Exhibit T3C
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MICROSTRATEGY INCORPORATED,
Issuer,
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Trustee
________________________
INDENTURE
Dated as of January 11, 2001
________________________
$80,500,000 as adjusted pursuant to the Stipulation of Settlement defined herein
7 1/2% Series A Unsecured Notes
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; TRUST INDENTURE ACT ............................................... 1
SECTION 1.01. DEFINITIONS. ............................................................. 1
SECTION 1.02. OTHER DEFINITIONS. ....................................................... 5
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. ....................... 5
SECTION 1.04. RULES OF CONSTRUCTION. ................................................... 6
ARTICLE II THE NOTES ..................................................................... 6
SECTION 2.01. FORM AND DATING. ......................................................... 6
SECTION 2.02. EXECUTION AND AUTHENTICATION. ............................................ 8
SECTION 2.03. REGISTRAR AND PAYING AGENT. .............................................. 8
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. ..................................... 9
SECTION 2.05. HOLDER LISTS. ............................................................ 9
SECTION 2.06. TRANSFER AND EXCHANGE. ................................................... 9
SECTION 2.07. REPLACEMENT NOTES. ....................................................... 10
SECTION 2.08. OUTSTANDING NOTES. ....................................................... 10
SECTION 2.09. TREASURY NOTES. .......................................................... 10
SECTION 2.10. TEMPORARY NOTES. ......................................................... 11
SECTION 2.11. CANCELLATION. ............................................................ 11
SECTION 2.12. ADDITIONAL REDUCTION IN PRINCIPAL AMOUNT OF AND INTEREST ON THE NOTES. ... 11
SECTION 2.13. DEFAULTED INTEREST. ...................................................... 11
SECTION 2.14. CUSIP NUMBERS. ........................................................... 12
ARTICLE III REDEMPTION ................................................................... 12
SECTION 3.01. REDEMPTION ............................................................... 12
SECTION 3.02. NOTICES TO TRUSTEE. ...................................................... 12
SECTION 3.03. SELECTION OF NOTES TO BE REDEEMED. ....................................... 12
SECTION 3.04. NOTICE TO HOLDERS OF REDEMPTION. ......................................... 13
SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION. .......................................... 14
SECTION 3.06. DEPOSIT OF REDEMPTION PRICE. ............................................. 14
SECTION 3.07. NOTES REDEEMED IN PART. .................................................. 14
SECTION 3.08. PAYMENT OF INTEREST FOLLOWING NOTICE OF REDEMPTION ....................... 14
ARTICLE IV MANDATORY CONVERSION .......................................................... 14
SECTION 4.01. MANDATORY CONVERSION ..................................................... 14
SECTION 4.02. NOTICES TO TRUSTEE. ...................................................... 15
SECTION 4.03. SELECTION OF NOTES TO BE CONVERTED. ...................................... 15
SECTION 4.04. NOTICE TO HOLDERS OF CONVERSION. ......................................... 15
SECTION 4.05. EFFECT OF NOTICE OF CONVERSION. .......................................... 16
SECTION 4.06. DEPOSIT OF CONVERSION SHARES AND MONEY. .................................. 16
SECTION 4.07. NOTES CONVERTED IN PART. ................................................. 16
SECTION 4.08. FRACTIONAL SHARES. ....................................................... 17
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SECTION 4.09. TAXES ON CONVERSION. ....................................... 17
SECTION 4.10. COMPANY TO PROVIDE STOCK. .................................. 17
SECTION 4.11. PAYMENT OF INTEREST AND DIVIDENDS FOLLOWING NOTICE OF
CONVERSION. .............................................................. 17
ARTICLE V COVENANTS ......................................................... 18
SECTION 5.01. PAYMENT OF NOTES. .......................................... 18
SECTION 5.02. COMPLIANCE CERTIFICATE. .................................... 18
SECTION 5.03 REPORTS .................................................... 19
SECTION 5.04. CORPORATE EXISTENCE ........................................ 19
SECTION 5.05. OBLIGATION TO REDEEM/CONVERT ............................... 19
SECTION 5.06. RESTRICTIONS ON CONVERSION ................................. 19
ARTICLE VI SUBORDINATION .................................................... 20
SECTION 6.01. AGREEMENT TO SUBORDINATE AND RANKING. ...................... 20
SECTION 6.02. NO PAYMENT ON NOTES IF SENIOR DEBT IN DEFAULT. ............. 20
SECTION 6.03. DISTRIBUTION ON ACCELERATION OF NOTES; DISSOLUTION AND
REORGANIZATION; SUBROGATION OF NOTES. .................................... 21
SECTION 6.04. RELIANCE BY SENIOR DEBT ON SUBORDINATION PROVISIONS. ....... 24
SECTION 6.05. NO WAIVER OF SUBORDINATION PROVISIONS. ..................... 24
SECTION 6.06. TRUSTEE'S RELATION TO SENIOR DEBT. ......................... 25
SECTION 6.07. OTHER PROVISIONS SUBJECT HERETO. ........................... 25
ARTICLE VII SUCCESSORS ...................................................... 26
SECTION 7.01. LIMITATION ON MERGER, SALE OR CONSOLIDATION. ............... 26
SECTION 7.02. SUCCESSOR CORPORATION SUBSTITUTED. ......................... 26
ARTICLE VIII DEFAULTS AND REMEDIES .......................................... 27
SECTION 8.01. EVENTS OF DEFAULT. ......................................... 27
SECTION 8.02. ACCELERATION. .............................................. 28
SECTION 8.03. OTHER REMEDIES. ............................................ 28
SECTION 8.04. WAIVER OF PAST DEFAULTS. ................................... 28
SECTION 8.05. CONTROL BY MAJORITY. ....................................... 29
SECTION 8.06. LIMITATION ON SUITS. ....................................... 29
SECTION 8.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. ...................... 29
SECTION 8.08. COLLECTION SUIT BY TRUSTEE. ................................ 29
SECTION 8.09. TRUSTEE MAY FILE PROOFS OF CLAIM. .......................... 30
SECTION 8.10. PRIORITIES. ................................................ 30
SECTION 8.11. UNDERTAKING FOR COSTS. ..................................... 30
ARTICLE IX TRUSTEE .......................................................... 31
SECTION 9.01. DUTIES OF TRUSTEE. ......................................... 31
SECTION 9.02. RIGHTS OF TRUSTEE. ......................................... 31
SECTION 9.03. INDIVIDUAL RIGHTS OF TRUSTEE. .............................. 32
SECTION 9.04. TRUSTEE'S DISCLAIMER. ...................................... 32
SECTION 9.05. NOTICE OF DEFAULTS. ........................................ 32
SECTION 9.06. REPORTS BY TRUSTEE TO HOLDERS. ............................. 32
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SECTION 9.07. COMPENSATION AND INDEMNITY. ............................. 33
SECTION 9.08. REPLACEMENT OF TRUSTEE. ................................. 34
SECTION 9.09. SUCCESSOR TRUSTEE BY MERGER, ETC. ....................... 35
SECTION 9.10. ELIGIBILITY; DISQUALIFICATION. .......................... 35
SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. ...... 35
ARTICLE X DISCHARGE OF INDENTURE .......................................... 35
SECTION 10.01. TERMINATION OF COMPANY'S OBLIGATIONS. ................... 35
SECTION 10.02. REPAYMENT TO COMPANY. ................................... 35
ARTICLE XI AMENDMENTS, SUPPLEMENTS AND WAIVERS ............................ 36
SECTION 11.01. WITHOUT CONSENT OF HOLDERS. ............................. 36
SECTION 11.02. WITH CONSENT OF HOLDERS. ................................ 36
SECTION 11.03. COMPLIANCE WITH TRUST INDENTURE ACT. .................... 37
SECTION 11.04. REVOCATION AND EFFECT OF CONSENTS. ...................... 37
SECTION 11.05. NOTATION ON OR EXCHANGE OF NOTES. ....................... 38
SECTION 11.06. TRUSTEE PROTECTED. ...................................... 38
ARTICLE XII MISCELLANEOUS ................................................. 38
SECTION 12.01. TRUST INDENTURE ACT CONTROLS. ........................... 38
SECTION 12.02. NOTICES. ................................................ 38
SECTION 12.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. ............ 39
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. ..... 39
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. .......... 39
SECTION 12.06. RULES BY TRUSTEE AND AGENTS. ............................ 39
SECTION 12.07. LEGAL HOLIDAYS. ......................................... 40
SECTION 12.08. NO RECOURSE AGAINST OTHERS. ............................. 40
SECTION 12.09. COUNTERPARTS AND FACSIMILE SIGNATURES. .................. 40
SECTION 12.10. VARIABLE PROVISIONS. .................................... 40
SECTION 12.11. GOVERNING LAW, SUBMISSION TO JURISDICTION. .............. 41
SECTION 12.12. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. .......... 42
SECTION 12.13. SUCCESSORS. ............................................. 42
SECTION 12.14. SEVERABILITY. ........................................... 42
SECTION 12.15. TABLE OF CONTENTS, HEADINGS, ETC. ....................... 42
Exhibit
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Exhibit A. Form of Note ................................................... A1
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INDENTURE, dated as of January 11, 2001, between MicroStrategy
Incorporated, a Delaware corporation with a principal place of business
at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 (the
"COMPANY"), and American Stock Transfer & Trust Company, a New York
limited purpose trust company with a principal place of business at 00
Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000, as trustee (the "TRUSTEE").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders (as defined
in Section 1.01 hereof) of the Company's 7 1/2% Series A Unsecured
Notes due five years after the Initial Issuance Date of the Notes (the
"NOTES"):
ARTICLE I
DEFINITIONS; TRUST INDENTURE ACT
SECTION 1.01. DEFINITIONS.
"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, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise.
"AGENT" means any Registrar, Paying Agent, Presenting Agent or
Conversion Agent.
"BOARD OF DIRECTORS" means the Board of Directors of the
Company or any authorized committee of the Board of Directors.
"BOARD RESOLUTION" means a duly authorized resolution of the
Board of Directors.
"BUSINESS DAY" means any day that is not a Legal Holiday.
"CAPITAL STOCK" means any and all shares, interests,
participations, rights or other equivalents, however designated, of
corporate stock, including, without limitation, partnership interests.
"COMMON STOCK" means the Class A common stock, par value
$0.001 per share, of the Company as the same exists at the date of the
execution of this Indenture or as such stock may be constituted from
time to time.
"COMPANY" means the party named as such above until a
successor replaces it in accordance with Article VII and thereafter
means the successor.
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"DEFAULT" means any event that is, or with the passage of time
or the giving of notice or both would be, an Event of Default.
"DESIGNATED SENIOR DEBT" means Senior Debt in which the
instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the
Company is a party) expressly provides that such Senior Debt shall be
"Designated Senior Debt" for the purposes of the Indenture.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE RATE CONTRACT" means, with respect to any Person,
any currency swap agreements, forward exchange rate agreements, foreign
currency futures or options, exchange rate collar agreements, exchange
rate insurance and other agreements or arrangements, or combination
thereof, the principal purpose of which is to provide protection
against fluctuations in currency exchange rates. An Exchange Rate
Contract may also include an Interest Rate Agreement.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as approved by a
significant segment of the accounting profession, which are in effect
from time to time.
"GUARANTEE" means a guarantee, other than by endorsement of
negotiable instruments for collection in the ordinary course of
business, direct or indirect, in any manner, including, without
limitation, letters of credit and reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"HOLDER" means a Person in whose name a Note is registered in
the register referred to in Section 2.03.
