall have occurred and be continuing;
(q) exchanges or swaps, including, without limitation, transactions covered by Section 1031 of the Code, of Real Estate Assets so long as the exchange or swap is made for fair value and on an arm’s length basis for other Real Estate Assets; provided that upon the consummation of such exchange or swap, in the case of any Notes Party, the Collateral Trustee has a perfected Lien having the same priority as any Lien held on the Real Estate Assets so exchanged or swapped;
(r) sales and dispositions for fair market value in an aggregate amount since the Issue Date of up to $20,125,000 or, after the date that the audited financial statements have been received by the Trustee pursuant to Section 4.15(a), if greater, 1.15% of the Consolidated Total Assets as of the last day of the last Test Period for which financial statements have been delivered pursuant to Section 4.02;
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(s) (i) non-exclusive licensing and cross-licensing arrangements involving any technology or other intellectual property of the Issuer or any Restricted Subsidiary in the ordinary course of business and (ii) dispositions of property in the ordinary course of business consisting of the abandonment of intellectual property rights which, in the reasonable good faith determination of the Parent Borrower, are not material to the conduct of the business of the Issuer and the Restricted Subsidiaries; and
(t) terminations of Derivative Transactions.
“Excluded Subsidiary” means (a) any Immaterial Subsidiary, (b) any Domestic Subsidiary that is (and for so long as such Domestic Subsidiary is) prohibited by law, regulation or contractual obligations (to the extent existing on the Issue Date or on the date such Person becomes a Subsidiary (and not entered into in contemplation of such Person becoming a Subsidiary or for the primary purpose of being classified as an Excluded Subsidiary hereunder)) from Guaranteeing the Guaranteed Obligations or that would (and for so long as it would) require a governmental (including regulatory) consent, approval, license or authorization to provide such a Guarantee or where the provision of such Guarantee would result in material adverse tax consequences as reasonably determined by the Issuer, (c) any Foreign Subsidiary, (d) any not-for-profit Subsidiary, (e) any Captive Insurance Subsidiaries, (f) any special purpose entities used for securitization facilities, (g) any Disregarded Domestic Subsidiary, (h) any FSHCO Subsidiary, (i) any direct or indirect Domestic Subsidiary of a Foreign Subsidiary, FSHCO Subsidiary or Disregarded Domestic Subsidiary, and (j) any other Domestic Subsidiary with respect to which, in the reasonable judgment of the Issuer, the burden or cost of providing a Guarantee or a Lien to secure such Guarantee shall outweigh the benefits to be afforded thereby; provided that any Subsidiary that provides a Guarantee in respect of the ABL Obligations shall not be permitted to be an Excluded Subsidiary hereunder for so long as it provides such Guarantee.
“Existing Credit Agreement” means that certain ABL Credit Agreement (as amended, restated, modified or otherwise supplemented from time to time prior to the Issue Date), dated as of August 19, 2015, among, inter alios, the borrowers named therein, certain Subsidiaries of the borrowers from time to time party thereto, as guarantors, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.
“Fair Market Value” means the value that would be paid by a buyer to an unaffiliated seller, determined in good faith by senior management of the Company; provided, that if such value is in excess of $10.0 million, it shall be determined in good faith by the board of directors of the Company (unless otherwise provided in this Indenture) and evidenced by a board resolution.
“FILO Loan” has the meaning assigned to “FILO Loan” in the ABL Credit Agreement.
“Financial Officer” of any Person means the chief financial officer, treasurer, assistant treasurer, vice president of finance or controller of such Person.
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“Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of a Financial Officer of the Issuer that such financial statements fairly present, in all material respects, in accordance with GAAP, the financial condition of the Issuer and its Restricted Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.
“Fiscal Quarter” means a fiscal quarter of any Fiscal Year, such fiscal quarter ending on the later of the retail fiscal quarter and the calendar quarter.
“Fiscal Year” means the fiscal year of the Issuer and its Restricted Subsidiaries ending on December 31 of each calendar year or the Saturday closest to December 31 of each calendar year.
“Fixed Charge Coverage Ratio” means, with respect to any Test Period, the ratio of (a) Consolidated Adjusted EBITDA for such Test Period minus (i) Maintenance Capital Expenditures (except such expenditures financed with Indebtedness other than ABL Obligations) during such period to (b) Fixed Charges for such Test Period, in all cases calculated for the Issuer and its Restricted Subsidiaries on a Pro Forma Basis.
“Fixed Charges” means, with reference to any period, without duplication, the sum of (a) Consolidated Cash Interest Expense, plus (b) the aggregate amount of scheduled principal payments in respect of Indebtedness of the Issuer and its Restricted Subsidiaries paid or payable in Cash during such period (other than payments made by the Issuer or any Restricted Subsidiary to the Issuer or any Restricted Subsidiary), plus (c) the aggregate amount of any mandatory prepayments of principal in respect of the Securities and any Indebtedness permitted under Section 4.03(w) (other than payments made by the Issuer or any Restricted Subsidiary to the Issuer or any Restricted Subsidiary), plus (d) the aggregate amount of federal, state, local and foreign income taxes paid or payable in Cash during such period, plus (e) the aggregate amount of Restricted Payments under Section 4.06(a)(i)(B) (to the extent not otherwise included pursuant to clause (c)), Section 4.06(a)(ii) and Section 4.06(a)(iii) plus (f) scheduled payments in respect of Capital Leases paid or payable in Cash during such period, all calculated for such period for the Issuer and its Restricted Subsidiaries on a consolidated basis.
“Foreign Subsidiary” means, with respect to any Person (1) (A) any Restricted Subsidiary of such Person that is not organized or existing under the laws of the United States, any state thereof or the District of Columbia and (B) any Restricted Subsidiary of such Foreign Subsidiary, and (2) any FSHCO Subsidiary of such Person.
“FSHCO Subsidiary” means any direct or indirect Domestic Subsidiary substantially all of the assets of which consist of the equity and/or indebtedness treated as equity for U.S. federal income tax purposes, of one or more Foreign Subsidiaries.
“GAAP” means generally accepted accounting principles in the United States which are in effect on the Issue Date, except for any reports required to be delivered
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under Section 4.02, which shall be prepared in accordance with GAAP in effect on the date thereof. For purposes of this Indenture, the term “consolidated” with respect to any Person means such Person consolidated with its Restricted Subsidiaries and does not include any Unrestricted Subsidiary.
“Global Securities” has the meaning set forth in Appendix A.
“Government Securities” means securities that are:
(1) direct obligations of the United States for the timely payment of which its full faith and credit is pledged; or
(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States,
which, in either case, are not callable or redeemable at the option of the issuers thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt.
“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state or locality of the United States, the United States, or a foreign government.
“Grantor” has the meaning set forth in the Security Agreement.
“Grantor Supplement” means a supplement to the Security Agreement in substantially the form of Exhibit H attached to the Security Agreement.
“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 letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.
“Guarantee” means the guarantee by any Guarantor of the Issuer’s Obligations under this Indenture and the Securities.
“Guarantor” means each Restricted Subsidiary that Guarantees the Securities in accordance with the terms of this Indenture. On the Issue Date, the Guarantors consist of:
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Party City Holdings Inc., Party City Corporation, PC Intermediate Holdings, Inc., Amscan Inc., Am-Source, LLC and Trisar, Inc.
“Hedge Agreement” means any agreement with respect to any Derivative Transaction between the Issuer or any Restricted Subsidiary and any other Person.
“Holder” or “Holders” means the Person(s) in whose name a Security is registered on the registrar’s books.
“Immaterial Subsidiary” means, as of any date, any Restricted Subsidiary of the Parent Borrower (a) having Consolidated Total Assets in an amount of less than 4.0% of Consolidated Total Assets of the Issuer and its Restricted Subsidiaries and (b) contributing less than 4.0% to consolidated revenues of the Issuer and its Restricted Subsidiaries, in each case, for the most recently ended Test Period for which financial statements have been delivered pursuant to Section 4.02; provided that the Consolidated Total Assets (as so determined) and revenue (as so determined) of all Immaterial Subsidiaries shall not exceed 5.0% of Consolidated Total Assets of the Issuer and its Restricted Subsidiaries or 5.0% of the consolidated revenues of the Issuer and its Restricted Subsidiaries for the relevant Test Period, as the case may be.
“Immediate Family Member” means with respect to any individual, such individual’s child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former spouse, qualified domestic partner, sibling, mother-in-law, father-in-law, son-in-law and daughter-in-law (including adoptive relationships) and any trust, partnership or other bona fide estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals or any private foundation or fund that is controlled by any of the foregoing individuals or any donor-advised fund of which any such individual is the donor.
“Indebtedness”, as applied to any Person, means, without duplication, (a) all indebtedness for borrowed money; (b) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP; (c) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments to the extent the same would appear as a liability on a balance sheet prepared in accordance with GAAP; (d) any obligation owed for all or any part of the deferred purchase price of property or services (excluding (w) any earn out obligation or purchase price adjustment until such obligation becomes a liability on the balance sheet in accordance with GAAP, (x) any such obligations incurred under ERISA, (y) trade accounts payable in the ordinary course of business (including on an inter-company basis), other than trade accounts payable owed to Persons other than Notes Parties which are overdue by more than 90 days and not being contested in good faith by appropriate proceedings, and (z) liabilities associated with customer prepayments and deposits), which purchase price is (i) due more than six months from the date of incurrence of the obligation in respect thereof or (ii) evidenced by a note or similar written instrument; (e) all Indebtedness of others secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person; (f) the face amount
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of any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (g) the guarantee by such Person of the Indebtedness of another; (h) all obligations of such Person in respect of any Disqualified Capital Stock and (i) all net obligations of such Person in respect of any Derivative Transaction, including, without limitation, any Hedge Agreement, whether or not entered into for hedging or speculative purposes; provided that (i) in no event shall obligations under any Derivative Transaction be deemed “Indebtedness” for any calculation of the Total Leverage Ratio, Fixed Charge Coverage Ratio or any other financial ratio under this Indenture except to the extent of any accrued interest in respect of unpaid termination or settlement amounts thereunder and (ii) the amount of Indebtedness of any Person for purposes of clause (e) shall be deemed to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined by such Person in good faith. For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, except to the extent such Person’s liability for such Indebtedness is otherwise limited and only to the extent such Indebtedness would otherwise be included in the calculation of Consolidated Total Debt; provided that, notwithstanding anything herein to the contrary, Indebtedness shall not include, and shall be calculated without giving effect to, the effects of Accounting Standards Codification Topic 815 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose hereunder as a result of accounting for any embedded derivatives created by the terms of such Indebtedness; and any such amounts that would have constituted Indebtedness hereunder but for the application of this proviso shall not be deemed an incurrence of Indebtedness hereunder.
“Intellectual Property” has the meaning assigned to such term in the Security Agreement.
“Intercreditor Agreements” means, collectively, (a) the ABL Intercreditor Agreement and (b) any additional (including a Subordinating Intercreditor Agreement and/or a Pari Intercreditor Agreement) or replacement intercreditor agreement entered into by the Collateral Trustee pursuant to Article 11, each as amended, restated, modified or supplemented from time to time in accordance with the terms of such intercreditor agreement.
“Interest Payment Date” means (i) February 15, May 15, August 15 and November 15 of each year, commencing February 15, 2024 and ending on the date that is exactly five years after the date hereof and (ii) the Maturity Date; provided, however, that if the last Interest Payment Date prior to the Maturity Date would not be a Business Day, then such Interest Payment Date shall instead be the immediately preceding Business Day.
“Interest Period” means, with respect to any Security, the period commencing on and including an Interest Payment Date and ending on and including the day immediately preceding the next Interest Payment Date, with the exception that the first Interest Period
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with respect to any Security shall commence on and include the Issue Date of the Securities and end on and exclude the first Interest Payment Date to occur after the Issue Date (the Interest Payment Date for any Interest Period shall be the interest payment date occurring on the date immediately following the last day of such Interest Period).
“Inventory” has the meaning assigned to such term in the Security Agreement.
“Investments” means (a) any purchase or other acquisition by the Issuer or any of its Restricted Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person (other than the Issuer or a Guarantor), (b) the acquisition by purchase or otherwise (other than purchases or other acquisitions of inventory, materials, supplies and equipment in the ordinary course of business) of all or a substantial portion of the business, property or fixed assets of any Person or any division or line of business or other business unit of any Person, and (c) any loan, advance (other than (i) advances to current or former employees, officers, directors and consultants of the Issuer or its Restricted Subsidiaries for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business and (ii) advances made on an inter-company basis in the ordinary course of business for the purchase of inventory) or capital contribution by the Issuer or any of its Restricted Subsidiaries to any other Person (other than the Issuer or any Guarantor). Subject to the definition of “Unrestricted Subsidiary” and Section 4.08, the amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, but giving effect to any repayments of principal in the case of Investments in the form of loans and any return of capital or return on Investment in the case of equity Investments (whether as a distribution, dividend, redemption or sale but not in excess of the amount of the initial Investment).
“Issue Date” means October 12, 2023.
“Junior Indebtedness” means any Subordinated Indebtedness, unsecured Indebtedness for borrowed money and any Indebtedness secured by Liens junior to the Lien of the Collateral Trustee with respect to the Collateral.
“Legal Holiday” means a Saturday, a Sunday or a day on which commercial banking institutions are not required to be open in the State of New York or in the State of the place of payment. If a payment date at a place of payment is on a Legal Holiday, payment shall be made at that place on the next succeeding Business Day, and no interest shall accrue on such payment for the intervening period.
“Lien” means any mortgage, pledge, hypothecation, license, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any Capital Lease having substantially the same economic effect as any of the foregoing), in each case, in the
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nature of security; provided that in no event shall an operating lease in and of itself be deemed a Lien.
“Limited Condition Acquisition” means any Permitted Acquisition whose consummation is not conditioned on the availability of, or on obtaining, third party financing.
“Maintenance Capital Expenditures” means any Consolidated Capital Expenditures of the Issuer and its Restricted Subsidiaries that are necessary to (a) repair any damage to any store, distribution center or other facility of the Issuer or any of its Restricted Subsidiaries or (b) maintain any store, distribution center or other facility of the Issuer or any of the Restricted Subsidiaries in good condition and working order (including any Consolidated Capital Expenditures that are necessary to repair any ordinary wear and tear to such store, distribution center or other facility).
“Material Adverse Effect” means, a material adverse effect on (i) the business, assets, financial condition or results of operations, in each case, of the Issuer and its Restricted Subsidiaries, taken as a whole, (ii) the rights and remedies (taken as a whole) of the Trustee and/or the Collateral Trustee or the Holders under the applicable Notes Documents or (iii) the ability of the Notes Parties (taken as a whole) to perform their payment obligations under the Notes Documents.
“Material Indebtedness” means any Indebtedness permitted under Sections 4.03(w) and Indebtedness (other than Indebtedness under the ABL Facility and Letters of Credit) or obligations in respect of one or more Derivative Transactions of any one or more of the Notes Parties in an aggregate principal amount that exceeds $28,750,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Notes Parties in respect of any Derivative Transaction at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Notes Party would be required to pay if such Derivative Transaction were terminated at such time.
“Material Intellectual Property” means any Intellectual Property owned by the Issuer or any of its Restricted Subsidiaries that, in the good faith determination of the Issuer, is material to the business of the Issuer and its Restricted Subsidiaries, taken as a whole (whether owned as of the Issue Date or thereafter acquired).
“Maturity Date” means January 11, 2029.
“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.
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“Mudrick Promissory Note” means the promissory note due October 12, 2024 issued by the Issuer in the aggregate principal amount equal to $1.5 million.
“Narrative Report” means, with respect to the financial statements for which such narrative report is required, a narrative report describing the operations of the Issuer and its Restricted Subsidiaries in the form prepared for presentation to senior management thereof for the applicable Fiscal Quarter or Fiscal Year and for the period from the beginning of the then current Fiscal Year to the end of such period to which such financial statements relate.
“Net Proceeds” means the aggregate cash proceeds received by the Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale, net of the direct costs relating to such Asset Sale, including legal, accounting and investment banking fees, payments made in order to obtain a necessary consent or required by applicable law, and brokerage and sales commissions, all dividends, distributions or other payments required to be made to minority interest holders in Restricted Subsidiaries that are not Guarantors as a result of any such Asset Sale by such Restricted Subsidiary, the amount of any purchase price or similar adjustment claimed by any Person to be owed by the Issuer or any Restricted Subsidiary as a result of such Asset Sale, until such time as such claim shall have been settled or otherwise finally resolved, or paid or payable by the Issuer or any Restricted Subsidiary, in either case, in respect of such Asset Sale, any relocation expenses incurred as a result thereof, other fees and expenses, including title and recordation expenses, taxes paid or payable as a result thereof or any transactions occurring or deemed to occur to effectuate a payment under this Indenture (including taxes that are or would be imposed on the distribution or repatriation of any such Net Proceeds), amounts required to be applied to the repayment of principal, premium, if any, and interest on Indebtedness (other than Indebtedness under the Notes Documents and Subordinated Indebtedness) secured by a Lien on the assets disposed of required to be paid as a result of such transaction and any deduction of appropriate amounts to be provided by the Issuer or any of its Restricted Subsidiaries as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Issuer or any of its Restricted Subsidiaries after such sale or other disposition thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.
“New York UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.
“Notes Documents” means this Indenture, the Securities, the Security Documents and the Intercreditor Agreements.
“Notes Parties” means the Issuer and any Guarantor.
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“Obligations” means any principal, accrued but unpaid interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and banker’s acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness.
“Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Issuer.
“Officer’s Certificate” means a certificate signed on behalf of the Issuer by an Officer of the Issuer, who must be the principal executive officer, the principal financial officer or the principal accounting officer of the Issuer, that meets the requirements set forth in this Indenture and is delivered to the Trustee.
“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee, which meets the requirements set forth in this Indenture. The counsel may be an employee of or counsel to the Issuer.
“Original Securities” means the $232,394,231 aggregate principal amount of the Issuer’s 12.00% Senior Secured Second Lien PIK Toggle Notes due 2029, issued pursuant to this Indenture on the Issue Date.
“Parent Borrower” means Party City Holdings Inc.
“Parent Company” means (a) the Issuer, (b) PC Intermediate and (c) any other Person of which the Parent Borrower is an indirect Wholly-Owned Subsidiary to the extent such Person is a Notes Party.
“Pari Intercreditor Agreement” means an intercreditor agreement which shares the Lien on the Collateral of the holders of the Pari Passu Lien Indebtedness on a pari passu basis and the terms of which are consistent with market terms (in the view of the Collateral Trustee (as defined therein)) governing security arrangements for the sharing of Liens on a pari passu basis or arrangements relating to the distribution of payments, as applicable, at the time the intercreditor agreement is proposed to be established in light of the type of Indebtedness subject thereto.
“Pari Passu Indebtedness” means Indebtedness that ranks equally in right of payment to the Securities, in the case of the Issuer, or the Guarantees, in the case of any Guarantor (without giving effect to collateral arrangements).
“Pari Passu Lien Indebtedness” means any Additional Securities, any PIK Securities and any other Indebtedness that is Pari Passu Indebtedness and that is secured by a Lien on the Collateral that has equal priority as the Liens securing the Securities and
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the Guarantees with respect to the Collateral and is not secured by any other assets; provided that, in each case, an authorized representative of the holders of such Indebtedness (other than any Additional Securities and any PIK Securities issued in connection with the payment of interest or as otherwise set forth herein) shall have executed a joinder to the Security Documents, the ABL Intercreditor Agreement (if applicable) and the Pari Intercreditor Agreement in the forms provided therein.
“Paying Agent” means an office or agency maintained by the Issuer pursuant to the terms of this Indenture, where Securities may be presented for payment.
“Payment Conditions” means, with respect to any transaction, (a) there is no Default or Event of Default existing immediately before or after such transaction, (b) the Fixed Charge Coverage Ratio (calculated on a Pro Forma Basis in connection with the proposed transaction) as of such date is at least 1.00 to 1.00, (c) the audited financial statements have been received by the Trustee in the manner required by Section 4.02(a) and (d) the Issuer shall have delivered an Officer’s Certificate to the Trustee certifying as to compliance with the requirements of clauses (a) through (c).
“PC Intermediate” means PC Intermediate Holdings, Inc., a Delaware Corporation.
“Pension Plan” means any employee pension benefit plan, as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Issuer or any of its Restricted Subsidiaries, or any of their respective ERISA Affiliates, is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Perfection Certificate” has the meaning set forth in the Security Agreement.
“Perfection Certificate Supplement” has the meaning assigned to “Perfection Certificate Supplement” in the Security Agreement.
“Permitted Acquisition” means any acquisition by the Parent Borrower or any of its Restricted Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of or any business line, unit, division or any operating stores of, any Person or of a majority of the outstanding Capital Stock of any Person (but in any event including any Investment in a Restricted Subsidiary which serves to increase the Issuer’s or any Restricted Subsidiary’s respective equity ownership in such Restricted Subsidiary), or any acquisition of or Investment in any joint venture; provided that:
(a) immediately prior to, and after giving effect to such acquisition, the Payment Conditions shall have been satisfied, provided that this clause (a) shall not apply to any acquisition or series of related acquisitions during any Fiscal Year in which the aggregate amount of consideration for such acquisition or series of related acquisitions is less than $28,750,000, so long as the aggregate amount of consideration for such acquisition or series of related acquisitions, together with the aggregate amount of consideration for all other Permitted Acquisitions in such period (excluding any
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Permitted Acquisition previously subject to the Payment Conditions pursuant to this clause (a)), is less than $40,250,000;
(b) on the date of execution of the purchase agreement in respect of such acquisition, no Event of Default shall have occurred and be continuing or would result therefrom;
(c) the Parent Borrower shall take or cause to be taken with respect to the acquisition of any new Subsidiary of the Parent Borrower, each of the actions required to be taken under Section 4.17 as applicable;
(d) the total consideration paid for by the Notes Parties for (i) the acquisition, directly or indirectly, of any Person that does not become a Guarantor and (ii) if an asset acquisition, assets that are not acquired by the Issuer or any Guarantor, when taken together with the total consideration for all such acquired Persons and assets acquired after the Issue Date, shall not exceed the sum of (A) $86,250,000 or, after the date that the audited financial statements have been received by the Trustee pursuant to Section 4.15(a), if greater, 5.50% of the Consolidated Total Assets as of the last day of the last Test Period for which financial statements have been delivered pursuant to Section 4.02 at such time and (B) amounts available under clause (q) of Section 4.08; provided that the limitation under this clause (d) shall not apply to any acquisition to the extent (x) such acquisition is made with the proceeds of sales of the Qualified Capital Stock of, or common equity capital contributions to, the Parent Borrower or (y) the Person so acquired (or the Person owning the assets so acquired) becomes a Guarantor even though such Guarantor owns Capital Stock in Persons that are not otherwise required to become Guarantors, if, in the case of this clause (y) for such acquisition, not less than 80.0% of the Consolidated Adjusted EBITDA of the Person(s) acquired (for this purpose and for the component definitions used therein, determined on a consolidated basis for such Persons and their Restricted Subsidiaries) is directly generated by Person(s) that become Guarantors (i.e., disregarding all such Consolidated Adjusted EBITDA generated by Restricted Subsidiaries of such Guarantors that are not Guarantors);
(e) the Issuer shall have delivered to the Trustee the final executed documentation relating to such acquisition within one (1) Business Day following the consummation thereof; and
(f) the Issuer shall have delivered to the Trustee on or prior to such acquisition an Officer’s Certificate stating that any related incurrence of Indebtedness is permitted pursuant to this Indenture, that the conditions set forth in clauses (a) through (d) above have been satisfied and including any supporting calculations to demonstrate compliance with clause (a) above.
“Permitted Liens” means, with respect to any Person:
(a) Liens granted pursuant to the ABL Facility Documents to secure the ABL Obligations incurred under Section 4.03(a);
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(b) Liens for taxes which are (i) not then due or if due obligations with respect to such taxes that are not at such time required to be paid or (ii) which are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (A) adequate reserves or other appropriate provisions, as shall be required in conformity with GAAP, shall have been made therefor and (B) in the case of a tax which has or may become a Lien against any of the Collateral, such contest proceedings operate to stay the sale of any portion of the Collateral to satisfy such tax or claim;
(c) statutory Liens of landlords, banks (and rights of set-off), carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Code or by ERISA), in each case incurred in the ordinary course of business (i) for amounts not yet overdue by more than 30 days, (ii) for amounts that are overdue by more than 30 days and that are being contested in good faith by appropriate proceedings, so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts or (iii) with respect to which the failure to make payment could not reasonably be expected to have a Material Adverse Effect;
(d) Liens incurred (i) in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security laws and regulations, (ii) in the ordinary course of business to secure the performance of tenders, statutory obligations, surety, stay, customs and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) or (iii) pursuant to pledges and deposits of Cash or Cash Equivalents in the ordinary course of business securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to the Issuer and its Restricted Subsidiaries;
(e) easements, rights-of-way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not, in the aggregate, materially interfere with the ordinary conduct of the business of the Issuer, any other Parent Company and the Restricted Subsidiaries taken as a whole, or the use of the affected property for its intended purpose;
(f) any (i) interest or title of a lessor or sublessor under any lease of real estate permitted hereunder, (ii) landlord liens permitted by the terms of any lease, (iii) restrictions or encumbrances that the interest or title of such lessor or sublessor may be subject to or (iv) subordination of the interest of the lessee or sublessee under such lease to any restriction or encumbrance referred to in the preceding clause (iii);
(g) Liens solely on any Cash earnest money deposits made by the Issuer or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement with respect to any Investment permitted hereunder;
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(h) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property or consignment or bailee arrangements entered into in the ordinary course of business;
(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(j) Liens in connection with any zoning, building or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any or dimensions of real property or the structure thereon;
(k) Liens securing Indebtedness permitted pursuant to Section 4.03(p) (solely with respect to the permitted refinancing of Indebtedness permitted pursuant to Sections 4.03(n) and (q)); provided that (i) any such Lien does not extend to any asset not covered by the Lien securing the Indebtedness that is refinanced and (ii) if the Indebtedness being refinanced was subject to intercreditor arrangements, then any such refinancing Indebtedness shall be subject to intercreditor arrangements no less favorable, taken as a whole, than the intercreditor arrangements governing the Indebtedness that is refinanced;
(l) Liens existing on the Issue Date and any modifications, replacements, refinancings, renewals or extensions thereof; provided that (i) the Lien does not extend to any additional property other than (A) after-acquired property that is affixed or incorporated into the property covered by such Lien or financed by Indebtedness permitted under Section 4.03 and (B) proceeds and products thereof and accessions thereto and improvements thereon (it being understood that individual financings of the type permitted under Section 4.03(m) provided by any lender may be cross-collateralized to other financings of such type provided by such lender or its affiliates) and (ii) the replacement, refinancing, renewal or extension of the obligations secured or benefited by such Liens is permitted by Section 4.03;
(m) Liens arising out of Sale and Lease-Back Transactions permitted under Section 4.10;
(n) Liens securing Indebtedness permitted pursuant to Section 4.03(m); provided that any such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness and proceeds and products thereof, accessions thereto and improvements thereon (it being understood that individual financings of the type permitted under Section 4.03(m) provided by any lender may be cross-collateralized to other financings of such type provided by such lender or its affiliates);
(o) (i) Liens securing Indebtedness permitted pursuant to Section 4.03(n) on assets acquired or on the Capital Stock of any Person (to the extent such Capital Stock would not otherwise constitute Collateral) and assets of the newly acquired Restricted Subsidiary; provided that such Lien (x) does not extend to or cover any other assets (other than the proceeds or products thereof and accessions or additions thereto and improvements thereon) and (y) was not created in contemplation of the applicable acquisition of assets or Capital Stock; provided, further, that in the case of any Liens on
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Collateral, such Indebtedness shall be secured on a junior basis with respect to the Securities pursuant to an intercreditor arrangement reasonably satisfactory to the Collateral Trustee and (ii) Liens securing Indebtedness incurred pursuant to Section 4.03(q); provided that in the case of any Liens on Collateral, such Indebtedness shall be secured on a junior basis with respect to the Securities pursuant to an intercreditor arrangement reasonably satisfactory to the Collateral Trustee;
(p) Liens that are contractual rights of setoff relating to (i) the establishment of depositary relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Issuer or any Restricted Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Issuer or any Restricted Subsidiary, (iii) relating to purchase orders and other agreements entered into with customers of the Issuer or any Restricted Subsidiary in the ordinary course of business, (iv) attaching to commodity trading or other brokerage accounts incurred in the ordinary course of business and (v) encumbering reasonable customary initial deposits and margin deposits;
(q) Liens on assets of Foreign Subsidiaries and other Restricted Subsidiaries that are not Notes Parties (including Capital Stock owned by such Persons) securing Indebtedness of Restricted Subsidiaries that are not Notes Parties permitted pursuant to Section 4.03
(r) Liens securing the Original Securities issued on the Issue Date and any PIK Securities, and Guarantees of such Securities;
(s) Liens disclosed in the final title insurance policies insuring mortgages delivered pursuant to Section 4.17 with respect to any mortgaged property;
(t) Liens securing obligations in respect of any Indebtedness permitted under Sections 4.03(b), (k) and/or (w); provided that in the case of any Liens on Collateral, Indebtedness incurred in reliance on (i) Section 4.03(b) shall be secured on a junior basis, and (ii) Sections 4.03(k) and (w) may be secured on a senior or pari passu basis, in each case with respect to the Securities pursuant to the applicable intercreditor arrangements explicitly contemplated hereunder (including, with respect to Indebtedness permitted under (x) Section 4.03(b), the ABL Intercreditor Agreement, and (y) Sections 4.03(k) and (w), any applicable Intercreditor Agreement);
(u) Liens on assets securing Indebtedness in an aggregate principal amount not to exceed $34,500,000; provided that, in the case of any Liens on Collateral, such Indebtedness shall be secured on a junior basis with respect to the Securities pursuant to an intercreditor arrangement reasonably satisfactory to the Collateral Trustee;
(v) Liens on assets securing judgments for the payment of money not constituting an Event of Default under Section 6.01(e):
(w) leases, licenses, subleases or sublicenses granted to others in the ordinary course of business which do not (i) interfere in any material respect with the business of the Issuer and its Restricted Subsidiaries (other than an Immaterial Subsidiary), or
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adversely affect in any material respect the value of any Collateral or adversely affect in any material respect or could reasonably be expected to adversely affect any of the material rights or remedies of the Collateral Trustee with respect to any Collateral or (ii) secure any Indebtedness;
(x) [Reserved];
(y) Liens securing obligations in respect of letters of credit permitted under Sections 4.03(e), (z) and (cc);
(z) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of any assets or property in the ordinary course of business and permitted by this Indenture;
(aa) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto; and
(bb) Liens on specific items of inventory or other goods and the proceeds thereof, on premises not owned, controlled or leased by any Notes Party, securing such Person’s obligations in respect of documentary letters of credit or banker’s acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or goods, in an aggregate outstanding amount not to exceed $11,500,000 at any time.