"INDEBTEDNESS" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit, or reimbursement agreements in
respect thereof, or representing the balance deferred and unpaid of the
purchase price of any property (which purchase price is due more than
six months after the placing into service or delivery of such property)
including pursuant to capital leases and sale-and-leaseback
transactions, or representing any hedging obligations under an Exchange
Rate Contract or an Interest Rate Agreement, except any such balance
that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing indebtedness, other than obligations under
an Exchange Rate Contract or an Interest Rate Agreement, would appear
as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and also includes, to the extent not otherwise
included, the Guarantee of items which would be included within this
definition if incurred directly by such Person. The amount of any
Indebtedness outstanding as of any date shall be the accreted value
thereof, in the case of any Indebtedness issued with original issue
discount. Indebtedness shall not include liabilities for taxes of any
kind.
"INDENTURE" means this Indenture, as amended from time to
time.
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"INITIAL ISSUANCE DATE" shall be the date of the first
issuance of a 71/2% Series A Unsecured Note.
"INITIAL RECIPIENTS" means those Persons initially receiving
Notes pursuant to the Stipulation of Settlement.
"INTEREST ACCRUAL COMMENCEMENT DATE" shall be the date of the
commencement of the Settlement Hearing in respect of a class-action
lawsuit in the United Stated District Court for the Eastern District of
Virginia, entitled In re MicroStrategy Incorporated Securities
Litigation, Civil Action No. 00-473-A.
"INTEREST RATE AGREEMENT" means, with respect to any Person,
any interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement or other similar agreement the principal purpose
of which is to protect the party indicated therein against fluctuations
in interest rates.
"ISSUANCE DATE" means the date on which the Notes are first
authenticated and issued.
"MARKET" means the Nasdaq National Market, or if the Common
Stock is no longer authorized for quotation on such market, such
national securities exchange upon which the Common Stock is listed, or
if the Common Stock is not authorized for quotation on the Nasdaq
National Market or listed on any national securities exchange, the
over-the-counter market as reported by the National Association of
Securities Dealers Automated Quotation System, or if not so quoted, as
reported by National Quotation Bureau, Incorporated, or a similar
organization.
"NOTES" has the meaning set forth in the preamble hereto.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
"OFFICER" means the Chairman or Vice Chairman of the Board,
the President, any Vice President, the Treasurer, the Secretary, any
Assistant Treasurer or any Assistant Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate of the Company
signed by two Officers, one of whom must be the Chairman of the Board,
the President, the Treasurer or a Vice President of the Company.
"OPINION OF COUNSEL" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be
an employee of or counsel to the Company or the Trustee.
"PERSON" means any natural person, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, limited liability
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company, limited liability partnership, government or any agency or
political subdivision thereof or any other entity or organization.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR DEBT" means the principal of, interest on and other
amounts due on: (i) secured Indebtedness of the Company, whether
outstanding on the date hereof or thereafter created, incurred, assumed
or guaranteed by the Company; and (ii) unsecured institutional
Indebtedness of the Company evidenced by one or more promissory notes,
whether outstanding on the date hereof or thereafter created, incurred,
assumed or guaranteed by the Company: unless, in the instrument
creating or evidencing or pursuant to which Indebtedness under (i) or
(ii) is outstanding, it is expressly provided that such Indebtedness is
not senior in right of payment to the Notes.
"STIPULATION OF SETTLEMENT" means that certain Stipulation of
Settlement, dated as of January 11, 2001, entered into among Akiko and
Atsukuni Minami and Local 144 Nursing Home Pension Fund on behalf of
the Class (as such term is defined in the Stipulation of Settlement),
the Company as defendant, and defendants Xxxxxxx X. Xxxxxx, Xxxxx X.
Xxxxxx, Xxxx S, Xxxxx, Xxxxxxx X. Trundle, Xxxxx X. Xxxxxxxxx, and
Xxxxx X. Xxxxxx, by and through their respective counsel, and filed in
the United States District Court for the Eastern District of Virginia
(Alexandria Division).
"SUBSIDIARY" means any corporation, association or other
business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled, without regard to the occurrence of
any contingency, to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more of the other Subsidiaries of
that Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of execution of this
Indenture.
"TRUST OFFICER" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust
matters.
"TRUSTEE" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of
this Indenture and thereafter means the successor.
"WHOLLY-OWNED SUBSIDIARY" of any specified Person means a
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more
Wholly-Owned Subsidiaries of such Person or a combination thereof.
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SECTION 1.02. OTHER DEFINITIONS.
DEFINED
TERM IN SECTION
"BANKRUPTCY LAW" .......................................... 8.01
"CHANGE OF CONTROL" ....................................... 7.01
"CONVERSION AGENT" ........................................ 2.03
"CUSTODIAN" ............................................... 8.01
"DESIGNATED SENIOR DEBT DEFAULT" .......................... 6.02
"EVENT OF DEFAULT" ........................................ 8.01
"EXCESS AMOUNT" ........................................... 2.12
"INTEREST PAYMENT DATE" ................................... 2.01(b)
"LEGAL HOLIDAY" ........................................... 12.07
"PAYING AGENT" ............................................ 2.03
"PAYMENT BLOCKAGE NOTICE" ................................. 6.02
"PAYMENT BLOCKAGE PERIOD" ................................. 6.02
"PRESENTING AGENT" ........................................ 2.03
"REGISTRAR" ............................................... 2.03
"SENIOR DEBT DEFAULT" ..................................... 6.02
"SETTLEMENT COSTS" ........................................ 2.12
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this
Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee; and
"OBLIGOR" on the Notes means the Company or any other obligor
on the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule
under the TIA have the meanings so assigned to them.
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SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP consistently applied;
(c) "OR" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions;
(f) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement or successor sections or
rules adopted by the SEC from time to time; and
(g) a reference to "$" or U.S. Dollars is to United States dollars.
ARTICLE II
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) GENERAL.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, which is hereby incorporated
by reference and expressly made a part of this Indenture, with such
appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such
notation, legend or endorsement is in a form acceptable to the Company and,
if such notation, legend or endorsement would have any material effect on
the rights of the Holders, to Co-Lead Counsel for the Holders (as defined
in the Stipulation of Settlement)). The Company shall furnish any such
legend not contained in Exhibit A to the Trustee in writing. Each Note
shall be dated the date of its authentication. The Notes shall be in
registered form without coupons in denominations of $100 and integral
multiples thereof. The terms and provisions of the Notes set forth in
Exhibit A are part of this Indenture and to the extent applicable, the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern
and be controlling.
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(b) NOTES.
The Notes are being issued by the Company pursuant to the Stipulation of
Settlement. The Notes are exempt from registration by virtue of an exemption
pursuant to Section 3(a)(10) of the Securities Act. In the event that such
exemption from registration is not available under the Securities Act, the
Company shall take such steps as are necessary either to cause the registration
of the Notes under the Securities Act or to obtain relief from the registration
requirements of the Securities Act by obtaining a "no action" letter from the
SEC.
The Notes shall be issued to the Initial Recipients on the Issuance Date in
the form of certificated Notes in definitive, fully registered form without
interest coupons in the form set forth in Exhibit A hereto, each of which Notes
shall be registered in the name of the appropriate Initial Recipient or its
nominee, duly executed by the Company and authenticated by the Trustee as
hereinafter provided.
The aggregate principal amount of the Notes which may be authenticated and
delivered under this Indenture is limited to eighty million five hundred
thousand dollars and no cents ($80,500,000), except that, pursuant to the
Stipulation of Settlement, such amount may be increased, at the Company's
option, to account for the issuance of Notes in lieu of fractional shares of
Common Stock or warrants to purchase fractional shares of Common Stock, and
except for Notes authenticated and delivered pursuant to Section 2.07 hereof in
exchange for, or in lieu of, other Notes previously authenticated and delivered
under this Indenture.
The Notes shall be known as the "7 1/2% Series A Unsecured Notes" of the
Company. The Notes shall mature on the date which is five (5) years from the
Initial Issuance Date. The principal amount of the Notes shall bear interest at
a rate of seven and one half percent (7 1/2%) per annum from the Interest
Accrual Commencement Date until maturity. The Company shall pay interest
semiannually commencing six (6) months after the Initial Issuance Date of the
Notes until maturity, or if any such day is not a Business Day, on the next
succeeding Business Day, beginning on the date which is six (6) months after the
date of issuance of the Notes (each an "INTEREST PAYMENT DATE"). Principal of
the Notes shall be due at maturity. Interest on the Notes will accrue and
compound annually from the Interest Accrual Commencement Date until the Initial
Issuance Date and thereafter will accrue semiannually. The Company shall pay
interest (including post-petition interest in any proceeding under Bankruptcy
Law) on overdue principal from time to time at the same rate per annum on the
Notes then in effect; it shall pay interest (including post-petition interest in
any proceeding under Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360 day year consisting of 12 months of 30 days each.
The principal and interest shall be payable as provided in the form of the
Notes attached hereto as Exhibit A. The Notes shall be redeemable at the option
of the Company at any time, in whole or in part, subject to the conditions
provided in Article III hereof. The Notes shall be convertible at the option of
the Company at any time, in whole or in part, as
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provided in Article IV hereof. The Notes shall be subordinated in right
of payment and in right of remedies to Senior Debt of the Company as
provided in Article VI hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that
office at the time the Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid until authenticated by the signature of an
authorized officer of the Trustee. The signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer, authenticate one or more Notes for original issue up to an
aggregate principal amount stated in Section 2.01(b) hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture
to authentication by the Trustee includes authentication by such agent.
An authenticating agent has the same rights as an Agent to deal with
Holders, the Company or an Affiliate.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain in New York, New York an office or agency
where the Notes may be presented for registration of transfer or for
exchange, payment or conversion (collectively, the "PRESENTING AGENT"),
which Presenting Agent may, but need not, be the Trustee. The Company
initially designates American Stock Transfer & Trust Company to act as
Presenting Agent. The Trustee is initially appointed to act as Note
registrar to maintain a register of transfers of the Notes (the
"REGISTRAR") and to act as paying agent with respect to the Notes
("PAYING AGENT") and to act as agent for conversion of the Notes
("CONVERSION AGENT"). The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-Registrars, one or more additional Paying Agents and one or more
additional Conversion Agents in such other locations as it shall
determine. The term "Registrar" includes any co-Registrar, the term
"Paying Agent" includes any additional Paying Agent and the term
"Conversion Agent" includes any additional conversion agent. The
Company may change any Paying Agent, Registrar, Presenting Agent or
Conversion Agent without prior notice to any Holder. The Company shall
notify the Trustee of the name and address of any Agent not a party to
this Indenture. If the Company fails to appoint or maintain another
entity as Registrar, Paying Agent, Presenting Agent or Conversion
Agent, the Trustee shall act as such. The Company or any of its
Affiliates may act as Paying Agent, Registrar, Presenting Agent or
Conversion Agent.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent
for the payment of principal or interest on the Notes, and will notify
the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee and to account for
any money disbursed by it. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon such
payment over to the Trustee, the Paying Agent (if other than the
Company or an Affiliate of the Company) shall have no further
liability for the money. If the Company or an Affiliate of the Company
acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying
Agent.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and
addresses of Holders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee on or 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.
SECTION 2.06. TRANSFER AND EXCHANGE.
Whenever Notes are presented to the Registrar or a co-Registrar
with a request to register a transfer or to exchange them for an equal
principal amount of Notes of other denominations, the Registrar shall
register the transfer or make the exchange if its requirements for
such transactions are met. To permit registrations of transfers and
exchanges, the Company shall issue and the Trustee shall authenticate
Notes at the Registrar's request. No service charge shall be made to a
Holder for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer tax or similar governmental charge payable upon
exchanges pursuant to Sections 2.10, 3.07, 4.07 or 11.05 hereof).
The Company shall not be required (i) to issue, register the
transfer of or exchange any Note for a period beginning at the opening
of business 15 days before the day of any selection of Notes to be
redeemed under Section 3.01 hereof or to be converted under Section
4.01 hereof and ending at the close of business on the day of
selection, or (ii) to register the transfer, or exchange, of any Note
so selected for redemption or conversion in whole or in part, except
the unredeemed or unconverted portion of any Note being redeemed or
converted in part.
Notwithstanding anything contained herein to the contrary, neither
the Trustee nor the Registrar shall be responsible for ascertaining
whether any purchase or transfer complies with the registration
provisions of or exemptions from the Securities Act or any applicable
state securities laws.
9
Any transfer or exchange of a Note in certificated form shall
be accompanied by surrender of the certificated Note, endorsed or
accompanied by an instrument of transfer acceptable to the Registrar,
executed by the Holder or an attorney in fact acting on its behalf.
SECTION 2.07. REPLACEMENT NOTES.
If the Holder of a Note claims that the Note has been lost,
destroyed or wrongfully taken or if such Note is mutilated and is
surrendered to the Trustee, the Company shall issue and the Trustee
shall authenticate a replacement Note if the Trustee's and the
Company's requirements are met. If required by the Trustee or the
Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of both to protect the Company, the
Trustee, any Agent or any authenticating agent from any loss which any
of them may suffer if a Note is replaced. The Company may charge for
its expenses in replacing a Note.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, or is about to be
purchased by the Company pursuant to Article III hereof, the Company
in its discretion may, instead of issuing a new Note, pay or purchase
such Note, as the case may be.
Every replacement Note shall be in exchange for, or in lieu of,
other Notes previously issued and shall be entitled to all of the
benefits of this Indenture equally and proportionately with all other
Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated
by the Trustee except for those canceled by it, those delivered to it
for cancellation, and those described in this Section 2.08 as not
outstanding.
If a Note is replaced, paid or purchased pursuant to Section 2.07
hereof, it ceases to be outstanding.
If the principal amount of any Note is considered paid under
Section 5.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue.
Except as set forth in Section 2.09 hereof, a Note does not cease
to be outstanding because the Company or an Affiliate of the Company
holds the Note.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent,
Notes owned by the Company or an Affiliate of the Company shall be
considered as though they are not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes that the
Trustee knows are so owned shall be so disregarded.
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SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes. Temporary
Notes shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for temporary
Notes. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary
Notes. Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Presenting Agent, Registrar, Paying Agent and
Conversion Agent shall forward to the Trustee any Notes surrendered to
them for registration of transfer, exchange, payment, redemption or
conversion. The Trustee shall promptly cancel all Notes surrendered
for registration of transfer, exchange, payment, redemption,
conversion, replacement or cancellation and shall dispose of canceled
Notes as the Company directs. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.
SECTION 2.12. ADDITIONAL REDUCTION IN PRINCIPAL AMOUNT OF AND INTEREST ON
THE NOTES.
Pursuant to the Stipulation of Settlement, the Company is
obligated to pay all costs of notice and administration of all
transactions contemplated by the Stipulation of Settlement (exclusive
of any attorneys' fees and expenses, the "SETTLEMENT COSTS"). If the
Settlement Costs exceed $750,000, then the Company shall pay such
excess (the "EXCESS AMOUNT") as and when incurred but shall be
entitled to a credit equal to the Excess Amount against the
installment of interest on the Notes next due, to be applied against
the Notes then outstanding on a pro rata basis. If the Excess Amount
exceeds the total amount of interest due on the Notes on the next
subsequent interest payment date, the Company may, in its sole
discretion, either reduce the principal amount of the Notes then
outstanding on a pro rata basis by the balance of the Excess Amount
not previously applied or apply such amount against subsequent
installments of interest, provided, however, that no Note shall be
reduced to an amount not divisible by $100. The Company shall not be
entitled to any refund or reimbursement of the costs of notice and
administration in the event that the Settlement is not approved,
terminated, or does not become final and effective for any reason. The
Company shall notify the Trustee in writing of the reduction of
interest due on and/or principal amount of the Notes and will supply
the Trustee with such documentation of Settlement Costs as the Trustee
may reasonably request. The Company shall promptly thereafter provide
notice, or cause the Trustee to provide notice, to the Holders of the
reduction in interest payable on or principal amount of the Notes.
SECTION 2.13. DEFAULTED INTEREST.
If the Company fails to make a payment of interest on the Notes,
it shall pay such defaulted interest plus any interest payable on the
defaulted interest, in any lawful manner. It may pay such defaulted
interest, plus any such interest payable on it, to the Persons who are
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Holders on a subsequent special record date. The Company shall fix any
such record date and payment date, provided that no such record date
shall be less than 10 days prior to the related payment date for such
defaulted interest. At least 15 days before any such record date, the
Company shall mail to Holders a notice that states the special record
date, the related payment date and amount of such interest to be paid.
SECTION 2.14. CUSIP NUMBERS.
The Company in issuing the Notes shall use "CUSIP" numbers if then
generally in use, and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption or conversion and other notices as a convenience
to Holders of Notes; provided, that any such notice may state that no
representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption or
conversion and that reliance may be placed only on the other
identification numbers printed on the Notes, and any redemption or
conversion shall not be affected by any defect in or omission of such
numbers. The Company will promptly notify the Trustee of any change in
the "CUSIP" numbers.
ARTICLE III
REDEMPTION
SECTION 3.01. REDEMPTION.
Subject to Sections 5.05 and 5.06 hereof, the Company, in its sole
discretion, may redeem all or any of the Notes, in whole or in part,
selected in accordance with the provisions of Section 3.03 hereof, at
any time upon thirty (30) days written notice to the record Holders
thereof, without premium or penalty, at a redemption price payable
solely in cash equal to the principal of and (except if the redemption
date shall be an Interest Payment Date) any accrued but unpaid
interest on the Notes through but excluding the redemption date. Any
redemption pursuant to this Section 3.01 shall be made pursuant to the
provisions of Sections 3.02 through 3.07 hereof.
SECTION 3.02. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the redemption
provisions of Section 3.01 hereof, it shall notify the Trustee in
writing of the redemption date and the accrued interest on and
principal amount of Notes to be redeemed. The Company shall give the
notice provided for in this Section 3.02 at least 45 days before the
redemption date, unless a shorter notice period shall be satisfactory
to the Trustee. The Company may not give notice of any redemption if
the Company has defaulted in payment of interest and the default is
continuing.
SECTION 3.03. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time,
selection of Notes shall be made by the Trustee on a pro rata basis
considering all of the Notes outstanding on the redemption date,
provided that no partial redemption shall leave a balance that is not
evenly divisible by $100. The Trustee shall make the selection not
more that five (5) Business Days
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after it receives the notice described in Section 3.02 hereof from the
Notes outstanding not previously called for redemption or conversion.
Notes and portions of Notes selected shall be in amounts of $100 or
integral multiples of $100. Provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption. The Trustee shall notify the Company promptly of the Notes
or portions of Notes to be called for redemption.
SECTION 3.04. NOTICE TO HOLDERS OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption
date which date shall also be at least 5 days after notice to the
Trustee pursuant to Section 3.02, the Company shall mail or cause the
Trustee to mail, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address. The
notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price together with accrued interest
separately stated on the portion of the Notes to be redeemed to the
date of redemption;
(c) if any Note is to be redeemed in part only (but not in any
amount not divisible by $100), the portion of the principal amount
thereof redeemed, and that, after the redemption date, upon surrender
of such Note, a new Note in principal amount equal to the unredeemed
portion thereof shall be issued in the name of the Holder thereof upon
cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price plus accrued interest
if any;
(f) that interest on Notes called for redemption ceases to accrue
on and after the redemption date;
(g) the paragraph of the Notes pursuant to which the Notes called
for redemption are being redeemed; and
(h) the "CUSIP" number of the Notes to be redeemed.
At the Company's request, the Trustee shall give notice of
redemption in the Company's name and at the Company's expense;
provided that the Company shall have delivered to the Trustee, at
least 30 days prior to the redemption date, an Officers' Certificate
requesting that the Trustee give such notice and setting forth the
information to be stated in such notice, as provided in the preceding
paragraph.
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SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.04 hereof, Notes called for redemption become due and payable on the
redemption date at the price set forth in the Note. A notice of
redemption may not be conditional.
SECTION 3.06. DEPOSIT OF REDEMPTION PRICE.
On or before 1:00 p.m. (Eastern Standard Time) on the redemption
date, the Company shall deposit with the Paying Agent money (in
immediately available funds) sufficient to pay the redemption price of
and (except if the redemption date shall be an Interest Payment Date)
accrued interest on all Notes to be redeemed on that date. The Paying
Agent shall return to the Company any money not required or used for
that purpose.
SECTION 3.07. NOTES REDEEMED IN PART.
Subject to Sections 5.05 and 5.06 hereof, upon surrender of a Note
that is redeemed in part, the Company shall issue and the Trustee
shall authenticate for the Holder at the expense of the Company a new
Note equal in principal amount to the unredeemed portion of the Note
surrendered.
SECTION 3.08. PAYMENT OF INTEREST FOLLOWING NOTICE OF REDEMPTION.
Interest shall not accrue and no payment for interest shall be
made on any Note or portion thereof called for redemption pursuant to
this Article III with respect to the period following the date of
redemption. In the case of any Note surrendered for redemption after
the close of business on any record date for the payment of an
installment of interest but before the opening of business on the next
succeeding Interest Payment Date, such Note, when surrendered for
redemption, must be accompanied by payment in an amount equal to the
interest payable on such Interest Payment Date on the principal amount
of the Note so converted. Accrued interest shall be paid on such
Interest Payment Date to the holder of the Note on such record date.
If less than all of the Notes are to be redeemed at any time, the
foregoing provision shall apply only to the portion so redeemed and
interest shall accrue and be paid on the balance of the Notes in
accordance with the provisions of Article II.
ARTICLE IV
MANDATORY CONVERSION
SECTION 4.01. MANDATORY CONVERSION.
Subject to Sections 5.05 and 5.06 hereof, the Company, in its sole
discretion, may cause the Holders to convert all or any of the Notes,
in whole or in part, selected in accordance with the provisions of
Section 4.03 hereof, at any time upon thirty (30) days written notice
to the record Holders thereof, without premium or penalty, into shares
of Common Stock. The number of shares of Common Stock into which the
Notes, or any parts thereof, shall be converted shall be such number
of shares of Common Stock as may be
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obtained by dividing the principal of and (except if the redemption
date is an Interest Payment Date) any accrued but unpaid interest
(through but excluding the conversion date) on the Notes to be
converted by an amount equal to eighty percent (80%) of the
dollar-weighted average trading price per share for all round lot
transactions in the Common Stock on the Market for the ten (10)
trading days ending two (2) days prior to the date of the written
notice to the Trustee and issuance of a press release by the Company
describing the redemption. Any conversion pursuant to this Section
4.01 shall be made pursuant to the provisions of Sections 4.02 through
4.07 hereof.