For purposes of this definition, the term “Indebtedness” shall be deemed to include interest on such Indebtedness.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or any other entity.
“PIK Interest” means the payment of interest on the Securities on an Interest Payment Date, which is paid, at the Company’s election, in accordance with the terms hereof (including upon timely notice), by increasing the amount of outstanding Securities or, with respect to any Definitive Security, by issuing additional PIK Securities.
“PIK Securities” means any Securities issued in connection (including by way of increasing the amount of outstanding Securities) with the payment of PIK Interest.
“Pledge and Security Agreement” means that certain Pledge and Security Agreement, dated as of the Issue Date, between the loan parties under the ABL Credit Agreement and the administrative agent named therein, for the benefit of the administrative agent and the other secured parties party thereto.
“Pro Forma Basis” or “pro forma effect” means, with respect to compliance with any test or covenant or calculation of any ratio hereunder, the determination or calculation of such test, covenant or ratio (including in connection with Subject Transactions) in accordance with Section 1.05.
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“Public Company Costs” means costs relating to compliance with the provisions of the Securities Act and the Exchange Act, in each case as applicable to companies with registered equity or debt securities held by the public, the rules of national securities exchange companies with listed equity or debt securities, directors’ compensation, fees and expense reimbursement, costs relating to investor relations, shareholder meetings and reports to shareholders or debtholders, directors’ and officers’ insurance, listing fees and all executive, legal and professional fees related to the foregoing.
“Qualified Capital Stock” of any Person means any Capital Stock of such Person that is not Disqualified Capital Stock.
“Rating Agencies” means Moody’s and S&P or if Moody’s or S&P or both shall not make a rating publicly available, a nationally recognized statistical rating agency or agencies, as the case may be.
“Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or otherwise) in real property then owned by any Notes Party.
“Recapitalization” means the repayment, redemption, defeasance, discharge, refinancing or termination in full of, redemption, defeasance, discharge, refinancing or termination to the extent accompanied by any prepayments or deposits required to defease, terminate and satisfy in full such Indebtedness) (a) all amounts, if any, due or owing under the Existing Credit Agreement, and the termination of all commitments thereunder, (b) that certain Senior Secured Superpriority Debtor-In-Possession Term Loan Credit Agreement, dated as of January 19, 2023, among, inter alios, PC Intermediate, the borrowers named therein, the other guarantors party thereto from time to time, the financial institutions and other persons party thereto as the lenders and Ankura Trust Company, LLC, as administrative agent and collateral agent, (c) the 6.125% Senior Notes due 2023 issued by Party City Holdco Inc. in the aggregate principal amount equal to $350,000,000 (including any Registered Equivalent Notes), (d) the Senior Secured First Lien Floating Rate Notes due 2025 issued by Party City Holdco Inc. in the aggregate principal amount equal to $156,669,177 (including any Registered Equivalent Notes), (e) the 8.750% Senior Secured Notes due 2026 issued by Party City Holdings Inc. in the aggregate principal amount equal to $750,000,000 (including any Registered Equivalent Notes), (f) the 6.625% Senior Notes due 2026 issued by Party City Holdco Inc. in the aggregate principal amount equal to $500,000,000 (including any Registered Equivalent Notes) and (g) all amounts, if any, due or owing under that certain Term Loan Credit Agreement (as amended, restated, modified or otherwise supplemented from time to time prior to the Issue Date) dated as of August 19, 2015, among, inter alios, PC Intermediate, Party City Holdings Inc., as parent borrower, Party City Corporation, Deutsche Bank AG New York Branch, as administrative agent and collateral agent, and the lenders from time to time party thereto.
“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act, substantially identical notes (having the same guarantees) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
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“Registrar” has the meaning set forth in the preamble.
“Regulation S” means Regulation S under the Securities Act.
“Requirements of Law” means, with respect to any Person, collectively, the common law and all federal, state, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of any Governmental Authority, in each case whether or not having the force of law and that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Restricted Payment” means (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of the Capital Stock of the Parent Borrower now or hereafter outstanding, except a dividend payable solely in shares of that class of the Capital Stock to the holders of that class; (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value of any shares of any class of the Capital Stock of the Parent Borrower now or hereafter outstanding and (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of the Capital Stock of the Parent Borrower now or hereafter outstanding.
“Restricted Subsidiary” means, at any time, any direct or indirect Subsidiary of the Issuer (including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided, however, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of “Restricted Subsidiary.”
“Revolving Loans” has the meaning assigned to “Revolving Loans” in the ABL Credit Agreement.
“Rule 144A” means Rule 144A under the Securities Act.
“S&P” means S&P Global Ratings and any successor to its rating agency business.
“SEC” means the U.S. Securities and Exchange Commission.
“Secured Indebtedness” means any Indebtedness of the Issuer or any of its Restricted Subsidiaries, as applicable, secured by a Lien.
“Secured Parties” has the meaning set forth in the Security Agreement.
“Securities” means the Original Securities and more particularly means any security authenticated and delivered under this Indenture. For all purposes of this Indenture, the term “Securities” shall also include any Additional Securities and
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Securities to be issued or authenticated upon transfer, replacement or exchange of Securities and any Securities to be issued in connection with a PIK Payment.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
“Securities Custodian” has the meaning set forth in Appendix A.
“Security Agreement” means that certain Second Lien Pledge and Security Agreement, dated as of the Issue Date, by and among the Issuer and the Guarantors, as grantors, and the Collateral Trustee, as amended, restated, amended and restated, supplemented, renewed, replaced, or otherwise modified, in whole or in part, from time to time, in accordance with its terms, the form of which is attached as Exhibit D hereto.
“Security Documents” means the Security Agreement, and any one or more additional security agreements, pledge agreements, intellectual property security agreements, collateral assignments, mortgages, deeds of covenants, assignments of earnings and insurances, share pledges, share charges, collateral agency agreements, deeds of trust or other grants or transfers for security executed and delivered by the Issuer or the Guarantors to be entered into on the Issue Date for such Issuer or Guarantor, creating, or purporting to create, a Lien upon all or a portion of the Collateral in favor of the Collateral Trustee for the benefit of the Secured Parties, in each case as amended, restated, amended and restated, supplemented, renewed, replaced or otherwise modified, in whole or part, from time to time, in accordance with its terms.
“Security Register” means the register of Securities, maintained by the Registrar, pursuant to Section 2.04.
“Senior Lien Indebtedness” means any Indebtedness that is Pari Passu Indebtedness and that is secured by a Lien on the Collateral that has senior priority in respect of the Liens securing the Securities and the Guarantees (and any other Pari Passu Indebtedness) with respect to the Collateral and is not secured by any other assets; provided that, in each case, an authorized representative of the holders of such Indebtedness (other than any Additional Securities and any PIK Securities issued in connection with the payment of interest or as otherwise set forth herein) shall have executed a joinder to the Security Documents, the ABL Intercreditor Agreement (if applicable) and a Subordinating Intercreditor Agreement.
“Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is in effect on the Issue Date.
“Store Exchange” means the substantially concurrent purchase and sale or exchange of one or more stores, distribution centers and/or other locations (including any inventory, equipment and other assets used or useful at such location) or a combination of the foregoing and Cash and/or Cash Equivalents between any Notes Party and/or any other Restricted Subsidiary on the one hand, and any Person on the other hand.
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“Subject Transaction” means, with respect to any period, (a) the Transactions, (b) any Permitted Acquisition or the making of other Investments permitted by this Indenture, (c) any disposition of all or substantially all of the assets or stock of a Restricted Subsidiary (or any business unit, line of business or division of the Issuer or a Restricted Subsidiary) permitted by this Indenture, (d) the designation of a subsidiary as an Unrestricted Subsidiary or an Unrestricted Subsidiary as a Subsidiary in accordance with the definition of “Unrestricted Subsidiary” and Section 4.08 or (e) any other event that by the terms of the Notes Documents requires pro forma compliance with a test or covenant hereunder or requires such test or covenant to be calculated on a Pro Forma Basis.
“Subordinated Indebtedness” means, with respect to the Securities,
(1) any Indebtedness of the Issuer which is by its terms subordinated in right of payment to the Securities, and
(2) any Indebtedness of any Guarantor which is by its terms subordinated in right of payment to the Guarantee of such entity of the Securities.
“Subordinating Intercreditor Agreement” means an intercreditor agreement which subordinates the Lien on the Collateral of the holders of the Original Securities and any Pari Passu Lien Indebtedness to the Lien on the Collateral of each of the holders of Senior Lien Indebtedness and the terms of which are consistent with market terms governing security arrangements for the subordination and sharing of Liens or arrangements relating to the distribution of payments, as applicable, at the time the intercreditor agreement is proposed to be established in light of the type of Indebtedness subject thereto.
“Subsidiary” means, with respect to any Person:
(1) any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar 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 thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof or is consolidated under GAAP with such Person at such time; and
(2) any partnership, joint venture, limited liability company or similar entity of which
(x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and
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(y) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.
“Term Loan Credit Agreement” means that certain Term Loan Credit Agreement, dated as of August 19, 2015, among PC Intermediate, the Issuer, Party City Corporation, a Delaware corporation, the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent, and the other parties thereto, as amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time.
“Test Period” means a period of four consecutive Fiscal Quarters.
“Total Leverage Ratio” means, with respect to any Test Period, the ratio of (a) Consolidated Total Debt as of the last day of such Test Period (net of the Unrestricted Cash Amount as of such date) to (b) Consolidated Adjusted EBITDA for such Test Period, in each case for the Issuer and its Restricted Subsidiaries.
“Transaction Costs” means fees, premiums, expenses and other transaction costs (including original issue discount) payable or otherwise borne by the Issuer and its Restricted Subsidiaries in connection with the Transactions and the transactions contemplated thereby.
“Transactions” means, collectively, (a) the execution, delivery and performance by the Notes Parties of the Notes Documents to which they are a party and the issuance of the Securities hereunder, (b) the Recapitalization and (c) the payment of the Transaction Costs.
“Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 that has become publicly available at least two Business Days prior to the redemption date (or, if such Federal Reserve Statistical Release H.15 is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to the stated Maturity Date; provided, however, that if the period from the redemption date to the stated Maturity Date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).
“Trust Officer” means:
(1) any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject, and
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(2) who shall have direct responsibility for the administration of this Indenture.
“Trustee” means the party named as such in the preamble until a successor replaces it and, thereafter, means the successor.
“United States” and “U.S.” means the United States of America.
“Unrestricted Cash Amount” means, as of any date of determination, the amount of (a) unrestricted Cash and Cash Equivalents of the Issuer and its Restricted Subsidiaries whether or not held in an account pledged to the Collateral Trustee and (b) Cash and Cash Equivalents restricted in favor of the ABL Facility (which may also include Cash and Cash Equivalents securing other Indebtedness secured by a Lien on the Collateral along with the ABL Facility); provided that the Unrestricted Cash Amount shall not exceed $86,250,000.
“Unrestricted Subsidiary” means:
(1) any Subsidiary of the Issuer which at the time of determination is an Unrestricted Subsidiary (as designated by the Issuer, as provided below); and
(2) any Subsidiary of an Unrestricted Subsidiary.
As of the Issue Date, the Anagram Issuers and their Subsidiaries shall be Unrestricted Subsidiaries hereunder.
The Issuer may designate any Subsidiary of the Issuer (including any existing Restricted Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Issuer or any Subsidiary of the Issuer (other than solely any Subsidiary of the Subsidiary to be so designated); provided that
(1) any Unrestricted Subsidiary must be an entity of which the Equity Interests entitled to cast at least a majority of the votes that may be cast by all Equity Interests having ordinary voting power for the election of directors or Persons performing a similar function are owned, directly or indirectly, by the Issuer;
(2) such designation complies with and may be made using capacity under Section 4.08 (other than with respect to the Anagram Issuers and their Subsidiaries); and
(3) each of:
(a) the Subsidiary to be so designated; and
(b) its Subsidiaries
has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any
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Indebtedness pursuant to which the lender has recourse to any of the assets of the Issuer or any Restricted Subsidiary.
The Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that, immediately after giving effect to such designation, (i) no Default shall have occurred and be continuing and (ii) the Issuer could incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test in Section 4.03(r).
Any such designation by the Issuer shall be notified by the Issuer to the Trustee by promptly filing with the Trustee a copy of the resolution of the board of directors of the Issuer or any committee thereof giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing provisions.
“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: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then-outstanding principal amount of such Indebtedness.
“Wholly-Owned Subsidiary” of any Person means a Restricted Subsidiary of such Person, 100% of the outstanding Equity Interests of which (other than directors’ qualifying shares and shares issued to foreign nationals as required under applicable law) shall at the time be directly or indirectly owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person or by such Person and one or more Wholly-Owned Subsidiaries of such Person.
Section 1.02. Other Definitions.
|
Term |
Defined in Section | |
| “Acceptable Commitment” | 4.09(d) | |
| “Appendix” | 2.01 | |
| “Applicable Premium Deficit” | 8.01(b) | |
| “Asset Sale” | 4.09(a) | |
| “Asset Sale Offer” | 4.09(f) | |
| “Authenticating Agent” | 2.03 | |
| “Authentication Order” | 2.03 | |
| “Cash Equivalent Bank” | 1.01 (definition of “Cash Equivalents”) | |
| “Change of Control Offer” | 4.14(a) | |
| “Change of Control Payment” | 4.14(a) |
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|
Term |
Defined in Section | |
| “Change of Control Payment Date” | 4.14(b)(ii) | |
| “Collateral Trustee” | Preamble | |
| “Company” | Preamble | |
| “covenant defeasance option” | 8.01 | |
| “Declined Excess Proceeds” | 4.09(g) | |
| “Definitive Security” | Appendix A | |
| “Event of Default” | 6.01 | |
| “Excess Proceeds” | 4.09(f) | |
| “Guaranteed Obligations” | 10.01 | |
| “Indenture” | Preamble | |
| “Issuer” | Preamble | |
| “LCT Election” | 1.06 | |
| “LCT Period” | 1.06 | |
| “LCT Test Date” | 1.06 | |
| “legal defeasance option” | 8.01 | |
| “Offer Period” | 4.09(i) | |
| “Original Securities” | Recitals | |
| “Paying Agent” | Preamble | |
| “PIK Payment” | 2.02 | |
| “Plan” | Recitals | |
| “protected purchaser” | 2.08 | |
| “Purchase Date” | 4.09(i) | |
| “Refinancing Indebtedness” | 4.03(p) | |
| “Refunding Capital Stock” | 4.06(a)(vii) | |
| “Registrar” | Preamble | |
| “Restricted Debt Payments” | 4.06(b) | |
| “Securities” | Recitals | |
| “Securities Register” | 2.04 | |
| “Successor Company” | 5.01(a)(i) | |
| “Successor Person” | 5.01(b)(i) | |
| “Treasury Capital Stock” | 4.06(a)(viii) | |
| “Trustee | Preamble | |
Section 1.03. 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) “including” means including without limitation;
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(e) words in the singular include the plural and words in the plural include the singular;
(f) unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness, and senior Indebtedness shall not be deemed to be subordinate or junior to any other senior Indebtedness merely by virtue of its junior priority with respect to the same collateral;
(g) “$” and “U.S. dollars” each refer to United States dollars, or such other money of the United States that at the time of payment is legal tender for payment of public and private debts;
(h) “consolidated” means, with respect to any Person, such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary, but the interest of such Person in an Unrestricted Subsidiary shall be accounted for as an Investment;
(i) “will” shall be interpreted to express a command;
(j) provisions apply to successive events and transactions;
(k) unless the context otherwise requires, any reference to an “Appendix,” “Article,” “Section,” “clause,” “Schedule” or “Exhibit” refers to an Appendix, Article, Section, clause, Schedule or Exhibit, as the case may be, of this Indenture;
(l) the words “herein,” “hereof” and other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision;
(m) references to sections of, or rules under the Securities Act, the Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;
(n) unless otherwise provided, references to agreements and other instruments shall be deemed to include all amendments and other modifications to such agreements or instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Indenture; and
(o) this Indenture is not qualified under the Trust Indenture Act, and the Trust Indenture Act shall not apply to or in any way govern the terms of this Indenture, including Section 316(b) thereof. No provisions of the Trust Indenture Act are incorporated into this Indenture, other than as referenced for the limited purpose set forth in Section 7.09 and Section 7.10.
Section 1.04. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when
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such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Issuer. Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgements of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Securities Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Security.
(e) The Issuer may, at its option, set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders, but the Issuer shall have no obligation to do so.
(f) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of each such different part.
(g) Without limiting the generality of the foregoing, a Holder, including the Depositary, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and the Depositary may provide its proxy to the beneficial owners of interests in any such Global Security through such Depositary’s standing instructions and customary practices.
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(h) The Issuer may fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Security held by DTC entitled under the procedures of such Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders.If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date.
Section 1.05. Pro Forma Basis. (a) Notwithstanding anything to the contrary herein, financial ratios and tests, including the Total Leverage Ratio, the Fixed Charge Coverage Ratio or any test of availability under this Indenture and compliance with covenants determined by reference to Consolidated Adjusted EBITDA (including any component definitions thereof) or Consolidated Total Assets, shall be calculated in the manner prescribed by this Section 1.05; provided that notwithstanding anything to the contrary in clauses (b), (c), (d) or (e) of this Section 1.05, when calculating any such ratio or test for purposes of the incurrence of any Indebtedness, cash and Cash Equivalents resulting from the incurrence of any such Indebtedness shall be excluded from the pro forma calculation of any applicable ratio or test. In addition, whenever a financial ratio or test is to be calculated on a Pro Forma Basis, the reference to the “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which internal financial statements (which internal financial statements, for the avoidance of doubt, shall include an unaudited consolidated balance sheet, unaudited consolidated cash flow statement and unaudited consolidated statement of income of the Issuer and its Restricted Subsidiaries, to the extent such financial statements are applicable with respect to the calculation of such financial ratio or test) of the Issuer and its Restricted Subsidiaries are available (as determined in good faith by the Issuer).
(b) For purposes of calculating any financial ratio or test or compliance with any covenant determined by reference to Consolidated Adjusted EBITDA or Consolidated Total Assets, Subject Transactions (with any incurrence or repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.05) that (i) have been made during the applicable Test Period or (ii) if applicable as described in clause (a) above, have been made subsequent to such Test Period and prior to or substantially concurrently with the event for which the calculation of any such ratio is made shall be calculated on a Pro Forma Basis assuming that all such Subject Transactions (and any increase or decrease in Consolidated Adjusted EBITDA, Consolidated Total Assets and the component financial definitions used therein attributable to any Subject Transaction) had occurred on the first day of the applicable Test Period (or, in the case of Consolidated Total Assets, on the last day of the applicable Test Period). If since the beginning of any applicable Test Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Issuer or any of its Restricted Subsidiaries since the beginning of such Test Period shall have made any Subject Transaction that would have required adjustment pursuant to this Section 1.05, then such financial ratio or test (or
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Consolidated Total Assets) shall be calculated to give pro forma effect thereto in accordance with this Section 1.05.
(c) Whenever pro forma effect is to be given to a Subject Transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Issuer and, in the case of any “Test Period” determined by reference to the financial statements most recently delivered pursuant to Section 4.02, as set forth in a certificate of a responsible financial or accounting officer of the Issuer (with supporting calculations), and may include, for the avoidance of doubt, the amount of “run-rate” cost savings, operating expense reductions and synergies resulting from or relating to, any Subject Transaction (including the Transactions) which is being given pro forma effect that have been realized or are projected in good faith to result (in the good faith determination of the Issuer) (calculated on a Pro Forma Basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of such period and as if such cost savings, operating expense reductions and synergies were realized during the entirety of such period and “run-rate” means the full recurring projected benefit (including any savings or other benefits expected to result from the elimination of a public target’s Public Company Costs) net of the amount of actual savings or other benefits realized during such period from such actions, and any such adjustments shall be included in the initial pro forma calculations of any financial ratios or tests (and in respect of any subsequent pro forma calculations in which such Subject Transaction is given pro forma effect) and during any applicable subsequent Test Period in which the effects thereof are expected to be realized) relating to such Subject Transaction; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the Issuer, (B) such amounts result from actions taken or actions with respect to which substantial steps have been taken or are expected to be taken (in the good faith determination of the Issuer) no later than eighteen (18) months after the date of such Subject Transaction, (C) no amounts shall be added pursuant to this clause (c) to the extent duplicative of any amounts that are otherwise added back in computing Consolidated Adjusted EBITDA (or any other components thereof), whether through a pro forma adjustment or otherwise, with respect to such period and (D) the aggregate amount of any such amounts added back pursuant to this clause (c) (other than in connection with any mergers, business combinations, acquisitions or divestures) shall not exceed, together with any amounts added back pursuant to clauses (x) and (xi) of the definition of Consolidated Adjusted EBITDA, 25.0% of Consolidated Adjusted EBITDA in any four-Fiscal Quarter period (calculated before giving effect to any such add-backs and adjustments).
(d) In the event that the Issuer or any Restricted Subsidiary incurs (including by assumption or guarantees) or repays (including by purchase, redemption, repayment, retirement or extinguishment) any Indebtedness (other than Indebtedness incurred or repaid (other than any repayment from the proceeds of other Indebtedness) under any revolving credit facility unless such Indebtedness has been permanently repaid (and related commitments terminated) and not replaced), (i) during the applicable Test Period or (ii) subject to paragraph (a), subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such
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incurrence (including the intended use of proceeds) or repayment of Indebtedness, in each case to the extent required, as if the same had occurred on the last day of the applicable Test Period.
(e) If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of the event for which the calculation of the Fixed Charge Coverage Ratio is made had been the applicable rate for the entire period (taking into account any interest hedging arrangements applicable to such Indebtedness); provided, in the case of repayment of any Indebtedness, to the extent actual interest related thereto was included during all or any portion of the applicable Test Period, the actual interest may be used for the applicable portion of such Test Period.
Section 1.06. Limited Condition Acquisitions. When calculating the availability under any basket or ratio under this Indenture or compliance with any provision of this Indenture in connection with any Limited Condition Acquisition and any actions or transactions related thereto, in each case, at the option of the Issuer (the Issuer’s election to exercise such option, an “LCT Election”), the date of determination for availability under any such basket or ratio and whether any such action or transaction is permitted (or any requirement or condition therefor is complied with or satisfied (including as to the absence of any continuing Default or Event of Default)) hereunder shall be deemed to be the date (the “LCT Test Date”) the definitive agreements for such Limited Condition Acquisition are entered into, and if, after giving pro forma effect to the Limited Condition Acquisition and any actions or transactions related thereto (including any incurrence of Indebtedness and the use of proceeds thereof) and any related pro forma adjustments, Issuer or any of its Restricted Subsidiaries would have been permitted to take such actions or consummate such transactions on the relevant LCT Test Date in compliance with such ratio, test or basket (and any related requirements and conditions), such ratio, test or basket (and any related requirements and conditions) shall be deemed to have been complied with (or satisfied) for all purposes (in the case of Indebtedness, for example, whether such Indebtedness is committed, issued or incurred at the LCT Test Date or at any time thereafter); provided that any such Limited Condition Acquisition which is a Permitted Acquisition shall be consummated prior to the date which is 150 days following such LCT Test Date (each such period, a “LCT Period”).
For the avoidance of doubt, if the Issuer has made an LCT Election, (1) if any of the ratios, tests or baskets for which compliance was determined or tested as of the LCT Test Date would at any time during the applicable LCT Period have been exceeded or otherwise failed to have been complied with as a result of fluctuations in any such ratio, test or basket, including due to fluctuations in Consolidated Adjusted EBITDA or Consolidated Total Assets of the Issuer or the Person subject to such Limited Condition Acquisition, such baskets, tests or ratios will not be deemed to have been exceeded or failed to have been complied with as a result of such fluctuations, (2) if any related requirements and conditions (including as to the absence of any continuing Default or Event of Default) for which compliance or satisfaction was determined or tested as of the LCT Test Date would at any time during the applicable LCT Period not have been complied with or satisfied (including due to the occurrence or continuation of an Default
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or Event of Default), such requirements and conditions will not be deemed to have been failed to be complied with or satisfied (and such Default or Event of Default shall be deemed not to have occurred or be continuing, solely for purposes of determining whether the applicable Limited Condition Acquisition and any actions or transactions related thereto (including any incurrence of Indebtedness (other than Revolving Loans) and the use of proceeds thereof) are permitted hereunder) and (3) in calculating the availability under any ratio, test or basket in connection with any action or transaction unrelated to such Limited Condition Acquisition following the relevant LCT Test Date and prior to the date on which such Limited Condition Acquisition is consummated, any such ratio, test or basket shall be determined or tested giving pro forma effect to such Limited Condition Acquisition and any actions or transactions related thereto (including any incurrence of Indebtedness (other than Revolving Loans) and the use of proceeds thereof) and any related pro forma adjustments unless the definitive agreement (or notice) for such Limited Condition Acquisition is terminated or expires (or is rescinded) without consummation of such Limited Condition Acquisition; provided that, with respect to this clause (3), for the purposes of Sections 4.06 and 4.08 (other than Section 4.08(r)) only, Consolidated Net Income shall not include any Consolidated Net Income of or attributed to the target company or assets associated with any such Limited Condition Acquisition unless and until the closing of such Limited Condition Acquisition shall have actually occurred. Notwithstanding anything to the contrary herein, the Issuer may not make an LCT Election in connection with a Limited Condition Acquisition or any action or transaction related thereto if the applicable LCT Test Date would be prior to the date of delivery of the financial statements required by Section 4.15(a).
Article
2
The Securities
Section 2.01. Amount of Securities. The aggregate principal amount of Original Securities which may be authenticated and delivered under this Indenture on the Issue Date is $232,394,231.
The Issuer may from time to time after the Issue Date issue Additional Securities under this Indenture in an unlimited principal amount, so long as (i) the incurrence of the Indebtedness represented by such Additional Securities is at such time permitted by Section 4.03 and (ii) such Additional Securities are issued in compliance with the other applicable provisions of this Indenture. With respect to any Additional Securities issued after the Issue Date (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Section 2.07, 2.08, 2.09, 2.10, 3.06, 3.08, 4.14 or Appendix A (the “Appendix”)), there shall be i) established in or pursuant to a resolution of the board of directors of the Issuer and ii) (i) set forth or determined in the manner provided in an Officer’s Certificate or (ii) established in one or more indentures supplemental hereto, prior to the issuance of such Additional Securities:
(1) the aggregate principal amount of such Additional Securities to be authenticated and delivered under this Indenture;
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(2) the issue price and issuance date of such Additional Securities, including the date from which interest on such Additional Securities shall accrue;
(3) the maturity date, interest rate and optional redemption provisions applicable to each series of Additional Securities, if different from the maturity date, interest rate and optional redemption provisions applicable to the Original Securities;
(4) the CUSIP or ISIN, if different than those assigned to the Original Securities; and
(5) if applicable, that such Additional Securities shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective depositaries for such Global Securities, the form of any legend or legends which shall be borne by such Global Securities in addition to or in lieu of those set forth in Exhibit A hereto and any circumstances in addition to or in lieu of those set forth in Section 2.2 of the Appendix in which any such Global Security may be exchanged in whole or in part for Additional Securities registered, or any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof.
If any of the terms of any Additional Securities are established by action taken pursuant to a resolution of the board of directors of the Issuer, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Issuer and delivered to the Trustee at or prior to the delivery of the Officer’s Certificate or the indenture supplemental hereto setting forth the terms of the Additional Securities.
The Issuer may designate the maturity date, interest rate and optional redemption provisions applicable to each series of Additional Securities, which may differ from the maturity date, interest rate and optional redemption provisions applicable to the Original Securities. Additional Securities that differ with respect to maturity date, interest rate, optional redemption provisions or otherwise from the Original Securities will constitute a different series of Securities from the Original Securities. Additional Securities that have the same maturity date, interest rate and optional redemption provisions as the Original Securities will be treated as the same series as the Original Securities unless otherwise designated by the Issuer.
The Securities, including any Additional Securities and any PIK Securities issued in connection with the payment of interest or as otherwise set forth herein, shall be treated as a single class for all purposes under this Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase; provided, however,
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a separate CUSIP or ISIN will be issued for Additional Securities, unless the Original Securities and Additional Securities are fungible for U.S. federal income tax purposes.
Section 2.02. Form and Dating; Terms. Provisions relating to the Securities are set forth in Appendix A, which is hereby incorporated into and expressly made a part of this Indenture. The (i) Original Securities, (ii) the PIK Securities and (iii) any Additional Securities and any other notes issued under this Indenture shall each be substantially in the form of Exhibit A hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Issuer or any Guarantor is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Issuer). Each Security shall be dated the date of its authentication. Subject to the issuance of Additional Securities or the increase in the principal amount of the Global Securities in order to evidence PIK Interest (which Additional Securities or increased principal amount shall be in denominations of $1.00 and integral multiples of $1.00 in excess thereof), the Securities shall be issuable only in registered form without interest coupons and in minimum denominations of $1.00 and any integral multiples of $1.00 in excess thereof.
On any Interest Payment Date on which the Company pays interest in PIK Interest (a “PIK Payment”) with respect to a Global Security, the Trustee shall (subject to the Company delivering to the Trustee and the Paying Agent (if other than the Trustee) written notification (which notification the Trustee and Paying Agent shall be entitled to solely rely upon without independent investigation or verification of the accuracy of the contents thereof), executed by an Officer of the Company, substantially in the form of Exhibit F hereto, setting forth the amount of PIK Interest to be paid on such Interest Payment Date and directing the Trustee and the Paying Agent (if other than the Trustee) to increase the principal amount of the Global Securities by an amount equal to the interest payable as PIK Interest, rounded up to the nearest whole dollar, for the relevant Interest Period on the principal amount of such Global Security as of the relevant record date for such Interest Payment Date, to the credit of the Holders of such Global Security on such record date, pro rata in accordance with their interests, and an adjustment shall be made on the books and records of the Trustee and Registrar with respect to such Global Security to reflect such increase. On any Interest Payment Date on which the Company pays PIK Interest with respect to a Definitive Security or otherwise issues definitive PIK Securities, the principal amount of any definitive PIK Securities issued to any Holder, for the relevant Interest Period on the principal amount of such Security as of the relevant record date for such Interest Payment Date, shall be rounded up to the nearest whole dollar.
For each of the Interest Periods, the Company may elect, no later than 15 days prior to the relevant Interest Payment Date, to pay interest in cash or in the form of PIK Interest and, if the Company elects to pay PIK Interest in respect of an Interest Period, the Company shall deliver to the Trustee and the Paying Agent written notification, executed by an Officer of the Company, substantially in the form of Exhibit E, setting forth such election no later than 15 days prior to the relevant Interest Payment Date (and the Trustee shall furnish a copy thereof to the Holders in accordance with the applicable procedures).
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Section 2.03. Execution and Authentication. On the Issue Date, the Trustee shall authenticate and make available for delivery upon a written order of the Issuer signed by one Officer (an “Authentication Order”) Original Securities for original issue on the Issue Date in an aggregate principal amount of $232,394,231. In addition, subject to the terms of this Indenture, the Trustee shall upon receipt of an Authentication Order authenticate and deliver (1) Additional Securities issued after the Issue Date in an aggregate principal amount to be determined at the time of issuance and specified therein and (2) PIK Securities issued in connection with a PIK Payment with respect to a Global Security. Such Authentication Order shall specify the amount of the Securities to be authenticated, the date on which the original issue of Securities is to be authenticated, and the registered holder of each of the Securities and delivery instructions. Notwithstanding anything to the contrary in this Indenture or the Appendix, any issuance of Additional Securities or any increase in the principal amount of the Global Securities in order to evidence PIK Interest after the Issue Date shall be in a principal amount of at least $1.00 and integral multiples of $1.00 in excess thereof. It is understood that, notwithstanding anything to the contrary in this Indenture, only an Authentication Order and an Officer’s Certificate and not an Opinion of Counsel is required for the Trustee to authenticate Original Securities.
One Officer shall sign the Securities for the Issuer by manual, facsimile or PDF signature.
If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be entitled to any benefit under this Indenture or valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.
The Trustee may appoint one or more authenticating agents (an “Authenticating Agent”) reasonably acceptable to the Issuer to authenticate the Securities. Unless limited by the terms of such appointment, an Authenticating Agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An Authenticating Agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.
Section 2.04. Registrar and Paying Agent. (a) The Issuer shall maintain (i) an office or agency where Securities may be presented for registration of transfer or for exchange (the “Registrar”) and (ii) a Paying Agent. The Registrar shall keep a register of the Securities and of their transfer and exchange (the “Securities Register”) and, with respect to Global Securities, keep such Securities Register in accordance with the rules and procedures of DTC. The Issuer may have one or more co-registrars and one or more additional paying agents. The term “Registrar” includes the Registrar and any co-registrars. The term “Paying Agent” includes the Paying Agent and any additional paying agents. The Issuer initially appoints the Trustee as Registrar, Paying Agent and the
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Securities Custodian with respect to the Global Securities. The Issuer initially appoints DTC to act as Depositary with respect to the Global Securities.
(b) The Issuer shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Issuer shall notify the Trustee in writing of the name and address of any such agent. If the Issuer fails to maintain a Registrar or Paying Agent, the Trustee may act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.06.
(c) The Issuer may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee and without prior notice to any Holder; provided, however, that no such removal shall become effective until (i) if applicable, acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Issuer and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) above. The Registrar or Paying Agent may resign at any time upon written notice to the Issuer and the Trustee; provided, however, that the Trustee may resign as Paying Agent or Registrar only if the Trustee also resigns as Trustee in accordance with Section 7.07.
Section 2.05. Paying Agent to Hold Money in Trust. Prior to or on each due date of the principal of and interest on any Security, the Issuer shall deposit with a Paying Agent a sum sufficient to pay such principal and interest when so becoming due. The Issuer shall require each Paying Agent (other than the Trustee) to agree in writing that a Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by a Paying Agent for the payment of principal of and interest on the Securities, and shall notify the Trustee in writing of any Default by the Issuer in making any such payment. The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by such Paying Agent. Upon complying with this Section, a Paying Agent shall have no further liability for the money delivered to the Trustee. Upon any bankruptcy or reorganization proceedings relating to the Issuer, the Trustee shall serve as Paying Agent for the Securities. For the avoidance of doubt, the Paying Agent shall be held harmless and have no liability with respect to payments or disbursements to be made by the Paying Agent until the Paying Agent has confirmed receipt of funds sufficient to make such relevant payment.
Section 2.06. Holder Lists. The Registrar shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Issuer shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders.
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Section 2.07. Transfer and Exchange. The Securities shall be issued in registered form and shall be transferable only upon the surrender of a Security for registration of transfer and in compliance with the Appendix. When a Security is presented to the Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if its requirements therefor are met. When Securities are presented to the Registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registration of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Securities at the Registrar’s request. The Issuer may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to this Section. The Issuer shall not be required to make, and the Registrar need not register, transfers or exchanges of any Securities (i) selected for redemption (except, in the case of Securities to be redeemed in part, the portion thereof not to be redeemed) (ii) for a period of 15 days before the mailing of a notice of redemption of Securities to be redeemed or (iii) between a regular record date and the next succeeding interest payment date.
Prior to the due presentation for registration of transfer of any Security, the Issuer, the Guarantors, the Trustee, the Paying Agent and the Registrar may deem and treat the Person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Issuer, any Guarantor, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.
Any Holder of a beneficial interest in a Global Security shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in such Global Security may be effected only through a book-entry system maintained by (a) the Holder of such Global Security (or its agent) or (b) any Holder of a beneficial interest in such Global Security, and that ownership of a beneficial interest in such Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange.
Section 2.08. Replacement Securities. If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the New York UCC are met, such that the Holder (a) satisfies the Issuer or the Trustee within a reasonable time after such Holder has notice of such loss, destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (b) makes such request to the Issuer or the Trustee prior to the Security being acquired by a protected purchaser as defined in Section 8-303 of the New York UCC (a “protected purchaser”) and (c) satisfies any other reasonable requirements of the Trustee. Such Holder shall furnish an indemnity bond sufficient in the judgment of (i) the Trustee to protect the Trustee (in all
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capacities hereunder) or (ii) the Issuer to protect the Issuer, the Trustee, the Paying Agent and the Registrar from any loss that any of them may suffer if a Security is replaced. The Issuer and the Trustee may charge the Holder for their expenses in replacing a Security (including without limitation, attorneys’ fees and disbursements in replacing such Security). In the event any such mutilated, lost, destroyed or wrongfully taken Security has become or is about to become due and payable, the Issuer in its discretion may pay such Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the Issuer.
The provisions of this Section 2.08 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Securities.
Section 2.09. Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those paid pursuant to Section 2.08 and those described in this Section as not outstanding. Subject to Section 12.04, a Security does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Security.
If a Security is replaced pursuant to Section 2.08, it ceases to be outstanding unless the Trustee and the Issuer receive proof satisfactory to them that the replaced Security is held by a protected purchaser.
If a Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or Maturity Date or any date of purchase pursuant to an offer to purchase money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed, maturing or purchased, as the case may be, and no Paying Agent is prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue.
Section 2.10. Temporary Securities. In the event that Definitive Securities are to be issued under the terms of this Indenture, until such Definitive Securities are ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of Definitive Securities but may have variations that the Issuer considers appropriate for temporary Securities. Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate Definitive Securities and make them available for delivery in exchange for temporary Securities upon surrender of such temporary Securities at the office or agency of the Issuer, without charge to the Holder. Until such exchange, temporary Securities shall be entitled to the same rights, benefits and privileges as Definitive Securities.
Section 2.11. Cancellation. The Issuer at any time may deliver Securities to the Trustee for cancellation. The Registrar and each Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or
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payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Securities surrendered for registration of transfer, exchange, payment or cancellation and shall dispose of canceled Securities in accordance with its customary procedures (subject to the record retention requirement of the Exchange Act). The Issuer may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancellation. The Trustee shall not authenticate Securities in place of canceled Securities other than pursuant to the terms of this Indenture.
Section 2.12. Defaulted Interest. If the Issuer defaults in a payment of interest on the Securities, the Issuer shall pay the defaulted interest then borne by the Securities (plus interest on such defaulted interest to the extent lawful) in cash or in payment-in-kind and in any lawful manner. The Issuer may pay the defaulted interest to the Persons who are Holders on a subsequent special record date. The Issuer shall fix or cause to be fixed any such special record date and payment and shall promptly mail or cause to be sent, or otherwise deliver in accordance with the procedures of DTC, to each affected Holder and the Trustee a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.
Section 2.13. CUSIP Numbers, ISINs, etc. The Issuer in issuing the Securities may use CUSIP numbers, ISINs and “Common Code” numbers (if then generally in use) and, if so, the Trustee shall use CUSIP numbers, ISINs and “Common Code” numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers, either as printed on the Securities or as contained in any notice of a redemption that reliance may be placed only on the other identification numbers printed on the Securities and that any such redemption shall not be affected by any defect in or omission of such numbers. The Issuer shall promptly advise the Trustee in writing of any change in the CUSIP numbers, ISINs and “Common Code” numbers.
Section 2.14. Calculation of Principal Amount of Securities. The aggregate principal amount of the Securities, at any date of determination, shall be the principal amount of the Securities outstanding at such date of determination. With respect to any matter requiring consent, waiver, approval or other action of the Holders of a specified percentage of the principal amount of all the Securities, such percentage shall be calculated, on the relevant date of determination, by dividing (a) the principal amount, as of such date of determination, of Securities, the Holders of which have so consented (other than the Securities beneficially owned by the Issuer or any of its Restricted Subsidiaries), by (b) the aggregate principal amount, as of such date of determination, of the Securities then outstanding, in each case, as determined in accordance with the preceding sentence, Section 2.09 and Section 12.04 of this Indenture. Any such calculation made pursuant to this Section 2.14 shall be made by the Issuer and delivered to the Trustee pursuant to an Officer’s Certificate.
Section 2.15. Tax Treatment. The Notes Parties intend to treat the Securities as indebtedness for U.S. federal, state and local income tax purposes in accordance with its form . Each of the Notes Parties and (by acquiring the Securities) each Holder agrees that
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it will (a) treat the Securities as indebtedness for U.S. federal, state and local income tax purposes, (b) determine the issue price of the Original Securities under section 1274(a)(1) of the Code and treat the Securities as indebtedness that is not governed by the rules set out in Treasury Regulations section 1.1275-4 if (i) the Original Securities are issued in accordance with the Plan and (ii) (A) at least one of the Securities and the New Common Stock (as defined in the Plan), (B) the subscription rights (as described in the Plan) and (C) at least one of the DIP Claims, the Fixed Rate Notes Claims and the Floating Rate Notes Claims (each as defined in the Plan) are not, in each case, “publicly traded” as described in Treasury Regulations section 1.1273-2(f) during the 31-day period ending 15 days after the Issue Date and (c) take no position inconsistent with the foregoing, unless otherwise required by a final determination to the contrary within the meaning of Section 1313(a) of the Code.
Article
3
Redemption
Section 3.01. Redemption. The Securities may be redeemed, in whole, or from time to time in part, subject to the conditions and at the redemption prices set forth in Section 3.09, together with accrued and unpaid interest to, but excluding, the redemption date.
Section 3.02. Applicability of Article. Redemption of Securities at the election of the Issuer or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article.
Section 3.03. Notices to Trustee. If the Issuer elects to redeem Securities pursuant to the optional redemption provisions of Section 3.09, it shall notify the Trustee in writing of (i) the paragraph or subparagraph of such Security and the Section of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Securities to be redeemed and (iv) the redemption price. The Issuer shall give notice to the Trustee provided for in this paragraph at least two (2) Business Days (or such shorter period as shall be acceptable to the Trustee) before notice of redemption is required to be delivered or mailed to Holders pursuant to Section 3.05 but not more than 60 days before a redemption date if the redemption is pursuant to Section 3.09; provided, that notice may be given more than 60 days prior to a redemption date if the notice is (x) issued in connection with Section 8.01 or (y) conditioned upon satisfaction (or waiver by the Issuer in its sole discretion) of one or more conditions precedent and any or all such conditions shall not have been satisfied (or waived by the Issuer in its sole discretion). Such notice shall be accompanied by an Officer’s Certificate from the Issuer to the effect that such redemption will comply with the conditions herein. Any such notice may be canceled at any time prior to notice of such redemption being sent to any Holder and shall thereby be void and of no effect.
Section 3.04. Selection of Securities to Be Redeemed. In the case of any partial redemption or purchase of Global Securities, the Global Securities to be redeemed or purchased shall be selected on a pro rata pass-through distribution basis and otherwise in accordance with the procedures of DTC, and, in the case of any partial redemption or
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purchase of Definitive Securities, the Trustee shall select the Definitive Securities to be redeemed or purchased on a pro rata basis, to the extent practicable or, to the extent that selection on a pro rata basis is not practicable, by lot or such other method as the Trustee shall deem fair and appropriate; provided that, in each case, no Securities of $1.00 or less shall be redeemed or purchased in part and all redemptions or purchases shall be made in increments of $1.00. The Trustee shall make the selection from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities that have denominations larger than $1.00. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Issuer promptly of the Definitive Securities or portions of Definitive Securities to be redeemed.
After the redemption date, upon surrender of the Definitive Security to be redeemed in part only, a new Definitive Security or Securities in principal amount equal to the unredeemed portion of the original Security representing the same Indebtedness to the extent not redeemed shall be issued in the name of the Holder of the Definitive Securities upon cancellation of the Original Security (or appropriate book entries shall be made to reflect such partial redemption).
Section 3.05. Notice of Optional Redemption. (a) At least 10 days but not more than 60 days before a redemption date pursuant to the optional redemption provisions of Section 3.09, the Issuer shall send electronically, mail or cause to be mailed by first-class mail a notice of redemption to each Holder whose Securities are to be redeemed (except that such notice of redemption may be mailed more than 60 days prior to a redemption date if the notice is (i) issued in connection with Section 8.01 or (ii) conditioned upon satisfaction (or waiver by the Issuer in its sole discretion) of one or more conditions precedent and any or all such conditions shall not have been satisfied (or waived by the Issuer in its sole discretion)).
Any such notice shall identify the Securities to be redeemed and shall state:
(i) the redemption date;
(ii) the redemption price and the amount of accrued and unpaid interest to the redemption date;
(iii) the paragraph or subparagraph of the Securities and/or Section of this Indenture pursuant to which the Securities called for redemption are being redeemed;
(iv) the name and address of the Paying Agent;
(v) that Definitive Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price, plus accrued interest;
(vi) if fewer than all the outstanding Securities are to be redeemed, the principal amounts of the particular Securities to be redeemed, the aggregate principal amount of Securities to be redeemed and the aggregate
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principal amount of Securities to be outstanding after such partial redemption;
(vii) any condition to such redemption;
(viii) that, unless the Issuer defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest on Securities (or portion thereof) called for redemption ceases to accrue on and after the redemption date;
(ix) the CUSIP number, ISIN and/or “Common Code” number, if any, printed on the Securities being redeemed; and
(x) that no representation is made as to the correctness or accuracy of the CUSIP number or ISIN and/or “Common Code” number, if any, listed in such notice or printed on the Securities.
(b) At the Issuer’s written request, the Trustee shall give the notice of redemption in the Issuer’s name and at the Issuer’s expense. In such event, the Issuer shall provide the Trustee with the information required by this Section at least 2 Business Days (or such shorter period as shall be acceptable to the Trustee) prior to the date such notice is to be provided to Holders.
(c) Notice of any redemption of Securities described above may be given prior to such redemption, and any such redemption or notice may, at the Issuer’s sole discretion, be subject to one or more conditions precedent, and any notice of redemption made in connection with a related transaction or event may, at the Issuer’s discretion, be given prior to the completion or the occurrence thereof. Any such notice may provide that redemptions made pursuant to different provisions will have different redemption dates. In addition, if such redemption is subject to satisfaction of one or more conditions precedent, such notice shall state that, in the Issuer’s sole discretion, the redemption date may be delayed until such time (including more than 60 days after the date the notice of redemption was mailed or delivered, including by electronic transmission) as any or all such conditions shall be satisfied (or waived by the Issuer in its sole discretion), or that such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied (or waived, in the Issuer’s sole discretion) by the redemption date, or by the redemption date as so delayed, or that such notice may be rescinded at any time in the Issuer’s discretion if in the good faith judgment of the Issuer any or all of such conditions will not be satisfied. If any such condition precedent has not been satisfied, the Issuer shall provide written notice to the Trustee prior to the close of business on the Business Day immediately prior to the redemption date (or such shorter period as may be acceptable to the Trustee). Upon receipt of such notice, the notice of redemption shall be rescinded or delayed, and the redemption of the Securities shall be rescinded or delayed as provided in such notice. Upon receipt, the Trustee shall deliver such notice to each Holder. In addition, the Issuer may provide in such notice that payment of the redemption price and performance of the
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Issuer’s obligations with respect to such redemption may be performed by another Person.
Section 3.06. Effect of Notice of Redemption. Once notice of redemption is mailed or sent in accordance with Section 3.05, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice (except as described in Section 3.05). Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice, plus accrued interest, to, but not including, the redemption date; provided, however, that if the redemption date is after a regular record date and on or prior to the interest payment date, the accrued interest shall be payable to the Holder of the redeemed Securities registered on the relevant record date. The notice, if mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.
Section 3.07. Deposit of Redemption Price. With respect to any Securities, prior to 11:00 a.m., New York City time, on the redemption date, the Issuer shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Securities or portions thereof to be redeemed on that date other than Securities or portions of Securities called for redemption that have been delivered by the Issuer to the Trustee for cancellation. On and after the redemption date, interest shall cease to accrue on Securities or portions thereof called for redemption so long as the Issuer has deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest on, the Securities to be redeemed, unless the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture or applicable law. If a Security is redeemed on or after a record date but on or prior to the related interest payment date, then any accrued and unpaid interest to the redemption date shall be paid on the relevant interest payment date to the Person in whose name such Security was registered at the close of business on such record date.
Section 3.08. Securities Redeemed in Part. Upon surrender of a Definitive Security that is redeemed in part, the Issuer shall execute and the Trustee shall authenticate for the Holder (at the Issuer’s expense) a new Definitive Security equal in principal amount to the unredeemed portion of the Definitive Security surrendered; provided that no Securities of $1.00 or less shall be redeemed in part and all redemptions shall be made in increments of $1.00. It is understood that, notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an Opinion of Counsel or Officer’s Certificate is required for the Trustee to authenticate such new Security.
Section 3.09. Optional Redemption.
(a) (i) On April 12, 2025 or thereafter, to the extent permitted by the terms of any Senior Lien Indebtedness (including the terms of any applicable Intercreditor
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Agreement), the Issuer may, on any one or more occasions, redeem the Securities, in whole or in part, upon notice in accordance with Section 3.05 at the redemption price of 100% (expressed as a percentage of principal amount of the Securities to be redeemed) plus accrued and unpaid interest on the Securities, if any, to, but excluding, the applicable date of redemption subject to the right of the Holder of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the redemption date.
(ii) Any redemption pursuant to this Section 3.09(a) shall be made pursuant to the provisions of Sections 3.01 through 3.08.
(b) At any time prior to April 12, 2025, to the extent permitted by the terms of any Senior Lien Indebtedness (including the terms of any applicable Intercreditor Agreement),the Issuer may redeem all or a part of the Securities, at its option, at any time or from time to time, upon notice in accordance with Section 3.05 of this Indenture or otherwise delivered in accordance with the procedures of DTC, at a redemption price equal to 100% of the principal amount of the Securities redeemed plus the Applicable Premium as of, and accrued and unpaid interest to, but not including, the applicable redemption date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the redemption date).
(c) Notwithstanding the foregoing, to the extent permitted by the terms of any Senior Lien Indebtedness (including the terms of any applicable Intercreditor Agreement), in connection with any Change of Control Offer or other tender offer (to the extent such other tender offer is for all of the Securities), if Holders of not less than 90.0% in aggregate principal amount of the outstanding Securities validly tender and do not withdraw such Securities in such Change of Control Offer or other tender offer and the Company, or any other Person making such Change of Control Offer in lieu of the Company as described above, purchases all of the Securities validly tendered and not validly withdrawn by such Holders, the Company or such other Person will have the right, upon not less than 10 nor more than 60 days’ prior notice, given not more than 30 days following such purchase pursuant to the Change of Control Offer or other tender offer, as applicable, to redeem all Securities that remain outstanding following such purchase at a redemption price in cash equal to the applicable Change of Control Payment price or other tender offer price plus, to the extent not included in the Change of Control Offer or other tender offer payment, accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).
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Article
4
Covenants
Section 4.01. Payment of Securities. The Issuer shall promptly pay the principal of, premium, if any, and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. An installment of principal or interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds as of 11:00 a.m., New York City time, money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.
The Issuer shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate borne by the Securities to the extent lawful.
Section 4.02. Reports and Other Information. (a) So long as any Securities are outstanding, the Issuer will furnish to the Trustee within 15 days after each of the periods set forth below:
(i) within 90 days after the end of each fiscal year or, solely in the case of the Fiscal Year ending December 31, 2023, on or before September 30, 2024 (but, in each case, no later than the date the following items are delivered or are required to be delivered to lenders and/or lender-representatives in connection with other Indebtedness), annual reports containing substantially all of the information that would have been required to be contained in an Annual Report on Form 10-K under the Exchange Act of the Issuer, or any successor or comparable form, containing the information required to be contained therein, or required in such successor or comparable form as if the Issuer had been a reporting company under the Exchange Act for such period, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” with respect to the periods presented and a report on the annual financial statements by the Issuer’s independent registered public accounting firm;
(ii) within 45 days after the end of each of the first three fiscal quarters of each fiscal year (or 75 days in the case of the Fiscal Quarter ending September 30, 2023) commencing with the Fiscal Quarter ending September 30, 2023, quarterly reports containing substantially all of the information that would have been required to be contained in a Quarterly Report on Form 10-Q of the Issuer containing all quarterly information that would be required to be contained in Form 10-Q, or any successor or comparable form as if the Issuer had been a reporting company under the Exchange Act for such period, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” subject to normal year-end adjustments and the absence of footnotes; and
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(iii) promptly from time to time after the occurrence of an event required to be therein reported, such other reports on Form 8-K pursuant to Items 1, 2 and 4, Items 5.01, 5.02(a), (b) and (c) and Item 5.03 of Form 8-K, or any successor or comparable form as if the Issuer had been a reporting company under the Exchange Act for such period; provided, however, that no such report or information will be required to be so furnished if the Issuer determines in good faith that such event is not material to the Holders of the Securities or the business, assets, operations or financial condition of the Issuer and its Restricted Subsidiaries, taken as a whole; in each case, in a manner that complies in all material respects with the requirements specified in such form, provided, that such reports required pursuant to clauses (i), (ii) and (iii) above (a) shall not be required to comply with Section 302, Section 404 or 906 of the Sarbanes-Oxley Act of 2002, as amended, or related Items 307 and 308 of Regulation S-K promulgated by the SEC, Regulation G or Item 10(e) of Regulation S-K (with respect to any non-GAAP financial measures contained therein), (b) shall not be required to comply with Items 402, 403, 406 and 407 of Regulation S-K promulgated by the SEC, (c) shall not be required to comply with Rule 3-05, Rule 3-09, Rule 3-10 or Rule 3-16 of Regulation S-X promulgated by the SEC, (d) shall not be required to include any exhibits that would have been required to be filed pursuant to Item 601 of Regulation S-K promulgated by the SEC, (e) shall not be required to comply with any conflict minerals rules of the SEC or similar rules and regulations of any other government agency, (f) shall not be required to present compensation, employment arrangements, related party or beneficial ownership information, (g) shall not be required to contain any segment reporting, (h) shall not be required to disclose any trade secrets and other proprietary information and (i) shall not be required to include financial statements in interactive data format using the eXtensible Business Reporting Language.
(b) If the Issuer has designated any of its Subsidiaries as an Unrestricted Subsidiary and if any such Unrestricted Subsidiary or group of Unrestricted Subsidiaries, if taken together as one Subsidiary, would constitute a Significant Subsidiary of the Issuer, then the annual and quarterly information required above shall include a presentation of selected financial metrics (in the Issuer’s sole discretion) of such Unrestricted Subsidiaries as a group in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
(c) In addition, to the extent not satisfied by the foregoing, the Issuer will agree that, for so long as any Securities are outstanding, it will furnish to 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.
(d) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute actual or constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates with respect thereto). The Trustee shall have no responsibility for the filing,
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timeliness or content of such reports. The Trustee shall have no obligation whatsoever to determine whether or not any information has been posted. Additionally, the Trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise, the Issuer’s compliance with the covenants or with respect to any reports or other documents filed with the SEC via the EDGAR (or a successor) filing system (if applicable) or any website or data site under this Indenture.
(e) The subsequent filing or making available of any materials required by Section 4.02(a) shall be deemed automatically to cure any Default or Event of Default resulting from the failure to file or make available such materials within the required time frame.
(f) The obligations in Section 4.02(a) may be satisfied by furnishing the information of the Issuer or any Parent Company of the Issuer, provided that to the extent such information relates to the Parent Company, the financial statements shall be shall be accompanied by consolidating information that explains in reasonable detail the differences between the information relating to the Parent Company, on the one hand, and the information relating to the Issuer and its Restricted Subsidiaries on a standalone basis, on the other hand, which consolidating information may be unaudited.
(g) The Issuer will be deemed to have satisfied the reporting requirements of Section 4.02(a) if (i) at any time that the Issuer or any Parent Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or is a voluntary filer, the Issuer or any Parent Company has filed such reports containing such information with the SEC via the EDGAR (or a successor) filing system or (ii) at any time that the Issuer or any Parent Company does not file such reports with the SEC via the EDGAR (or a successor) filing system, the Issuer or any Parent Company posts such reports required by Section 4.02(a) on the Issuer’s website (or a password protected online data system). Access to any such reports on the Issuer’s website (or a password protected online data system) may be password protected; provided that the Issuer or the Parent Company makes reasonable efforts to notify the Trustee and provide the Trustee with access, and, upon request, provides to bona fide securities analysts and bona fide prospective investors, the password and other information required to access such reports on its website (or a password protected online data system). Any Person who requests such information from the Issuer will be required to represent to and agree with the Issuer (and by accepting such information, such Person will be deemed to have represented to and agreed with the Issuer) to the Issuer’s good faith satisfaction that:
(i) it is a Holder, a bona fide prospective investor in the Securities, a bona fide market maker (or intended market maker) with respect to the Securities or a bona fide securities analyst, as applicable;
(ii) if it is a prospective purchaser of the Securities, it is (A) a “qualified institutional buyer,” within the meaning of Rule 144A, (B) a non-U.S. person, within the meaning of Regulation S, or (C) an institutional “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act;
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(iii) it will not use the information in violation of applicable securities laws or regulations;
(iv) it will not communicate the information to any Person and will keep the information confidential;
(v) it will use such information only in connection with evaluating an investment in the Securities (or, if it is a bona fide market maker or intended market maker, only in connection with making a market in the Securities or, if it is a bona fide securities analyst, for preparing analysis for Holders and prospective purchasers of the Securities that otherwise have access to the information in compliance with this covenant); and
(vi) (A) will not use such information in any manner intended to compete with the business of the Issuer and (B) is not a Person (which includes such Person’s Affiliates, other than the Affiliates of a bona fide securities research analyst with whom such research analyst does not share such information) that is principally engaged in or derives a significant portion of its revenues from operating or owning a business which is substantially similar to the business engaged in by the Issuer and its Subsidiaries on the Issue Date.