SECTION 4.02. NOTICES TO TRUSTEE.
If the Company elects to convert any of the Notes pursuant to the
mandatory conversion provisions of Section 4.01 hereof, it shall
notify the Trustee in writing of the conversion date and the accrued
interest on and principal amount of Notes to be converted. The Company
shall give the notice provided for in this Section 4.02 at least 45
days before the conversion date, unless a shorter notice period shall
be satisfactory to the Trustee. The Company may not give notice of any
conversion if the Company has defaulted in payment of interest and the
default is continuing.
SECTION 4.03. SELECTION OF NOTES TO BE CONVERTED.
If less than all of the Notes are to be converted at any time,
selection of Notes shall be made by the Trustee on a pro rata basis
considering all of the Notes outstanding on the redemption date
provided that no partial conversion shall leave a balance that is not
evenly divisible by $100. The Trustee shall make the selection not
more that five (5) Business Days after it receives the notice
described in Section 4.02 hereof from the Notes outstanding not
previously called for redemption or conversion. Notes and portions of
Notes selected shall be in amounts of $100 or integral multiples of
$100. Provisions of this Indenture that apply to Notes called for
conversion also apply to portions of Notes called for conversion. The
Trustee shall notify the Company promptly of the Notes or portions of
Notes to be called for conversion.
SECTION 4.04. NOTICE TO HOLDERS OF CONVERSION.
At least 30 days but not more than 60 days before a conversion
date which date shall also be at least 5 days after the notice to the
Trustee pursuant to Section 4.02, the Company shall mail or cause the
Trustee to mail, by first class mail, a notice of conversion to each
Holder whose Notes are to be converted at its registered address. The
notice shall identify the Notes to be converted and shall state:
(a) the conversion date;
(b) the conversion ratio which shall specify in reasonable detail
the methodology used to determine the conversion ratio, including the
stock price, the discount rate and the trading dates used to calculate
the conversion ratio;
(c) if any Note is to be converted in part only, the portion of
the principal amount thereof converted, and that, after the conversion
date, upon surrender of such Note, a new
15
Note in principal amount equal to the unconverted portion thereof shall be
issued in the name of the Holder thereof upon cancellation of the original
Note;
(d) the name and address of the Conversion Agent;
(e) that Notes called for conversion must be surrendered to the
Conversion Agent to collect the shares of Common Stock which shall be based
on the principal amount of the Notes to be converted together with interest
accrued to the conversion date and cash in lieu of fractional shares, if
any;
(f) that interest on Notes called for conversion ceases to accrue on
and after the conversion date;
(g) the paragraph of the Notes pursuant to which the Notes called for
conversion are being converted; and
(h) the "CUSIP" number of the Notes to be converted.
At the Company's request, the Trustee shall give notice of conversion
in the Company's name and at the Company's expense; provided that the
Company shall have delivered to the Trustee, at least 30 days prior to the
conversion date, an Officers' Certificate requesting that the Trustee give
such notice and setting forth the information to be stated in such notice,
as provided in the preceding paragraph.
SECTION 4.05. EFFECT OF NOTICE OF CONVERSION.
Once notice of conversion is mailed in accordance with Section 4.04
hereof, Notes called for conversion shall be deemed converted into the
requisite number of shares of Common Stock on the conversion date at the
conversion ratio set forth in the Note. A notice of conversion may not be
conditional.
SECTION 4.06. DEPOSIT OF CONVERSION SHARES AND MONEY.
On or before 1:00 p.m. (Eastern Standard Time) on the conversion date,
the Company shall deposit with the Conversion Agent certificates for the
number of whole shares of Common Stock issuable upon the conversion and
money (in immediately available funds) sufficient to pay for any fractional
shares determined pursuant to Section 4.08 hereof sufficient to convert all
Notes to be converted and to acquire all fractional shares to be acquired
on that date. The Conversion Agent shall return to the Company any shares
and/or money not required or used for such purposes.
SECTION 4.07. NOTES CONVERTED IN PART.
Subject to Sections 5.05 and 5.06 hereof, upon surrender of a Note
that is converted in part, the Company shall issue and the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal
in principal amount to the unconverted portion of the Note surrendered.
16
SECTION 4.08. FRACTIONAL SHARES.
The Company will not issue fractional shares of Common Stock upon
conversion of a Note. In lieu thereof, the Company will pay either an
amount in cash calculated by multiplying the fractional share times the per
share price based upon the dollar-weighted average trading price per share
for all round lot transactions in the Common Stock on the Market for the
ten (10) trading days ending two (2) days prior to the date of notice to
the Trustee pursuant to Section 4.01 or issue additional shares of Common
Stock rounded up to the next whole number of shares, or a combination of
the two.
SECTION 4.09. TAXES ON CONVERSION.
The issuance of certificates for shares of Common Stock upon the
conversion of any Note shall be made without charge to the converting
Holder for such certificates or for any tax in respect of the issuance of
such certificates, and such certificates shall be issued in the respective
names of, or in such names as may be directed by, the Holder or Holders of
the converted Note; provided, however, that in the event that certificates
for shares of Common Stock are to be issued in a name other than the name
of the Holder of the Note converted, such Note, when surrendered for
conversion, shall be accompanied by an instrument of transfer, in form
satisfactory to the Company, duly executed by the registered Holder thereof
or his duly authorized attorney; and provided further, however, that the
Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Holder of the converted Note,
and the Company shall not be required to issue or deliver such certificates
unless or until the Person or Persons requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid or is not
applicable.
SECTION 4.10. COMPANY TO PROVIDE STOCK.
The Company shall at all times, after the giving of a notice of
conversion pursuant to Section 4.04 hereof, reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common
Stock, solely for the purpose of issuance upon conversion of Notes as
herein provided with respect to such notice of conversion, a sufficient
number of shares of Common Stock to permit the conversion of all
outstanding Notes subject to such notice of conversion for shares of Common
Stock. All shares of Common Stock which may be issued upon conversion of
the Notes shall be duly authorized, validly issued, fully paid and
nonassessable when so issued.
SECTION 4.11. PAYMENT OF INTEREST AND DIVIDENDS FOLLOWING NOTICE OF CONVERSION.
Interest shall not accrue and no payment for interest shall be made on
any Note or portion thereof called for conversion pursuant to this Article
IV with respect to the period following the date of conversion. In the case
of any Note surrendered for conversion after the close of business on any
record date for the payment of an installment of interest but before the
opening of business on the next succeeding Interest Payment Date, such
Note, when surrendered for conversion, must be accompanied by payment in an
amount equal to the
17
interest payable on such Interest Payment Date on the principal amount of
the Note so converted. Accrued interest shall be paid on such Interest
Payment Date to the holder of the Note on such record date. If less than
all of the Notes are to be converted at any time, the foregoing provision
shall apply only to the portion so converted and interest shall accrue and
be paid on the balance of the Notes in accordance with the provisions of
Article II. Interest that accrues from the last Interest Payment Date to a
date of conversion preceding a record date shall only be paid on the date
of conversion in the form of Common Stock or cash in lieu of Common Stock
in accordance with the provisions of this Article IV and Holders of Shares
of Common Stock issued upon conversion will not be entitled to receive any
dividends payable to holders of shares of Common Stock as of any record
date before the close of business on the conversion date.
ARTICLE V
COVENANTS
SECTION 5.01. PAYMENT OF NOTES.
The Company shall pay the principal of, and interest on, the Notes on
the dates and in the manner provided in the Notes. Principal and interest
shall be considered paid on the date due if the Paying Agent (other than
the Company or an Affiliate of the Company) holds on that date money
designated for and sufficient to pay all principal and interest then due.
To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i)
overdue principal at the rate borne by the Notes, compounded semiannually;
and (ii) overdue installments of interest (without regard to any applicable
grace period) at the same rate, compounded semiannually.
SECTION 5.02. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year of the Company, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under, and complied with the
covenants and conditions contained in, this Indenture, and further stating,
as to each such Officer signing such certificate, that to the best of his
knowledge the Company has kept, observed, performed and fulfilled each and
every covenant, and complied with the covenants and conditions contained in
this Indenture and is not in default in the performance or observance of
any of the terms, provisions and conditions hereof (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or
Events of Default of which he may have knowledge) and that to the best of
his knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal or of interest, if any, on the
Notes are prohibited. One of the Officers signing such Officers'
Certificate shall be either the Company's principal executive officer,
principal financial officer or principal accounting officer.
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The Company will, so long as any of the Notes are outstanding, deliver
to the Trustee forthwith upon becoming aware of any Default or Event of
Default, an Officers' Certificate specifying such Default or Event of
Default.
SECTION 5.03. REPORTS.
Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall file with the SEC and
furnish to the Trustee and to the Holders of Notes, all quarterly and
annual financial information required to be contained in a filing with the
SEC on Forms 10-Q and 10-K, including a "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and, with
respect to the annual information only, a report thereon by the Company's
certified independent accountants, in each case, as required by the rules
and regulations of the SEC as in effect on the Issuance Date. The Trustee
shall be under no obligation or duty to review such reports, such delivery
to it being for the purpose of having the same on file with the Trustee and
available for examination.
SECTION 5.04. CORPORATE EXISTENCE.
Subject to Article VII hereof, to the extent permitted by law the
Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence.
SECTION 5.05. OBLIGATION TO REDEEM, CONVERT OR REPURCHASE.
The Company shall not reduce the outstanding principal amount of the
Notes below sixty percent (60%) of the original outstanding principal
amount of such Notes, unless it shall, without penalty or premium, redeem
or cause the conversion into Common Stock of the entire remaining
outstanding principal amount of the Notes pursuant to Article III or IV
hereof.
SECTION 5.06. RESTRICTIONS ON CONVERSION OR REDEMPTION.
The provisions of Articles III or IV or anything else in this
Indenture to the contrary notwithstanding, the Company shall not convert or
redeem any Notes while a petition in bankruptcy relating to the Company is
pending and is not discharged or stayed. If notice of conversion or
redemption is given during the thirty (30) day period prior to the filing
date of a petition in bankruptcy relating to the Company, then conversion
or redemption as the case may be shall take place five (5) days after such
petition is discharged or stayed or thirty (30) days after the notice of
conversion, whichever is later. Furthermore, the Company shall not convert
any Notes if, during the ten (10) trading day period used for calculating
the conversion ratio as set forth in Section 4.01 hereof, the Company, any
member of the Board of Directors or any officer of the Company subject to
the requirements of Section 16 of the Exchange Act purchased shares of
Common Stock (excluding any issuance of Common Stock to any director or
officer of the Company pursuant to any Company stock option, employee stock
purchase or similar plan or rights plan in effect on the date hereof or
subsequently approved by the Board of Directors, or any exercise of options
or rights issued under such plans).
19
ARTICLE VI
SUBORDINATION
SECTION 6.01. AGREEMENT TO SUBORDINATE AND RANKING.
The Company, for itself and its successors, and each Holder, by its
acceptance of Notes, agree that the indebtedness represented by, and the
payment of the principal of or interest on or any other amounts due on, the
Notes is subordinated in right of payment, to the extent and in the manner
stated in this Article VI, to the prior payment in full of all existing and
future Senior Debt. The Notes shall rank pari passu with, and shall not be
senior in right of payment to, such other Indebtedness of the Company
whether outstanding on the date of this Indenture or hereafter created,
incurred, issued or guaranteed by the Company.