Section 4.03. Indebtedness. The Issuer shall not, nor shall it permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise become or remain liable with respect to any Indebtedness, except:
(a) Indebtedness incurred pursuant to any ABL Facility by any “Borrower” under the ABL Credit Agreement; provided that immediately after giving effect to any such incurrence, the aggregate principal amount of Indebtedness consisting of loans made, and letters of credit issued, thereunder incurred under this clause (a) and then outstanding does not exceed the greater of (A) $662,110,550 and (B) the Borrowing Base (plus any protective advances contemplated by the ABL Credit Agreement (and expressly subject to Section 4.12));
(b) Indebtedness of any “Borrower” under the ABL Credit Agreement to any Restricted Subsidiary or the Issuer and of any Restricted Subsidiary to the Issuer or any Restricted Subsidiary; provided that in the case of any Indebtedness of a Restricted Subsidiary that is not a Guarantor owing to a Notes Party, such Indebtedness shall (x) be permitted as an Investment by Section 4.08 or (y) be of the type described in clause (ii) of the parenthetical under clause (c) of the definition of “Investment”; provided, further, that (A) all such Indebtedness shall be evidenced by an intercompany note or similar written agreement and shall be subject to a Second Priority Lien pursuant to the Security Agreement and (B) all such Indebtedness of any Notes Party to any Restricted Subsidiary that is not a Notes Party must be expressly subordinated to the Obligations of such Notes Party;
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(c) the incurrence by the Issuer and any Guarantor of Indebtedness represented by the Securities (including any Guarantee), including any Indebtedness thereunder representing capitalized accrued interest, other than any Additional Securities;
(d) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations (including contingent earnout obligations) incurred in connection with asset sales or other sales or Permitted Acquisitions or other purchases of assets, or Indebtedness arising from guaranties, letters of credit, surety bonds or performance bonds securing the performance of the Issuer or any applicable Restricted Subsidiary pursuant to such agreements;
(e) Indebtedness which may be deemed to exist pursuant to any performance and completion guaranties or customs, stay, performance, bid, surety, statutory, appeal or other similar obligations incurred in the ordinary course of business or in respect of any letters of credit related thereto;
(f) Indebtedness in respect of Banking Services Obligations and other netting services, overdraft protections, automated clearing-house arrangements, employee credit card programs and similar arrangements and otherwise in connection with Cash management and Deposit Accounts;
(g) (x) guaranties of the obligations of suppliers, customers, franchisees and licensees in the ordinary course of business and consistent with past practice as in effect on the Issue Date and (y) Indebtedness incurred in the ordinary course of business in respect of obligations of any “Borrower” under the ABL Credit Agreement or any Restricted Subsidiary to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services;
(h) Guarantees by any “Borrower” under the ABL Credit Agreement or any Restricted Subsidiary of Indebtedness or other obligations of any “Borrower” under the ABL Credit Agreement or any Restricted Subsidiary with respect to Indebtedness otherwise permitted to be incurred pursuant to this Section 4.03 or obligations not prohibited by this Indenture; provided that (A) in the case of any Guarantees by a Guarantor of the obligations of a non-Guarantor the related Investment is permitted under Section 4.08, (B) no Guarantee by any Restricted Subsidiary of any Indebtedness permitted under Sections 4.03(a) and (w) shall be permitted unless the guaranteeing party shall have also provided a Guarantee of the Guaranteed Obligations on the terms set forth herein, (C) if the Indebtedness being Guaranteed is subordinated to the Obligations, such Guarantee shall be subordinated to the Obligations on terms at least as favorable (as reasonably determined by the Parent Borrower) to the Holders as those contained in the subordination of such Indebtedness and (D) any Guarantee by a Restricted Subsidiary that is not a Guarantor of any Indebtedness permitted under Sections 4.03(r) shall only be permitted if such Guarantee meets the requirements of such Sections;
(i) Indebtedness existing on the Issue Date; provided that, in the case of Indebtedness of any “Borrower” under the ABL Credit Agreement to any Restricted Subsidiary and of any Restricted Subsidiary to any “Borrower” under the ABL Credit
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Agreement or any other Restricted Subsidiary, (A) all such Indebtedness owed to a Guarantor shall be evidenced by an intercompany note or similar written agreement and such Guarantor’s interest therein shall be subject to a Second Priority Lien pursuant to the Security Agreement (and all such Indebtedness of any Guarantor owed to any Restricted Subsidiary that is not a Guarantor must be expressly subordinated to the Obligations of such Guarantor on the terms set forth therein);
(j) Indebtedness of Restricted Subsidiaries that are not Guarantors; provided that the aggregate outstanding principal amount of such Indebtedness at any time outstanding shall not exceed $57,500,000 or, after the date that the audited financial statements have been received by the Trustee pursuant to Section 4.02(a), if greater, 3.45% of the Consolidated Total Assets as of the last day of the last Test Period for which financial statements most recently have been delivered pursuant to Section 4.02;
(k) Indebtedness of the Parent Borrower or any Restricted Subsidiary at any time outstanding in an aggregate principal amount not to exceed $86,250,000; provided that (i) no Event of Default then exists or would result therefrom, (ii) any such Indebtedness shall not mature or require any scheduled amortization or scheduled payments of principal and is not subject to mandatory redemption, repurchase, repayment or sinking fund obligation (other than AHYDO payments, customary offers to repurchase on a change of control, asset sale or casualty event and customary acceleration rights after an event of default), in each case, prior to the date that is 91 days after the Maturity Date, (iii) the terms of such Indebtedness (excluding pricing, fees, rate floors, optional prepayment or redemption terms (and, if applicable, subordination terms)), are not, taken as a whole (as reasonably determined by the Parent Borrower), materially more favorable to the lenders providing such Indebtedness than those applicable to this Indenture (other than any covenants or any other provisions applicable only to periods after the Maturity Date), (iv) the Parent Borrower shall have delivered a certificate of a Financial Officer of the Parent Borrower to the Trustee certifying as to compliance with the requirements of clauses (i) through (iii) of this clause (k) and (v) such Indebtedness shall be subject to an applicable Intercreditor Agreement;
(l) Indebtedness consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(m) Indebtedness of the Parent Borrower or any Restricted Subsidiary with respect to Capital Leases and purchase money Indebtedness incurred prior to or within 270 days of the acquisition or lease or completion of construction, repair of, improvement to or installation of the assets acquired in connection with the incurrence of such Indebtedness in an aggregate principal amount at any time outstanding not to exceed $40,250,000 or, after the date that the audited financial statements have been received by the Trustee pursuant to Section 4.02, if greater, 2.30% of Consolidated Total Assets as of the last day of the last Test Period for which financial statements most recently have been delivered pursuant to Section 4.02;
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(n) Indebtedness of a Person that becomes a Restricted Subsidiary or Indebtedness assumed in connection with an acquisition permitted hereunder after the Issue Date; provided that (i) such Indebtedness existed at the time such Person became a Restricted Subsidiary or the assets subject to such Indebtedness were acquired and was not created in anticipation thereof, (ii) no Event of Default then exists or would result therefrom, (iii) the Fixed Charge Coverage Ratio is at least 1.00 to 1.00 calculated on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 4.02, (iv) the Total Leverage Ratio would not exceed 6.90:1.00 calculated on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 4.02 (provided that, for purposes of calculating the Total Leverage Ratio under this clause (n), in no event shall the Unrestricted Cash Amount include the proceeds of such Indebtedness being incurred), (v) such Indebtedness was not incurred in contemplation of such acquisition, (vi) any such Indebtedness shall not mature or require any scheduled amortization or scheduled payments of principal and is not subject to mandatory redemption, repurchase, repayment or sinking fund obligation (other than AHYDO payments, customary offers to repurchase on a change of control, asset sale or casualty event and customary acceleration rights after an event of default), in each case, prior to the date that is 91 days after the stated Maturity Date, (vii) the terms of such Indebtedness (excluding pricing, fees, rate floors, optional prepayment or redemption terms (and, if applicable, subordination terms)), are not, taken as a whole (as reasonably determined by the Parent Borrower), materially more favorable to the lenders providing such Indebtedness than those applicable to the Securities (other than any covenants or any other provisions applicable only to periods after the Maturity Date) and (viii) the Parent Borrower shall have delivered an Officer’s Certificate of the Parent Borrower to the Trustee certifying as to compliance with the requirements of clauses (i) through (vii) of this clause (n);
(o) Indebtedness consisting of unsecured subordinated promissory notes, issued by any “Borrower” under the ABL Credit Agreement to any stockholders of any Parent Company or any current or former directors, officers, employees, members of management or consultants of any Parent Company, any “Borrower” under the ABL Credit Agreement or any Restricted Subsidiary (or their Immediate Family Members), to finance the purchase or redemption of Capital Stock of any Parent Company permitted by Section 4.06(a);
(p) The Parent Borrower and its Restricted Subsidiaries may become and remain liable for any Indebtedness replacing, refunding or refinancing any Indebtedness permitted under clauses (c), (i), (n), (q), (r) and (gg) of this Section 4.03 and any subsequent refinancing Indebtedness in respect thereof (in any case, “Refinancing Indebtedness”); provided that (i) the principal amount of such Indebtedness does not exceed the principal amount of the Indebtedness being refinanced, refunded or replaced, except by an amount equal to unpaid accrued interest and premiums (including tender premiums) thereon plus other reasonable and customary fees and expenses (including upfront fees and original issue discount) reasonably incurred in connection with such refinancing or replacement, (ii) such Indebtedness has a final maturity on or later than (and, in the case of any revolving Indebtedness, shall not require mandatory commitment
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reductions prior to) the final maturity of the Indebtedness being refinanced, refunded or replaced and, other than with respect to any revolving Indebtedness, a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being refinanced, refunded or replaced, (iii) the terms of such Indebtedness (excluding pricing, fees, premiums, rate floors, optional prepayment or redemption terms (and, if applicable, subordination terms) and, with respect to clauses (q) (if applicable), security), are not, taken as a whole (as reasonably determined by the Parent Borrower), more favorable to the lenders providing such indebtedness than those applicable to the Indebtedness being refinanced, refunded or replaced (other than any covenants or any other provisions applicable only to periods after the stated Maturity Date), (iv) such Indebtedness is secured only by the same collateral (or assets required to become collateral) and by Permitted Liens of the same or lower priority and by the same collateral (or assets required to become collateral) as the Liens securing the Indebtedness being refinanced, refunded or replaced at the time of such refinancing, refunding or replacement (it being understood, however, that such Indebtedness may go from being secured to being unsecured), (v) such Indebtedness is incurred by any “Borrower” under the ABL Credit Agreement or its Restricted Subsidiary that is the obligor on the Indebtedness being refinanced, refunded or replaced, except to the extent otherwise permitted pursuant to Section 4.03 and Section 4.08, (vi) if the Indebtedness being refinanced, refunded or replaced was originally contractually subordinated to the Obligations in right of payment (or the Liens on any Collateral securing such Indebtedness were originally contractually subordinated to the Liens on such Collateral securing the Securities), such Indebtedness is contractually subordinated to the Obligations in right of payment (or the Liens on such Collateral securing such Indebtedness shall be subordinated to the Liens on such Collateral securing the Securities) on terms not less favorable to the Holders than those applicable to the Indebtedness (or Liens, as applicable) being refinanced, refunded or replaced, taken as a whole, (vii) Indebtedness of any “Borrower” under the ABL Credit Agreement or any Restricted Subsidiary shall not refinance Indebtedness of an Unrestricted Subsidiary, (viii) as of the date of incurring such Indebtedness and after giving effect thereto, no Event of Default shall exist or have occurred and be continuing and (ix) if such Indebtedness being refinanced, refunded or replaced is guaranteed, the applicable Refinancing Indebtedness shall not be guaranteed by any Person that is not a Notes Party other than persons who guaranteed the Indebtedness being refinanced, refunded or replaced;
(q) Indebtedness incurred by the Parent Borrower or any Restricted Subsidiary to finance an acquisition permitted hereunder after the Issue Date; provided that (i) no Event of Default then exists or would result therefrom, (ii) such Indebtedness shall not mature or require any payment of principal, in each case, prior to the date which is 91 days after the Maturity Date, (iii) the Fixed Charge Coverage Ratio is at least 1.00 to 1.00 calculated on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 4.02, (iv) the Total Leverage Ratio would not exceed 6.90:1.00 calculated on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 4.02 (provided that, for purposes of calculating the Total Leverage Ratio under this clause (q), in no event shall the Unrestricted Cash
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Amount include the proceeds of such Indebtedness being incurred), (v) any such Indebtedness shall not mature or require any scheduled amortization or scheduled payments of principal and is not subject to mandatory redemption, repurchase, repayment or sinking fund obligation (other than AHYDO payments, customary offers to repurchase on a change of control, asset sale or casualty event and customary acceleration rights after an event of default), in each case, prior to the date that is 91 days after the stated Maturity Date, (vi) the terms of such Indebtedness (excluding pricing, fees, rate floors, optional prepayment or redemption terms (and, if applicable, subordination terms)), are not, taken as a whole (as reasonably determined by the Parent Borrower), materially more favorable to the lenders providing such Indebtedness than those applicable to the Securities (other than any covenants or any other provisions applicable only to periods after the stated Maturity Date) and (vii) the Parent Borrower shall have delivered an Officer’s Certificate of the Parent Borrower to the Trustee certifying as to compliance with the requirements of clauses (i) through (vi) of this clause (q);
(r) senior or subordinated unsecured Indebtedness of the Parent Borrower or any Restricted Subsidiary, so long as, after giving effect thereto, (A) no Default or Event of Default has occurred and is continuing at the time of the incurrence thereof, (B) the Total Leverage Ratio would not exceed 6.90:1.00 calculated on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 4.02 (provided that, for purposes of calculating the Total Leverage Ratio under this clause (r), in no event shall the Unrestricted Cash Amount include the proceeds of such Indebtedness being incurred), (C) the Fixed Charge Coverage Ratio is at least 1.00 to 1.00 calculated on a Pro Forma Basis as of the last day of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 4.02 and (D) the Parent Borrower shall have delivered an Officer’s Certificate of the Parent Borrower to the Trustee certifying as to compliance with the requirements of clauses (A) through (C) of this clause (r); provided that (x) any such Indebtedness shall not mature or require any scheduled amortization or scheduled payments of principal and is not subject to mandatory redemption, repurchase, repayment or sinking fund obligation (other than AHYDO payments, customary offers to repurchase on a change of control, asset sale or casualty event and customary acceleration rights after an event of default), in each case, prior to the date that is 91 days after the stated Maturity Date, (y) the terms of such Indebtedness (excluding pricing, fees, rate floors, optional prepayment or redemption terms (and, if applicable, subordination terms)), are not, taken as a whole (as reasonably determined by the Parent Borrower), materially more favorable to the lenders providing such Indebtedness than those applicable to the Holders (other than any covenants or any other provisions applicable only to periods after the stated Maturity Date) and (z) with respect to Indebtedness incurred under this clause (r) by a non-Notes Party, the aggregate outstanding principal amount of such Indebtedness of Restricted Subsidiaries that are not Notes Parties shall not exceed, $57,500,000 or, after the date that the latest audited financial statements have been received by the Trustee pursuant to Section 4.02, if greater, 3.45% of the Consolidated Total Assets as of the last day of the last Test Period for which financial statements have been delivered pursuant to Section 4.02;
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(s) Indebtedness incurred by the Parent Borrower or any Restricted Subsidiary under any Derivative Transaction entered into for the purpose of hedging risks associated with the Issuer’s and its Restricted Subsidiaries’ operations and not for speculative purposes;
(t) contingent obligations incurred by the Parent Borrower or any Restricted Subsidiary in respect of corporate leases assigned, sold or otherwise transferred (i) as set forth on Schedule 4.03(t) or (ii) incurred or created after the Issue Date in connection with the sale of retail stores; provided that in the case of clause (ii) above all such contingent obligations shall be unsecured and shall not permit a cross-default to this Indenture;
(u) Indebtedness incurred by the Parent Borrower or any Restricted Subsidiary at any time outstanding in an aggregate principal amount not to exceed $57,500,000 or, after the date that the audited financial statements have been received by the Trustee pursuant to Section 4.02, if greater, 3.45% of Consolidated Total Assets as of the last day of the last Test Period for which financial statements have been delivered pursuant to Section 4.02 at such time;
(v) [Reserved];
(w) Indebtedness incurred in exchange for, and in order to discharge obligations under, Indebtedness existing on the Issue Date pursuant to notes issued by Anagram International, Inc. and Anagram Holdings, LLC and in an aggregate principal amount not to exceed $230,000,000; provided that (i) the terms of such Indebtedness shall not be materially more restrictive than the terms of this Indenture, (ii) no Event of Default then exists or would result therefrom, (iii) Anagram International, Inc., Anagram Holdings, LLC and the Subsidiaries thereof (other than any of the immediately foregoing entities that would be classified as an Excluded Subsidiary (unless such entity is a “Notes Party” (or the functional equivalent thereof) for the purpose of any Indebtedness constituting Material Indebtedness) until such time as such entity ceases to be an Excluded Subsidiary) shall become Guarantors of the Securities, (iv) such Indebtedness shall not mature prior to the Maturity Date and (v) such Indebtedness shall be subject to an Intercreditor Agreement on customary terms acceptable to the Collateral Trustee, and to which the Collateral Trustee shall be party;
(x) Indebtedness incurred by the Parent Borrower or any Restricted Subsidiary in connection with Sale and Lease-Back Transactions permitted pursuant to Section 4.10;
(y) [Reserved];
(z) Indebtedness (including obligations in respect of letters of credit or bank guarantees or similar instruments with respect to such Indebtedness) incurred in respect of workers compensation claims, unemployment insurance (including premiums related thereto), other types of social security, pension obligations, vacation pay, health, disability or other employee benefits;
(aa) [Reserved];
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(bb) Indebtedness representing (i) deferred compensation to directors, officers, employees, members of management and consultants of the Issuer, any other Parent Company or any Restricted Subsidiary in the ordinary course of business and (ii) deferred compensation or other similar arrangements in connection with the Transactions, any Permitted Acquisition or any Investment permitted hereby;
(cc) [Reserved];
(dd) [Reserved];
(ee) unfunded pension fund and other employee benefit plan obligations and liabilities incurred in the ordinary course of business;
(ff) without duplications of any other Indebtedness, all premiums (if any), interest (including post-petition interest and payment in kind interest), accretion or amortization of original issue discount, fees, expenses and charges with respect to Indebtedness hereunder; and
(gg) the Mudrick Promissory Note.
Notwithstanding anything to the contrary herein, no Indebtedness shall be incurred by the Issuer, any other Parent Company or any Restricted Subsidiary (x) in exchange for, (y) in order to discharge obligations under and/or (z) that otherwise refinances or replaces, in each case, Indebtedness pursuant to notes issued by Anagram International, Inc. and Anagram Holdings, LLC other than as permitted under Section 4.03(w).
For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased, plus the aggregate amount of fees, underwriting discounts, premiums (including tender premiums) and other costs and expenses (including original issue discount) incurred in connection with such refinancing.
Section 4.04. Liens. The Parent Borrower and the Guarantors shall not, nor shall they permit any of their Restricted Subsidiaries to, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document
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or instrument in respect of goods or accounts receivable) owned by it, whether now owned or hereafter acquired, or any income or profits therefrom, except Permitted Liens.
Section 4.05. No Further Negative Pledges. The Issuer and the Guarantors shall not, nor shall they permit any of their Restricted Subsidiaries to, enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired, except with respect to:
(a) specific property to be sold pursuant to an Asset Sale permitted by Section 4.09;
(b) restrictions contained in any agreement with respect to Indebtedness permitted by Section 4.03(m) or Section 4.03(n) that is secured by a Permitted Lien, but only if such agreement applies solely to the specific asset or assets to which such Permitted Lien applies;
(c) restrictions contained in the ABL Credit Agreement and the documentation governing Indebtedness permitted by clauses (q), (r), (u) and (w) of Section 4.03;
(d) restrictions by reason of customary provisions restricting assignments, subletting or other transfers (including the granting of any Lien) contained in leases, subleases, licenses, sublicenses and similar agreements entered into in the ordinary course of business (provided that such restrictions are limited to the property or assets secured by such Liens or the property or assets subject to such leases, subleases, licenses, sublicenses or similar agreements, as the case may be);
(e) Permitted Liens and restrictions in the agreements relating thereto that limit the right of the Parent Borrower or any of its Restricted Subsidiaries to dispose of or transfer the assets subject to such Liens;
(f) provisions limiting the disposition or distribution of assets or property in joint venture agreements, sale-leaseback agreements, stock sale agreements and other similar agreements, which limitation is applicable only to the assets that are the subject of such agreements;
(g) any encumbrance or restriction assumed in connection with an acquisition of property or new Restricted Subsidiaries, so long as such encumbrance or restriction relates solely to the property so acquired and was not created in connection with or in anticipation of such acquisition;
(h) restrictions imposed by customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture or similar Person;
(i) restrictions on Cash or other deposits imposed by customers under contracts entered into in the ordinary course of business;
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(j) restrictions set forth in documents which exist on the Issue Date; and
(k) restrictions or encumbrances imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (j) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Issuer, no more restrictive with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
Section 4.06. Restricted Payments; Certain Payments of Indebtedness. (a) The Parent Borrower shall not pay or make, directly or indirectly, any Restricted Payment, except that:
(i) the Parent Borrower may make Restricted Payments to the extent necessary to permit any Parent Company;
(A) to pay (x) general administrative costs and expenses (including corporate overhead, legal or similar expenses) and franchise fees and taxes and similar fees, taxes and expenses required to maintain the organizational existence of such Parent Company, in each case, which are reasonable and customary and incurred in the ordinary course of business, plus any reasonable and customary indemnification claims made by directors, officers, members of management or employees of any Parent Company, in each case, to the extent attributable to the ownership or operations of any of PC Intermediate, any “Borrower” under the ABL Credit Agreement and the Restricted Subsidiaries and (y) without duplication of preceding clause (x), any Public Company Costs;
(B) to discharge, when and as due, tax liabilities of Issuer, or of any person that is a member of any consolidated, combined or similar income tax group of which Issuer is a member;
(C) to pay audit and other accounting and reporting expenses at such Parent Company to the extent relating to the ownership or operations of any “Borrower” under the ABL Credit Agreement and the Restricted Subsidiaries;
(D) for the payment of insurance premiums to the extent relating to the ownership or operations of any “Borrower” under the ABL Credit Agreement and the Restricted Subsidiaries;
(E) pay fees and expenses related to debt or equity offerings, investments or acquisitions permitted by this Indenture (whether or not consummated);
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(F) to pay the consideration to finance any Investment permitted under Section 4.08 (provided that (x) such Restricted Payments under this clause (a)(i)(F) shall be made substantially concurrently with the closing of such Investment and (y) such Parent Company shall, promptly following the closing thereof, cause all such property acquired to be contributed to any “Borrower” under the ABL Credit Agreement or one of the Restricted Subsidiaries, or the merger or amalgamation of the Person formed or acquired into any “Borrower” under the ABL Credit Agreement or one of the Restricted Subsidiaries, in order to consummate such Investment in a manner that causes such Investment to comply with the applicable requirements of Section 4.08 as if undertaken as a direct Investment by such Person or such Restricted Subsidiary); and
(G) without duplication of clause (A)(y) above, to pay customary salary, bonus and other benefits payable to directors, officers, members of management or employees of any Parent Company to the extent such salary, bonuses and other benefits are directly attributable and reasonably allocated to the operations of any “Borrower” under the ABL Credit Agreement and the Restricted Subsidiaries, in each case, so long as such Parent Company applies the amount of any such Restricted Payment for such purpose;
(ii) the Parent Borrower may pay (or make Restricted Payments to allow any Parent Company to pay) for the repurchase, redemption, retirement or other acquisition or retirement for value of Capital Stock of any Parent Company held by any future, present or former employee, director, member of management, officer, manager or consultant (or any Affiliate or Immediate Family Member thereof) of any Parent Company, any “Borrower” under the ABL Credit Agreement or any Restricted Subsidiary;
(A) in exchange for notes issued pursuant to Section 4.03(o), so long as the aggregate amount of all cash payments made in respect of such notes, together with the aggregate amount of Restricted Payments made (x) pursuant to clause (D) of this clause (ii) below and (y) pursuant to Section 4.06(a)(iv), does not exceed $5,750,000 in any Fiscal Year, which, if not used in any Fiscal Year, may be carried forward to the next subsequent Fiscal Year;
(B) [Reserved];
(C) in exchange for net proceeds of any key-man life insurance policies received during such fiscal year; or
(D) in exchange for Cash and Cash Equivalents in an amount not to exceed, together with (x) the aggregate amount of all cash payments made in respect of notes issued pursuant to Section 4.03(o) and (y) the aggregate amount of Restricted Payments made pursuant to
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Section 4.06(a)(iv), $5,750,000 in any Fiscal Year, which, if not used in any Fiscal Year, may be carried forward to the next subsequent Fiscal Year;
(iii) the Parent Borrower may make Restricted Payments; provided that at the time they are paid by the Parent Borrower, before and after giving effect to such Restricted Payments under this clause (iii), the Payment Conditions are satisfied;
(iv) the Parent Borrower may make Restricted Payments to any Parent Company to enable such Parent Company to make Cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of such Parent Company in an amount not to exceed, together with (x) the aggregate amount of all cash payments made in respect of notes issued pursuant to Section 4.03(o) and (y) the aggregate amount of all Restricted Payments made pursuant to Section 4.06(a)(ii)(D), $5,750,000 in any Fiscal Year, which, if not used in any Fiscal Year, may be carried forward to the next subsequent Fiscal Year;
(v) [reserved];
(vi) [reserved];
(vii) the Parent Borrower may make Restricted Payments to the Issuer to the extent necessary to permit the Issuer to pay interest, fees, principal and expenses on (1) the Securities and (2) any other permitted Indebtedness of Issuer, in each case, to the extent such payments of interest, fees, principal and expenses are not prohibited under Section 4.06(b);
(viii) the Parent Borrower may make Restricted Payments to (i) redeem, repurchase, retire or otherwise acquire (A) any Capital Stock (“Treasury Capital Stock”) of the Parent Borrower or any Restricted Subsidiary or (B) Capital Stock of any Parent Company, in the case of each of subclauses (A) and (B) in exchange for, or out of the proceeds of the substantially concurrent sale (other than to the Parent Borrower or a Restricted Subsidiary) of, Capital Stock of the Parent Borrower or any Parent Company to the extent contributed as a common equity contribution to the capital of the Parent Borrower or any Restricted Subsidiary (in each case, other than Disqualified Capital Stock) (“Refunding Capital Stock”) and (ii) declare and pay dividends on the Treasury Capital Stock out of the proceeds of the substantially concurrent sale (other than to the Parent Borrower or a Restricted Subsidiary) of the Refunding Capital Stock; and
Notwithstanding anything to the contrary herein, in no event shall the Issuer, PC Intermediate or the Parent Borrower pay or make, directly or indirectly, any Restricted Payment in reliance on sections 4.06(a)(i)(E) or (iii) unless all FILO Loans have been paid in full.
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(b) The Issuer and the Guarantors shall not, nor shall they permit any Restricted Subsidiary to, make, directly or indirectly, any payment or other distribution (whether in Cash, securities or other property) on or in respect of principal of or interest on Indebtedness permitted under Sections 4.03(k) or (w) (or Refinancing Indebtedness in respect of either of the foregoing if permitted hereunder) or any Junior Indebtedness or (without duplication) Indebtedness permitted under Section 4.03(r), or any payment or other distribution (whether in Cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of Indebtedness permitted under Sections 4.03(k) or (w) (or Refinancing Indebtedness in respect of either of the foregoing if permitted hereunder) or any Junior Indebtedness, in each case prior to the scheduled maturity of such Indebtedness (collectively, “Restricted Debt Payments”), except:
(i) the defeasance, redemption, repurchase or other acquisition or retirement of Indebtedness permitted under Sections 4.03(k) or (w) (or Refinancing Indebtedness in respect of either of the foregoing if permitted hereunder) or Junior Indebtedness made by exchange for, or out of the proceeds of the substantially concurrent incurrence of, Refinancing Indebtedness permitted by Section 4.03;
(ii) payments as part of an “applicable high yield discount obligation” catch-up payment, so long as no Event of Default shall have occurred and be continuing;
(iii) payments of regularly scheduled principal with respect to any (A) Indebtedness incurred under Section 4.03(m), (B) Indebtedness of the type described in Section 4.03(m) to the extent incurred under Section 4.03(u) and (C) Indebtedness incurred under Section 4.03(gg);
(iv) payments of regularly scheduled principal and interest, fees, expenses and indemnification obligations as and when due in respect of any Indebtedness (solely with respect to such interest, other than the Indebtedness permitted under Section 4.03(k), (n), (q), (r) or (w) and payments with respect to Subordinated Indebtedness prohibited by the subordination provisions thereof);
(v) payments with respect to intercompany Indebtedness permitted under Section 4.03, subject to the subordination provisions applicable thereto;
(vi) [reserved];
(vii) (A) payments of any Indebtedness under any Indebtedness permitted under Sections 4.03(k) and/or (w) and/or any Junior Indebtedness in exchange for, or with proceeds of any substantially contemporaneous issuance of Qualified Capital Stock of any Parent Company or the Parent Borrower, and any substantially contemporaneous capital contribution in respect of Qualified Capital Stock of the Parent Borrower, (B) payments of Indebtedness by the conversion of all or any portion thereof into Qualified Capital Stock of any Parent Company or
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the Parent Borrower and (C) payments of interest in respect of Indebtedness in the form of payment-in-kind interest with respect to such Indebtedness permitted under Section 4.03; and
(viii) Restricted Debt Payments; provided that as of the date of any such payment and after giving effect thereto, the Payment Conditions are satisfied (provided that in the case of an irrevocable notice required under the terms of the applicable agreements or instruments to be given in respect of a Restricted Debt Payment prior to the date of the making of such payment, the Payment Conditions with respect to such Restricted Debt Payment shall be satisfied at the time of the giving of such irrevocable notice and on the date of the making of such payment).
Notwithstanding anything to the contrary herein, in no event shall any Restricted Debt Payment be permitted under Sections 4.06(b)(viii) unless all FILO Loans have been paid in full.
Section 4.07. Restrictions on Subsidiary Distributions. Except as provided herein or in any other Notes Document, in the ABL Credit Agreement, in agreements governing Indebtedness permitted under Section 4.03(w), or in agreements with respect to refinancings, renewals or replacements of such Indebtedness permitted by Section 4.03, so long as such refinancing, renewal or replacement does not expand the scope of such contractual obligation, none of the Issuer, any other Parent Company and the other Guarantors shall, nor shall they permit any of their Restricted Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary of the Issuer to:
(a) pay dividends or make any other distributions on any of such Restricted Subsidiary’s Capital Stock owned by any Notes Party or any other Restricted Subsidiary;
(b) repay or prepay any Indebtedness owed by such Restricted Subsidiary to the Issuer or any Restricted Subsidiary;
(c) make loans or advances to the Issuer or any Restricted Subsidiary of the Issuer; or
(d) transfer any of its property or assets to the Issuer or any Restricted Subsidiary other than restrictions:
(i) in any agreement evidencing (x) Indebtedness of a Restricted Subsidiary other than a Notes Party permitted by Section 4.03, (y) Indebtedness permitted by Section 4.03 that is secured by a Permitted Lien if such encumbrances or restrictions apply only to the Person obligated under such Indebtedness and its Restricted Subsidiaries or the property or assets intended to secure such Indebtedness and (z) Indebtedness permitted pursuant to clauses (p) (as it relates to Indebtedness in respect of clauses (q), (r) and (w) of Section 4.03), (q), (r) and (w) of Section 4.03;
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(ii) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, subleases, licenses, sublicenses, joint venture agreements and similar agreements entered into in the ordinary course of business;
(iii) that are or were created by virtue of any Lien granted upon, transfer of, agreement to transfer or grant of any option or right with respect to any property, assets or Capital Stock not otherwise prohibited under this Indenture;
(iv) assumed in connection with an acquisition of property or new Restricted Subsidiaries, so long as such encumbrance or restriction relates solely to the property so acquired and was not created in connection with or in anticipation of such acquisition;
(v) in any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition;
(vi) in provisions in agreements or instruments which prohibit the payment of dividends or the making of other distributions with respect to any class of Capital Stock of a Person other than on a pro rata basis;
(vii) imposed by customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture or similar Person;
(viii) on Cash or other deposits imposed by customers under contracts entered into in the ordinary course of business;
(ix) set forth in documents which exist on the Issue Date; and
(x) of the types referred to in clauses (a) through (d) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (i) through (ix) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Parent Borrower, no more restrictive with respect to such restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
Section 4.08. Investments. The Issuer and the Guarantors shall not, nor shall they permit any of their Restricted Subsidiaries to make or own any Investment in any Person except:
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(a) Cash or Cash Equivalents;
(b) (i) equity Investments owned as of the Issue Date in any Restricted Subsidiary, (ii) Investments made after the Issue Date in Restricted Subsidiaries that are Notes Parties and (iii) equity Investments by a Notes Party in a non-Notes Party consisting of the Capital Stock of any Person which is not a Notes Party;
(c) Investments (i) constituting deposits, prepayments and other credits to suppliers, (ii) made in connection with obtaining, maintaining or renewing client and customer contracts and (iii) in the form of advances made to distributors, suppliers, licensors and licensees, in each case, in the ordinary course of business;
(d) Investments (i) by any Restricted Subsidiary that is not a Notes Party in any other Restricted Subsidiary that is not a Notes Party and (ii) subject to Section 4.19(c), by the Issuer or any other Notes Party in any Restricted Subsidiary that is not a Notes Party so long as, in the case of this clause (ii), the aggregate amount of any such Investments outstanding at any time does not exceed $57,500,000 or, after the date that the audited financial statements have been received by the Trustee pursuant to Section 4.15, if greater, 3.45% of the Consolidated Total Assets as of the last day of the last Test Period for which financial statements have been delivered pursuant to Section 4.02;
(e) (i) Permitted Acquisitions and (ii) Investments in any Restricted Subsidiary that is not a Notes Party in an amount required to permit such Restricted Subsidiary to consummate a Permitted Acquisition (so long as the consideration for such Permitted Acquisition shall be included for the purposes of calculating any amount available for Permitted Acquisitions pursuant to clause (d) of the proviso to the definition of “Permitted Acquisition” (without regard to the proviso contained in such clause (d)));
(f) Investments existing on, or contractually committed to as of, the Issue Date and any modification, replacement, renewal or extension thereof so long as any such modification, renewal or extension thereof does not increase the amount of such Investment except by the terms thereof or as otherwise permitted by this Section 4.08;
(g) Investments received in lieu of Cash in connection with any Asset Sale permitted by Section 4.09;
(h) loans or advances to officers, directors, employees, consultants or independent contractors of the Issuer, any other Parent Company, or any of its Restricted Subsidiaries to the extent permitted by Requirements of Law, in connection with such Person’s purchase of Capital Stock of any Parent Company or the Parent Borrower, in an aggregate principal amount not to exceed $11,500,000 at any one time outstanding;
(i) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business;
(j) Investments consisting of Indebtedness permitted under Section 4.03 (other than Indebtedness permitted under Sections 4.03(b) and (h)), Permitted Liens, Restricted
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Payments permitted under Section 4.06 (other than Section 4.06(a)(i)), Restricted Debt Payments permitted by Section 4.06 and mergers, consolidations or Asset Sales or dispositions permitted by Section 4.09;
(k) Investments in the ordinary course of business consisting of endorsements for collection or deposit and customary trade arrangements with customers;
(l) Investments (including debt obligations and Capital Stock) received (i) in connection with the bankruptcy or reorganization of any Person, (ii) in settlement of delinquent obligations of, or other disputes with, customers, suppliers and other financially troubled account debtors arising in the ordinary course of business and/or (iii) upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
(m) loans and advances of payroll payments or other compensation to employees, officers, directors, consultants or independent contractors of the Issuer, any other Parent Company or any Restricted Subsidiary in the ordinary course of business, in an aggregate principal amount not to exceed $2,875,000 at any one time outstanding;
(n) Investments to the extent that payment for such Investments is made solely with Capital Stock (other than Disqualified Capital Stock) of PC Intermediate or of any Parent Company in each case, to the extent not resulting in a Change of Control;
(o) Investments of any Person acquired by, or merged into or consolidated or amalgamated with, any “Borrower” under the ABL Credit Agreement or any Restricted Subsidiary pursuant to an Investment otherwise permitted by this Section 4.08 after the Issue Date to the extent that such Investments of such Person were not made in contemplation of or in connection with such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation and any modification, replacement, renewal or extension thereof so long as any such modification, renewal or extension thereof does not increase the amount of such Investment except as otherwise permitted by this Section 4.08 (it being understood that the “grandfathering” of Investments pursuant to this clause (o) is not intended to limit the application of clause (d) of the definition of “Permitted Acquisition” to existing Investments in non-Notes Parties acquired pursuant to a Permitted Acquisition);
(p) the Transactions;
(q) Investments made after the Issue Date by, subject to Section 4.19(c), the Issuer and its Restricted Subsidiaries in an aggregate principal amount at any time outstanding not to exceed $28,750,000 or, after the date that the audited financial statements have been received by the Trustee pursuant to Section 4.15(a), if greater, 1.725% of the Consolidated Total Assets as of the last day of the last Test Period for which financial statements have been delivered pursuant to Section 4.02;
(r) Investments made after the Issue Date by, subject to Section 4.19(c), the Issuer and its Restricted Subsidiaries (other than any acquisition); provided that as of the
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date of such Investment and after giving effect thereto, as to any such Investment, the Payment Conditions are satisfied;
(s) Guarantees of leases (other than Capital Leases) or of other obligations not constituting Indebtedness, in each case in the ordinary course of business;
(t) Investments in the Issuer or PC Intermediate in amounts and for purposes for which Restricted Payments to the Issuer or PC Intermediate are permitted under Section 4.06(a); provided that any such Investments made as provided above in lieu of such Restricted Payments shall reduce availability under any applicable Restricted Payment basket under Section 4.06(a);
(u) [reserved];
(v) Investments under any Derivative Transactions permitted to be entered into under Section 4.03; and
(w) loans or advances in favor of franchisees of any “Borrower” under the ABL Credit Agreement and its Restricted Subsidiaries made in the ordinary course of business in an aggregate principal amount not to exceed $17,250,000 at any one time outstanding.
(x) Notwithstanding anything in this Section 4.08 or in any other Notes Document to the contrary, from and after the Issue Date, neither the Issuer, any other Parent Company, nor any Restricted Subsidiary shall exclusively license any Material Intellectual Property to any Unrestricted Subsidiary or other Affiliate, or transfer (including, for the avoidance of doubt, by way of Investment or designation of a Restricted Subsidiary as an Unrestricted Subsidiary), assign, sell, or otherwise dispose of ownership of any Material Intellectual Property to any Unrestricted Subsidiary or other Affiliate; provided that nothing contained in this paragraph shall restrict or prohibit (i) any license or other arrangement existing on the Issue Date and, solely with respect to any Material Intellectual Property subject to such license or other arrangement as of the Issue Date, any amendments, modifications, restatements, renewals, or replacements of such license or other arrangement in the ordinary course of business that do not materially expand the scope of such Unrestricted Subsidiary’s or other Person’s, as applicable, rights in such Material Intellectual Property (ii) any jointly held intellectual property licenses from third parties existing on the Issue Date or any transfer, assignment, sale or other disposition of any rights with respect thereto, in any such case, for a bona fide business purpose.
Section 4.09. Asset Sales.
(a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to convey, sell, lease or sublease (as lessor or sublessor), license or sublicense (as lessor or licensor), transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its (or their) business, assets or property of any kind whatsoever (other than as contemplated in Section 5.01), whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired (each such transaction, an “Asset Sale”), other than an Excluded Asset Sale, unless:
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(i) the Issuer or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (as determined in good faith by the Issuer) of the assets sold or otherwise disposed of; and
(ii) at least 75% of the consideration therefor received by the Issuer or such Restricted Subsidiary, as the case may be, calculated on a cumulative basis, is in the form of Cash or Cash Equivalents; provided that the amount of:
(A) any liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most recent balance sheet or in the footnotes thereto or, if incurred or increased subsequent to the date of such balance sheet, such liabilities that would have been shown on the Issuer’s or such Restricted Subsidiary’s balance sheet or in the footnotes thereto if such incurrence or increase had taken place on or prior to the date of such balance sheet, as determined by the Issuer), contingent or otherwise, of the Issuer or such Restricted Subsidiary, other than liabilities that are by their terms subordinated to the Securities, that are assumed by the transferee of any such assets or that are otherwise cancelled or terminated in connection with the transaction with such transferee and for which the Issuer and all of its Restricted Subsidiaries have been validly released by all creditors in writing,
(B) any securities, notes or other obligations or assets received by the Issuer or such Restricted Subsidiary from such transferee that are converted by the Issuer or such Restricted Subsidiary into Cash Equivalents (to the extent of the Cash Equivalents received) or by their terms are required to be satisfied for Cash Equivalents within 180 days following the closing of such Asset Sale, and
(C) [reserved],
(b) shall be deemed to be Cash Equivalents for the purposes of this Section 4.09(a).
(c) Within 365 days after the receipt of any Net Proceeds of any Asset Sale, the Issuer or such Restricted Subsidiary, at its option, may apply the Net Proceeds from such Asset Sale:
(i) to repurchase the Securities on a pro rata basis pursuant to an offer to all Holders at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of purchase, or pursuant to a notice of redemption issued in compliance with Section 3.09 of this Indenture;
(ii) in respect of any Asset Sale involving Collateral or Equity Interests of a Restricted Subsidiary that owns, directly or indirectly, any Collateral, to repurchase, prepay, redeem or repay Indebtedness under the ABL Facility (or any
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other Senior Lien Indebtedness) and to reduce commitments thereunder (including, for the avoidance of doubt, any Refinancing Indebtedness in respect thereof);
(iii) in respect of any Asset Sale involving Collateral or Equity Interests of a Restricted Subsidiary that owns, directly or indirectly, any Collateral, to make (a) an Investment in any one or more businesses; provided that such Investment in any business is in the form of the acquisition of Capital Stock and results in the Issuer or any of its Restricted Subsidiaries, as the case may be, owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary, (b) capital expenditures or (c) acquisitions of other properties or assets that, in the case of (a), (b) or (c), constitute assets which replace the businesses, properties and/or other assets that are the subject of such Asset Sale and are thereupon with their acquisition added to the Collateral securing the Securities;
(iv) in respect of any Asset Sale not involving Collateral or Equity Interests of a Restricted Subsidiary that owns, directly or indirectly, any Collateral, to repurchase, prepay, redeem or repay Indebtedness of a Restricted Subsidiary which is not a Guarantor, including Indebtedness guaranteed by such Restricted Subsidiary (other than Indebtedness owed to the Company or a Restricted Subsidiary) or Indebtedness of the Issuer or any Guarantor that is secured by a Lien or that is senior unsecured Indebtedness;
(v) in respect of any Asset Sale not involving Collateral or Equity Interests of a Restricted Subsidiary that owns, directly or indirectly, any Collateral, to make (a) an Investment in any one or more businesses; provided that such Investment in any business is in the form of the acquisition of Capital Stock and results in the Issuer or any of its Restricted Subsidiaries, as the case may be, owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary, (b) capital expenditures or (c) acquisitions of other properties or assets that, in the case of each of (a) and (c), replace the businesses, properties and/or other assets that are the subject of such Asset Sale; or
(vi) any combination of the foregoing;
(d) provided that, in the case of clauses (iii) and (v) above, a binding commitment shall be treated as a permitted application of the Net Proceeds from the date of such commitment so long as the Issuer or such other Restricted Subsidiary enters into such commitment with the good faith expectation that such Net Proceeds will be applied to satisfy such commitment within the later of such 365th day and 180 days of such commitment (an “Acceptable Commitment”); provided, further, that if an Acceptable Commitment is later cancelled or terminated for any reason before such Net Proceeds are applied and after such 365th day, then such Net Proceeds shall constitute Excess Proceeds (as defined below).
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(e) If an Event of Default has occurred and is continuing, the Company or the applicable Guarantor shall, pending the final application of any Net Proceeds, deposit such Net Proceeds in a Deposit Account or security account in which the Collateral Trustee (subject to the terms of the Intercreditor Agreements) has a perfected security interest for the benefit of the Secured Parties in accordance with the applicable Lien priorities described in the Intercreditor Agreements.
(f) Any Net Proceeds from any Asset Sale that are not invested or applied as provided and within the time period set forth in Section 4.09(b) (it being understood that any portion of such Net Proceeds used to make an offer to purchase Securities, as described in clause (i) of Section 4.09(b), shall be deemed to have been invested or applied whether or not such offer is accepted) will be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $50.0 million, and to the extent permitted by the terms of any Senior Lien Indebtedness (including the terms of any applicable Intercreditor Agreement), the Issuer shall make an offer (an “Asset Sale Offer”) to all Holders of the Securities and, at the option of the Issuer, to (i) in the case of Excess Proceeds of an Asset Sale involving Collateral or Equity Interests of a Restricted Subsidiary that owns, directly or indirectly, any Collateral, any holders of Pari Passu Lien Indebtedness and (ii) in the case of Excess Proceeds of an Asset Sale not involving Collateral or Equity Interests of a Restricted Subsidiary that owns, directly or indirectly, any Collateral, any holders of Pari Passu Indebtedness, in each case to purchase the maximum aggregate principal amount of the Securities that is at least $1.00 and an integral multiple of $1.00 in excess thereof and any Pari Passu Lien Indebtedness or Pari Passu Indebtedness, as the case may be, 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, or 100% of the accreted value thereof, if less, plus accrued and unpaid interest (or, in respect of any such Pari Passu Lien Indebtedness or Pari Passu Indebtedness, as the case may be, such lesser price, if any, as may be provided for by the terms of such Indebtedness) to, but not including, the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture. The Issuer will commence an Asset Sale Offer with respect to Excess Proceeds within thirty Business Days after the date that Excess Proceeds exceed $50.0 million by mailing the notice required pursuant to the terms of this Indenture, with a copy to the Trustee, or otherwise delivered in accordance with the procedures of DTC.
(g) To the extent that the aggregate amount of Securities and Pari Passu Lien Indebtedness or Pari Passu Indebtedness, as the case may be, tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds used to make such Asset Sale Offer, the Issuer may use any remaining Excess Proceeds for general corporate purposes, subject to compliance with other covenants contained in this Indenture (any such remaining Excess Proceeds amount, “Declined Excess Proceeds”). If the aggregate principal amount of Securities and Pari Passu Lien Indebtedness or Pari Passu Indebtedness, as the case may be, surrendered in an Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Securities to be purchased in the manner described in Section 3.04. Selection of such Pari Passu Lien Indebtedness or Pari Passu Indebtedness will be made pursuant to the terms of such Indebtedness. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds used to make such Asset Sale Offer shall be
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reset to zero (regardless of whether there are any remaining Excess Proceeds upon such completion).
(h) Pending the final application of any Net Proceeds pursuant to this Section 4.09, the holder of such Net Proceeds may apply such Net Proceeds temporarily to reduce Indebtedness outstanding under a revolving credit facility or otherwise invest such Net Proceeds in any manner not prohibited by this Indenture.
(i) An 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 Issuer shall apply the applicable Excess Proceeds to the purchase of the Securities. Payment for any Securities so purchased shall be made in the same manner as interest payments are made.
(j) Upon the commencement of an Asset Sale Offer the Issuer shall send, electronically or by first-class mail, a notice to 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 Securities pursuant to an Asset Sale Offer. An Asset Sale Offer shall be made to all Holders and, if required or permitted by the terms thereof, holders of Pari Passu Lien Indebtedness and holders of Pari Passu Indebtedness. The notice, which shall govern the terms of an Asset Sale Offer, shall state:
(i) that an Asset Sale Offer is being made pursuant to this Section 4.09 and the length of time an Asset Sale Offer shall remain open;
(ii) the amount of the Asset Sale Offer, the purchase price and the Purchase Date;
(iii) that any Security not tendered or accepted for payment shall continue to accrue interest;
(iv) that, unless the Issuer defaults in making such payment, any Security accepted for payment pursuant to an Asset Sale Offer shall cease to accrue interest on and after the Purchase Date;
(v) that any Holder electing to have less than all of the aggregate principal amount of its Securities purchased pursuant to an Asset Sale Offer may elect to have Securities purchased in minimum principal amounts of $1.00 and integral multiples of $1.00;
(vi) that Holders electing to have a Security purchased pursuant to an Asset Sale Offer shall be required to surrender the Security, with the form entitled “Option of Holder to Elect Purchase” attached to the Security completed, or transfer such Security by book-entry transfer, to the Issuer, the applicable Depositary, if appointed by the Issuer, or a Paying Agent at the address specified in the notice at least two Business Days before the Purchase Date;
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(vii) that Holders shall be entitled to withdraw their election if the Issuer, the applicable Depositary or the applicable Paying Agent, as the case may be, receives, not later than the close of business on the tenth Business Day prior to the expiration date of the Offer Period, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security the Holder delivered for purchase and a statement that such Holder is withdrawing their election to have such Security purchased; and
(viii) that Holders whose certificated Securities were purchased only in part shall be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered (or transferred by book-entry transfer) representing the same indebtedness to the extent not repurchased; provided that new Securities will only be issued in denominations of $1.00 and in integral multiples of $1.00 in excess thereof.
The notice, if delivered electronically or mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. If (i) the notice is delivered or mailed in a manner herein provided and (ii) any Holder fails to receive such notice or a Holder receives such notice but it is defective, such Holder’s failure to receive such notice or such defect shall not affect the validity of the proceedings for the purchase of the Notes as to all other Holders that properly received such notice without defect.
If the Securities are in global form and the Issuer makes an offer to purchase the Securities pursuant to an Asset Sale Offer, a Holder may exercise its option to elect for the purchase of the Securities or withdraw such election through the facilities of DTC, subject to its rules and regulations.
(k) The Issuer, the applicable Depositary or the applicable Paying Agent, as the case may be, shall promptly mail or deliver to each tendering Holder an amount equal to the purchase price of the Securities properly tendered by such Holder and accepted by the Issuer for purchase, and the Issuer shall promptly issue a new Security, and the Trustee, upon receipt of an Authentication Order, shall authenticate and mail or deliver (or cause to be transferred by book-entry) such new Security to such Holder (it being understood that, notwithstanding anything in this Indenture to the contrary, only an Officer’s Certificate and not an Opinion of Counsel is required for the Trustee to authenticate and mail or deliver such new Security) in a principal amount equal to any unpurchased portion of the Security surrendered representing the same indebtedness to the extent not repurchased; provided, that each such new Security shall be in a principal amount of $1.00 or an integral multiple of $1.00 in excess thereof. Any Security not so accepted shall be promptly mailed or delivered by the Issuer to the Holder thereof. The Issuer shall announce the results of an Asset Sale Offer on or as soon as practicable after the Purchase Date on the website or online data system maintain pursuant to Section 4.02(g).
(l) Prior to 11:00 a.m. (New York City time) on the Purchase Date, with respect to the Securities, the Issuer shall deposit with the Trustee or with the applicable Paying Agent money sufficient to pay the purchase price of and accrued and unpaid
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interest on all Securities to be purchased on that Purchase Date. The Trustee or the applicable Paying Agent shall promptly return to the Issuer any money deposited with the Trustee or the applicable Paying Agent by the Issuer in excess of the amounts necessary to pay the purchase price of, and accrued and unpaid interest on, all Securities to be redeemed.
(m) The Issuer 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 or regulations are applicable in connection with the repurchase of the Securities pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue thereof. Notwithstanding the foregoing, the Issuer may rely on any no-action letters issued by the SEC indicating that the staff of the SEC will not recommend enforcement action in the event a tender offer satisfies certain conditions.
(n) Notwithstanding any other provisions of this Section 4.09, to the extent that any or all of the Net Proceeds of any Asset Sale by a Foreign Subsidiary is (x) prohibited or delayed by applicable local law, (y) restricted by applicable organizational documents or any agreement or (z) subject to other onerous organizational or administrative impediments from being repatriated to the United States, the portion of such Net Proceeds so affected will not be required to be applied in compliance with this covenant, and such amounts may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not permit repatriation to the Issuer or a Guarantor (the Issuer hereby agreeing to use commercially reasonable efforts (as determined in the Issuer’s reasonable business judgment) to otherwise cause the Foreign Subsidiary to within one year following the date on which the respective payment would otherwise have been required, promptly take all actions reasonably required by the applicable local law to permit such repatriation to the Issuer or a Guarantor), and if within one year following the date on which the respective payment would otherwise have been required, such repatriation of any of such affected Net Proceeds is permitted under the applicable local law, an amount equal to such amount of Net Proceeds so permitted to be repatriated will be promptly (and in any event no later than ten (10) Business Days after such repatriation is permitted) applied (net of any taxes, costs or expenses that would be payable or reserved against if such amounts were actually repatriated whether or not they are repatriated) in compliance with this covenant. The non-application of any prepayment amounts as a consequence of the foregoing provisions will not, for the avoidance of doubt, constitute a Default or an Event of Default. For the avoidance of doubt, nothing in this Indenture shall be construed to require any Subsidiary to repatriate cash.
Section 4.10. Sales and Lease-Backs. The Issuer and the Guarantors shall not, nor shall they permit any of their Restricted Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which such Person (a) has sold or transferred or is to sell or to transfer to any other Person (other than the Issuer or any of its Restricted Subsidiaries) and (b) intends to use
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for substantially the same purpose as the property which has been or is to be sold or transferred by the Issuer or such Restricted Subsidiary (as applicable) to any Person (other than the Issuer or any of its Restricted Subsidiaries) in connection with such lease (such a transaction described herein, a “Sale and Lease-Back Transaction”); provided that Sale and Lease-Back Transactions shall be permitted in respect of the real properties owned by any “Borrower” under the ABL Credit Agreement and/or the Guarantors and located at (i) 47 Elizabeth Drive, Chester, New York, (ii) 7700 Anagram Drive, Eden Prairie, Hennepin County, MN 55344 and (iii) 2800 Purple Sage Road NW, Village of Los Lunas, New Mexico, in each case, so long as (x) [reserved], (y) [reserved] and (z) the Issuer shall use commercially reasonable efforts to deliver to the Collateral Trustee a Collateral Access Agreement from the purchaser or transferee of each of the foregoing real properties on terms and conditions reasonably satisfactory to the Collateral Trustee.
Section 4.11. Transactions with Affiliates. The Issuer and the Guarantors shall not, nor shall they permit any of their Restricted Subsidiaries to enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any of their Affiliates on terms that are less favorable to the Issuer or such Restricted Subsidiary, as the case may be, than those that might be obtained at the time in a comparable arm’s-length transaction from a Person who is not an Affiliate; provided that the foregoing restriction shall not apply to:
(a) to the extent permitted or not restricted by this Indenture, (i) any transaction between or among any Notes Parties or (ii) any transactions between or among Restricted Subsidiaries (none of which is a Notes Party);
(b) reasonable and customary fees, indemnities and reasonable out-of-pocket expenses paid to members of the board of directors (or similar governing body) of the Issuer, any other Parent Company, and the Restricted Subsidiaries in the ordinary course of business and, in the case of payments to any Parent Company, to the extent attributable to the operations of the Parent Borrower and the Restricted Subsidiaries;
(c) (i) any employment, severance agreements or compensatory (including profit sharing) arrangements entered into by any “Borrower” under the ABL Credit Agreement or any of the Restricted Subsidiaries with their respective current or former officers, directors, members of management, employees, consultants or independent contractors in the ordinary course of business, (ii) any subscription agreement or similar agreement pertaining to the repurchase of Capital Stock pursuant to put/call rights or similar rights with current or former officers, directors, members of management, employees, consultants or independent contractors and (iii) transactions pursuant to any employee compensation, benefit plan, stock option plan or arrangement, any health, disability or similar insurance plan which covers employees or any employment contract or arrangement;
(d) (x) transactions permitted by Sections 4.03(d), (o) and (bb), 4.06 (excluding transactions permitted under section 4.06(a)(ii)(D) and 4.08(h) and (m)) and (y) issuances of Capital Stock and debt securities not restricted by this Indenture;
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(e) the transactions in existence on the Issue Date and any amendment thereto to the extent such amendment is not adverse to the Holders in any material respect;
(f) [reserved];
(g) [reserved];
(h) [reserved];
(i) Guarantees permitted by Section 4.03 in accordance with the terms of Section 4.03 and Section 4.08;
(j) loans and other transactions among the Issuer, PC Intermediate and any other Notes Party to the extent permitted under this Article 4;
(k) the payment of customary fees, reasonable out-of-pocket costs to and indemnities provided on behalf of, directors, officers, employees, members of management, consultants and independent contractors of the Parent Borrower and the Restricted Subsidiaries in the ordinary course of business and, in the case of payments to any Parent Company, to the extent attributable to the operations of the Parent Borrower and the Restricted Subsidiaries;
(l) transactions with customers, clients, suppliers or joint ventures for the purchase or sale of goods and services entered into in the ordinary course of business, which are fair to the Parent Borrower and the Restricted Subsidiaries, in the reasonable determination of the board of directors of the Parent Borrower or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;
(m) [reserved]; and
(n) the payment of reasonable out-of-pocket costs and expenses related to registration rights and customary indemnities provided to shareholders under any shareholder agreement.
Section 4.12. Amendments of or Waivers with Respect to Certain Indebtedness. The Issuer and the Guarantors shall not, nor shall they permit any of their Restricted Subsidiaries to, amend or otherwise change (a) the terms of the ABL Credit Agreement, Indebtedness permitted under Sections 4.03(w) (or Refinancing Indebtedness in respect of either of the foregoing if permitted hereunder) or Junior Indebtedness (or the documentation governing the foregoing (including, for the avoidance of doubt, Indebtedness permitted under Sections 4.03(r) and (gg))) or (b) the subordination provisions of any Subordinated Indebtedness (and the component definitions as used therein), in each case, if the effect of such amendment or change, together with all other amendments or changes made, is materially adverse to the interests of the Holders.