SECTION 6.02. NO PAYMENT ON NOTES IF SENIOR DEBT IN DEFAULT.
Anything in this Indenture to the contrary notwithstanding, no payment
on account of principal of or redemption of, interest on, or other amounts
due on the Notes, and no redemption, conversion, purchase, or other
acquisition of the Notes, shall be made by or on behalf of the Company (i)
unless full payment of amounts then due for principal and interest and of
all other amounts then due on all Senior Debt has been made or duly
provided for pursuant to the terms of the instrument governing such Senior
Debt, (ii) if, at the time of such payment, redemption, conversion,
purchase or other acquisition, or immediately after giving effect thereto,
there shall exist under any Senior Debt, or any agreement pursuant to which
any Senior Debt is issued, any default, which default shall have resulted
in the full amount of such Senior Debt being declared due and payable (any
such event, a "SENIOR DEBT DEFAULT"), or (iii) if, at the time of such
payment, redemption, conversion, purchase or other acquisition, the Trustee
shall have received written notice from any of the holders of Designated
Senior Debt or such holder's representative (a "PAYMENT BLOCKAGE NOTICE")
that there exists under such Designated Senior Debt, or any agreement
pursuant to which such Designated Senior Debt is issued, any default,
permitting the holders thereof to declare any amounts of such Designated
Senior Debt due and payable (any such event, a "DESIGNATED SENIOR DEBT
DEFAULT"), but only for the period (the "PAYMENT BLOCKAGE PERIOD")
commencing on the date of receipt by the Trustee of the Payment Blockage
Notice and ending (unless earlier terminated by notice given to the Trustee
by the holders of such Designated Senior Debt) on the earlier of (a) the
date on which such Designated Senior Debt Default shall have been cured or
waived or (b) 90 days from the receipt of the Payment Blockage Notice,
unless the holders of the Designated Senior Debt that provided the Payment
Blockage Notice have so accelerated the Designated Senior Debt. Upon
termination of the Payment Blockage Period, subject to Section 6.03 hereof,
payments on account of regularly scheduled principal of or interest on the
Notes which are then due and payable or which had been blocked and
redemptions, conversions, purchases or other acquisitions may be made by or
on behalf of the Company. Notwithstanding anything herein to the contrary,
(a) only one Payment Blockage Notice may be given during any period of 360
consecutive days with respect to the same Designated Senior Debt Default or
any other Designated Senior Debt Defaults on the same issue of Designated
Senior Debt existing or continuing at the time of such notice unless such
Designated Senior Debt Default or such other Designated Senior Debt
Defaults have been cured or waived for a period of not less than
20
90 consecutive days and (b) no new Payment Blockage Period may be commenced
by the holder or holders of the same issue of Designated Senior Debt or
their representative or representatives during any period of 360
consecutive days unless all Designated Senior Debt Defaults which were the
subject of the immediately preceding Payment Blockage Notice have been
cured or waived.
In the event that, notwithstanding the provisions of this Section
6.02, payments are made by or on behalf of the Company in contravention of
the provisions of this Section 6.02, such payments shall be held by the
Trustee or any Paying Agent, as applicable, in trust for the benefit of,
and shall be paid over to and delivered to, the holders of Senior Debt or
their representative or the trustee under the indenture or other agreement
(if any), pursuant to which any instruments evidencing any Senior Debt may
have been issued (as to which the Trustee shall be entitled to request and
rely upon written certification from such holders of Senior Debt or related
trustees) for application to the payment of all Senior Debt ratably
according to the aggregate amounts remaining unpaid to the extent necessary
to pay all Senior Debt in full in cash in accordance with the terms of such
Senior Debt, after giving effect to any concurrent payment or distribution
to or for the holders of Senior Debt.
The Company shall give prompt written notice to the Trustee and any
Paying Agent of any Senior Debt Default or Designated Senior Debt Default.
This Section 6.02 shall not be construed or interpreted to mean that a
failure to pay principal or interest on the Notes when due does not
constitute a Default under the Notes despite the fact that such principal
or interest may not be paid on the Notes pursuant to the terms of this
Section 6.02.
SECTION 6.03. DISTRIBUTION ON ACCELERATION OF NOTES; DISSOLUTION AND
REORGANIZATION; SUBROGATION OF NOTES.
(a) If the Notes are declared due and payable because of the
occurrence of an Event of Default, the Company or the Trustee shall give
prompt written notice to the holders of all Senior Debt or to the
trustee(s) for such Senior Debt (in each case to the extent known to the
Trustee) of such acceleration. The Company may not pay the principal of or
interest on or any other amounts due on the Notes until five days after
such holders or trustee(s) of Senior Debt receive such notice and,
thereafter, the Company may pay the principal of or interest on or any
other amounts due on the Notes only if the provisions of this Article VI
permit such payment.
(b) Upon (i) any acceleration of the principal amount due on the Notes
because of an Event of Default or (ii) any distribution of assets of the
Company upon any dissolution, winding up, liquidation or reorganization of
the Company (whether in bankruptcy, insolvency or receivership proceedings
or upon an assignment for the benefit of creditors or any other
dissolution, winding up, liquidation or reorganization of the Company):
(1) the holders of all Senior Debt shall first be entitled to
receive payment in full of the principal thereof, the interest thereon
and any other amounts due thereon before the Holders are entitled to
receive payment on account of the principal of or interest on or any
other amounts due on the Notes;
21
(2) any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, to which the Holders or the Trustee would be
entitled except for the provisions of this Article VI, shall
be paid by the liquidating trustee or agent or other Person
making such a payment or distribution, directly to the holders
of Senior Debt (or their representatives(s) or trustee(s)
acting on their behalf), ratably according to the aggregate
amounts remaining unpaid on account of the principal of or
interest on and other amounts due on the Senior Debt held or
represented by each, to the extent necessary to make payment
in full in cash of all Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution to the
holders of such Senior Debt; and
(3) in the event that, notwithstanding the foregoing,
any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities,
shall be received by the Trustee or the Holders before all
Senior Debt is paid in full in cash, such payment or
distribution shall be held in trust for the benefit of, and be
paid over to the holders of the Senior Debt remaining unpaid
(or their representatives) or trustee(s) acting on their
behalf, ratably as aforesaid, for application to the payment
of such Senior Debt until all such Senior Debt shall have been
paid in full in cash, after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt.
Subject to the payment in full in cash of all Senior Debt, the
Holders shall be subrogated to the rights of the holders of
Senior Debt to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior
Debt to the extent of the payments or distributions made to
the holders of such Senior Debt pursuant to the provisions of
this Article VI until the principal of and interest on the
Notes shall be paid in full and, for purposes of such
subrogation, no such payments or distributions to the holders
of Senior Debt of cash, property or securities which otherwise
would have been payable or distributable to Holders shall, as
between the Company, its creditors other than the holders of
Senior Debt, and the Holders, be deemed to be a payment by the
Company to or on account of the Senior Debt, it being
understood that the provisions of this Article VI are, and are
intended solely for the purpose of, defining the relative
rights of the Holders, on the one hand, and the holders of
Senior Debt, on the other hand.
Nothing contained in this Article VI or elsewhere in this
Indenture or in the Notes is intended to or shall (i) impair, as
between the Company and its creditors other than the holders of Senior
Debt, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders the principal of and interest on
the Notes as and when the same shall become due and payable in
accordance with the terms of the Notes, or, (ii) affect the relative
rights of the Holders and creditors of the Company other than holders
of Senior Debt or, as between the Company and the Trustee, the
obligations of the Company to the Trustee, or (iii) prevent the Trustee
or the Holders from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the
rights, if any, under this Article VI of the holders of Senior Debt in
respect of cash, property and securities of the Company received upon
the exercise of any such remedy.
22
Upon distribution of assets of the Company referred to in this
Article VI, the Trustee, subject to the provisions of Section 9.01
hereof, and the Holders shall be entitled to rely upon a certificate of
the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of
ascertaining the Persons entitled to participate in such distribution,
the holders of the Senior Debt and other Indebtedness of the Company,
the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this
Article VI, unless the Trustee reasonably believes or should believe
that such information is not correct or accurate.
(c) The provisions of this Article VI shall not be applicable
to any cash, properties or securities received by the Trustee or by any
Holder when received as a holder of Senior Debt and nothing in Section
9.11 hereof or elsewhere in this Indenture shall deprive the Trustee or
such Holder of any of its rights as such holder.
(d) The Company shall give prompt written notice to the Trustee
of any fact known to the Company which would prohibit the making of any
payment of money to or by the Trustee in respect of the Notes pursuant
to the provisions of this Article VI. The Trustee, subject to the
provisions of Section 9.01 hereof, shall be entitled to assume that no
such fact exists unless the Company or any holder of Senior Debt or any
trustee therefor has given such notice to the Trustee. Notwithstanding
the provisions of this Article VI or any other provisions of this
Indenture, the Trustee shall not be charged with knowledge of the
existence of any fact which would prohibit the making of any payment of
monies to or by the Trustee in respect of the Notes pursuant to the
provisions in this Article VI, unless, and until, the Trustee shall
have received written notice thereof from the Company or any holder or
holders of Senior Debt or from any trustee therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the
provisions of Section 9.01 hereof, shall be entitled in all respects to
assume that no such facts exist; provided that if on a date not less
than two (2) Business Days immediately preceding the date upon which by
the terms hereof any such monies may become payable for any purpose
(including, without limitation, the principal of or interest on any
Note), the Trustee shall not have received with respect to such monies
the notice provided for in this Section 6.03(d), then anything herein
contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such monies and to apply the same to the
purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such
prior date.
The Trustee shall be entitled to rely on the delivery to it of
a written notice by a Person representing himself to be a holder of
Senior Debt (or a trustee on behalf of such holder) to establish that
such notice has been given by a holder of Senior Debt (or a trustee on
behalf of any such holder or holders). In the event that the Trustee
determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Debt to participate in
any payment or distribution pursuant to this Article VI, the Trustee
may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt held by
such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article VI, and, if such evidence is
not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such
payment; nor shall the Trustee be charged with knowledge of the curing
or
23
waiving of any default of the character specified in Section 6.02 hereof or
that any event or any condition preventing any payment in respect of the
Notes shall have ceased to exist, unless and until the Trustee shall have
received an Officers' Certificate to such effect.
(e) The provisions of this Section 6.03 applicable to the Trustee
shall also apply to any Paying Agent for the Company.
SECTION 6.04. RELIANCE BY SENIOR DEBT ON SUBORDINATION PROVISIONS.
Each Holder of any Note by his acceptance thereof acknowledges and
agrees that the foregoing subordination provisions are, and are intended to
be, an inducement and a consideration for each holder of any Senior Debt,
whether such Senior Debt was created or acquired before or after the
issuance of the Notes, to acquire and continue to hold, or to continue to
hold, such Senior Debt, and such holder of Senior Debt shall be deemed
conclusively to have relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such Senior Debt, and no
amendment or modification of the provisions contained in this Article VI
shall diminish the rights of such holders of Senior Debt unless such
holders have expressly agreed thereto in writing. Notice of any default in
the payment of any Senior Debt, except as expressly stated in this Article
VI, and notice of acceptance of the provisions hereof are hereby expressly
waived. Except as otherwise expressly provided herein, no waiver,
forbearance or release by any holder of Senior Debt under such Senior Debt
or under this Article VI shall constitute a release of any of the
obligations or liabilities of the Trustee or Holders of the Notes provided
in this Article VI.