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Section 4.13. Fiscal Year. The Issuer and the Guarantors shall not, nor shall they permit any of their Restricted Subsidiaries to, change its Fiscal Year-end to a date other than December 31 or the Saturday closest to December 31.
Section 4.14. Change of Control. (a) Upon the occurrence of a Change of Control after the Issue Date, unless the Issuer has previously or concurrently sent a redemption notice with respect to all the outstanding Securities as described in Article 3 hereto, the Issuer will make an offer to purchase all of the Securities pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to, but not including, the date of purchase, subject to the right of Holders of record of the Securities on the relevant record date to receive interest due on the relevant interest payment date.
(b) Within 60 days following any Change of Control, the Issuer will send notice of such Change of Control Offer electronically or by first-class mail, with a copy to the Trustee, to each Holder of Securities to the registered address of such Holder or otherwise in accordance with the procedures of DTC, with the following information:
(i) that a Change of Control Offer is being made pursuant to this Section 4.14, and that all Securities properly tendered pursuant to such Change of Control Offer will be accepted for payment by the Issuer at a repurchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of repurchase, subject to the right of Holders of record of the Securities on the relevant record date to receive interest due on the relevant interest payment date;
(ii) the purchase price and the purchase date, which shall be no earlier than 10 days nor later than 60 days from the date such notice is mailed or otherwise delivered (the “Change of Control Payment Date”), subject to the extension (in the case where such notice was mailed or otherwise delivered prior to the occurrence of the Change of Control) in the event that occurrence of the Change of Control is delayed;
(iii) that any Security not properly tendered will remain outstanding and continue to accrue interest;
(iv) that unless the Issuer defaults in the payment of the Change of Control Payment, all Securities accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;
(v) if such notice is delivered prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control;
(vi) that Holders electing to have any Securities purchased pursuant to a Change of Control Offer will be required to surrender such Securities, with the
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form entitled “Option of Holder to Elect Purchase” on the reverse of such Securities completed, to the Paying Agent specified in the notice 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;
(vii) that Holders will be entitled to withdraw their tendered Securities and their election to require the Issuer to purchase such Securities; provided that the Paying Agent receives, not later than the close of business on the second Business Day prior to the Change of Control Payment Date, a facsimile transmission or letter setting forth the name of the Holder of the Securities, the principal amount of Securities tendered for purchase, and a statement that such Securities is withdrawing its tendered Securities and its election to have such Securities purchased;
(viii) that if the Issuer is redeeming less than all of the Securities, the Holders of the remaining Securities will be issued new Securities and such new Securities will be equal in principal amount to the unpurchased portion of the Securities surrendered. The unpurchased portion of the Securities must be equal to $1.00 or an integral multiple of $1.00 in excess of $1.00;
(ix) if such notice is delivered prior to the occurrence of a Change of Control, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control and shall describe each such condition, and, if applicable, shall state that, in the Issuer’s discretion, the Change of Control Payment Date may be delayed until such time as any or all such conditions shall be satisfied, or that such repurchase may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the Change of Control Payment Date, or by the Change of Control Payment Date as so delayed; and
(x) the other instructions, as determined by the Issuer, consistent with this Section 4.14, that a Holder must follow.
Securities repurchased by the Issuer pursuant to a Change of Control Offer will have the status of Securities issued but not outstanding or will be retired and cancelled at the option of the Issuer. Securities purchased by a third party pursuant to the preceding paragraph will have the status of Securities issued and outstanding.
The notice, if electronically delivered or mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. If (a) the notice is electronically delivered or mailed in a manner herein provided and (b) any Holder fails to receive such notice or a Holder receives such notice but it is defective, such Holder’s failure to receive such notice or such defect shall not affect the validity of the proceedings for the purchase of the Securities as to all other Holders that properly received such notice without defect.
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If the Securities are in global form and the Issuer makes an offer to purchase all of the Securities pursuant to the Change of Control Offer, a Holder may exercise its option to elect for the purchase of the Securities or withdraw such election through the facilities of DTC, subject to its rules and regulations.
The Issuer 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 or regulations are applicable in connection with the repurchase by the Issuer of Securities pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Issuer will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue thereof. Notwithstanding the foregoing, the Issuer may rely on any no-action letters issued by the SEC indicating that the staff of the SEC will not recommend enforcement action in the event a tender offer satisfies certain conditions.
(c) On the Change of Control Payment Date, the Issuer shall, to the extent permitted by law,
(i) accept for payment all Securities issued by it or portions thereof properly tendered pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all Securities or portions thereof so tendered; and
(iii) deliver, or cause to be delivered, to the Trustee for cancellation the Securities so accepted together with an Officer’s Certificate to the Trustee stating that such Securities or portions thereof have been tendered to and purchased by the Issuer.
(d) The Issuer shall not be required to make a Change of Control Offer following 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 Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer. Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.
(e) Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control.
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(f) A Change of Control Offer may be made at the same time as consents are solicited with respect to an amendment, supplement or waiver of this Indenture, the Securities, Guarantees and/or Security Documents (but the Change of Control Offer may not condition tenders on the delivery of such consents).
(g) Other than as specifically provided in this Section 4.14, any purchase pursuant to this Section 4.14 shall be made pursuant to the provisions of Sections 3.04, 3.07 and 3.08.
(h) The Issuer’s obligations to make an offer to repurchase the Securities as a result of a Change of Control under this Section 4.14 may be waived or modified with the written consent of the Holders of a majority in principal amount of the Securities.
Section 4.15. Post-Closing Items. (a) Provided that the Issuer has not filed an Annual Report on Form 10-K for the Fiscal Year ended December 31, 2022 with the SEC, as soon as available, and in any event no later than December 31, 2024 (but no later than the date the following items are delivered to the ABL Administrative Agent or any ABL Lender in connection with the ABL Facility), the Trustee shall have received (for delivery to each Holder) (i) the audited consolidated balance sheet of the Issuer and its Restricted Subsidiaries as at the end of Fiscal Year 2022 and the related statements of income, stockholders’ equity and cash flows of the Issuer and its Restricted Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year, in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto, (ii) with respect to such financial statements, a report thereon of BDO USA, P.A. or other independent certified public accountants of recognized national standing (which report shall be unqualified as to “going concern” and scope of audit (except for qualifications pertaining to debt maturities occurring within 12 months of such audit), and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of the Issuer and its Restricted Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with GAAP) and (iii) together with the delivery of financial statements required by Section 4.15(a)(i), the compliance certificate required to be delivered pursuant to Section 4.16(a).
(b) The Notes Parties shall take all necessary actions to satisfy the items described on Schedule 4.15(b) within the applicable periods of time specified in such Schedule (or such longer periods as the administrative agent under the ABL Credit Agreement may have agreed in its sole discretion, as set forth in an Officer’s Certificate provided to the Trustee). The Issuer shall post the Officer’s Certificate provided to the Trustee under this Section 4.15(b) on the Issuer’s website or a password protected online data system) where the Issuer posts the reports required under Section 4.02.
Section 4.16. Compliance Certificate. (a) The Issuer shall deliver to the Trustee within 120 days after the end of each fiscal year of the Issuer, beginning with the fiscal year ending on or about December 31, 2023, a certificate (the signer of which shall be the
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principal executive officer, the principal financial officer or the principal accounting officer of the Issuer) stating that in the course of the performance by the signer of the signer’s duties as an Officer of the Issuer the signer would normally have knowledge of any Default and whether or not the signer knows of any Default that occurred during such period. If the signer does, the certificate shall describe the Default, its status and the action the Issuer is taking or proposes to take with respect thereto.
(b) Together with the delivery of each officer’s certificate delivered pursuant to Section 4.16(a), the Issuer shall deliver to the Collateral Trustee a Perfection Certificate Supplement, either confirming that there has been no change in the information contained in the Perfection Certificate delivered on the Issue Date, or the date on which the most recent Perfection Certificate Supplement was delivered to the Collateral Trustee, or identifying changes to such information previously disclosed.
(c) The Issuer shall deliver to the Trustee, within 20 Business Days after any Officer of the Issuer becomes aware of any Default or Event of Default, an Officer’s Certificate specifying such Default or Event of Default and what action the Issuer is taking or propose to take with respect thereto.
Section 4.17. Limitation on Guarantees of Indebtedness by Restricted Subsidiaries. The Issuer shall not permit any of its Wholly-Owned Subsidiaries that are Restricted Subsidiaries (and non-Wholly-Owned Subsidiaries if such non-Wholly-Owned Subsidiaries guarantee the ABL Obligations and/or Capital Markets Indebtedness of the Issuer or any Guarantor), other than a Guarantor or an Excluded Subsidiary, to guarantee the payment of (i) any Indebtedness (including, for the avoidance of doubt, commitments in respect thereof) of the Issuer or any other Guarantor under the ABL Facility or (ii) Capital Markets Indebtedness of the Issuer or any Guarantor having an aggregate principal amount outstanding in excess of $10.0 million unless:
(a) such Restricted Subsidiary within 45 days executes and delivers a supplemental indenture to this Indenture, the form of which is attached as Exhibit C hereto, providing for a Guarantee by such Restricted Subsidiary, except that with respect to a guarantee of Indebtedness of the Issuer or any Guarantor, if such Indebtedness is by its express terms subordinated in right of payment to the Securities or such Guarantor’s Guarantee, any such guarantee by such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Guarantee substantially to the same extent as such Indebtedness is subordinated to the Securities; and
(b) such Restricted Subsidiary waives and shall not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Issuer or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee, provided that this Section 4.17 shall not be applicable to any guarantee of any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary.
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Each Guarantee will be limited, to the extent enforceable, to an amount not to exceed the maximum amount that can be guaranteed by that Restricted Subsidiary without rendering the Guarantee, as it relates to such Restricted Subsidiary, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
The Issuer may elect, in its sole discretion, to cause any Restricted Subsidiary that is not otherwise required to be a Guarantor to become a Guarantor, in which case, such Restricted Subsidiary will not be required to comply with clause (i) or (ii) of this Section 4.17 and such Guarantee may be released at any time in the Issuer’s sole discretion; provided that at the time of such release, no Default or Event of Default shall have occurred and be continuing or would occur as consequences thereof.
Each Guarantee shall be released in accordance with Section 10.02(b) or (c), as applicable.
Section 4.18. Further Instruments and Acts. Upon request of the Trustee, the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
Section 4.19. Permitted Activities of Parent Companies. None of the Issuer, PC Intermediate or any other Person of which the Parent Borrower is an indirect Wholly Owned Subsidiary (to the extent such Person is a Notes Party) shall (notwithstanding anything to the contrary contained herein) (a) incur, directly or indirectly, any Indebtedness other than (i) the Indebtedness under the Notes Documents, Indebtedness described in Section 4.03(c), Section 4.03(w), Section 4.03(gg) or otherwise in connection with the Transactions (it being understood that Indebtedness of any Parent Company of the Parent Borrower to any Restricted Subsidiary shall not be permitted under this clause (a)) and (ii) Guarantees of Indebtedness of any “Borrower” under the ABL Credit Agreement and the Restricted Subsidiaries permitted hereunder; (b) create or suffer to exist any Lien upon any property or assets now owned or hereafter acquired by it other than (i) the Liens created under the Security Documents, (ii) subject to the applicable intercreditor arrangements explicitly contemplated hereunder (including, with respect to the ABL Obligations, the ABL Intercreditor Agreement), Liens securing the Original Securities issued on the Issue Date and any PIK Securities, Indebtedness described in Section 4.03(w) and, in each case, permitted guarantees thereof, in each case, to the extent such Liens would be permitted under Section 4.04 if incurred by the Parent Borrower or (iii) any other Lien created in connection with the Transactions (it being understood that no Lien shall be permitted under this clause (iii) other than a Lien on the property or assets of the Issuer or PC Intermediate that would be a Permitted Lien but for the subject property or assets not being property or assets of the Parent Borrower); (c) engage in any business activity or own any material assets other than (i) holding 100.0% of the Capital Stock (and any amount of Subordinated Indebtedness issued by) of, in the case of the Issuer, PC Intermediate, in the case of PC Intermediate, the Parent Borrower and, indirectly, any other Subsidiary; provided that any such Subordinated Indebtedness shall be evidenced by an intercompany note and shall be subject to a
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Second Priority Lien pursuant to the Security Agreement, (ii) performing its obligations under the Notes Documents and other Indebtedness, Liens (including the granting of Liens) and Guarantees permitted hereunder, (iii) issuing its own Capital Stock, (iv) filing tax reports and paying taxes in the ordinary course (and contesting any taxes); (v) preparing reports to Governmental Authorities and to its shareholders; (vi) holding director and shareholder meetings, preparing corporate records and other corporate activities required to maintain its separate corporate structure or to comply with applicable Requirements of Law; (vii) [reserved]; (viii) holding Cash and other assets received in connection with Restricted Payments or Investments made by the Parent Borrower or any other borrower under the ABL Facilities and the Restricted Subsidiaries or contributions to, or proceeds from the issuance of, issuances of Capital Stock of PC Intermediate, in each case, pending the application thereof in a manner not prohibited by this Indenture; (ix) providing indemnification for its officers, directors or members of management; (x) participating in tax, accounting and other administrative matters; (xi) the performance of its obligations under the other documents, agreements and Investments contemplated by the Transactions and (xii) activities incidental to the foregoing; (d) liquidate, wind up or dissolve itself or consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person; provided that so long as no Default or Event of Default exists or would result therefrom, PC Intermediate may merge with any other Person (other than the Parent Borrower and any of the Restricted Subsidiaries) so long as (i) PC Intermediate shall be the continuing or surviving Person or (ii) if the Person formed by or surviving any such merger or consolidation is not PC Intermediate, (A) the successor to PC Intermediate shall expressly assume all the obligations of PC Intermediate under this Indenture and the other Notes Documents to which PC Intermediate is a party pursuant to a supplement hereto or thereto in a form reasonably satisfactory to the Trustee and/or the Collateral Trustee; (B) such successor shall be an entity organized under the laws of the United States, any state thereof or the District of Columbia and (C) the Parent Borrower shall deliver a certificate of a responsible officer with respect to the satisfaction of the conditions under clauses (A) and (B) hereof; provided, further, that if the conditions set forth in the preceding proviso are satisfied, the successor to PC Intermediate will succeed to, and be substituted for, PC Intermediate under this Indenture; or (e) fail to hold itself out to the public as a legal entity separate and distinct from all other Persons.
Article
5
Successor Company
Section 5.01. Merger, Consolidation or Sale of All or Substantially All Assets.
(a) The Issuer shall not consolidate or merge with or into or wind up into (whether or not the Issuer is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:
(i) the Issuer is the surviving Person or the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have
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been made is a corporation, partnership or limited liability company organized or existing under the laws of the jurisdiction of organization of the Issuer or the laws of the United States, any state thereof, the District of Columbia (the Issuer or such Person, as the case may be, being herein called the “Successor Company”); provided that in the case where the Successor Company is not a corporation, a co-obligor of the Securities is a corporation;
(ii) the Successor Company, if other than the Issuer, expressly assumes all the obligations of the Issuer under this Indenture, the Securities, the Security Documents and the Intercreditor Agreements pursuant to supplemental indentures or other documents or instruments;
(iii) immediately after such transaction, no Default shall have occurred and be continuing;
(iv) immediately after giving pro forma effect to such transaction and any related financing transactions, as if such transactions had occurred at the beginning of the applicable four-quarter period, either:
(A) the Successor Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(r); or
(B) the Fixed Charge Coverage Ratio for the Successor Company and its Restricted Subsidiaries would be equal to or greater than the Fixed Charge Coverage Ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction;
(v) each Guarantor, unless it is the other party to the transactions described above, in which case Section 5.01(b)(i)(B) shall apply, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations under this Indenture and the Securities; and
(vi) the Successor Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indentures, if any, comply with this Indenture.
The Successor Company (if other than the Issuer) shall succeed to, and be substituted for the Issuer, as the case may be, under this Indenture and the Securities, and in such event the Issuer will automatically be released and discharged from its obligation under this Indenture and the Securities. Notwithstanding the foregoing clauses (iii), (iv) and (vi) of Section 5.01(a) (which shall not apply to the following): (A) any Restricted Subsidiary may consolidate with or merge with or into or wind up into or sell, assign, transfer, lease, convey or otherwise dispose of all or part of its properties and assets to the Issuer, and (B) the Issuer may consolidate with or merge with or into or wind up into an Affiliate of the Issuer solely for the purpose of reincorporating the Issuer in a State of the
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United States, so long as the amount of Indebtedness of the Issuer and its Restricted Subsidiaries is not increased thereby.
(b) No Guarantor shall, and the Issuer shall not permit any Guarantor to, consolidate or merge with or into or wind up into (whether or not the Issuer or Guarantor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless:
(i) (A) such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation, partnership or limited liability company organized or existing under the laws of the jurisdiction of organization of such Guarantor, as the case may be, or the laws of the United States, any state thereof, the District of Columbia or any territory thereof (such Guarantor or such Person, as the case may be, being herein called the “Successor Person” ), (B) the Successor Person (if other than such Guarantor) expressly assumes all the obligations of such Guarantor under this Indenture and such Guarantor’s Guarantee pursuant to a supplemental indenture or other documents or instruments, (C) immediately after such transaction, no Default exists, and (D) the Successor Person shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indentures, if any, comply with this Indenture; or
(ii) the transaction is otherwise permitted by this Indenture, including in compliance with clauses (i) and (ii) of Section 4.09(a).
Except as otherwise provided in this Indenture, the Successor Person (if other than such Guarantor) will succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor’s Guarantee, and such Guarantor will automatically be released and discharged from its obligations under this Indenture and such Guarantor’s Guarantee. Notwithstanding the foregoing, (1) a Guarantor may consolidate with or merge with or into or wind up into or sell, assign, transfer, lease, convey or otherwise dispose of all or part of its properties and assets to another Guarantor or the Issuer and (2) a Guarantor may consolidate with or merge with or into or wind up or convert into an Affiliate incorporated solely for the purpose of reincorporating such Guarantor in another state of the United States or the District of Columbia so long as the amount of Indebtedness of the Guarantor is not increased thereby.
(c) Clauses (iii) and (iv) of Section 5.01(a) shall not apply to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Issuer and the Restricted Subsidiaries.
Section 5.02. Successor Corporation Substituted.
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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 Issuer in accordance with Section 5.01, the successor corporation formed by such consolidation or into or with which the Issuer 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 Issuer shall refer instead to the successor corporation and not to the Issuer), and may exercise every right and power of the Issuer under this Indenture with the same effect as if such Successor Person had been named as the Issuer herein; provided that the predecessor Issuer shall not be relieved from the obligation to pay the principal of and interest on the Securities except in the case of a sale, assignment, transfer, lease, conveyance or other disposition of all of the Issuer’s assets that meets the requirements of Section 5.01.
Article
6
Defaults and Remedies
Section 6.01. Events of Default. An “Event of Default” with respect to the Securities occurs if:
(a) there is a default in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the Securities;
(b) there is a default for 30 days or more in the payment when due of interest on or with respect to the Securities;
(c) Issuer or any Guarantor fails for 30 days after receipt of written notice given by the Trustee or the Holders of not less than 30% in principal amount of the Securities (with a copy to the Trustee) to comply with any of its obligations, covenants or agreements (other than a default referred to in clauses (a) and (b) above) contained in this Indenture, the Securities, the Security Documents, or the ABL Intercreditor Agreement (or any other applicable intercreditor agreement);
(d) there is a default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Issuer or any of its Restricted Subsidiaries or the payment of which is guaranteed by the Issuer or any of its Restricted Subsidiaries, other than Indebtedness owed to the Issuer or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists or is created after the issuance of the Securities, if both:
(i) such default either results from the failure to pay any principal of such Indebtedness at its stated maturity (after giving effect to any applicable grace periods) or relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity; and
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(ii) the principal amount of such Indebtedness, together with the principal amount of any other such indebtedness in default for failure to pay any principal at its stated maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, aggregate $28,750,000 or more at any one time outstanding;
(e) Issuer or any Significant Subsidiary, or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer), would constitute a Significant Subsidiary, fails to pay final judgments aggregating in excess of $28,750,000 (net of amounts covered by insurance policies issued by insurance companies), which final judgments remain unpaid, undischarged, unwaived and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed;
(f) the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer), would constitute a Significant Subsidiary, pursuant to or within the meaning of any 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; or
(iv) makes a general assignment for the benefit of its creditors or takes any comparable action under any foreign laws relating to insolvency;
(g) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is for relief against the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, in a proceeding in which the Issuer or any such Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer), would constitute a Significant Subsidiary, is to be adjudicated bankrupt or insolvent;
(ii) appoints a receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer), would constitute a Significant Subsidiary, or for all or substantially all of the property of
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the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer), would constitute a Significant Subsidiary; or
(iii) orders the winding up or liquidation of the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer), would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days;
(h) the Guarantee of any Significant Subsidiary, or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer), would constitute a Significant Subsidiary, shall for any reason cease to be in full force and effect (except as contemplated by the terms thereof) or any responsible officer of any Guarantor that is a Significant Subsidiary, or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer), would constitute a Significant Subsidiary, as the case may be, denies that it has any further liability under its or their Guarantee(s) or gives notice to such effect, other than by reason of the termination of this Indenture or the release of any such Guarantee in accordance with this Indenture; or
(i) except (a) as expressly permitted by this Indenture, the Intercreditor Agreements and the applicable Security Documents, (b) for the satisfaction in full of all obligations under this Indenture or the release of any such security interest in accordance with the terms of this Indenture, the Intercreditor Agreements or the applicable Security Documents, (c) to the extent that any loss of perfection or priority results from the failure of the Collateral Trustee to maintain possession of certificates actually delivered to it representing securities pledged under the Security Documents or to authorize any Guarantor or the Issuer to file Uniform Commercial Code amendments relating to any Guarantor’s or Issuer’s change of name or jurisdiction of formation after having received prior written notice by the Issuer of the same, if any material provision of the Security Documents or the Guarantees shall for any reason cease to be in full force and effect and such default continues for 30 days or the Issuer shall so assert, or any security interest created, or purported to be created, by any of the Security Documents shall cease to be enforceable with respect to any material portion of the Collateral covered or purported to be covered thereby and such default continues for 30 days.
In the event of any Event of Default specified in clause 6.01(d) above, such Event of Default and all consequences thereof (excluding any resulting payment default, other than as a result of acceleration of the Securities) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if within 30 days after such Event of Default arose:
(1) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged; or
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(2) the requisite number of holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default; or
(3) the default that is the basis for such Event of Default has been cured, waived or is no longer continuing.
Section 6.02. Acceleration. Following the ABL Payoff Date, if any Event of Default (other than an Event of Default specified in clause (f) or (g) of Section 6.01 with respect to the Issuer) occurs and is continuing under this Indenture, the Trustee or the Holders of at least 30% in principal amount of the then total outstanding Securities by notice to the Issuer (with a copy to the Trustee if from the Holders) may declare the principal, premium, if any, and accrued but unpaid interest and any other monetary obligations on all the then outstanding Securities to be due and payable immediately. Upon the effectiveness of such declaration, such principal and interest shall be due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in Section 6.01(f) or (g) with respect to the Issuer occurs, the principal of, premium, if any, and accrued but unpaid interest on all Securities will ipso facto become due and payable immediately without any declaration or other act on the part of the Trustee or any Holders.
The Holders of a majority in aggregate principal amount of the then outstanding Securities by written notice to the Trustee (with a copy to the Issuer, provided that any rescission under this Section 6.02 shall be valid and binding notwithstanding the failure to provide a copy of such notice to the Issuer) may on behalf of all of the Holders rescind an acceleration and its consequences:
(a) if the rescission would not conflict with any judgment or decree;
(b) if all existing Events of Default have been cured, waived, annulled or rescinded except nonpayment of principal or interest that has become due solely because of the acceleration;
(c) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; and
(d) if the Issuer has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IN THE EVENT THE SECURITIES ARE ACCELERATED OR OTHERWISE BECOME DUE AND PAYABLE AS A RESULT OF, OR FOLLOWING, AN EVENT OF DEFAULT, THE APPLICABLE PREMIUM WILL ALSO BE DUE AND PAYABLE AND SHALL CONSTITUTE PART OF THE OBLIGATIONS UNDER THE SECURITIES IN VIEW OF THE IMPRACTICABILITY AND EXTREME DIFFICULTY OF ASCERTAINING ACTUAL DAMAGES AND BY MUTUAL AGREEMENT OF THE PARTIES AS TO
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A REASONABLE CALCULATION OF EACH HOLDER’S LOST PROFITS AS A RESULT THEREOF. ANY PREMIUM (INCLUDING THE APPLICABLE PREMIUM) PAYABLE ABOVE SHALL BE THE LIQUIDATED DAMAGES SUSTAINED BY EACH HOLDER AS THE RESULT OF THE EARLY REDEMPTION AND THE ISSUER AGREES THAT IT IS REASONABLE UNDER THE CIRCUMSTANCES CURRENTLY EXISTING. THE PREMIUM (INCLUDING THE APPLICABLE PREMIUM) SHALL ALSO BE PAYABLE IN THE EVENT THE SECURITIES (AND/OR THIS INDENTURE) ARE SATISFIED OR RELEASED BY FORECLOSURE (WHETHER BY POWER OF JUDICIAL PROCEEDING), DEED IN LIEU OF FORECLOSURE, EXERCISE OF REMEDIES AND/OR SALE OF COLLATERAL FOLLOWING EVENTS OF DEFAULT OR ANY SALE OF COLLATERAL IN AN INSOLVENCY PROCEEDING, ANY RESTRUCTURING, REORGANIZATION OR COMPROMISE OF THE OBLIGATIONS UNDER THE SECURITIES OR OTHER OBLIGATIONS UNDER THIS INDENTURE OR ANY OTHER TERMINATION OF THIS INDENTURE OR SECURITIES AS A RESULT OF ANY SUCH EVENTS.
Section 6.03. Other Remedies. If an Event of Default with respect to the Securities occurs and is continuing, the Trustee may pursue any available remedy at law or in equity to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. To the extent permitted by law, all available remedies are cumulative.
Section 6.04. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the then outstanding Securities by written notice to the Trustee (with a copy to the Issuer, provided that any waiver under this Section 6.04 shall be valid and binding notwithstanding the failure to provide a copy of such notice to the Issuer) may on the behalf of all Holders waive an existing Default or Event of Default and its consequences except a continuing Default or Event of Default in the payment of interest on, premium, if any, or the principal of any Security held by a non-consenting Holder. When a Default or Event of Default is so waived, it is deemed cured and the Issuer, the Trustee and the Holders will be restored to their former positions and rights under this Indenture, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.
Section 6.05. Control by Majority. The Holders of a majority in principal amount of the then outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of any other Holder (it being
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understood that the Trustee does not have an affirmative duty to ascertain whether or not such directions are unduly prejudicial to such Holder) or that would involve the Trustee in personal liability. Prior to taking any action under this Indenture, the Trustee shall be entitled to indemnification and/or security satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
Section 6.06. Limitation on Suits. (a) Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Securities unless:
(i) such Holder has previously given the Trustee written notice that an Event of Default is continuing;
(ii) Holders of at least 30% in principal amount of the total outstanding Securities have requested the Trustee, in writing, to pursue the remedy;
(iii) Holders of the Securities have offered the Trustee security and/or indemnity reasonably satisfactory to it against any loss, liability or expense;
(iv) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security and/or indemnity; and
(v) Holders of a majority in principal amount of the total outstanding Securities have not given the Trustee a written direction inconsistent with such request within such 60-day period.
(b) A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders).
Section 6.07. Rights of the Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Securities held by such Holder, on or after the respective due dates expressed or provided for in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing with respect to Securities, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer or any other obligor on the Securities for the whole amount then due and owing (together
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with interest on overdue principal and (to the extent lawful) on any unpaid interest at the rate provided for in such Securities) and the amounts provided for in Section 7.06.
Section 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation, expenses disbursements and advances of the Trustee (including counsel, accountants, experts or such other professionals as the Trustee deems necessary, advisable or appropriate)) and the Holders of Securities then outstanding allowed in any judicial proceedings relative to the Issuer or any Guarantor, its creditors or its property, shall be entitled to participate as a member, voting or otherwise, of any official committee of creditors appointed in such matters and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.06.
Section 6.10. Priorities. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:
FIRST: to the Trustee (acting in any capacity hereunder) and Collateral Trustee, and their respective agents and attorneys, for amounts due under Section 7.06;
SECOND: to the Holders for amounts due and unpaid on the Securities for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and
THIRD: to the Issuer or to whosoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to the Holders pursuant to this Section. At least 15 days before such record date, the Trustee shall send to each Holder and the Issuer a notice that states the record date, the payment date and amount to be paid.
Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, 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
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suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Securities.
Section 6.12. Waiver of Stay or Extension Laws. Neither the Issuer nor any Guarantor (to the extent it may lawfully do so) shall at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Issuer and each Guarantor (to the extent that it may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.
Article
7
Trustee
Section 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their 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:
(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee (it being agreed that the permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty); and
(ii) in the absence of negligence, willful misconduct or 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. The Trustee shall be under no duty to make any investigation as to any statement contained in any such instance, but may accept the same as conclusive evidence of the truth and accuracy of such statement or the correctness of such opinions. However, in the case of certificates or opinions required by any provision hereof to be provided to it, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own grossly negligent action, its own grossly negligent failure to act or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this Section;
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(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05; and
(iv) no provision of this Indenture, the Securities, the Intercreditor Agreements or the Security Documents shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers.