SECTION 6.05. NO WAIVER OF SUBORDINATION PROVISIONS.
Except as otherwise expressly provided herein, no right of any present
or future holder of any Senior Debt to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act
or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the
Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without
the consent of, or notice to, the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article VI or the
obligations hereunder of the Holders of the Notes to the holders of Senior
Debt, do any one or more of the following: (i) change the manner, place or
terms of payment of, or renew or alter, Senior Debt (including, without
limitation, changing the principal amount of, interest rate on, or maturity
date of, such Senior Debt), or otherwise amend or supplement in any manner
Senior Debt or any instrument evidencing the same or any agreement under
which Senior Debt is outstanding; (ii) sell, exchange, release or otherwise
dispose of any property pledged, mortgaged or otherwise securing Senior
Debt; (iii) release any Person liable in any manner for the collection of
Senior Debt; and (iv) exercise or refrain from exercising any rights
against the Company or any other Person.
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SECTION 6.06. TRUSTEE'S RELATION TO SENIOR DEBT.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article VI in respect of any Senior Debt at any
time held by it, to the same extent as any holder of Senior Debt, and
nothing in Section 9.11 hereof or elsewhere in this Indenture shall deprive
the Trustee of any of its rights as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligation, as are
specifically set forth in this Article VI, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into
this Indenture against the Trustee. The Trustee shall not owe any fiduciary
duty to the holders of Senior Debt but shall have only such obligations to
such holders as are expressly set forth in this Article VI; and in no event
shall the Trustee be liable to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of the Notes or to the Company
(or any other Person) amounts to which such holders of Senior Debt would be
entitled under this Article VI.
Each Holder of a Note by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article VI and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding up or liquidation or
reorganization under any applicable bankruptcy law of the Company (whether
in bankruptcy, insolvency or receivership proceedings or otherwise), the
timely filing of a claim for the unpaid balance of such Holder's Notes in
the form required in such proceedings and the causing of such claim to be
approved. If the Trustee does not file a claim or proof of debt in the form
required in such proceedings prior to 30 days before the expiration of the
time to file such claims or proofs, then any Holder or holders of Senior
Debt or their representative or representatives shall have the right to
demand, xxx for, collect, receive and receipt for the payments and
distributions in respect of the Notes which are required to be paid or
delivered to the holders of Senior Debt as provided in this Article VI and
to file and prove all claims therefore and to take all such other action in
the name of the holders or otherwise, as such holders of Senior Debt or
representative thereof may determine to be necessary or appropriate for the
enforcement of the provisions of this Article VI.
SECTION 6.07. OTHER PROVISIONS SUBJECT HERETO.
Except as expressly stated in this Article VI, notwithstanding
anything contained in this Indenture to the contrary, all the provisions of
this Indenture and the Notes are subject to the provisions of this Article
VI. However, nothing in this Article VI shall apply to or adversely affect
the claims of, or payment, to, the Trustee pursuant to Section 9.07 hereof.
Notwithstanding the foregoing, the failure to make a payment on account of
principal of or interest on the Notes by reason of any provision of this
Article VI shall not be construed as preventing the occurrence of an Event
of Default under Section 8.01 hereof.
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ARTICLE VII
SUCCESSORS
SECTION 7.01. LIMITATION ON MERGER, SALE OR CONSOLIDATION.
The Company may not, directly or indirectly, consolidate with or merge
with or into, or sell, lease or otherwise dispose of all or substantially
all of its assets, on a consolidated basis, whether in a single transaction
or a series of related transactions, to another person or group of
affiliated persons, other than to its Wholly-Owned Subsidiaries, unless:
(a) either: (i) in the case of a merger or consolidation, the Company
is the surviving entity; or (ii) the resulting, surviving or transferee
entity is a corporation organized under the laws of the United States, any
state thereof or the District of Columbia and expressly assumes by
supplemental indenture all of the Company's obligations in connection with
the Notes and the Indenture; and
(b) no Default or Event of Default shall exist immediately before or
after giving effect on a pro forma basis to such transaction.
Upon any permitted consolidation or merger or any permitted sale,
lease or other disposition of all or substantially all of the assets of the
Company in accordance with the foregoing (a "CHANGE OF CONTROL"), the
successor corporation formed by such consolidation or into which the
Company is merged or to which such sale, lease or other disposition is
made, shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect
as if such successor corporation had been named therein in the same manner
as the Company is named, but such a transaction will not release the
Company from its obligations under the Indenture and the Notes.
For purposes of the foregoing, the transfer, by lease, assignment,
sale or otherwise, of all or substantially all of the properties and assets
of one or more Subsidiaries, which properties and assets, if held by the
Company instead of such Subsidiary, would constitute all or substantially
all of the Company's properties and assets, shall be deemed to be the
transfer of all or substantially all of the Company's properties and
assets. This Section 7.01 will not apply to a sale, assignment, transfer,
conveyance or other disposition of assets between or among the Company and
any of its Wholly-Owned Subsidiaries
SECTION 7.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any Change of Control, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person has been named as the Company herein.
26
ARTICLE VIII
DEFAULTS AND REMEDIES
SECTION 8.01. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" occurs if:
(a) the Company defaults in the payment of interest on any Note when
the same becomes due and payable;
(b) the Company defaults in the payment of the principal of any Note
when the same becomes due and payable at maturity, upon redemption or
mandatory conversion, or otherwise;
(c) the Company fails to observe or perform any covenant or agreement
contained in Section 5.01, 5.04, 5.05, 5.06 and 7.01 hereof;
(d) the Company fails to observe or perform any other covenant or
agreement contained in this Indenture or the Notes, required by it to be
performed and the failure continues for a period of 60 days after notice
from the Trustee to the Company or from the Holders of at least thirty-five
percent (35%) in principal amount of the then outstanding Notes to the
Company and the Trustee stating that such notice is a "Notice of Default";
(e) the Company, 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 in which it is the debtor;
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property;
(iv) makes a general assignment for the benefit of its creditors;
or
(v) generally is unable to pay its debts as the same become due;
or
(f) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company in an involuntary case
which order remains unstayed or unwithdrawn for 60 days;
(ii) appoints a Custodian of the Company or for all or
substantially all of its property which order is not stayed or
withdrawn within 60 days; and
(iii) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for 60 days.
(g) there shall exist under any Senior Debt, or any agreement pursuant
to which any Senior Debt is issued, any default which (i) shall remain uncured
after the expiration of any
27
applicable notice or cure period and (ii) shall have caused such Senior Debt to
become due and payable.
The term "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors or the protection
of creditors. The term "CUSTODIAN" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
SECTION 8.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clauses (e) or (f) of Section 8.01 hereof) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least thirty-five
percent (35%) in principal amount of the then outstanding Notes by notice
to the Company and the Trustee, may declare all the Notes to be due and
payable. Upon such declaration, the principal of, and interest on the Notes
shall be due and payable immediately. If an Event of Default specified in
clause (e) or (f) of Section 8.01 hereof occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.
The Holders of a majority in principal amount of the then outstanding
Notes by notice to the Trustee may rescind an acceleration and its
consequences (i) if the recission would not conflict with any judgment or
decree of a court of competent jurisdiction and (ii) if all existing Events
of Default have been cured or waived except nonpayment of principal or
interest on the Notes that has become due solely because of the
acceleration of the Notes.
SECTION 8.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal or interest
on the Notes or to enforce the performance of any provision of the Notes or
this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 8.04. WAIVER OF PAST DEFAULTS.
The Holders of a majority in principal amount of the then outstanding
Notes by notice to the Trustee may on behalf of all of the Holders of the
Notes waive an existing Default or Event of Default and its consequences
except a continuing Default or Event of Default in the payment of the
principal of or interest on any Note. Any such waiver of an existing
Default or Event of Default and its consequences may be made subject to
such conditions as may be requested by the Holders of a majority in
principal amount of the then outstanding Notes by notice to the Trustee and
agreed upon by the Trustee in its sole and absolute discretion. When a
Default or Event of Default is waived, it is cured and ceases; provided,
however, that no such waiver shall extend to any subsequent or other
Default or impair any right consequent
28
thereon and any such waivers shall be subject to the provisions of Section
11.02 hereof; provided, further, that a conditional waiver shall be
effective only in accordance with its conditions.
SECTION 8.05. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, is unduly prejudicial to the
rights of other Holders, or would involve the Trustee in personal
liability.
SECTION 8.06. LIMITATION ON SUITS.
Subject to the provisions of Section 8.07 hereof, a Holder may pursue
a remedy with respect to this Indenture or the Notes only if:
(a) the Holder gives to the Trustee notice of a continuing Event of
Default;
(b) the Holders of at least thirty-five percent (35%) in principal
amount of the then outstanding Notes make a request to the Trustee to
pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity satisfactory
to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 8.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, and interest on the
Note, on or after the respective due dates and in accordance with the terms
set forth in the Note, 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 the Holder.
SECTION 8.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 8.01(a) or (b), hereof
occurs and is continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount
of principal and interest remaining unpaid on the Notes and interest on
overdue principal and interest and such further amount as shall be
29
sufficient to cover the costs and, to the extent lawful, expenses of
collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
SECTION 8.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee and the Holders allowed in any judicial proceedings relative to
the Company, its creditors or its property. Nothing contained herein shall
be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 8.10. PRIORITIES.
Subject to the provisions of Article VI hereof, if the Trustee
collects any money pursuant to this Article VIII, it shall pay out the
money in the following order:
First: to the Trustee for amounts due under Section 9.07 hereof;
Second: to the holders of Senior Debt, if and to the extent required
by Article VI;
Third: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectively; and
Fourth: to the Holders for any other payments pursuant to the terms of
this Indenture; and
Fifth: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders made pursuant to this Section 8.10.
SECTION 8.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section 8.11 does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 8.07 hereof, or
a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
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ARTICLE IX
TRUSTEE
SECTION 9.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of an Event of Default: (i) the
Trustee need perform only those duties that are specifically set forth in
this Indenture and no others and (ii) in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform on their face to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that: (i) this paragraph does not limit the effect of
paragraph (b) of this Section 9.01; (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 and (iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 8.05 hereof.
(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 9.01.
(e) The Trustee may refuse to perform any duty or exercise any right
or power (including, without limitation, as requested or directed by a
Holder) unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money
held in trust by the Trustee need not be segregated from other funds except
to the extent required by law.
SECTION 9.02. RIGHTS OF TRUSTEE.
(a) The Trustee may 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
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel.
31
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers.
(e) The Trustee shall not be charged with knowledge of any Event of
Default under subsections (c) through (f) (and subsection (a) or (b) if the
Trustee does not act as Paying Agent) of Section 8.01, unless either (1) a
Trust Officer of the Trustee assigned to its corporate trust department
shall have actual knowledge thereof, or (2) the Trustee shall have received
written notice thereof in accordance with Section 12.02 hereof from the
Company or any Holder.
(f) The grant of any permissive rights, power or authority hereunder
to the Trustee shall not be construed to be a duty.
SECTION 9.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or an
Affiliate with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 9.10 and 9.11 hereof.
SECTION 9.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's
use of the proceeds from the Notes, and it shall not be responsible for any
statement of the Company in the Indenture or any statement in the Notes
other than its authentication.
SECTION 9.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders a notice of the
Default or Event of Default within 30 days after the Trustee becomes aware
of such Default or Event of Default. Except in the case of a Default or
Event of Default in payment of principal or interest on any Note, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Holders.
SECTION 9.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after the reporting date stated in Section 12.10, the
Trustee shall mail to Holders a brief report dated as of such reporting
date that complies with TIA Section 313(a) if and to the extent required by
such Section 313(a). The Trustee also shall comply with TIA Section
313(b)(2). The Trustee shall also transmit by mail all reports as required
by TIA Section 313(c).
32
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each stock exchange on which the Notes are listed.
The Company shall notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 9.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder as to which the Company and the
Trustee shall from time to time mutually agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee
of an express trust. The Company shall reimburse the Trustee upon request
for all reasonable disbursements, expenses and advances incurred or made by
it. Such disbursements and expenses may include the reasonable
disbursements, compensation and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee against any claims, demands,
expenses (including but not limited to reasonable compensation, fees,
disbursements and expenses of the Trustee's agents and counsel), losses,
damages or liabilities incurred by it, except as set forth in the next
paragraph, arising out of, related to, or in connection with the acceptance
or administration of this trust and its rights or duties hereunder,
including the reasonable costs and expenses, and the costs and expenses of
enforcing this Indenture (including this Section 9.07) against the Company
and of defending itself against any claim (whether asserted by the Company,
or any Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim for which it may
seek indemnity. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees, disbursements and expenses of such
counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through the Trustee's negligence
or willful misconduct.
To secure the Company's payment obligations in this Section 9.07, the
Trustee shall have a lien prior to the Notes on all money or property held
or collected by the Trustee, except money or property held in trust to pay
principal and interest on particular Notes.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services after
an Event of Default specified in Section 8.01(e) or (f) hereof occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
All amounts owing to the Trustee under this Section 9.07 shall be
payable by the Company in United States dollars.
33
SECTION 9.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance
of appointment as provided in this Section 9.08.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove
the Trustee if:
(a) the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA Section 310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes
office, the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company
or any Person that has been a bona fide Holder of a Note for at least six
(6) months may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA Section 310(b), any
Holder who has been a bona fide Holder of a Note for at least six months
may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 9.07 hereof. Notwithstanding replacement of
the Trustee pursuant to this Section 9.08 hereof, the Company's obligations
under Section 9.07 hereof shall continue for the benefit of the retiring
trustee with respect to expenses and liabilities incurred by it prior to
such replacement.
34
SECTION 9.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business (including the
administration of this Indenture) to, another corporation, the successor
corporation without any further act shall be the successor Trustee.
SECTION 9.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (5). The Trustee shall always
have a combined capital and surplus as stated in Section 12.10 hereof. The
Trustee is subject to TIA Section 310(b).
SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or
been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE X
DISCHARGE OF INDENTURE
SECTION 10.01. TERMINATION OF COMPANY'S OBLIGATIONS.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Sections 9.07 and 10.02 hereof shall survive)
when all outstanding Notes theretofore authenticated and issued have been
delivered to the Trustee for cancellation and the Company has paid all sums
payable hereunder. In the event that any payment made under the Indenture
is avoided under any bankruptcy or reorganization law following termination
of the Indenture, the Indenture shall be revived as if the challenged
amount had never been paid.
SECTION 10.02 REPAYMENT TO COMPANY.
The Trustee and the Paying Agent shall promptly pay to the Company
upon request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that
remains unclaimed for two years after the date upon which such payment
shall have become due (subject to the requirements of any abandoned
property laws that may be applicable); provided, however, that the Company
shall have first caused notice of such payment to the Company to be mailed
to each Holder entitled thereto no less than 30 days prior to such payment.
After payment to the Company, the Trustee and the Paying Agent shall have
no further liability with respect to such money and Holders entitled to the
money must look to the Company for payment as general creditors unless any
applicable abandoned property law designates another Person.
35
ARTICLE XI
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 11.01. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this Indenture or
the Notes without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Section 7.01 hereof;
(c) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(d) to make any change that provides additional rights or benefits to
the Holders of the Notes;
(e) to make any change that does not adversely affect the interests
hereunder of any Holder; or
(f) to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the
Indenture under the TIA.
SECTION 11.02. WITH CONSENT OF HOLDERS.
Subject to Section 8.07 hereof, the Company and the Trustee may amend
or supplement this Indenture or the Notes with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes. Subject to Sections 8.04 and 8.07 hereof, the Holders of a majority
in principal amount of the Notes then outstanding may also waive compliance
in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder
affected, an amendment, supplement or waiver under this Section 11.02 may
not:
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter the provisions of Section 7 of the Notes in a manner adverse to
the Holders;
(c) reduce the rate of or change the time for payment or accrual of
interest on any Note;
(d) waive a continuing default or Event of Default in the payment of
the principal of or interest on any Note, except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default
that resulted from such acceleration;
(e) make any Note payable in money other than that stated in the Note;
36
(f) make any change in Section 8.04 or 8.07 hereof;
(g) waive a redemption payment with respect to any Note;
(h) modify Article V or VI in a manner adverse to the Holders of
Notes; and
(i) make any change in the foregoing amendment and waiver provisions
of this Article XI.
To secure a consent of the Holders under this Section 11.02, it shall
not be necessary for the Holders to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 11.02
becomes effective, the Company shall mail to Holders a notice briefly
describing the amendment or waiver.
SECTION 11.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to this Indenture or the Notes shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
SECTION 11.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is
not made on any Note. However, any such Holder or subsequent Holder may
revoke the consent as to his Note or portion of a Note if the Trustee
receives the notice of revocation before the date on which the Trustee
receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then
notwithstanding the provisions of 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 consent
to such amendment, supplement or waiver or to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of
Notes required hereunder for such amendment or waiver to be effective shall
have also been given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall
bind every Holder, unless it is of the type described in any of clauses (a)
through (i) of Section 11.02 hereof. In such case, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder
that evidences the same debt as the consenting Holder's Note.
37
SECTION 11.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment or
waiver on any Note thereafter authenticated. The Company in exchange for
all Notes may issue and the Trustee shall authenticate new Notes that
reflect the amendment or waiver.
Failure to make such notation on a Note or to issue a new Note as
aforesaid shall not affect the validity and effect of such amendment or
waiver.
SECTION 11.06. TRUSTEE PROTECTED.
The Trustee shall sign all supplemental indentures, except that the
Trustee may, but need not, sign any supplemental indenture that adversely
affects its rights, obligations or protections. Upon request by the Company
to sign any amendment or supplement, the Trustee shall be entitled to
request and receive from the Company, and to rely upon, an Opinion of
Counsel and Officer's Certificate to the effect that such supplement or
amendment is authorized or permitted under this Article XI.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
This Indenture is subject to the provisions of the TIA that are
required to be incorporated into this Indenture, and shall, to the extent
applicable, be governed by such provisions. If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
required (or would be so required) to be incorporated in this Indenture by
the TIA, the incorporated provision shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in Person or mailed by first
class mail to the other's address stated in Section 12.10 hereof. The
Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication to a Holder shall be mailed by first class
mail to his address shown on the register kept by the Registrar. Failure to
mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
38
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as
required by the Indenture, then such method of notification as shall be
made with the approval of the Trustee shall constitute a sufficient mailing
of such notice.
SECTION 12.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee
upon the Trustee's request:
(a) an Officers' Certificate 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 stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than pursuant
to Section 5.03) shall include:
(a) a statement that the Person signing such certificate or rendering
such 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 Person, such Person has
made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by, or a meeting of,
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
39
SECTION 12.07. LEGAL HOLIDAYS.
A "LEGAL HOLIDAY" is a Saturday, a Sunday or a day on which banking
institutions in the State of Delaware are not required to be open. If a
payment date is a Legal Holiday, payment may be made on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If any other operative date for purposes of this
Indenture shall occur on a Legal Holiday then for all purposes the next
succeeding day that is not a Legal Holiday shall be such operative date.
SECTION 12.08. NO RECOURSE AGAINST OTHERS.
A director, officer, employee, incorporator or shareholder of the
Company, as such, shall not have any liability for any Obligations of the
Company under the Notes or this Indenture or for any claim based on, in
respect of or by reason of such Obligations or their creation. Each Holder
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Notes.
SECTION 12.09. COUNTERPARTS AND FACSIMILE SIGNATURES.
This Indenture may be executed by manual or facsimile signature in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
SECTION 12.10. VARIABLE PROVISIONS.
The first certificate pursuant to Section 5.03 hereof shall be for the
fiscal year ended on December 31 of the year of the Initial Issuance Date
or such other date as may be required under the Trust Indenture Act.
The reporting date for Section 9.06 hereof is May 1st of each year.
The first reporting date shall be the first day of May of the year
following the year in which the Notes are first issued.
The Trustee shall always have a combined capital and surplus of at
least $10,000,000 as set forth in its most recent published annual report
of condition and any Successor Trustee shall have a combined capital and
surplus of at least $100,000,000.
The Company's address is:
MICROSTRATEGY INCORPORATED
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No. (000) 000-0000
40
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxx, Esq.
Facsimile No. (000) 000-0000
The Trustee's address is:
if by mail:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Executive Vice President
if by delivery or overnight courier:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Executive Vice President
SECTION 12.11. GOVERNING LAW, SUBMISSION TO JURISDICTION.
THE INTERNAL LAWS OF THE STATE OF DELAWARE SHALL GOVERN THIS INDENTURE
AND THE NOTES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
To the extent permitted by applicable law, the Company irrevocably
submits to the nonexclusive jurisdiction of the United States District
Court for the Eastern District of Virginia in any suit or proceeding based
on or arising under this Indenture and the Notes and irrevocably agrees
that all claims in respect of such suit or proceeding may be determined in
any such court. The Company irrevocably and fully waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The
Company hereby irrevocably designates and appoints CT Corporation System as
the authorized agent of the Company upon whom process may be served in any
such suit or proceeding (the "PROCESS AGENT"), it being understood that the
designation and appointment of the Process Agent as such authorized agent
shall become effective immediately without any further action on the part
of the Company. The Company represents to the Trustee that it has notified
the Process Agent of such designation and appointment and that the Process
Agent has accepted the same. The Company hereby irrevocably authorizes and
directs the Process Agent to accept such service. The Company further
agrees that service of process upon the Process Agent shall be deemed in
every respect effective service of process upon the Company in any such
suit or proceeding. Nothing herein shall affect the right of the Trustee or
any Holder to serve process in any other manner permitted by law. In the
event that CT Corporation System ceases to be
41
the Process Agent, the Company agrees that it will take any and all action,
including the execution and filing of any and all such documents and
instruments as may be necessary to validly designate and appoint an
alternate agent as Process Agent, and to maintain such designation and
appointment in full force and effect so long as the Company has any
outstanding obligations under this Indenture or the Notes, on terms that
are reasonably acceptable to the Trustee. To the extent that the Company
has or hereafter may acquire any immunity from jurisdiction of any court or
from any legal process (whether through service of notice, attachment prior
to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, the Company hereby irrevocably waives
such immunity in respect of its obligations hereunder and thereunder, to
the extent permitted by law.
SECTION 12.12. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or an Affiliate. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 12.13. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 12.14. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 12.15. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table, and headings of the
Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no
way modify or restrict any of the terms or provisions hereof.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
42
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
MICROSTRATEGY INCORPORATED,
as Issuer
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: counsel for MicroStrategy Incorporated
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Trustee
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
43
EXHIBIT A
(Face of Security)
7 1/2% SERIES A UNSECURED NOTE
Due five (5) years from date of first issuance of any 7 1/2% Series A
Unsecured Note
Cusip No. ____________
Note No. ____________ $__________
MICROSTRATEGY INCORPORATED
promises to pay to the order of ______________________________________________
or registered assigns, the principal sum of _____________________Dollars on
____________
Interest Payment Dates: _______________ and _______________
commencing _________________________________________
Record Dates: _______________ and _______________
Authenticated: Dated: ______________
_________________, MICROSTRATEGY INCORPORATED
as Trustee
By:________________________ By:_________________________
Authorized Officer Officer of the Company
Attest: _______________________
Officer of the Company
(SEAL)
A-1
(Back of Security)
7 1/2% SERIES A UNSECURED NOTE
Due five (5) years from date of first issuance of any 7 1/2% Series A
Unsecured Note
Capitalized terms used herein shall have the meanings ascribed to them in
that certain Indenture dated as of January 11, 2001 (the "Indenture") between
MicroStrategy Incorporated, a Delaware corporation (the "Company"), and American
Stock Transfer & Trust Company, a New York limited purpose trust company (the
"Trustee") unless otherwise indicated.
1. Interest and Principal. The Company promises to pay interest on the principal
----------------------
amount of this 7 1/2% Series A Unsecured Note due five (5) years from date of
first issuance of any 7 1/2% Series A Unsecured Note (the "Note") at a rate of
seven and one half percent (7 1/2%) per annum from the date of the commencement
of the Settlement Hearing in respect of a class-action lawsuit in the United
States District Court for the Eastern District of Virginia, entitled In re
MicroStrategy Incorporated Securities Litigation, Civil Action No. 00-473-A (the
"Interest Accrual Commencement Date") until maturity. The Company will pay
interest semiannually commencing after the date of issuance of the Note on dates
that shall be common for all 7 1/2% Series A Unsecured Notes and shall be the
date that is six (6) months after the issuance of the first 7 1/2% Series A
Unsecured Notes until maturity (each an "Interest Payment Date"), or if any such
day is not a Business Day, on the next succeeding Business Day. Principal of the
Notes will be due at maturity. Interest on the Notes will accrue and compound
annually from the Interest Accrual Commencement Date until the date of issuance
and thereafter will accrue semiannually. The Company shall pay interest
(including post-petition interest in any proceeding under Bankruptcy Law) on
overdue principal from time to time at the same rate per annum on the Notes then
in effect; it shall pay interest (including post-petition interest in any
proceeding under Bankruptcy Law) on overdue installments of interest (without
regard to any applicable grace periods) from time to time at the same rate to
the extent lawful. Interest will be computed on the basis of a 360 day year of
12 months of 30 days each.
2. Method of Payment. The Company will pay interest on the Notes by check or
-----------------
wire transfer (pursuant to wire instructions provided by the Holder no later
than 30 days prior to the applicable Interest Payment Date) to the Persons who
are registered Holders of Notes at the close of business on the record date next
preceding the Interest Payment Date. The Notes will be payable both as to
principal and interest at the office of the Paying Agent maintained for such
purpose within the City and State of New York. Interest shall not accrue and no
payment for interest shall be made on this Note if called for Redemption or
Mandatory Conversion pursuant to Section 5 or 6 of the Note with respect to any
period following the date of redemption or conversion. In the case of any Note
surrendered for redemption or conversion after the close of business on any
record date for the payment of an installment of interest but before the opening
of business on the next succeeding Interest Payment Date, such Note when
surrendered for conversion, must be accompanied by payment in an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
the Note so redeemed or converted. Accrued interest shall be paid on such
Interest Payment Date to the holder of this Note on such record date. If less
than all of this Note is to be converted at any time, the preceding provisions
shall apply only to the
A-2
portion so converted and interest shall accrue and be paid on the balance of
this Note in accordance with the provisions of Article II of the Indenture.
3. Presenting Agent, Paying Agent, Conversion Agent and Registrar. Initially,
--------------------------------------------------------------
the Trustee will act as Presenting Agent, Paying Agent, Conversion Agent and
Registrar. The Company may change any Presenting Agent, Paying Agent, Conversion
Agent or Registrar without notice to any Holder. The Company or any of its
subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under the Indenture. The terms of the
---------
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code xx.xx.
77aaa-77bbbb) (the "TIA"). The Notes are subject to all such terms, and Holders
are referred to the Indenture and the TIA for a statement of such terms. The
Notes are limited to eighty million five hundred thousand dollars and no cents
($80,500,000) in aggregate principal amount, except that, pursuant to the
Stipulation of Settlement, such amount may be increased, at the Company's
option, to account for the issuance of Notes in lieu of fractional shares of
Common Stock or Warrants (as defined below) to purchase fractional shares of
Common Stock.
5. Redemption. The Company, in its sole discretion, may redeem all or any of the
----------
Notes, in whole or in part, pro rata, at any time, without premium or penalty,
at a redemption price payable solely in cash equal to the principal of and any
accrued but unpaid interest on the Notes in accordance with Article III of the
Indenture.
6. Mandatory Conversion. The Company, in its sole discretion, may cause the
--------------------
Holder to convert all or any of the Notes, in whole or in part, pro rata,
without premium or penalty, into shares of Common Stock in accordance with
Article IV of the Indenture, provided, however, that nothing contained herein
-------- -------
shall be construed as conferring upon the Holders any rights whatsoever as
stockholders of the Company prior to such conversion. The number of shares of
Common Stock into which the Notes, or any part thereof, shall be converted shall
be such number of shares of Common Stock as may be obtained by dividing the
principal and any accrued but unpaid interest thereon to be converted by an
amount equal to eighty percent (80%) of the dollar-weighted average trading
price per share for all round lot transactions in the Common Stock on the Market
for the ten (10) trading days ending two (2) days prior to the date of the
written notice to the Trustee and issuance of a press release by the Company
describing the conversion. In the event of any such conversion, the Company
shall pay the holder cash in lieu of any fractional shares (valued in the same
manner as the shares actually issued) and shall pay, at the Company's option, in
lieu of any Note that would otherwise be reissued in an amount not evenly
divisible by $100, either cash or additional shares of Common Stock rounded up
to the next whole number of shares, or a combination of the two.
7. Possible Reduction in Principal Amount of and Interest on the Notes. Pursuant
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to the Stipulation of Settlement dated January 11, 2001, the Company is
obligated to pay all costs of notice and administration of all transactions
contemplated by the Stipulation of Settlement (exclusive of any attorneys' fees
and expenses, the "Settlement Costs"). If the Settlement Costs exceed $750,000,
then the Company shall pay such excess (the "Excess Amount") as and when
incurred but shall be entitled to a credit equal to the Excess Amount against
the installment of
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interest on the Notes next due, to be applied against the Notes then outstanding
on a pro rata basis. If the Excess Amount exceeds the total amount of interest
then due on the Notes, the Company may, in its sole discretion, either apply
such remaining Excess Amount against subsequent installments of interest on the
next subsequent interest payment date or reduce the principal amount of the
Notes outstanding on a pro rata basis by the balance of the Excess Amount not
previously applied, provided however, that this Note may not be reduced to an
amount not divisible by $100.
8. Obligation to Redeem/Convert. The Company shall not reduce the outstanding
----------------------------
principal amount of the Notes below sixty percent (60%) of their original
outstanding principal amount, unless it shall redeem or convert into Class A
Common Stock, without penalty or premium, the entire remaining outstanding
principal amount of the Notes pursuant to Section 5 or Section 6 hereof.
9. Change in Control. In the event of a Change in Control of the Company (as
-----------------
defined in Article VII of the Indenture), the resulting, surviving or transferee
entity shall expressly assume all of the Company's obligations in connection
with the Notes and the Indenture.
10. Denominations, Transfer, Exchange. The Notes are exempt from registration by
---------------------------------
virtue of an exemption pursuant to Section 3(a)(10) of the Securities Act of
1933, as amended (the "Securities Act"). In the event that such exemption from
registration is not available under the Securities Act, the Company shall take
such steps as are necessary either to cause the registration of the Notes under
the Securities Act or to obtain relief from the registration requirements of the
Securities Act by obtaining a "no action" letter from the U.S. Securities and
Exchange Commission (the "SEC"). The Notes shall be in registered form without
coupons in denominations of $100 and integral multiples of $100. The transfer of
Notes may be registered and Notes may be exchanged as provided in the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents, and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of
any Note being redeemed in part.
11. Persons Deemed Owners. The registered Holder of a Note may be treated as its
---------------------
owner for all purposes.
12. Amendments and Waivers. Without the consent of any Holder, the Company and
----------------------
the Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency; to provide for uncertificated Notes in
addition to or in place of certificated Notes; to make any change that would
provide any additional rights or benefits to the Holders or that does not
adversely affect the rights under the Indenture of any Holder; or to comply with
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA.
13. Defaults and Remedies. Events of Default are described in the Indenture and
---------------------
include default in payment when due of principal of and interest on the Notes.
If an Event of Default occurs and
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is continuing, the Trustee or the holders of at least thirty-five percent (35%)
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable immediately, except that in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes
shall become due and payable immediately without further action or notice.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power.
14. No Recourse Against Others. A director, officer, employee, incorporator or
--------------------------
stockholder of the Company, as such, shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated by the
--------------
manual signature of the Trustee or an authenticating agent.
16. Use of Notes to Exercise Warrants. Under the Stipulation of Settlement, the
---------------------------------
Company has issued certain warrants (the "Warrants") to purchase shares of
Common Stock. Pursuant to that certain Warrant Agreement between the Company and
American Stock Transfer & Trust Company, which governs the terms of the
Warrants, this Note may be used to pay the exercise price payable upon exercise
of Warrants (the "Exercise Price"). If a Holder elects to exercise a Warrant by
tendering this Note, the value of this Note for purposes of the payment of the
Exercise Price shall be the principal of and the accrued but unpaid interest on
the Note multiplied by 133%. In accepting payment in the form of a Note, the
Company shall reduce the principal and accrued but unpaid interest of this Note
pro rata when used as payment of the Exercise Price. In the event that upon
payment of all or part of the Exercise Price with this Note, the Holder is
entitled to the return of a new Note reflecting the remaining principal balance
hereof, the Company shall issue such new Note in a denomination of no less than
$100 and in integral multiples of $100, and will pay any remaining principal
amount, together with accrued and unpaid interest thereon, to the Holder in
cash.
17. Abbreviations. Customary abbreviations may be used in the name of a Holder
-------------
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
18. Subordination. This Note is subordinated to certain other indebtedness of
-------------
the Company as described more fully in the Indenture.
19. Governing Law. The internal laws of the State of Delaware shall govern this
-------------
Note without regard to its provisions of conflicts of laws.
The Company will furnish to any Holder upon written request and without charge a
copy of the Indenture. Requests may be made to the Trustee at the following
address:
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American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
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ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________
________________________________________________________________________________
________________________________________
________________________________________________________________________________
________________________________________
(Print or type assignee's name. address and zip code)
and irrevocably appoint _______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:
Your Signature:__________________________
(Sign exactly, as your name appears on the face of this Note)
Signature Guarantee.
Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
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