(d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest or investment income on any money received by it except as the Trustee may agree in writing with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
(h) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer or any Guarantor will be sufficient if signed by an Officer of the Issuer.
Section 7.02. Rights of Trustee. (a) The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officer’s 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 the Officer’s Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any attorney or agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers conferred upon it by this Indenture; provided, however, that the Trustee’s conduct does not constitute gross negligence, willful misconduct or bad faith as determined by a non-appealable order of a court of competent jurisdiction.
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(e) The Trustee may consult with counsel of its own selection and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document unless requested in writing to do so by the Holders of not less than a majority in principal amount of the Securities at the time outstanding, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney, at the expense of the Issuer and shall incur no liability of any kind by reason of such inquiry or investigation.
(g) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security and/or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(h) The rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be indemnified and/or secured, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.
(i) The Trustee shall not be liable for any action taken or omitted by it in good faith at the direction of the Holders of not less than a majority in principal amount of the outstanding Securities as to the time, method and place of conducting any proceedings for any remedy available to the Trustee or the exercising of any power conferred by this Indenture.
(j) Any action taken, or omitted to be taken, by the Trustee in good faith pursuant to this Indenture upon the request or authority or consent of any person who, at the time of making such request or giving such authority or consent, is the Holder of any Security shall be conclusive and binding upon future Holders of Securities and upon Securities executed and delivered in exchange therefor or in place thereof.
(k) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.
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(m) The Trustee may request that the Issuer deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to any Notes Document.
(n) The Trustee shall not be deemed to have knowledge of any fact or matter unless such fact or matter is actually known to a Trust Officer of the Trustee.
(o) The permissive rights of the Trustee under any Notes Documents shall not be construed as obligations or duties.
(p) In the event the Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of Holders, each representing less than a majority in the aggregate principal amount of the Notes then outstanding, pursuant to the provisions of this Indenture, the Trustee, in its sole discretion, may determine what action, if any, will be taken and the Trustee shall be entitled not to take any action until such instructions have been resolved or clarified to its satisfaction and the Trustee shall not be or become liability in any way or person for any failure to comply with any conflicting, unclear or equivocal instructions.
(q) The Trustee shall not have any obligation or duty to monitor, determine or inquire as to compliance, and shall not be responsible or liable for compliance with restrictions on transfer, exchange, redemption, purchase or repurchase, as applicable, of minimum denominations imposed under this Indenture or under applicable law or regulation with respect to any transfer, exchange, redemption, purchase or repurchase, as applicable, of any interest in any Notes.
(r) The Trustee shall have no duty (A) to see any recording, filing, or depositing of this Indenture or any Security Document, or any financing statement or continuation statement evidencing a security interest, or to see to the maintenance of such recording or filing or depositing, or to any re- recording, refiling, or redepositing of any thereof, or otherwise monitoring the perfection, continuation of perfection, or the sufficiency or validity of any security interest in or related to any Collateral or (B) to see to the payment or discharge of any tax, assessment, or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Collateral.
(s) The Trustee may assume without inquiry in the absence of actual knowledge that the Issuer and each of the Restricted Subsidiaries is duly complying with their obligations contained in any Notes Document required to be performed and observed by them, and that no Default or Event of Default or other event which would require repayment of the Notes has occurred.
(t) The Trustee shall have no obligation whatsoever to assure that the Collateral exists or is owned by any security provider or is cared for, protected, insured or has been encumbered, or that any Liens on the Collateral have been properly or sufficiently or lawfully created, perfected, protected, maintained or enforced or are entitled to any particular priority, or to determine whether the property constituting
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collateral intending to be subject to the interest and the interest of the Security Documents has been properly and completely listed or delivered, as the case may be, or the genuineness, validity, marketability or sufficiency thereof or title thereto.
(u) The Trustee shall have no duty to monitor the performance or actions of the Collateral Trustee. The Trustee shall have no responsibility or liability for the actions or omissions of the Collateral Trustee. In each case that the Trustee is requested hereunder or under any of the Security Documents to give direction or provide any consent or approval to the Collateral Trustee, the Issuer or to any other party, the Trustee may seek direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes. If the Trustee requests direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes with respect to giving any direction to the Collateral Trustee, the Trustee shall be entitled to refrain from giving such direction unless and until the Trustee shall have received direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes, and the Trustee shall not incur liability to any Person by reason of so refraining.
(v) At any time that the security granted pursuant to the Security Documents has become enforceable and the Holders have given a direction to the Trustee to enforce such security, the Trustee is not required to give any direction to the Collateral Trustee with respect thereto unless it has been indemnified and/or secured in accordance with Section 7.02(h). In any event, in connection with any enforcement of such security, the Trustee is not responsible for:
(i) any failure of the Collateral Trustee to enforce such security within a reasonable time or at all;
(ii) any failure of the Collateral Trustee to pay over the proceeds of enforcement of the Collateral;
(iii) any failure of the Collateral Trustee to realize such security for the best price obtainable;
(iv) monitoring the activities of the Collateral Trustee in relation to such enforcement;
(v) taking any enforcement action itself in relation to such security;
(vi) agreeing to any proposed course of action by the Collateral Trustee which could result in the Trustee incurring any liability for its own account; or
(vii) paying any fees, costs or expenses of the Collateral Trustee.
(w) No provision of this Indenture or of the Notes Documents shall require the Trustee to indemnify the Collateral Trustee, and the Collateral Trustee shall be required to waive any claim it may otherwise have by operation of law in any jurisdiction to be indemnified by the Trustee acting as principal vis-à-vis its agent, the Collateral Trustee (but this shall not prejudice the Collateral Trustee’s rights to bring any claim or suit
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against the Trustee (including for damages in the case of gross negligence or willful misconduct of the Trustee)).
(x) The Trustee shall be under no obligation to effect or maintain insurance or to renew any policies of insurance or to inquire as to the sufficiency of any policies of insurance carried by the Issuer or any Grantor, or to report, or make or file claims or proof of loss for, any loss or damage insured against it that may occur, or to keep itself informed or advised as to the payment of any taxes or assessments, or to require any such payment be made.
(y) Each of the above described rights (a) through (x) shall inure to the benefit of and be enforceable by the Collateral Trustee hereunder and under the Intercreditor Agreements and the Security Documents.
Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Issuer or their Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent or Registrar may do the same with like rights. However, the Trustee must comply with Sections 7.09 and 7.10.
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, any Guarantee or other Security Documents or the Securities, it shall not be accountable for the Issuer’s use of the proceeds from the Securities, and it shall not be responsible for any statement of the Issuer or any Guarantor in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee’s or its agent’s certificate of authentication. The Trustee shall not be charged with knowledge of any Default or Event of Default unless either (a) a Trust Officer shall have actual knowledge thereof or (b) the Trustee shall have received written notice thereof in accordance with Section 12.01 from the Issuer, any Guarantor or any Holder. In accepting the trust hereby created, the Trustee acts solely as Trustee for the Holders and not in its individual capacity and all persons, including without limitation the Holders of Securities and the Issuer having any claim against the Trustee arising from this Indenture shall look only to the funds and accounts held by the Trustee hereunder for payment.
Section 7.05. Notice of Defaults. If a Default occurs and is continuing and if it is actually known to a Trust Officer of the Trustee, the Trustee shall send to each Holder notice of the Default within the earlier of 90 days after it occurs or 30 days after it is actually known to a Trust Officer or written notice of it is received by the Trustee, or promptly after discovery or obtaining notice if such discovery is made or notice is received more than 90 days after the Default occurs. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Security, the Trustee may withhold the notice if and so long as it in good faith determines that withholding the notice is in the interests of the Holders.
Section 7.06. Compensation and Indemnity. The Issuer and each Guarantor, jointly and severally, shall pay to the Trustee (acting in any capacity hereunder) and the
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Collateral Trustee from time to time such compensation for its services as shall be agreed in writing between the Issuer and the Trustee and the Collateral Trustee. The Trustee and the Collateral Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer and the Guarantor, jointly and severally, shall reimburse the Trustee and the Collateral Trustee, as applicable, upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services, except any such disbursements, advances or expenses as may be attributable to its own respective gross negligence, willful misconduct or bad faith as determined by a final nonappealable order of a court of competent jurisdiction. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee and the Collateral Trustee’s agents, counsel, accountants and experts. The Issuer and each Guarantor, jointly and severally, shall indemnify the Trustee (acting in any capacity hereunder) and the Collateral Trustee against any and all loss, liability, claim, damage or expense (including reasonable attorneys’ fees and expenses) incurred by it arising out of or in connection with the acceptance or administration of this trust and the performance of its duties under this Indenture, including the costs and expenses of enforcing this Indenture or Guarantee against the Issuer or a Guarantor (including this Section 7.06) and defending itself against or investigating any claim (whether asserted by the Issuer, any Guarantor, any Holder or any other Person). The obligation to pay such amounts shall survive the payment in full or defeasance or discharge of the Securities or the removal or resignation of the Trustee or the Collateral Trustee. The Trustee and the Collateral Trustee shall notify the Issuer of any claim for which they may seek indemnity promptly upon obtaining actual knowledge thereof; provided, however, that any failure to so notify the Issuer shall not relieve the Issuer or any Guarantor of its indemnity obligations hereunder. The Issuer shall defend the claim and the indemnified party shall provide reasonable cooperation at the Issuer’s expense in the defense. Such indemnified parties may have separate counsel and the Issuer and the Guarantors, as applicable, shall pay the fees and expenses of such counsel; provided, however, that the Issuer shall not be required to pay such fees and expenses if the Issuer assumes such indemnified parties’ defense and, in such indemnified parties’ reasonable judgment, there is no conflict of interest between the Issuer and the Guarantors, as applicable, and such parties in connection with such defense; provided, further, that the Issuer shall be required to pay the reasonable fees and expenses of such counsel in evaluating such conflict. The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party through such party’s own willful misconduct, gross negligence or bad faith as finally determined by a final nonappealable order of a court of competent jurisdiction.
(a) To secure the Issuer’s and the Guarantors’ payment obligations in this Section, the Trustee and the Collateral Trustee shall have a Lien prior to the Securities on all money or property held or collected by the Trustee and the Collateral Trustee other than money or property held in trust to pay principal of and interest on particular Securities pursuant to Article 8 or otherwise.
(b) The Issuer’s and the Guarantors’ payment obligations pursuant to this Section shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any Bankruptcy Law or the resignation or removal of
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the Trustee or the Collateral Trustee. Without prejudice to any other rights available to the Trustee or the Collateral Trustee under applicable law, when the Trustee or the Collateral Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(f) or (g) with respect to the Issuer, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.
(c) No provision of this Indenture shall require the Trustee or the Collateral Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if adequate indemnity against such risk or liability is not assured to its satisfaction.
Section 7.07. Replacement of Trustee or Collateral Trustee. (a) A resignation or removal of the Trustee or Collateral Trustee and appointment of a successor Trustee or Collateral Trustee, as applicable will become effective only upon the applicable successor Trustee or Collateral Trustee’s acceptance of appointment as provided in this Section 7.07
(b) The Trustee or Collateral Trustee, as applicable, may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuer. The Holders of a majority in aggregate principal amount of the then outstanding Securities may remove the Trustee or Collateral Trustee, as applicable, by so notifying the Trustee or Collateral Trustee, as applicable, and the Issuer in writing, and may appoint a successor Trustee or Collateral Trustee, as applicable. The Issuer shall remove the Trustee or Collateral Trustee if:
(i) the Trustee or Collateral Trustee, as applicable, fails to comply with Section 7.09;
(ii) the Trustee or Collateral Trustee, as applicable, is adjudged bankrupt or insolvent, or an order for relief is entered with respect to the Trustee or Collateral Trustee under any Bankruptcy Law;
(iii) a receiver or other public officer takes charge of the Trustee or Collateral Trustee, as applicable, or its property; or
(iv) the Trustee or Collateral Trustee, as applicable, otherwise becomes incapable of acting.
(c) If the Trustee or Collateral Trustee resigns, is removed by the Issuer or by the Holders of a majority in principal amount of the Securities and such Holders do not reasonably promptly appoint a successor Trustee or Collateral Trustee, as applicable, or if a vacancy exists in the office of Trustee or Collateral Trustee, as applicable, for any reason (the Trustee or Collateral Trustee, as applicable, in any such event being referred to herein as the retiring Trustee or retiring Collateral Trustee, as applicable), the Issuer shall promptly appoint a successor Trustee or Collateral Trustee, as applicable.
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(d) A successor Trustee or Collateral Trustee, as applicable, shall deliver a written acceptance of its appointment to the retiring Trustee or Collateral Trustee, as applicable, and to the Issuer. Thereupon the resignation or removal of the retiring Trustee or Collateral Trustee, as applicable, shall become effective, and the successor Trustee or Collateral Trustee, as applicable, shall have all the rights, powers and duties of the Trustee or Collateral Trustee, as applicable, under this Indenture. The successor Trustee or Collateral Trustee, as applicable, shall mail a notice of its succession to the Holders. The retiring Trustee or Collateral Trustee, as applicable, shall promptly transfer all property held by it as Trustee or Collateral Trustee, as applicable, to the successor Trustee or Collateral Trustee, as applicable, subject to the Lien provided for in Section 7.06 and provided that all sums owing to the Trustee hereunder have been paid. The retiring Trustee or Collateral Trustee, as applicable, shall have no responsibility or liability for any action or inaction of a successor Trustee.
(e) If a successor Trustee or Collateral Trustee, as applicable, does not take office within 60 days after the retiring Trustee or Collateral Trustee, as applicable, resigns or is removed, the retiring Trustee or Collateral Trustee, as applicable, or the Holders of at least 10% in aggregate principal amount of the then outstanding Securities may petition at the expense of the Issuer any court of competent jurisdiction for the appointment of a successor Trustee or Collateral Trustee, as applicable.
(f) If the Trustee or Collateral Trustee, as applicable, fails to comply with Section 7.09, any Holder who has been a bona fide holder of a Security for at least six months may petition any court of competent jurisdiction for the removal of the Trustee or Collateral Trustee, as applicable, and the appointment of a successor Trustee or Collateral Trustee, as applicable.
(g) Notwithstanding the replacement of the Trustee or Collateral Trustee, as applicable, pursuant to this Section, the Issuer’s obligations under Section 7.06 shall continue for the benefit of the retiring Trustee or retiring Collateral Trustee, as applicable.
Section 7.08. Successor Trustee or Collateral Trustee by Merger. If the Trustee or Collateral Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation, limited liability company or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee or Collateral Trustee, as applicable.
In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture and any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force
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which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have.
Section 7.09. Eligibility; Disqualification. There will at all times be a Trustee hereunder that is an entity organized and doing business under the laws of the United States of America or any other state thereof that is authorized under such laws to exercise corporate trust powers, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50.0 million as set forth in its most recent published annual report.
Section 7.10. Preferential Collection of Claims Against the Issuer. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent indicated.
Article 8
Discharge of Indenture; Defeasance
Section 8.01. Discharge of Liability on Securities; Defeasance. 1. This Indenture shall be discharged and shall cease to be of further effect as to all outstanding Securities when either:
(a) all Securities theretofore authenticated and delivered, except lost, stolen or destroyed Securities which have been replaced or paid and Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from trust, have been delivered to the Trustee for cancellation; or
(b) (i) all Securities not theretofore delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer and the Issuer or any Guarantor have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders of the Securities, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness as determined by the Issuer on the Securities not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to, but not including, the date of maturity or redemption; (ii) the Issuer and/or the Guarantors have paid or caused to be paid all sums payable by it under this Indenture; and (iii) the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Securities at maturity or the redemption date, as the case may be; provided that upon any redemption that requires the payment of the Applicable Premium, the amount deposited shall be sufficient for purposes of this Indenture to the extent that an amount is deposited with the Trustee equal to the
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Applicable Premium calculated as of the date of deposit, with any deficit as of the date of redemption (any such amount, the “Applicable Premium Deficit”) only required to be deposited with the Trustee on or prior to the date of redemption. Any Applicable Premium Deficit shall be set forth in an Officer’s Certificate delivered to the Trustee simultaneously with the deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit shall be applied toward such redemption;
(c) In addition, the Issuer must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
2. Subject to Section 8.02, the Issuer may, at its option and at any time, elect to discharge (1) all of its obligations under the Securities and this Indenture (“legal defeasance option”) or (2) its obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 4.12, 4.15, 4.16, 4.17, 4.18 and 4.19 for the benefit of the Holders and the operation of Section 5.01 and Sections 6.01(c), 6.01(d), 6.01(e), 6.01(f) (with respect to Significant Subsidiaries of the Issuer only), 6.01(g) (with respect to Significant Subsidiaries of the Issuer only), 6.01(h) and 6.01(i) (“covenant defeasance option”) for the benefit of the Holders. The Issuer may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. In the event that the Issuer terminates all of its obligations under the Securities and this Indenture by exercising its legal defeasance option or its covenant defeasance option, the obligations of each Guarantor under its Guarantee of the Securities shall be terminated simultaneously with the termination of such obligations so long as no Securities are then outstanding.
3. If the Issuer exercises its legal defeasance option, payment of the Securities so defeased may not be accelerated because of an Event of Default. If the Issuer exercises its covenant defeasance option, payment of the Securities so defeased may not be accelerated because of an Event of Default specified in Sections 6.01(c), 6.01(d), 6.01(e), 6.01(f) (with respect to Significant Subsidiaries of the Issuer only), 6.01(g) (with respect to Significant Subsidiaries of the Issuer only), 6.01(h) and 6.01(i) or because of the failure of the Issuer to comply with Section 5.01.
4. Upon satisfaction of the conditions set forth herein and upon request of the Issuer, the Trustee shall acknowledge in writing the discharge of those obligations that the Issuer terminates.
5. Notwithstanding clause 2.(i) above, the Issuer’s obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.10, 2.15, 4.01, 4.13, 7.06, 7.07 and in this Article 8 shall survive until the Securities have been paid in full. Thereafter, the Issuer’s obligations in Sections 7.06, 8.06 and 8.06 shall survive such satisfaction and discharge.
Section 8.02. Conditions to Defeasance. (a) The Issuer may exercise its legal defeasance option or its covenant defeasance option, in each case, with respect to the Securities only if:
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(i) the Issuer shall irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Securities, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, investment bank or appraisal firm, to pay the principal of, premium, if any, and interest due on the Securities on the stated Maturity Date or on the redemption date, as the case may be, of such principal, premium, if any, or interest on such Securities (provided that if such redemption is made as provided under Paragraph 5 of the form of Securities set forth in Exhibit A hereto, (x) the amount of cash in U.S. dollars, Government Securities, or a combination thereof, that the Issuer must irrevocably deposit or cause to be deposited will be determined using an assumed Applicable Premium calculated as of the date of such deposit and (y) the Issuer must irrevocably deposit or cause to be deposited additional money in trust on the redemption date as necessary to pay the Applicable Premium as determined on such date), and the Issuer must specify whether such Securities are being defeased to maturity or to a particular redemption date;
(ii) in the case of the exercise of a legal defeasance option, the Issuer shall have delivered to the Trustee an Opinion of Counsel confirming that, subject to customary assumptions and exclusions, (a) the Issuer has received from, or there has been published by, the United States Internal Revenue Service a ruling, or (b) since the issuance of the Securities, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, subject to customary assumptions and exclusions, the beneficial owners of the Securities will not recognize income, gain or loss for U.S. federal income tax purposes, as applicable, as a result of such exercise of a legal defeasance option and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such exercise of a legal defeasance option had not occurred;
(iii) in the case of exercise of a covenant defeasance option, the Issuer shall have delivered to the Trustee an Opinion of Counsel confirming that, subject to customary assumptions and exclusions, the beneficial owners of the Securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such exercise of a covenant defeasance option and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such exercise of a covenant defeasance option had not occurred;
(iv) no Default (other than that resulting from borrowing funds to be applied to make such deposit and the granting of Liens in connection therewith) shall have occurred and be continuing on the date of such deposit;
(v) such exercise of a legal defeasance option or exercise of a covenant defeasance option shall not result in a breach or violation of, or constitute a default under the ABL Credit Agreement or any other material
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agreement or instrument (other than this Indenture) to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound (other than that resulting from any borrowing of funds to be applied to make the deposit required to effect such exercise of a legal defeasance option or exercise of a covenant defeasance option and any similar and simultaneous deposit relating to other Indebtedness, and, in each case, the granting of Liens in connection therewith);
(vi) the Issuer shall have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer or any Guarantor or others; and
(vii) the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the exercise of a legal defeasance option or the exercise of a covenant defeasance option, as the case may be, have been complied with.
Notwithstanding the foregoing, an Opinion of Counsel required by the immediately preceding paragraph with respect to legal defeasance need not be delivered if all of the Securities not theretofore delivered to the Trustee for cancellation (x) have become due and payable or (y) will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer.
(b) Before or after a deposit, the Issuer may make arrangements satisfactory to the Trustee for the redemption of such Securities at a future date in accordance with Article 3.
Section 8.03. Application of Trust Money. The Trustee shall hold in trust money or Government Securities (including proceeds thereof) deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from Government Securities through each Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities so discharged or defeased.
Section 8.04. Repayment to Issuer. Each of the Trustee and each Paying Agent shall promptly turn over to the Issuer upon written request any money or Government Securities held by it as provided in this Article 8 which, in the written opinion of a nationally recognized firm of independent public accountants delivered to the Trustee (which delivery shall only be required if Government Securities have been so deposited), are in excess of the amount thereof which would then be required to be deposited to effect an equivalent discharge or defeasance in accordance with this Article 8.
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Subject to any applicable abandoned property law, the Trustee and each Paying Agent shall pay to the Issuer upon written request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Issuer for payment as general creditors, and the Trustee and each Paying Agent shall have no further liability with respect to such monies.
Section 8.05. Indemnity for Government Securities. The Issuer shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited Government Securities or the principal and interest received on such Government Securities.
Section 8.06. Reinstatement. If the Trustee or any Paying Agent is unable to apply any money or Government Securities in accordance with this Article 8 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 Issuer’s obligations under this Indenture and the Securities so discharged or defeased shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or any Paying Agent is permitted to apply all such money or Government Securities in accordance with this Article 8; provided, however, that, if the Issuer has made any payment of principal of or interest on, any such Securities because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or Government Securities held by the Trustee or any Paying Agent.
Article
9
Amendments and Waivers
Section 9.01. Without Consent of the Holders. The Issuer, the Guarantors (with respect to a Guarantee or this Indenture to which it is a party), the Trustee and/or the Collateral Trustee may amend or supplement this Indenture, any Guarantee, the Securities, the Intercreditor Agreements and any Security Document without the consent of any Holder:
(i) to cure any ambiguity, omission, mistake, defect or inconsistency, as provided to the Trustee in an Officer’s Certificate;
(ii) to provide for uncertificated Securities of such series in addition to or in place of certificated Securities;
(iii) to comply with the covenant relating to mergers, consolidations and sales of assets;
(iv) to provide for the assumption of the Issuer’s or any Guarantor’s obligations to the Holders in a transaction that complies with this Indenture;
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(v) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under this Indenture of any such Holder in any material respect;
(vi) to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Issuer or any Guarantor;
(vii) to evidence and provide for the acceptance and appointment under this Indenture or the Intercreditor Agreements of a successor Trustee or successor Collateral Trustee thereunder pursuant to the requirements thereof or to provide for the accession by the Trustee or the Collateral Trustee, as applicable, to this Indenture, the Intercreditor Agreements or any Security Document;
(viii) to allow any Restricted Subsidiary to provide a Guarantee and execute a supplemental indenture and/or to release a Guarantor in accordance with the terms of this Indenture, the Intercreditor Agreements or the Security Documents;
(ix) to make certain changes to this Indenture to provide for the issuance of Additional Securities;
(x) to make any amendment to the provisions of this Indenture relating to the transfer and legending of Securities as permitted by this Indenture, including, without limitation to facilitate the issuance and administration of the Securities; provided, however, that (i) compliance with this Indenture as so amended would not result in Securities being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer Securities;
(xi) (A) to enter into additional or supplemental Security Documents or otherwise add additional parties or Collateral to further secure the Securities or any Guarantees or any other Obligations under this Indenture or (B) to make, complete or confirm any grant of Collateral permitted or required by this Indenture or any of the Security Documents or any release, termination or discharge of Collateral that becomes effective as set forth in this Indenture or any of the Security Documents;
(xii) to confirm and evidence the release of the Collateral from the Lien, or the subordination of Liens with respect to the Collateral, pursuant to this Indenture, the Security Documents, the Intercreditor Agreements when permitted or required by the Security Documents, this Indenture or the Intercreditor Agreements, as the case may be;
(xiii) in the case of the Security Documents, to mortgage, pledge, hypothecate or grant a security interest in favor of the Collateral Trustee for the benefit of the Secured Parties or in favor of the ABL Lenders, in any property which is required by the Security Documents or the ABL Credit Agreement or the other ABL Facility Documents (each, as in effect on the Issue Date) to be
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mortgaged, pledged or hypothecated, or in which a Lien is required to be granted to the Collateral Trustee, or to the extent necessary to grant a security interest in the Collateral for the benefit of any Person; provided that the granting of such security interest is not prohibited by this Indenture or the Intercreditor Agreements; or
(xiv) to add any Pari Passu Lien Indebtedness and/or Senior Lien Indebtedness, to the extent permitted under this Indenture, the Intercreditor Agreements or the Security Documents on the terms set forth therein and in accordance with the terms of this Indenture.
After an amendment under this Section 9.01 becomes effective, the Issuer shall mail or otherwise send in accordance with the procedures of the Depositary to the Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.
Section 9.02. With Consent of the Holders. Notwithstanding Section 9.01 of this Indenture, the Issuer, the Guarantors, the Trustee and the Collateral Trustee may amend or supplement this Indenture, the Securities, the Guarantees, the Intercreditor Agreements and any Security Document with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding voting as a single class (including consents obtained in connection with a purchase of, tender offer or exchange offer for, the Securities), and, subject to Sections 6.04 and 6.07, 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 Securities, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Securities, the Security Documents, the Intercreditor Agreements or the Guarantees, the Intercreditor Agreements and any other Security Document may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Securities (including Additional Securities, if any) voting as a single class (including consents obtained in connection with the purchase of, or tender offer or exchange offer for, Securities), other than the Securities beneficially owned by the Issuer or any of its Subsidiaries. Section 2.09 and Section 12.04 shall determine which Securities are considered to be “outstanding” for the purposes of this Section 9.02. However, without the consent of each Holder of an outstanding Security affected, an amendment or waiver may not, with respect to any Securities held by a non-consenting Holder:
(i) reduce the principal amount of such Securities whose Holders must consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed final maturity of any such Security or alter or waive the provisions with respect to the redemption of such Securities (other than provisions relating to Sections 4.09 and 4.14); provided, that any amendment to the notice requirements may be made with the
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consent of the Holders of a majority in aggregate principal amount of then outstanding Securities prior to giving of any notice;
(iii) reduce the rate of or change the time for payment of interest on any Security;
(iv) waive a Default in the payment of principal of or premium, if any, or interest on the Securities, except a rescission of acceleration of the Securities by the Holders of at least a majority in aggregate principal amount of the Securities and a waiver of the payment default that resulted from such acceleration, or in respect of a covenant or provision contained in this Indenture or any Guarantee which cannot be amended or modified without the consent of all affected Holders;
(v) make any Security payable in money other than that stated in such Security;
(vi) make any change in the provisions of this Indenture relating to waivers of past Defaults;
(vii) make any change to this Section 9.02 that is materially adverse to the Holders;
(viii) impair the contractual right under this Indenture of any Holder to receive payment of principal of, premium, if any, and interest on such Holder’s Securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Securities;
(ix) make any change to or modify the ranking of the Securities that would adversely affect the Holders; or
(x) except as expressly permitted by this Indenture, modify the Guarantees of any Significant Subsidiary, or any group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer), would constitute a Significant Subsidiary, in any manner adverse to the Holders.
It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the Issuer shall promptly mail or otherwise send in accordance with the procedures of the Depositary to the Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02.
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Notwithstanding anything herein to the contrary, without the consent of the Holders of at least 66 2/3% in principal amount of the Securities then outstanding, no amendment, supplement or waiver may release all or substantially all of the Collateral other than in accordance with this Indenture, the Intercreditor Agreements and the Security Documents.
Section 9.03. Revocation and Effect of Consents and Waivers. (a) A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Security or portion of the Security if the Trustee receives written notice of revocation delivered in accordance with Section 12.01 before the date on which the Trustee receives an Officer’s Certificate from the Issuer certifying that the requisite principal amount of Securities have consented. After an amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver becomes effective upon the (i) receipt by the Issuer or the Trustee of consents by the Holders of the requisite principal amount of Securities, (ii) satisfaction of conditions to effectiveness as set forth in this Indenture and any indenture supplemental hereto containing such amendment or waiver and (iii) execution of such amendment or waiver (or supplemental indenture) by the Issuer and the Trustee.
(b) The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.
Section 9.04. Notation on or Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Issuer may require the Holder to deliver it to the Trustee. The Trustee may place a notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Issuer so determines, the Issuer in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make a notation or to issue a new Security shall not affect the validity of such amendment, supplement or waiver.
Section 9.05. Trustee to Sign Amendments. The Trustee or the Collateral Trustee, as applicable, shall sign any amendment, supplement or waiver authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee or the Collateral Trustee, as the case may be. If it does, the Trustee or the Collateral Trustee, as the case may be, may but need not sign it. In signing such amendment, the Trustee or the Collateral Trustee, as applicable shall be entitled to receive indemnity reasonably satisfactory to it and shall be provided with, and
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(subject to Section 7.01) shall be fully protected in conclusively relying upon, an Officer’s Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Issuer and the Guarantors, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof. Notwithstanding the foregoing, no Opinion of Counsel shall be required for the Trustee or the Collateral Trustee, as applicable, to execute any supplement to this Indenture, the form of which is attached as Exhibit C hereto, solely to add a new Guarantor under this Indenture, or the Grantor Supplement.
Section 9.06. Payment for Consent. Neither the Issuer nor any Affiliate of the Issuer shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to all Holders and is paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement; provided that this covenant shall not be breached if consents, waivers or amendments are sought in connection with an exchange offer for all of the Securities where participation in such exchange offer is limited to holders who are “qualified institutional buyers,” within the meaning of Rule 144A, or non-U.S. persons, within the meaning of Regulation S.
Section 9.07. Additional Voting Terms; Calculation of Principal Amount. Except as otherwise set forth herein, all Securities issued under this Indenture shall vote and consent separately on all matters as to which any of such Securities may vote. Determinations as to whether Holders of the requisite aggregate principal amount of Securities have concurred in any direction, waiver or consent shall be made in accordance with this Article 9 and Section 2.14.
Article
10
Guarantees
Section 10.01. Guarantees. (a) Each Guarantor hereby jointly and severally, irrevocably and unconditionally guarantees on a senior secured basis, as a primary obligor and not merely as a surety, to each Holder and the Trustee (acting in any capacity hereunder) and their successors and assigns (i) the full and punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of all obligations of the Issuer under this Indenture (including obligations to the Trustee) and the Securities, whether for payment of principal of, premium, if any, or interest on the Securities and all other monetary obligations of the Issuer under this Indenture and the Securities and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Issuer whether for fees, expenses, indemnification or otherwise under this Indenture and the Securities, on the terms set forth in this Indenture by executing this Indenture.
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On the Issue Date, the Guarantors will jointly and severally irrevocably and unconditionally guarantee on a senior basis the Securities (“Guaranteed Obligations”) by executing this Indenture. Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from each such Guarantor, and that each such Guarantor shall remain bound under this Article 10 notwithstanding any extension or renewal of any Guaranteed Obligation.
(b) Each Guarantor waives presentation to, demand of payment from and protest to the Issuer of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Securities or the Guaranteed Obligations.
(c) Each Guarantor further agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations.
(d) Except as expressly set forth in Sections 8.01(2), 10.01 and 10.06, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise.
(e) Subject to Section 10.02, each Guarantor agrees that its Guarantee shall remain in full force and effect until payment in full of all the Guaranteed Obligations. Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Issuer or otherwise.
(f) In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuer to pay the principal of or interest on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Guaranteed Obligation, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee an amount equal to the sum of (i) the unpaid principal amount of such Guaranteed Obligations, (ii) accrued and unpaid interest on such Guaranteed Obligations (but only to the extent not prohibited by applicable law) and (iii) all other monetary obligations of the Issuer to the Trustee.
(g) Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Trustee in respect of any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Trustee, on the other hand, (i)
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the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of any Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section 10.01.
(h) Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.
Upon request of the Trustee, each Guarantor shall promptly execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
Section 10.02. Limitation on Liability. (a) Each Guarantor, and by its acceptance of Securities, each Holder, hereby confirms that it is the intention of all such parties that the Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that, any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. Each Guarantor that makes a payment under its Guarantee shall be entitled upon payment in full of all Guaranteed Obligations under this Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.
(b) A Guarantee as to any Guarantor shall be automatically and unconditionally released and discharged upon:
(i) (a) any sale, exchange, disposition or transfer (including through consolidation, merger or otherwise) of (x) the Capital Stock of such Guarantor, after which the applicable Guarantor is no longer a Restricted Subsidiary, or (y) all or substantially all the assets of such Guarantor, which sale, exchange, disposition or transfer in each case is made in compliance with Section 5.01; (b) the permitted designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary; (c) upon the consolidation or merger of any Guarantor with and into the Issuer or another Guarantor that is the surviving Person in such consolidation or merger, or upon the liquidation of such Guarantor following the transfer of all of its assets to the Issuer or another Guarantor; or (d) the Issuer
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exercising its legal defeasance option or covenant defeasance option as described under Article 8 or the Issuer’s obligations under this Indenture, including the Securities being discharged in accordance with the terms of this Indenture (including pursuant to a satisfaction and discharge under Article 8); and
(ii) the Issuer delivering to the Trustee an Officer’s Certificate of such Guarantor or the Issuer and an Opinion of Counsel, each stating that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.
(c) The Issuer will have the right, upon delivery of an Officer’s Certificate to the Trustee, to cause any Guarantor that has not guaranteed any Indebtedness of the Issuer or any Guarantor, and is not otherwise required by the applicable terms of this Indenture to provide a Guarantee (all as certified pursuant to such Officer’s Certificate), to be unconditionally released and discharged from all obligations under its Guarantee, and such Guarantee will thereupon automatically and unconditionally terminate and be discharged and of no further force or effect; provided that at the time of such release, no Event of Default shall have occurred and be continuing or would occur as consequences thereof (as certified pursuant to such Officer’s Certificate).
Section 10.03. Successors and Assigns. This Article 10 shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture.
Section 10.04. No Waiver. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 10 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 10 at law, in equity, by statute or otherwise.
Section 10.05. Modification. No modification, amendment or waiver of any provision of this Article 10, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances.
Section 10.06. Execution of Supplemental Indenture for Future Guarantors. Each Subsidiary and other Person which is required to become a Guarantor pursuant to Section 4.17 or the first sentence of Section 10.01(a) after the Issue Date shall promptly (i)
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execute and deliver to the Trustee a supplemental indenture in the form of Exhibit C hereto pursuant to which such Subsidiary or other Person shall become a Guarantor under this Article 10 and shall guarantee the Guaranteed Obligations and (ii) execute and deliver to the Collateral Trustee a Grantor Supplement pursuant to which such Guarantor shall, subject to applicable legal limitations, be subject to the terms of the applicable Security Documents. Concurrently with the execution and delivery of such supplemental indenture, the Issuer shall deliver to the Trustee an Officer’s Certificate to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary or other Person and that, subject to the application of bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and other similar laws relating to creditors’ rights generally and to the principles of equity, whether considered in a proceeding at law or in equity, the Guarantee of such Guarantor is a valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms.
Section 10.07. Evidence of Guarantee. To evidence its Guarantee set forth in this Article 10, each Guarantor hereby agrees that this Indenture shall be executed on behalf of such Guarantor by an Officer or person holding an equivalent title. Each Guarantor hereby agrees that its Guarantee set forth in this Article 10 shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Securities. If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Security, the Guarantees shall be valid nevertheless. The delivery of any Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.
Section 10.08. Benefits Acknowledged. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it pursuant to its Guarantee are knowingly made in contemplation of such benefits.
Article
11
Security
Section 11.01. Security Interests. The due and punctual payment of the principal of, premium (if any), and interest on, the Securities and the Guarantees when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of, premium (if any), and interest on, the Securities and performance of all other Securities (as defined in the Security Agreement) of the Issuer and the Guarantors, according to the terms hereunder, the Guarantees and under the Security Documents, are secured by the security interests granted in the Collateral as provided in the applicable Security Documents. Each Holder, by its acceptance of any Securities, consents and agrees (1) to the terms of the Security Documents and the Intercreditor Agreements (including, in each case, without limitation, the provisions providing for foreclosure and release of Collateral), as the same may be in effect or may be amended from time to time in accordance with their terms, (2) to the ranking of the Liens provided for in the
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Intercreditor Agreements, and that it will take no actions contrary to the provisions of the Intercreditor Agreements and (3) to the appointment of Wilmington Savings Fund Society, FSB as Trustee, Collateral Trustee, Paying Agent and Registrar under this Indenture. Each Holder and the Trustee authorizes and directs the Collateral Trustee to enter into the Intercreditor Agreements and each Security Document, as collateral trustee for the Secured Parties, and to perform its respective obligations and exercise its rights thereunder in accordance therewith. The Issuer and the Guarantors consent and agree to be bound by the terms of the applicable Security Documents, as the same may be in effect from time to time, and agree to perform their respective obligations thereunder in accordance therewith. The Issuer will deliver to the Trustee copies of all documents delivered to the Collateral Trustee pursuant to the Security Documents, and will do or cause to be done, at the Issuer’s sole cost and expense, all such acts and things as may be required by the provisions of the Intercreditor Agreements and the Security Documents, to assure and confirm to the Collateral Trustee the security interest in the Collateral contemplated by the Security Documents and the Intercreditor Agreements or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Secured Parties according to the intent and purposes herein expressed. The Issuer hereby agrees that the Collateral Trustee shall hold the Collateral in trust for the benefit of all Secured Parties pursuant to the Security Documents.
Section 11.02. Intercreditor Agreements. Notwithstanding anything herein to the contrary, the priority of the lien and security interest granted to the Collateral Trustee pursuant to the applicable Security Documents and the exercise of any right or remedy by the Trustee or Collateral Trustee hereunder and thereunder with respect to the Collateral are subject to the provisions of the Intercreditor Agreements. The Issuer and each Guarantor consents to, and agrees to be bound by, the terms of the Intercreditor Agreements, to the extent it is a party thereto, as the same may be in effect from time to time. In the event of any conflict between the terms of the Intercreditor Agreements on the one hand and this Indenture on the other, with respect to lien priority or rights and remedies in connection with the Collateral, the terms of the applicable Intercreditor Agreement(s) shall govern.
Section 11.03. Further Assurances. The Issuer and the Guarantors shall promptly execute and deliver, or cause to be promptly executed and delivered, to the Collateral Trustee such documents, agreements and instruments, and will take or cause to be taken such further actions (including the filing and recording of financing statements and continuations thereof, termination statements, notices of assignments, fixture filings, mortgages, deeds of trust, security agreements and other documents or instruments and such other actions or deliveries of the type required pursuant to the Security Documents), as may be required by the Security Documents or any applicable law or which the Collateral Trustee may, from time to time, reasonably request to carry out the terms and conditions of this Indenture and the Security Documents and to ensure perfection and priority of the Liens created or intended to be created by the Security Documents (to the extent required herein or therein), all at the expense of the Issuer and the Guarantors.
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Section 11.04. Impairment of Security Interests. Neither the Issuer nor any of its Restricted Subsidiaries will (i) take or omit to take any action which would materially adversely affect or impair the Liens granted in favor of the Secured Parties with respect to the Collateral (it being understood that the incurrence of Permitted Liens shall under no circumstances be deemed to materially impair the Liens with respect to the Collateral), except that (x) the Issuer and its Restricted Subsidiaries may amend, restate, supplement or otherwise modify any Security Documents for the purposes of granting Permitted Liens, or (y) the Collateral may be discharged and released in accordance with this Indenture, the applicable Security Documents or the applicable Intercreditor Agreement(s), (ii) grant any Person, or permit any Person to retain (other than the Collateral Trustee or any agent of a Secured Party), any Liens on the Collateral, other than Permitted Liens or (iii) enter into any agreement that requires the proceeds received from any sale of Collateral to be applied to repay, redeem, defease or otherwise acquire or retire any Indebtedness of any Person in a manner that conflicts with this Indenture, the Guarantees, the Intercreditor Agreements or the Security Documents, as applicable.
Section 11.05. Maintenance of Collateral; Collateral Trustee Obligations. (a) The Collateral Trustee shall have no obligation whatsoever to the Trustee or any of the Holders to assure that the Issuer and the Guarantors comply with their obligations under this Section 11.05. In addition, the Collateral Trustee shall have no obligation whatsoever to the Trustee or any of the Holders to assure that the Collateral exists or is owned by any Issuer or Guarantor or is cared for, protected, or insured or has been encumbered, the Collateral Trustee’s Liens have been properly or sufficiently or lawfully created, perfected, protected, maintained or enforced or are entitled to any particular priority, or to determine whether all of the property constituting Collateral intended to be subject to the Lien and security interest of the Security Documents has been properly and completely listed or delivered, as the case may be, or the genuineness, validity, marketability or sufficiency thereof or title thereto, or to exercise at all or in any particular manner or under any duty of care (other than the duty to use reasonable care with respect to any Collateral in its possession), disclosure, or to continue exercising, any of the rights, authorities, and powers granted or available to the Collateral Trustee pursuant to this Indenture, any Security Document or the Intercreditor Agreements other than pursuant to the instructions of the Holders of a majority in aggregate principal amount of the Securities or as otherwise provided in the Security Documents. The Collateral Trustee shall have the right at any time to seek instructions from the Holders with respect to the administration of this Indenture, the Security Documents, and the Intercreditor Agreements.
(b) The parties hereto and the Holders hereby agree and acknowledge that neither the Collateral Trustee nor the Trustee shall assume, be responsible for or otherwise be obligated for any liabilities, claims, causes of action, suits, losses, allegations, requests, demands, penalties, fines, settlements, damages (including foreseeable and unforeseeable), judgments, expenses and costs (including but not limited to, any remediation, corrective action, response, removal or remedial action, or investigation, operations and maintenance or monitoring costs, for personal injury or property damages, real or personal) of any kind whatsoever, pursuant to any environmental law as a result of this Indenture, the Intercreditor Agreements, the other
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Security Documents or any actions taken pursuant hereto or thereto. Further, the parties hereto and the Holders hereby agree and acknowledge that in the exercise of its rights under this Indenture, the Intercreditor Agreements, if any, and the other Security Documents, the Collateral Trustee may hold or obtain indicia of ownership primarily to protect the security interest of the Collateral Trustee in the Collateral and that any such actions taken by the Collateral Trustee shall not be construed as or otherwise constitute any participation in the management of such Collateral.
Section 11.06. Release of Liens in Respect of the Obligations. (a) The Collateral Trustee’s Liens upon the Collateral will no longer secure the Obligations under this Indenture, and the right of the Holders of Securities and such Obligations to the benefits and proceeds of the Collateral Trustee’s Liens on the Collateral will terminate and be automatically released upon the occurrence of any of the following:
(1) [reserved];
(2) the Issuer’s obligations under this Indenture, including the Securities being discharged in accordance with the terms of this Indenture (including pursuant to a satisfaction and discharge under Article 8);
(3) in whole or in part, with the consent of the Holders of the requisite percentage of Securities in accordance with the provisions of Article 9;
(4) the sale, transfer or other disposition of Collateral permitted under Section 4.09;
(5) in the case of a Guarantor that is released from its Guarantee hereunder pursuant to the terms of this Indenture, the release of the property and assets, and Equity Interests, of such Guarantor;
(6) the property or asset is or becomes Excluded Assets (as defined in the Security Agreement);
(7) a legal defeasance or covenant defeasance under Article 8;
(8) automatically without any action by the Collateral Trustee, if the Lien granted in favor of the Indebtedness that gave rise to the obligation to grant the Lien over such Collateral is released;
(9) in the event that the owner thereof is properly designated as an Unrestricted Subsidiary in accordance with the terms hereof;
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(10) as otherwise permitted in accordance with this Indenture;
(11) in the case of any lease or other agreement or contract that is Collateral, upon termination of such lease, agreement or contract; and
(12) with respect to Collateral that is Capital Stock, upon the dissolution or liquidation of the issuer of that Capital Stock in a transaction that is not prohibited by this Indenture.
(b) The Collateral Trustee shall execute, upon request and at the Issuer’s expense, any documents, instruments, agreements or filings reasonably requested by the Issuer or any Guarantor to evidence such release of such Collateral; provided that if the Collateral Trustee is required to execute any such documents, instruments, agreements or filings, the Collateral Trustee shall be fully protected in relying upon an Officer’s Certificate and Opinion of Counsel in connection with any such release each stating that such release of Collateral is permitted to be released under this Indenture, the Intercreditor Agreements and/or the Security Documents, as applicable, and that all conditions precedent to such release in such documents have been complied with.
Section 11.07. The Collateral Trustee. (a) The Collateral Trustee will hold (directly or through co-trustees or agents), and is directed by each Holder to so hold, and will be entitled to enforce, on behalf of the Holders, all Liens on the Collateral created by the Security Documents for their benefit and the benefit of the other Secured Parties, subject to the provisions of the Intercreditor Agreements. Neither the Issuer nor any of its Affiliates may serve as Collateral Trustee.
(b) Except as provided in this Indenture and the Security Documents, the Collateral Trustee will not be obligated:
(i) to act upon directions purported to be delivered to it by any Person;
(ii) to foreclose upon or otherwise enforce any Lien; or
(iii) to take any other action whatsoever with regard to any or all of the Security Documents, the Liens created thereby or the Collateral.
Section 11.08. Co-Collateral Trustee. At any time or times it shall be necessary or prudent in order to conform to any law of any jurisdiction in which any of the Collateral shall be located, or the Collateral Trustee shall be advised by counsel, satisfactory to it, that it is reasonably necessary in the interest of the Secured Parties, or the Holders of a majority in principal amount of the Securities shall in writing so request the Collateral Trustee, or the Collateral Trustee shall deem it desirable for its own protection in the performance of its duties hereunder, the Collateral Trustee and the Issuer shall, at the reasonable request of the Collateral Trustee, execute and deliver all instruments and agreements necessary or proper to constitute another bank or trust company, or one or more persons approved by the Collateral Trustee (or the Holders of a
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majority in principal amount of the Securities, as the case may be) and the Issuer, either to act as co-Collateral Trustee or co-Collateral Trustees of all or any of the Collateral, jointly with the Collateral Trustee originally named herein or any successor or successors, or to act as separate collateral trustee or collateral trustees of any such property. In case an Event of Default shall have occurred and be continuing, the Collateral Trustee may act under the foregoing provisions of this Section 11.08 without the consent of the Issuer, and each Holder hereby appoints the Collateral Trustee as its trustee and attorney to act under the foregoing provisions of this Section 11.08 in such case.
Section 11.09. New Guarantors; After-Acquired Property. (a) Following the acquisition by the Issuer or any Guarantor of any assets that constitute Collateral, the Issuer, as soon as reasonably practicable after such property’s acquisition or such property becoming an asset that constitutes Collateral and in no event later than 60 days after such acquisition (or such later date as the Issuer may reasonably request and agreed upon in writing by the Collateral Trustee), shall, and shall cause each Guarantor to, and each such Guarantor shall do or cause to be done all acts and things that may be required by applicable law or the Security Documents or as may be reasonably requested by the Collateral Trustee to perfect and maintain the perfection and priority of the Collateral Trustee’s Liens on the Collateral, for the benefit of the Secured Parties, in each case, as contemplated by, and with the Lien priority required hereunder and under the applicable Intercreditor Agreement(s) and the Security Documents, all at the Issuer’s sole expense.
(b) Following a Restricted Subsidiary (including a newly created one) becoming a Guarantor, the Issuer shall as soon as reasonably practicable after such Restricted Subsidiary becomes a Guarantor pursuant to Section 10.06 cause all of such Restricted Subsidiary’s assets that constitute Collateral to be subjected to a Lien securing the Securities subject to the terms and conditions set forth in the Security Agreement, and shall do or cause to be done all acts and things that may be required pursuant to the Security Agreement or by applicable law or as may be reasonably requested by the Collateral Trustee to assure and confirm that the Collateral Trustee holds, for the benefit of the Secured Parties enforceable and perfected Liens upon all of the Collateral, in each case, as contemplated by, and with the Lien priority required under, the applicable Intercreditor Agreement and the Security Documents, all at the Issuer’s sole expense.
(c) The Issuer shall from time to time promptly pay all financing and continuation statement recording and/or filing fee, charges and stamp and similar taxes relating to this Indenture, the Security Documents and any amendments thereto.
Section 11.10. Reserved.
Article
12
Miscellaneous
Section 12.01. Notices. (a) Any notice or communication by the Issuer, any Guarantor or the Trustee to the others is duly given if in writing and delivered in person, via facsimile, electronic mail or other electronic transmission, mailed by first-class mail
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(registered or certified, return receipt requested) or overnight air courier guaranteeing next day delivery, to the addressed as follows:
if to the Issuer or a Guarantor:
Party City Holdco Inc.
100 Tice Boulevard
Woodcliff Lake, NJ 07677
Attn: Ian Heller
Email:
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
Attn: David Huntington
Email:
if to the Trustee:
Wilmington Savings Fund Society, FSB, as Trustee
500 Delaware Avenue, 11th Floor
Wilmington, Delaware 19801
Attention: Global Capital Markets, Pat Healy
Fax No.: (302) 571-7081
Email:
The Issuer, any Guarantor or the Trustee by notice to the others may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders, Trustee, Collateral Trustee, Paying Agent and Registrar) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, first-class, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. All notices given by publication or electronic delivery will be deemed given on the first date on which publication or electronic delivery is made. Notices given in accordance with the procedures of DTC will be deemed given on the date sent to DTC. Any notice or communication delivered to the Trustee or the Collateral Trustee shall be deemed effective upon actual receipt thereof.
(b) Any notice or communication mailed to a Holder shall be mailed, first class mail (certified or registered, return receipt requested), by overnight air courier guaranteeing next day delivery or sent electronically to the Holder at the Holder’s address
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as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed or sent within the time prescribed.
(c) Failure to deliver 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 or otherwise delivered in the manner provided above, it is duly given, whether or not the addressee receives it.
(d) Notwithstanding any other provision of this Indenture or any Security, where this Indenture or any Security provides for notice of any event (including any notice of redemption) to a Holder of a Global Security (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary for such Security (or its designee) pursuant to the standing instructions from the Depositary (or its designee), including by electronic mail in accordance with accepted practices at the Depositary.
Section 12.02. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuer to the Trustee to take or refrain from taking any action under this Indenture, the Issuer shall furnish to the Trustee:
(a) an Officer’s Certificate in form reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
Section 12.03. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than pursuant to Section 4.16) shall include:
(a) a statement that the individual making such certificate or opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with (and, in the case of an Opinion of Counsel, may be limited to reliance on an Officer’s Certificate as to matters of fact); and
(d) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officer’s Certificate or certificates of public officials.
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Section 12.04. When Securities Disregarded. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Issuer or any Subsidiary shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent with respect to the Securities and that the pledgee is not the Issuer or a Subsidiary. Subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination.
Section 12.05. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by or a meeting of the Holders. The Registrar and a Paying Agent may make reasonable rules for their functions.
Section 12.06. Legal Holidays. If a payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue on any amount that would have been otherwise payable on such payment date if it were a Business Day for the intervening period. If a regular record date is not a Business Day, the record date shall not be affected.
Section 12.07. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE ISSUER, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY.
Section 12.08. No Recourse Against Others. No past, present or future director, officer, employee, manager, incorporator, member, partner or stockholder of the Issuer or any Guarantor or any of their Subsidiaries or direct or indirect Parent Companies, if applicable, shall have any liability for any obligations of the Issuer or the Guarantors under the Securities, the Guarantees or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securities.
Section 12.09. Successors. All agreements of the Issuer and each Guarantor in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.
Section 12.10. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent
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the same agreement. One signed copy is enough to prove this Indenture. The exchange of copies of this Indenture and of signature pages by facsimile or email (in PDF format or otherwise) transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or email (in PDF format or otherwise) shall be deemed to be their original signatures for all purposes.
Section 12.11. Table of Contents; Headings. The table of contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part of this Indenture and shall not modify or restrict any of the terms or provisions of this Indenture.
Section 12.12. Indenture Controls. If and to the extent that any provision of the Securities limits, qualifies or conflicts with a provision of this Indenture, such provision of this Indenture shall control.
Section 12.13. Severability. In case any provision in this Indenture 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 and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
Section 12.14. Force Majeure. Notwithstanding any provision to the contrary, in no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, embargo, government action, including laws, ordinances, regulations or the like, which limit, restrict or prohibit the provision of services contemplated by this Indenture, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
Section 12.15. U.S.A. Patriot Act. The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee.
Section 12.16. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.
| Very truly yours, | |||
| Party City Holdco Inc. | |||
| By: |
/s/ Ian Heller |
||
| Name: | Ian Heller | ||
| Title: | General Counsel and Corporate Secretary | ||
[Signature Page – Indenture] |
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.
| Party City Holdings Inc. | |||
| By: |
/s/ Ian Heller |
||
| Name: | Ian Heller | ||
| Title: | General Counsel and Corporate Secretary | ||
| Party City Corporation | |||
| By: |
/s/ Ian Heller |
||
| Name: | Ian Heller | ||
| Title: | Secretary | ||
| PC Intermediate Holdings, Inc. | |||
| By: |
/s/ Ian Heller |
||
| Name: | Ian Heller | ||
| Title: | Secretary | ||
| Amscan Inc. | |||
| By: |
/s/ Ian Heller |
||
| Name: | Ian Heller | ||
| Title: | Secretary | ||
| Am-Source, LLC | |||
| By: |
/s/ Ian Heller |
||
| Name: | Ian Heller | ||
| Title: | Secretary | ||
| Trisar, Inc. | |||
| By: |
/s/ Ian Heller |
||
| Name: | Ian Heller | ||
| Title: | Secretary | ||
[Signature Page – Indenture] |
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.
| Wilmington Savings Fund Society, FSB | |||
| By: |
/s/ Patrick J. Healy |
||
| Name: | Patrick J. Healy | ||
| Title: | Senior Vice President | ||
[Signature Page – Indenture] |
Schedule 1.01
Adjustments to Consolidated Adjusted EBITDA
(attached)
**Omitted**
Schedule 1.01-1 |
Appendix A
Transfer Restrictions
| 1. | Definitions. | |
| 1.1 | Definitions. |
For the purposes of this Appendix A the following terms shall have the meanings indicated below:
“Definitive Security” means a certificated Security (bearing the Restricted Securities Legend if the transfer of such Security is restricted by applicable law) that does not include the Global Securities Legend.
“Depository” means The Depository Trust Company, its nominees and their respective successors.
“Global Securities Legend” means the legend set forth under that caption in Exhibit A to the Indenture.
“IAI” means an institutional “accredited investor” as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Regulation S” means Regulation S under the Securities Act.
“Regulation S Securities” means all Securities offered and sold outside the United States in reliance on Regulation S.
“Restricted Global Securities” means Global Securities and any other Securities that are required to bear, or are subject to, the Restricted Securities Legend.
“Restricted Period,” with respect to any Securities, means the period of 40 consecutive days beginning on and including the later of (a) the day on which such Securities are first offered to persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S, notice of which day shall be promptly given by the Issuer to the Trustee and (b) the Issue Date.
| Appendix A-1 |
“Restricted Securities Legend” means the legend set forth in Section 2.2(f)(i) herein. “Rule 144A” means Rule 144A under the Securities Act.
“Rule 144A Securities” means all Securities offered and sold to QIBs in reliance on Rule 144A.
“Rule 501” means Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
“Securities Custodian” means the custodian with respect to a Global Security (as appointed by the Depository) or any successor person thereto, who shall initially be the Trustee.
“Transfer Restricted Securities” means Definitive Securities and any other Securities that bear or are required to bear or are subject to the Restricted Securities Legend.
“Unrestricted Definitive Securities” means Definitive Securities and any other Securities that are not required to bear, or are not subject to, the Restricted Securities Legend.
“Unrestricted Global Securities” means Global Securities and any other Securities that are not required to bear, or are not subject to, the Restricted Securities Legend.
| 1.2 | Other Definitions. |
| Term: | Defined in Section: | |
| 4(a)(2) Securities | 2.1(a) | |
| Agent Members | 2.1(a) | |
| Clearstream | 2.1(a) | |
| Euroclear | 2.1(a) | |
| Global Securities | 2.1(a) | |
| Regulation S Global Securities | 2.1(a) | |
| Regulation S Permanent Global Security | 2.1(a) | |
| Regulation S Temporary Global Security | 2.1(a) | |
| Rule 144A Global Securities | 2.1(a) |
| 2. | The Securities. | |
| 2.1 | Form and Dating; Global Securities. |
(a) Global Securities. 4(a)(2) Securities initially shall be represented by one or more Securities in definitive, fully registered, global form without interest coupons (collectively, the “4(a)(2) Global Securities”).
| Appendix A-2 |
Rule 144A Securities initially shall be represented by one or more Securities in definitive, fully registered, global form without interest coupons (collectively, the “Rule 144A Global Securities”).
Regulation S Securities initially shall be represented by one or more Securities in fully registered, global form without interest coupons (collectively, the “Regulation S Temporary Global Security” and, together with the Regulation S Permanent Global Security (defined below), the “Regulation S Global Securities”), which shall be registered in the name of the Depository or the nominee of the Depository for the accounts of designated agents holding on behalf of Euroclear Bank S.A./N.V., as operator of the Euroclear system (“Euroclear”) or Clearstream Banking, Société Anonyme (“Clearstream”).
Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Security shall be exchanged for beneficial interests in a permanent Global Security (the “Regulation S Permanent Global Security”) pursuant to the applicable procedures of the Depository. Simultaneously with the authentication of the Regulation S Permanent Global Security, the Trustee shall cancel the Regulation S Temporary Global Security. The aggregate principal amount of the Regulation S Temporary Global Security and the Regulation S Permanent Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. 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 Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests