ILX Incorporated
and
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
--------------------
As Trustee
INDENTURE
Dated as of __________________, 1995
$10,000,000
(With an Option for an Additional $1,500,000)
10% Convertible Adjustable Secured Bonds, Due 2000
Reconciliation and tie between Trust Indenture Act of 1939, as amended,
and the Indenture dated as of ______________, 1995.
Trust Indenture Action Section Indenture Section
------------------------------ -----------------
Section 310(a)(1)..........................................................607B
Section 310(a)(2)..........................................................607B
Section 310(a)(3)................................................Not Applicable
Section 310(a)(4)................................................Not Applicable
Section 310(a)(5)..........................................................607B
Section 310(b)........................................................607A, 608
Section 311(a)...........................................................611(a)
Section 311(b)...........................................................611(b)
Section 311(b)(2).....................................................704(a)(2)
Section 312(a)......................................................701, 703(a)
Section 312(b)...........................................................702(b)
Section 312(c)...........................................................702(c)
Section 313(a)...........................................................704(a)
Section 313(b)...........................................................704(b)
Section 313(c)...................................................704(a), 704(b)
Section 313(d)...........................................................704(c)
Section 314(a)..............................................................703
Section 314(b).............................................................703A
Section 314(c)(1)...........................................................102
Section 314(c)(2)...........................................................102
Section 314(c)(3)...........................................................102
Section 314(d)(1).......................................................703A(d)
Section 314(d)(2).......................................................703A(c)
Section 314(e)..............................................................102
Section 315(a)...........................................................601(a)
Section 315(b)...................................................602, 704(a)(6)
Section 315(c)...........................................................601(b)
Section 315(d)...........................................................601(c)
Section 315(d)(1).....................................................601(a)(1)
Section 315(d)(2).....................................................601(c)(2)
Section 315(d)(3).....................................................601(c)(3)
Section 315(e)..............................................................514
Section 316(a)(1)(A)...................................................502, 512
Section 316(a)(1)(B)........................................................513
Section 316(a)(2)...........................................................513
Section 316(b).........................................................508, 902
Section 317(a)(1)......................................................503, 905
Section 317(a)(2)...........................................................504
Section 317(b).............................................................1003
Section 318(a)..............................................................113
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NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION...................................................... 1
Section 101. Definitions.................................. 1
Section 102. Compliance Certificates and Opinions......... 7
Section 103. Form of Documents Delivered to Trustee....... 8
Section 104. Acts of Bondholders.......................... 8
Section 105. Notices, etc., to Trustee and Company........ 9
Section 106. Notices to Bondholders; Waiver............... 9
Section 107. Effect of Headings and Table of Contents.... 10
Section 108. Successors and Assigns...................... 10
Section 109. Severability Clause......................... 10
Section 110. Benefits of Indenture....................... 10
Section 111. Governing Law............................... 10
Section 112. Legal Holidays.............................. 10
Section 113. Incorporation of and Conflict with Trust
Indenture Act.................................... 11
ARTICLE TWO
BOND FORM.................................................................. 11
Section 201. Forms Generally............................. 11
ARTICLE THREE
THE BONDS.................................................................. 11
Section 301. Title and Terms............................ 11
Section 302. Denominations.............................. 12
Section 303. Execution, Authentication and Delivery
and Dating....................................... 12
Section 304. Temporary Bonds............................ 13
Section 305. Registration, Transfer and Exchange........ 13
Section 306. Mutilated, Destroyed, Lost and
Stolen Bonds..................................... 15
Section 307. Payment of Interest: Interest Rights
Preserved........................................ 15
Section 308. Persons Deemed Owners...................... 17
Section 309. Cancellation............................... 17
Section 310. Authentication and Delivery
of Original Issue................................ 18
Section 311. Computation of Interest.................... 18
ARTICLE FOUR
SATISFACTION AND DISCHARGE................................................. 18
Section 401. Satisfaction and Discharge of Indenture.... 18
Section 402. Application of Trust Money................. 19
ARTICLE FIVE
REMEDIES................................................................... 19
Section 501. Events of Default.......................... 19
Section 502. Acceleration of Maturity; Recision
and Annulment.................................... 20
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee........................... 21
Section 504. Trustee May File Proofs of Claim........... 22
Section 505. Trustee May Enforce Claims Without
Possession of Bonds.............................. 23
Section 506. Application of Money Collection............ 23
Section 507. Limitation on Suits........................ 24
Section 508. Unconditional Right of Bondholder
to Receive Principal, Premium and Interest
and to Convert................................... 25
Section 509. Restoration of Rights and Remedies......... 25
Section 510. Rights and Remedies Cumulative............. 25
Section 511. Delay or Omission Not Waiver............... 25
Section 512. Control by Bondholders..................... 26
Section 513. Waiver of Past Defaults.................... 26
Section 514. Undertaking for Costs...................... 26
ARTICLE SIX
THE TRUSTEE................................................................ 27
Section 601. Certain Duties and Responsibilities........ 27
Section 602. Notice of Defaults......................... 28
Section 603. Certain Rights of Trustee.................. 28
Section 604. Not Responsible for Recitals or Issuance
of Bonds......................................... 29
Section 605. May Hold Bonds............................. 29
Section 606. Money Held in Trust........................ 30
Section 607. Compensation and Reimbursement............. 30
Section 607A. Disqualification: Conflicting Interests.... 30
Section 607B. Corporate Trustee Required; Eligibility.... 36
Section 608. Resignation and Removal; Appointment
of Successor..................................... 36
Section 609. Acceptance of Appointment by Successor..... 37
Section 610. Merger, Conversion or Succession
to Business...................................... 38
Section 611. Preferential Collection of Claims
Against Company.................................. 38
ARTICLE SEVEN
BONDHOLDERS' LISTS AND
REPORTS BY TRUSTEE AND COMPANY............................................. 42
Section 701. Company to Furnish Trustee Names and
Addresses of Bondholders........................ 42
Section 702. Preservation of Information: Communications
to Bondholders................................... 42
Section 703. Reports by Company......................... 43
Section 703A. Reports and Opinions of Fair Value
Regarding Security Interest...................... 44
Section 704. Reports by Trustee......................... 45
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE....................... 46
Section 801. Company May Consolidate, Etc.. on Certain
Terms............................................ 46
Section 802. Successor Corporation Substituted.......... 47
ARTICLE NINE
SUPPLEMENTAL INDENTURES.................................................... 47
Section 901. Supplemental Indentures without Consent
of Bondholders................................... 47
Section 902. Supplemental Indentures with Consent
of Bondholders................................... 48
Section 903. Execution of Supplemental Indentures....... 50
Section 904. Effect of Supplemental Indentures.......... 50
Section 905. Reference in Bonds to Supplemental
Indentures................ 50
Section 906. Effect on Senior Indebtedness.............. 50
ARTICLE TEN
COVENANTS.................................................................. 51
Section 1001. Payment of Principal, Premium and Interest 51
Section 1002. Maintenance of Office or Agency........... 51
Section 1003. Money for Bond Payments to be Held
in Trust......................................... 51
Section 1004. Payment of Taxes.......................... 53
Section 1005. Maintenance of Properties................. 53
Section 1006. Statement as to Compliance................ 53
Section 1007. Corporate Existence....................... 53
Section 1008. Insurance................................. 53
Section 1009. Life Insurance on Key Personnel........... 54
Section 1010. Particular Covenants as to Certain of
Company's Affairs................................ 54
Section 1011. Limitations on Dividends and Other
Distributions.................................... 54
Section 1012. Limitation on Liquidation................. 54
Section 1013. Overhead Allocation Limitation............ 54
Section 1014. Limitation on Change of Control........... 55
Section 1015. Waiver of Certain Covenants............... 55
ARTICLE ELEVEN
REDEMPTION OF BONDS........................................................ 56
Section 1101. Right of Redemption....................... 56
Section 1102. Applicability of Article.................. 56
Section 1103. Election to Redeem; Notice to Trustee..... 56
Section 1104. Selection by Trustee of Bonds to
be Redeemed...................................... 56
Section 1105. Notice of Redemption...................... 57
Section 1106. Deposit of Redemption Price............... 57
Section 1107. Bonds Payable on Redemption Date.......... 58
Section 1108. Bonds Redeemed in Part.................... 58
ARTICLE TWELVE
SUBORDINATION OF BONDS..................................................... 58
Section 1201. Agreement to Subordinate.................. 58
Section 1202. Distribution of Assets, Other than
Collateral Stock................................. 59
Section 1203. No Payment to Bondholders if Senior
Indebtedness is in Default....................... 59
Section 1204. Subrogation............................... 60
Section 1205. Obligation of Company Unconditional....... 60
Section 1206. Payments on Bonds Permitted............... 61
Section 1207. Effectuation of Subordination by Trustee.. 61
Section 1208. Notice to Trustee......................... 61
Section 1209. Rights of Holders of Senior Indebtedness
Not Impaired..................................... 62
Section 1210. Trustee Not Fiduciary for Holders of
Senior Indebtedness.............................. 62
Section 1211. Rights of Trustee as Holder of
Senior Indebtedness.............................. 62
Section 1212. Article Applicable to Paying Agents....... 62
Section 1213. Rights and Obligations Subject to Power
of Court......................................... 62
Section 1214. No Effect on Secured Interest............. 63
ARTICLE THIRTEEN
CONVERSION OF BONDS........................................................ 63
Section 1301. Conversion Privilege and Conversion Price. 63
Section 1302. Exercise of Conversion Privilege.......... 63
Section 1303. Fractions of Shares....................... 64
Section 1304. Adjustment of Conversion Price............ 64
Section 1305. Adjustment Based on Market Price.......... 65
Section 1306. Notice of Adjustments of Conversion Price. 66
Section 1307. Notice of Certain Corporate Action........ 66
Section 1308. Company to Reserve Common Stock........... 67
Section 1309. Taxes on Conversions...................... 67
Section 1310. Covenant as to Common Stock............... 67
Section 1311. Cancellation of Converted Bonds........... 67
Section 1312. Provisions in Case of Consolidation,
Merger or Sale of Assets......................... 68
ARTICLE FOURTEEN
SECURITY FOR PAYMENT OF BONDS.............................................. 68
Section 1401. Pledge of Collateral Stock................ 68
Section 1402. Event of Default and Remedies............. 69
Section 1403. Method of Realizing Upon the Collateral
Stock............................................ 69
Section 1404. Further Assurances........................ 69
Section 1405. Rights Regarding Stock.................... 70
THIS INDENTURE, dated as ______________, 1995, between ILX
Incorporated, an Arizona corporation, having its principal office at 0000 Xxxx
Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000 (the "Company"), and U.S. Trust Company
of California, N.A., as Trustee (the "Trustee")
------------------------------.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Bonds
by the Holders thereof, it is mutually covenanted and agreed, for the benefit of
the parties hereto and for the equal and proportionate benefit of all Holders of
the Company's 10% Convertible Adjustable Secured Bonds (the "Bonds") as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or
unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act of 1939, as amended, either directly or by reference
therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
(4) "This Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or amended by
one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof;
(5) all references in this instrument to designated
"Articles", "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of this instrument as
originally executed. The words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision; and
(6) the word "or" is not exclusive.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act" when used with respect to any Bondholder has the meaning
specified in Section 104.
"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 the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or through one or
more intermediaries, whether through the ownership of voting securities, by
contract or otherwise. The terms "affiliate," affiliation," "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board of Directors" means the board of directors of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day upon which banking institutions in the Cities of
Phoenix, Arizona, New York, New York, and Los Angeles, California are authorized
or required by law to close.
"Collateral Stock" means all of the common stock of Varsity Clubs of
America Incorporated, an Arizona corporation, currently issued, outstanding and
held in the name of the Company.
"Commission" means the Securities and Exchange Commission, or if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it, then the body performing such duties
on such date at such time.
"Common Stock" means the Company's Common Stock, no par value,
authorized at the date this Indenture is executed, and shares of any class or
classes resulting from any reclassification or reclassifications thereof;
provided, however, that warrants, options or other rights to purchase Common
Stock will not be deemed to be Common Stock.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request", "Company Order" and "Company Consent" mean,
respectively, a written request, order or consent signed in the name of the
Company by its President or a Vice President.
"Conversion Price" has the meaning specified in Section 1301, as
adjusted in accordance with the terms and conditions of Sections 1304 and 1305.
"Date of Issue", as to any Bond, means the date as of which such Bond
shall be dated when it is originally issued by the Company to the initial
purchaser (whether or not an underwriter), which date shall be the settlement
date upon which it was originally purchased by such initial purchaser as
designated in the written confirmation of purchase thereof delivered to the
purchaser, subject to any agreements with respect thereto as the Company may
enter into in connection with the sale of the Bonds, and, otherwise, the Date of
Issue shall be as designated in the Company Order requesting authentication and
delivery thereof.
"Bondholder" means a Person in whose name a Bond is registered in the
Bond Register, or the beneficial owner of such Bond if record ownership is held
by a nominee.
"Bond Register" and "Bond Registrar" have the respective meanings
specified in Section 305.
"Equity Securities" means shares of Common Stock, Preferred Stock or of
any other class or classes of capital stock of the Company, and any other
securities of the Company other than debt securities (whether or not such debt
securities are convertible into other securities of the company).
"Event of Default" has the meaning specified in Section 501.
"Holder" when used with respect to any Bond means a Bondholder.
"Indebtedness" means and includes all items of indebtedness which, in
accordance with generally accepted accounting principles, would be included in
determining total liabilities as shown on the liabilities sale of balance sheet
at such date, and in addition and including without limitation,
(1) any debt of the Company (i) for money borrowed or (ii)
evidenced by a note, debenture or similar instrument (including a
capitalized lease and a purchase money obligation) given in connection
with the acquisition of any property or assets, including securities;
(2) any debt of others described in the preceding clause (1)
which the Company has guaranteed or for which it is otherwise liable;
and
(3) any debt or other obligation of the Company to any lender
undertaken to secure or satisfy any obligation of the Company to
repurchase, replace, acquire or liquidate receivables held by such
lenders and arising from the sale by the Company or its Subsidiaries of
interval ownership interests; and
(4) any amendment, renewal, extension, restructuring,
refunding or replacement of any such debt described in (1), (2) and (3)
above.
"Independent" when used with respect to any specified Person means such
a Person who (1) does not have any material direct financial interest or any
material indirect financial interest in the Company, and (2) is not connected
with the Company as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate shall be furnished
to the Trustee, such Person shall be appointed by a Company Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning hereof.
"Initial Interest Accrual Date", as to any Bond, means that date from
which interest shall begin to accrue in connection with the original issuance of
such Bond, which shall be the Date of Issue.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Bonds.
"Maturity" when used with respect to any Bond means the date on which
the principal of such Bond becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Officer" means the President, any Executive Vice President, any Vice
President, the Treasurer, or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by an Officer of the
Company.
"Opinion of Counsel" means the written opinion of legal counsel, who
may (except as otherwise expressly provided in this Indenture) be legal counsel
for the Company.
"Outstanding" when used with respect to Bonds means, as of the date of
determination, all Bonds theretofore authenticated and delivered under this
Indenture, except:
(i) Bonds theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Bonds for whose payment or redemption money in the
necessary amount theretofore has been deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Bonds, provided that, if such
Bonds are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor reasonably
satisfactory to the Trustee has been made; and
(iii) Bonds in exchange for or in lieu of which other Bonds
have been authenticated and delivered pursuant to this Indenture;
provided, however, that solely for purposes of determining whether the Holders
of the requisite principal amount of Bonds Outstanding have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Bonds
owned, of record or beneficially, by the Company or any person controlled or
under common control with the Company shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Bonds which the Trustee knows, after due inquiry to be
so owned shall be so disregarded. Bonds so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Bonds. "Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Bonds on behalf of the
Company. The Trustee shall be the initial Paying Agent.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.
"Predecessor Bonds" of any particular Bond means every previous Bond
evidencing all or a portion of the same debt as that evidenced by such
particular Bond; and, for the purposes of this definition, any Bond
authenticated and delivered under Section 306 in lieu of a lost, destroyed or
stolen Bond shall be deemed to evidence the same debt as the lost, destroyed or
stolen Bond.
"Preferred Stock" means the Company's (i) Series A Preferred Stock,
$10.00 par value, (ii) the Company's Series B Preferred Stock, and (iii) the
Company's Series C Preferred Stock, taken together, in each case as authorized
at the date this Indenture is executed, whether voting or non-voting, and shares
of any class or classes resulting from any reclassification or reclassifications
thereof; provided, however, that warrants, options or other rights to purchase
Preferred Stock shall not be deemed to be Preferred Stock.
"Principal Corporate Trust Office" means the office of the Trustee
located at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000 (except
for surrenders, exchanges and payments on Bonds, which are care of the corporate
parent of Trustee) and such other offices at the Trustee may designate from time
to time.
"Quotation System" means the National Association of Securities
Dealers, Inc. Automated Quotation System or other over-the-counter securities
market quotation system then in use.
"Redemption Date" when used with respect to any Bond to be redeemed
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Bond to be redeemed
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the date specified in Article Three.
"Responsible Officer" when used with respect to the Trustee means the
Chairman or Vice-Chairman of the Board of Directors, the Chairman or
Vice-Chairman of the Executive Committee of the Board of Directors, the
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any
Trust Officer or Assistant Trust Officer, the Controller and any Assistant
Controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his or her knowledge of and familiarity
with the particular subject.
"Sale Price" means (a) the closing price for the Company's Common Stock
in the over-the-counter market as reported by a Quotation System, (b) if the
Common Stock is traded on a national securities exchange, the last reported sale
price or, if no sale takes place on a day, the average of the closing bid and
asked prices, for the Company's Common Stock on a national securities exchange
on which the Common Stock is traded, (c) if the Common Stock is not traded on a
national securities exchange or quoted by any Quotation System, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors or, if
there is no such market maker, the fair value of the Common Stock as determined
by an investment banking firm of nationally recognized standing selected in good
faith by the Board of Directors of the Company.
"Senior Indebtedness" means the principal of, premium (if any) and
interest on any and all Indebtedness of the Company (other than the Bonds)
incurred in connection with (i) the borrowing of money from or guaranteed to
banks, trust companies, leasing companies, insurance companies and other
financial institutions, including all Indebtedness to such institutions and
other specialized industry lenders to the extent it is secured by real estate
and/or assets of the Company, evidenced by bonds, debentures, mortgages, notes
or other securities or other instruments, (ii) purchase money Indebtedness
incurred to or assumed from or on behalf of a seller in connection with the
acquisition of assets by the Company, (iii) the borrowing of money from any
source (including from Affiliates of the Company) for the purpose of financing
timeshare arrangements and secured by receivables or timeshare interests
generated from the sales of interval ownership interests by the Company or any
Subsidiary, or (iv) notes payable arising from the acquisition of stock in Red
Rock Collection Incorporated and the acquisition of partnership interests in Los
Abrigados Partners Limited Partnership, in each instance under (i), (ii) and
(iii) incurred, assumed or guaranteed by the Company before, at or after the
date of execution of this Indenture, and all renewals, extensions and refundings
thereof, unless in the instrument creating or evidencing any such Indebtedness
or pursuant to which such Indebtedness is outstanding, it is provided that such
Indebtedness, or such renewal, extension or refunding thereof, is junior or is
not superior in right of payment to the Bonds."
"Special Record Date" for the payment of any Defaulted Interest (as
defined in Section 307) means a date fixed by the Trustee pursuant to Section
307.
"Stated Maturity" when used with respect to any Bond or any installment
of interest thereon means the date specified in such Bond as the fixed date on
which the principal of such Bond or such installment of interest is due and
payable.
"Subordinated Indebtedness" means any and all Indebtedness of the
Company created incurred, assumed, or guaranteed by the Company before, at, or
after the date of execution of this Indenture which, by the terms of the
instrument (or any supplemental instrument) creating or evidencing such
Indebtedness or pursuant to which such Indebtedness is outstanding, (a) it is
provided that such Indebtedness, or any renewal, extension, or refunding thereof
is expressly subordinate and junior in right of payment to the Bonds (whether or
not subordinated to any other Indebtedness or the Company) or (b) it is not, by
its terms, Senior Indebtedness.
"Subsidiary" means any corporation of which at least a majority of the
outstanding voting stock is owned, at the time, directly or indirectly, by the
Company, or by one or more Subsidiaries of the Company. For purposes of this
definition, "voting stock" means stock which ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.
"TIA" means the Trust Indenture Act of 1939, as amended.
"Trading Day" means, with respect to any security, each Monday,
Tuesday, Wednesday, Thursday, and Friday, and which is a Business Day other than
any day on which securities are not traded on the exchange or market on which
such security is traded.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Underwriters" shall mean those Persons identified as underwriters in
that certain Underwriting Agreement executed by the Company in connection with
the initial public offering of the Bonds.
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and Opinion of Counsel stating that in the opinion of such Counsel
all such conditions precedent, if any, have been complied with, except that in
the case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or request no additional certificate or opinion
need be furnished.
In the case of conditions precedent compliance with which is subject to
verification by accountants, the Company shall furnish to the Trustee a
certificate or opinion of an accountant, chosen and subject to Section 314
(c)(3) of the TIA.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each Person signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such Person, he
or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
Person, such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion, or, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Company may be based,
in so far as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, a copy of which shall be attached to any such
certificate or opinion of any such officer unless such officer has actual
knowledge that the certificate or opinion or representations with respect to the
matters upon which his or her opinion or representations with respect to the
matters upon which his or her certificate or opinion is base are erroneous. Any
such certificate or Opinion of Counsel may be based, in so far as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such Counsel
has actual knowledge that the certificate or opinion or representations with
respect to such matters are erroneous.
Section 104. Acts of Bondholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Bondholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Bondholders in person or by agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Bondholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 601) conclusive in
favor of the Trustee and the Company, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by an officer of a corporation, a member of a partnership, or agent
of any other entity, on behalf of such corporation, partnership or entity, such
certificate or affidavit shall also constitute sufficient proof of his or her
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
(c) The ownership of Bonds shall be proved by the Bond Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Bond shall bind every future Holder
of the same Bond and the Holder of every Bond issued upon the transfer thereof
or in exchange therefor or in lieu thereof, in respect of anything done or
suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Bond.
Section 105. Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Bondholders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with, the Trustee or the
Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee or the Company, as
appropriate, is mailed, first-class postage prepaid, as follows:
(1) if to the Trustee, at its Principal Corporate Trust Office;
(2) if to the Company, at the address of its principal office
specified in the first paragraph of this instrument;
or at any other address previously furnished in writing to the Trustee or the
Company, as appropriate, by the other.
Section 106. Notices to Bondholders; Waiver.
Where this Indenture or any Bond provides for notice to Bondholders of
any event, such notice shall be sufficiently given (unless otherwise herein or
in such Bond expressly provided) if in writing and mailed, first-class postage
prepaid, to each Bondholder affected by such event, at its address as it appears
in the Bond Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Bondholders is given by mail, neither the failure to mail such notice,
nor any defect in any such notice so mailed, to any particular Bondholder shall
affect the sufficiency of such notice with respect to other Bondholders. If the
notice or communication is mailed in the manner provided above, it is duly given
whether or not received by the addressee. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Bondholders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
Section 107. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 108. Successors and Assigns.
All covenants and agreements in this Indenture by the Company and the
Trustee shall bind their respective successors and assigns, whether so expressed
or not.
Section 109. Severability Clause.
In case any provision in this Indenture or in the Bonds 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 110. Benefits of Indenture.
Nothing in this Indenture or in the Bonds, express or implied, shall
give to any person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness and the Bondholders, any benefit
of any legal or equitable right, remedy or claim under this Indenture.
Section 111. Governing Law.
This Indenture and the Bonds shall be governed by and construed in
accordance with the laws of the State of Arizona, excluding those applicable to
conflicts of laws.
Section 112. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Bond shall not be a Business Day at any Place of Payment then
(notwithstanding any other provision of this Indenture or of the Bond) payment
of interest or principal (and premium, if any) of the Bonds need not be made at
such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date or Redemption Date, or at the Stated Maturity,
provided that no interest shall accrue for the period from and after such
Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
Section 113. Incorporation of and Conflict with 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. If any
provision hereof limits, qualifies or conflicts with the duties imposed by
subsection 318(c) of the TIA, the TIA-imposed duties shall control.
ARTICLE TWO
BOND FORM
Section 201. Forms Generally.
The Bonds and the certificates of authentication thereon shall be in
substantially the form of Exhibit A hereto, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon, as may be
required to comply with applicable law, the rules of any securities exchange, or
as may, consistently herewith, be determined by the Officers executing such
Bonds, as evidenced by their execution of the Bond. Any portion of the text of
any Bond may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Bond. The Company shall approve the form of the Bond
and any notation, legend or endorsement thereon; provided that the Bond shall
conform to the requirements of this Indenture.
The definitive Bonds shall be printed, lithographed or engraved or
produced by any combination of these methods in any manner permitted by the
rules of any securities exchange, all as determined by the Officers executing
such Bonds, as evidenced by their execution of such Indenture.
ARTICLE THREE
THE BONDS
Section 301. Title and Terms.
The aggregate principal amount of Bonds which may be authenticated and
delivered under this Indenture is limited to $10,000,000 (except for such
additional principal amounts, not to exceed $1,500,000, of Bonds issued pursuant
to an option granted to the Underwriters in the initial public offering of the
Bonds) except for Bonds authenticated and delivered upon transfer of, or in
exchange for, or in lieu of other Bonds pursuant to Section 304, 305, 306, 905
and 1108 hereof. Forthwith upon the execution and delivery of this Indenture, or
from time to time thereafter, Bonds up to a maximum aggregate principal amount
of $11,500,000 may be executed by the Company and delivered to the Trustee for
authentication, and shall thereupon be authenticated and delivered by the
Trustee upon Company Order, without any further action by the Company.
The Bonds shall be known and designated as the "10% Convertible
Adjustable Secured Bonds, Due 2000" of the Company. Their Stated Maturity shall
be _____________ , 2000 and they shall bear interest at the rate per annum
specified in the title of the Bonds, from the Initial Interest Accrual Date, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, as the case may be, payable annually on January 1 and July 1
in each year, commencing January 1, 1996, until the principal thereof is paid or
made available for payment.
The principal of (and premium, if any) and interest on the Bonds shall
be payable at the office or agency of the Company maintained for such purpose
("Place of Payment"), which may be at the Principal Corporate Trust Office of
the Trustee, or at such other location designated by the Company and maintained
pursuant to Section 1002.
The Bonds shall be redeemable as provided in Article Eleven.
The Bonds shall be subordinated in right of payment to Senior
Indebtedness of the Company as provided in Article Twelve.
The Bonds shall be convertible as provided in Article Thirteen.
The Bonds shall be secured by the Collateral Stock as provided in
Article Fourteen.
Section 302. Denominations.
The Bonds shall be issuable only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof in excess
of such minimum purchase.
Section 303. Execution, Authentication and Delivery and Dating.
The Bonds shall be executed on behalf of the Company by two Officers of
the Company. The signature of any of these Officers on the Bonds may be manual
or facsimile.
Bonds bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Bonds or did not hold
such offices at the date of such Bonds.
At any time from time to time after the execution and delivery of this
Indenture, the Company may deliver Bonds executed by the Company to the Trustee
for authentication; and the Trustee shall authenticate and deliver such Bonds as
in this Indenture provided and not otherwise.
All Bonds authenticated for original issuance by the Company to the
initial purchaser thereof shall be dated as of their respective Dates of Issue.
All Bonds authenticated for any other purpose hereunder shall be dated the date
of their authentication.
No Bond shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Bond a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Bond
shall be conclusive evidence, and the only evidence, that such Bond has been
duly authenticated and delivered hereunder and is entitled to the benefits of
the Indenture.
Section 304. Temporary Bonds.
Pending the preparation of definitive Bonds, the Company may execute,
and upon Company Order, the Trustee shall authenticate and deliver, temporary
Bonds which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any denomination, substantially of the tenor of the definitive
Bonds in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Bonds may determine as appropriate for temporary Bonds.
If temporary Bonds are issued, the Company will cause definitive Bonds
to be prepared without unreasonable delay. After the preparation of definitive
Bonds, the temporary Bonds shall be exchangeable for definitive Bonds upon
surrender of the temporary Bonds at the office or agency of the Company in a
Place of Payment, without charge to the Holder. Upon surrender for cancellation
of any one or more temporary Bonds the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Bonds of authorized denominations. Until so exchanged the temporary
Bonds shall in all respects be entitled to the same benefits under this
Indenture as definitive Bonds.
Section 305. Registration, Transfer and Exchange.
The Company shall maintain an office or agency where Bonds may be
presented for registration of transfer or for exchange ("Registrar"), an office
or agency where Bonds may be presented for payment ("Paying Agent") and an
office or agency where Bonds may be presented for conversion ("Conversion
Agent"). The Registrar shall keep a register (the "Bond Register") of the Bonds
and of their transfer and exchange. The Company initially appoints the Trustee
as Registrar, Paying Agent and Conversion Agent and the Trustee hereby accepts
such appointment. The Company may appoint one or more co-Registrars, one or more
additional Paying Agents and one or more additional Conversion Agents. The term
"Paying Agent" includes any additional paying agent, and the term "Conversion
Agent" shall include any additional conversion agent. Reference in this
Indenture to an "Agent" shall mean a Registrar, Paying Agent or Conversion
Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act as
such.
Upon surrender for registration of transfer of any Bond at the office
or agency of the Company in a Place of Payment, the Company shall execute, and
the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Bonds of any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Bonds may be exchanged for other Bonds of
any authorized denominations, and of a like aggregate principal amount, upon
surrender of the Bonds to be exchanged at such office or agency. Whenever any
Bonds are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Bonds which the Bondholder making
the exchange is entitled to receive.
All Bonds issued upon any registration of transfer or exchange of Bonds
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Bonds surrendered
upon such registration of transfer or exchange.
Every Bond presented or surrendered for transfer or exchange shall (if
so required by the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Bond Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any transfer or exchange of Bonds,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any transfer or
exchange of Bonds, other than exchanges pursuant to Section 304 or Section 905
or Section 1108 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange any Bond during a period beginning at the opening of business
fifteen (15) days before the day of the mailing of a notice of redemption of
Bonds selected for redemption under Section 1104 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer or
exchange of any Bond so selected for redemption in whole or in part, except the
unredeemed portion of any Bond being redeemed in part.
Section 306. Mutilated, Destroyed, Lost and Stolen Bonds.
If (i) any mutilated Bond is surrendered to the Trustee and the Trustee
receives evidence (including without limitation an affidavit from the Holder) to
its satisfaction of the destruction, loss or theft of any Bond, and (ii) there
is delivered to the Company and the Trustee such security or indemnity as may be
required by it to save the Trustee harmless, then, in the absence of notice to
the Company or the Trustee that such Bond has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Bond, a new Bond of like tenor and principal amount, bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Bond has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Bond, pay such Bond.
Upon the issuance of any new Bond under this Section, the Company and
the Trustee may require the payment of a sum sufficient to pay any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Bond issued pursuant to this Section in lieu of any
destroyed, lost or stolen Bond shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Bond shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of (and subject to all the limitations of rights set forth in
or with respect to) this Indenture equally and proportionately with any and all
other Bonds duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Bonds.
Section 307. Payment of Interest: Interest Rights Preserved.
Interest on any Bond which is payable, and is punctually paid to the
Paying Agent or duly provided for, on any Interest Payment Date shall be paid to
the Person in whose name that Bond (or one or more Predecessor Bonds) is
registered at the close of business on the Regular Record Date for such payment.
Any interest on any Bond which is payable, but is not punctually paid
to the Paying Agent or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder; and, except as hereinafter provided, such Defaulted Interest may be
paid by the Company, at its election in each case, as provided in Section 307(1)
or Section 307(2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Bonds (or their respective
Predecessor Bonds) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Bond and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as provided herein. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than twenty-five (25) nor less than
ten (10) days prior to the date of the proposed payment and not
less than fifteen (15) days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefore to be mailed,
first-class postage prepaid, to each Bondholder at his address as it
appears in the Bond Register, not less than ten (10) days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefore having been mailed by
the Trustee as aforesaid, such Defaulted Interest shall be paid from
the amounts so deposited by the Company to the Persons in whose names
the Bonds (or their respective Predecessor Bonds) are registered on
such Special Record Date and shall no longer be payable pursuant to
Section 307(2).
(2) The Company may make payment of any Defaulted Interest on
the Bonds in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Bonds may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such payment shall be deemed
practicable by the Trustee (provided that it is understood that the
Trustee has no duty to verify the legality, or the compliance with any
rules of any securities exchange of, any payment method selected by the
Company).
If any installment of interest whose Stated Maturity is on or prior to
the Redemption Date for any Bonds called for redemption pursuant to Article
Eleven is not paid or duly provided for on or prior to the Redemption Date in
accordance with the foregoing provisions of this Section, such interest shall be
payable as part of the Redemption Price of such Bonds.
Subject to the foregoing provisions of this Section, each Bond
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Bond shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Bond.
All payments of interest on the Bonds to the person entitled thereto,
whether made by the Trustee or any Paying Agent, as authorized pursuant to this
Indenture, shall be made (subject to collection) by check mailed to the address
of the person entitled thereto as such address shall appear on the Bond
Register, unless the Trustee determines such methods to be inappropriate in the
circumstances.
The Regular Record Date referred to in this Section for the payment of
interest payable, and punctually paid or duly provided for, on any Interest
Payment Date shall be the December 15 or June 15 (whether or not a Business Day)
next preceding such Interest Payment Date.
In the case of any Bond which is converted after any Regular Record
Date but on or before the next Interest Payment Date, interest whose Stated
Maturity is on such Interest Payment Date shall be payable on such Interest
Payment Date notwithstanding such conversion, and such interest (whether or not
punctually paid or duly provided for) shall be paid to the Person in whose name
that Bond (or one or more Predecessor Bonds) is registered at the close of
business on such Regular Record Date.
Section 308. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Bond is registered on the Bond Register
as the owner of such Bond for the purpose of receiving payment of principal of
(and premium, if any) and (subject to Section 307) interest on, such Bond and
for all other purposes whatsoever, whether or not such Bond be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
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
Bondholders.
Section 309. Cancellation.
All Bonds surrendered for payment, redemption, registration of
transfer, exchange or conversion shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee and, if not already canceled, shall be
promptly canceled by it. The Company may at any time deliver to the Trustee for
cancellation any Bonds previously authenticated and delivered hereunder which
the Company may have acquired in any manner whatsoever, and all Bonds so
delivered shall be promptly canceled by the Trustee. No Bonds shall be
authenticated in lieu of or in exchange for any Bonds canceled as provided in
this Section except as expressly permitted by this Indenture. All canceled Bonds
held by the Trustee shall be disposed of as directed by a Company Order.
Section 310. Authentication and Delivery of Original Issue.
Forthwith upon the execution and delivery of this Indenture, or from
time to time thereafter, Bonds up to the aggregate principal amount of
$10,000,000 (except for such additional principal amounts not to exceed
$1,500,000 of Bonds issued pursuant to an option granted to the Underwriters in
the initial public offering of the Bonds) may be executed by the Company and
delivered to the Trustee for authentication and delivered by the Trustee upon
Company Order, without any further action by the Company.
Section 311. Computation of Interest.
Interest on the Bonds shall be computed on the basis of a 360-day year
of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Bonds herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Bonds theretofore authenticated and delivered
(other than (i) Bonds which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 306, and (ii) Bonds for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee or for cancellation; or
(B) all such Bonds not theretofore delivered to the
Trustee canceled or for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
(1) year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the stated
purpose an amount sufficient to pay and discharge the entire indebtedness on
such Bonds not theretofore delivered to the Trustee canceled or for
cancellation, for principal (and premium, if any) and interest to the date of
such deposit (in the case of Bonds which have become due and payable), or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company, including sums payable to the Trustee
under Section 607 hereof; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 shall survive, and,
if the money shall have been deposited with the Trustee pursuant to this
subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.
Section 402. Application of Trust Money.
All money deposited with the Trustee pursuant to Section 401 shall be
held in trust and applied by it, in accordance with the provisions of the Bonds
and this Indenture, to the payment either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee. Such money shall be segregated from other funds held by the Trustee.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default," wherever used herein means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon any Bond when
it becomes due and payable, and continuance of such default for a
period of thirty (30) days (whether or not such payment is prohibited
under the provisions of Article Twelve hereof); or
(2) default in the payment of the principal of (or premium, if
any, on) any Bond at its Maturity (whether or not such payment is
prohibited under the provisions of Article Twelve hereof); or
(3) material default in the performance, or breach, of any
material covenant or warranty of the Company in this Indenture (other
than a covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with), and
continuance of such material default or breach for a period of sixty
(60) days after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least a majority in principal amount of the Outstanding
Bonds, a written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(4) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of or in
respect of the Company under the Federal Bankruptcy Code or any other
applicable Federal or State law, or appointing a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Company or of a majority of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of sixty (60) consecutive
days; or
(5) the institution by the Company of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under the Federal Bankruptcy Code, or any other applicable
Federal or State law, or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or of
any substantial part of its property, or the making by it of a general
assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due,
or the taking of corporate action by the Company in furtherance of any
such action.
Section 502. Acceleration of Maturity; Recision and Annulment.
If an Event of Default occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than a majority in principal amount
of the Bonds Outstanding may declare the principal amount of all the Bonds to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Bondholders), and upon any such declaration such entire
principal amount and all interest shall become immediately due and payable.
Collection actions or judicial proceedings may be commenced as set forth in
Section 503.
At any time after such a declaration has been made and before a
judgment or decree for payment has been obtained by the Trustee as hereinafter
in this Article provided, the Trustee or the Holders of a majority in principal
amount of the Bonds Outstanding, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee
a sum sufficient to pay
(A) all overdue installments of interest on all
Bonds,
(B) the principal (and premium,if any) of any Bonds
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the
Bonds,
(C) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest at the
rate borne by the Bonds, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel and the Holders and their agents and counsel if such
Holders have initiated action in accordance with this Section
502; and
(2) all Events of Default, other than the non-payment of the
principal amount of Bonds which have become due solely by such
acceleration, have been cured, or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default occurs in the payment of any installment of
interest on any Bond when such interest becomes due and payable and
such default continues for a period of thirty (30) days, or
(2) default occurs in the payment of the principal of any Bond
at its Maturity thereof,
the Company will, upon demand of the (i) Trustee or (ii) Holders of not less
than a majority in principal amount of the Bonds Outstanding, pay to the
Trustee, for the benefit of the Holders of such Bonds, the whole amount then due
and payable upon such Bonds for principal (and premium, if any) and interest,
with interest upon the overdue principal and, to the extent that payment of such
interest shall be legally enforceable, upon overdue installments of interest, at
the rate borne by the Bonds; and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of (i) the Trustee
and its counsel or (ii) such Holders as set forth herein, their respective
agents and counsel, as the case may be, if judicial proceedings are commenced.
If the Company fails to pay such amount forthwith upon such demand, (i)
the Trustee, in its own name and as trustee of an express trust, or (ii) Holders
of not less than a majority in principal amount of the Bonds Outstanding, on
behalf of all Holders, may institute a judicial proceeding for the collection of
the sums so due and unpaid, and may prosecute such proceeding to judgment or
final decree, and may enforce the same against the Company and collect monies
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Bonds, wherever situated.
The Trustee or the Holders of not less than a majority in principal amount of
the Bonds Outstanding may also elect at any time to accelerate the entire
principal amount pursuant to Section 502 and then may institute judicial
proceedings or amend its existing judicial proceedings for the collection of the
entire amount due and owning as set forth herein.
If an Event of Default occurs and is continuing, the Trustee may, in
its discretion, proceeding to protect and enforce its rights and the rights of
the Bondholders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
Holders of not less than a majority in principal amount of the Bonds
Outstanding, on behalf of all Holders, may initiate such appropriate judicial
proceedings in the same manner as the Trustee. The Trustee or the Holders
initiating action hereunder, as the case may be, shall be reimbursed for the
reasonable costs of collection incurred as provided for above in this Section
503.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Bonds
or the property of the Company or of such other obligor or the creditors, the
Trustee (irrespective of whether the principal of the Bonds shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of overdue principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Bonds and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Bondholders allowed in such judicial proceeding, and
(ii) to collect and receive any monies or other property
payable or deliverable on any such claims and to disburse the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceedings as hereby authorized by
each Bondholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Bondholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Bondholder any plan
of reorganization, arrangement, adjustment or composition affecting the Bonds or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Bondholder in any such proceeding.
Section 505. Trustee May Enforce Claims Without Possession of Bonds.
All rights of action and claims under this Indenture or Bonds may be
prosecuted and enforced by the Trustee without the possession of any of the
Bonds or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Bonds in respect of which such judgment has been removed.
Section 506. Application of Money Collection.
Any money collected by the Trustee or the Holders directly pursuant to
this Article shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money on account of
principal (or premium, if any) or interest, upon presentation of the Bonds and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid
upon the Bonds for costs of collection, principal
(and premium, if any) and interest, in respect of
which or for the benefit of which such money has been
collected, ratably, without preference on priority of
any kind, according to the amounts due and payable on
such Bonds for principal (and premium, if any) and
interest, respectively; and
THIRD: To the payment of the remainder, if any, to the
Company or any other person lawfully entitled
thereto.
Section 507. Limitation on Suits.
(a) Prior to the declaration of acceleration provided for in Section
502 hereof, no Holder of any Bond shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than a majority in principal
amount of the Outstanding Bonds shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity, consistent with typical arrangements with other
similar indenture trustees, against the costs, expenses and liabilities
to be incurred in compliance with such request;
(4) the Trustee for thirty (30) days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceedings; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such thirty (30) day period by the
Holders of a majority in principal amount of the Outstanding Bonds;
it being understood and intended that no one or more Holders of Bonds shall have
any right in any manner whatever by virtue or, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Bonds, or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the Holders
of Bonds.
(b) After the declaration of acceleration provided for in Section 502
hereof, Holders of a majority or more in principal amount of Outstanding Bonds
may institute judicial proceedings in respect to such Event of Default which
triggers the declaration of acceleration in their own name in the manner
provided in Section 503 if the Trustee has not instituted such proceedings
within sixty (60) days after such declaration, it being understood that such
Holders shall not have any right in the matter whatever by virtue of, or by
availing of, any provisions of this Indenture to affect, disturb or prejudice
the rights of any Holders of Bonds, or to obtain or to seek to obtain priority
or preference over any other Holders or to enforce any rights under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all Holders of Bonds.
Section 508. Unconditional Right of Bondholder to Receive Principal,
Premium and Interest and to Convert.
Notwithstanding any other provision in this Indenture, but subject to
the provision of Article Twelve, the Holder of any Bond shall have the right
which is absolute and unconditional to receive payment of the principal of (and
premium, if any) and (subject to Section 307) interest on such Bond on the
respective Stated Maturities expressed in such Bond (or, in the case of
redemption or repurchase, on the Redemption Date or Repurchase Date, as the case
may be), and to convert such Bond in accordance with Article Thirteen and to
institute suit for the enforcement of any such payment and right to convert, and
such right shall not be impaired without the consent of such Holder, except as
to postponement of interest under Section 512 hereof.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Bondholder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Bondholder, then and in every such case, the Company, the
Trustee and the Bondholders shall, subject to any determination in such
proceeding and the payment of or reimbursement to the Company of any costs and
expenses of the Company associated therewith, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Bondholders shall continue as though no such
proceeding had been initiated.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Bonds in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Bondholders is intended to be exclusive of any other right or remedy and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion of any other
appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Bond to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Bondholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Bondholders, as the
case may be.
Section 512. Control by Bondholders.
The Holders of a majority in principal amount of the Outstanding Bonds
shall have the right to 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 the Trustee, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction,
(3) subject to Section 601, the Trustee need not take any
action which might be prejudicial to the Holders not consenting, or
that might expose the Trustee to personal expense or liability, or if
the Trustee does not have sufficient indemnification against loss or
expense.
and further provided, that Holders of not less than seventy-five percent (75%)
in principal amount of Bonds Outstanding may consent to a postponement of any
interest payment for a period not exceeding three (3) years from its due date.
Section 513. Waiver of Past Defaults.
The holders of not less than a majority in principal of the Bonds
Outstanding specified in Article Five may on behalf of the Holders of all the
Bonds waive any past default hereunder and its consequences, except a default in
respect of a covenant or provision hereof which under Section 902 cannot be
modified or amended without the consent of the Holder of each Outstanding Bond
affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereof.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Bond by his
acceptance thereof shall be deemed to have agreed, that any court may, in its
discretion, require, 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,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the cost of such suit, and that such court may, in
its discretion, assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee; to any suit instituted by any Bondholder, or group of Bondholders,
holding in the aggregate more than (i) twenty-five percent (25%) in principal
amount of the Outstanding Bonds if commenced prior to acceleration; or (ii) five
percent (5%) in principal amount of Outstanding Bonds if commenced after
acceleration; or to any suit instituted by any Bondholder for the enforcement of
the payment of the principal of (or premium, if any) or interest on any Bond on
or after the respective Stated Maturities expressed in such Bond (or, in the
case of redemption, on or after the Redemption Date) on the Repayment Date. This
Section is in lieu of Section 315(e) of the TIA.
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) The Trustee undertakes to perform its duties hereunder in
good faith, but only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
the Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(b) In any case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and power 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.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority (or any other amount that may
direct the Trustee in accordance with this Indenture) in principal
amount of the Outstanding Bonds relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee under this
Indenture; and
(4) no provision of this Indenture shall require the Trustee
to expand or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or power, if it shall have good faith
belief that repayment of such funds or adequate indemnity as required
under this Indenture against such risk or liability is not reasonably
assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 602. Notice of Defaults.
Within ninety (90) days after the occurrence of any default hereunder,
the Trustee shall transmit by mail to all Bondholders and otherwise in
accordance with Section 313(c) of the TIA, as their names and addresses appear
in the Bond Register, notice of such default hereunder known to a Responsible
Officer of the Trustee, unless such default shall have been cured or waived;
provided, however, that except in the case of a default in the payment of the
principal (or premium, if any) or interest on any Bond, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Bondholders. For the purpose of this Section,
the term "default" means any event which is, or after notice of lapse of time or
both would become, an Event of Default.
Section 603. Certain Rights of Trustee.
Except as otherwise provided in Section 601:
(a) the Trustee may relay and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture or other paper or document reasonable believed
by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of the Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or committing any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered, or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Bondholders pursuant to this Indenture,
unless such Bondholders shall have offered to the Trustee reasonable
indemnity, consistent with typical arrangements with other similar
indenture trustees against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;
and
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled at a mutually agreeable time and place to examine
the books, records and premises of the Company, personally or by agent
or attorney.
Section 604. Not Responsible for Recitals or Issuance of Bonds.
The recitals contained herein and in the Bonds, except the certificates
of authentication, shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Bonds. The Trustee shall not be accountable for the use or application by the
Company of Bonds or the proceeds thereof.
Section 605. May Hold Bonds.
The Trustee, any Paying Agent, Conversion Agent, Bond Registrar or any
other agent of the Company, in its individual or any other capacity, may become
the owner or pledgee of Bonds, and, subject to Section 611, if operative, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Conversion Agent, Bond Registrar or such other Agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder shall be segregated from
other funds. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Company.
Section 607. Compensation and Reimbursement.
The Company agrees:
(1) to pay the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) in an amount agreed
on between the Company and Trustee;
(2) except as otherwise provided herein, to reimburse the
Trustee as agreed between the Company and the Trustee upon its request
for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustee's
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance of administration of this Indenture, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder, upon final adjudication of the right to such
indemnification from the Company.
Section 607A. Disqualification: Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section, it shall, within ninety (90) days after ascertaining
that it has such conflicting interest, and if the Default as defined in this
Section, to which such conflict of interest relates has not been cured or waived
or otherwise eliminated before the end of such ninety (90) day period, the
Trustee shall either eliminate such conflicting interest or resign in the manner
and with the effect hereinafter specified in Article Six, and the Company shall
take prompt steps to have a successor Trustee apposited in the manner provided
herein.
(b) In the event that the Trustee shall fail to comply with the
provisions of subsection (a) of this Section 607A, the Trustee shall, within ten
(10) days after the expiration of such ninety (90) day period, transmit by mail
to all Bondholders, as their names and addresses appear in the Bond Register,
notice of such failure, in the manner and to the extent provided in Section
313(c) of the TIA.
(c) For the purposes of this Section, the Trustee shall be deemed to
have a conflicting interest if the Bonds are in default and
(1) the Trustee is trustee under another indenture under which
any other securities, or certificates of interest or participation in
any other securities, of the Company are outstanding, or is Trustee of
more than one outstanding series of Bonds, as defined in this Section,
under a single indenture of the Company, unless (A) such other
indenture is a collateral trust indenture under which the only
collateral consists of securities issued under such other indenture, or
(B) such other indenture is a collateral trust indenture under which
the only collateral consists of the Bonds, provided that there shall be
excluded from the operation of this paragraph any indenture or
indentures under which such securities, or certificates of interest or
participation in other securities, of the Company are outstanding, if
(i) this Indenture and such other indenture or
indentures and all series of securities issuable thereunder
are wholly unsecured and such other indenture or indentures
(and such series as are specifically described in the
Indenture) are hereafter qualified under TIA, unless the
Commission shall have found and declared by order pursuant to
Section 305(b) or Section 307(c) of TIA that differences exist
between the provision of this Indenture and the provisions of
such other indenture or indentures (or such series) which are
so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as such
under this Indenture and such other indenture or indentures,
or
(ii) the Company shall have sustained the burden of
proving, on application to the Commission and after
opportunity for hearing thereon, that trusteeship under this
Indenture and such other indenture or indentures or under more
than one outstanding series under such a single indenture is
not so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as such
under one of such indentures or with respect to such series;
(2) the Trustee or any of its directors or executive officers
is an underwriter for the Company or an obligor upon the Bonds;
(3) the Trustee directly or indirectly controls or is directly
or indirectly controlled by or is in direct or indirect common control
with the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers
is a director, officer, partner, employee, appointee or representative
of the Company, or of an underwriter (other than the Trustee itself)
for the Company who is currently engaged in the business of
underwriting, except that (a) one individual may be a director and/or
an executive officer, or both, of the Trustee and a director or an
executive officer, or both, of the Company but may not be at the same
time an executive officer of both the Trustee and the Company; (b) if
and so long as the number of directors of the Trustee is more than
nine, one individual may be a director or an executive officer, or
both, of the Trustee and a director of the Company; and (c) the Trustee
may be designated by the Company or by any underwriter for the Company
to act in the capacity of transfer agent, registrar, custodian, paying
agent, fiscal agent, escrow agent, or depositary, or in any other
similar capacity, or subject to the provisions of paragraph (1) of this
subsection, to act as trustee, whether pursuant to an indenture or
otherwise;
(5) ten percent (10%) or more of the voting securities of the
Trustee is beneficially owned either by the Company or by any director,
partner, or executive officer thereof, or twenty percent (20%) or more
of such voting securities is beneficially owned, collectively, by any
two or more of such persons; or ten percent (10%) or more of the voting
securities of the Trustee is beneficially owned either by an
underwriter for the Company or by any director, partner or executive
officer thereof, or is beneficially owned, collectively, by any two or
more such persons;
(6) the Trustee is the beneficial owner of, or holds a
collateral security for an obligation which is in default (as
hereinafter in this subsection defined), (i) five percent (5%) or more
of the voting securities, or ten percent (10%) or more of any other
class or security, of the Company not including the Bonds issued under
this Indenture and securities issued under any other indenture or
indentures under which the Trustee is also trustee; or (ii) ten percent
(10%) or more of any class of security of an underwriter for the
Company;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection defined), five percent (5%) or more of
the voting securities of any person who, to the knowledge of the
Trustee, owns ten percent (10%) or more of the voting securities, of,
or controls directly or indirectly or is under direct or indirect
common control with the Company.
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection defined) ten percent (10%) or more of
any class of security of any person who, to the knowledge of the
Trustee, owns fifty percent (50%) or more of the voting securities of
the Company; or
(9) the Trustee owns, on the date of Default on the Bonds
(exclusive of any period of grace or requirement of notice) or any
anniversary of such Default which such Default on the Bonds remains
outstanding, in the capacity of executor, administrator, testamentary
or inter vivos trustee, guardian, committee or conservator, or in any
other similar capacity, an aggregate of twenty-five percent (25%) or
more of the voting securities, or of any class of security, of any
person, the beneficial ownership of a specified percentage of which
would have constituted a conflicting interest under paragraphs (6), (7)
or (8) of this subsection. As to any such securities of which the
Trustee acquired ownership through becoming executor, administrator, or
testamentary trustee of an estate which included them, the provision of
the preceding sentence shall not apply, for a period of two (2) years
from the date of such acquisition, to the extent that such securities
included in such estate do not exceed twenty-five percent (25%) of such
voting securities or twenty-five percent (25%) of any such class of
security. Promptly after the date of any such Default upon the Bonds
and annually in each succeeding year that the Bonds remain in Default,
the Trustee shall make a check of its holdings of such securities in
any of the above-mentioned capacities as of such dates. If the Company
fails to make payment in full of the principal of, or the premium, if
any, or interest on, any of the Bonds when and as the same becomes due
and payable, and such failure continues for thirty (30) days
thereafter, the Trustee shall make a prompt check of its holdings of
such securities in any of the above-mentioned capacities as of the date
of expiration of such thirty (30) day period, and after such date,
notwithstanding the foregoing provisions of this paragraph, all such
securities so held by the Trustee, with sole or joint control over such
securities vested in it shall, but only so long as such failure shall
continue to be considered as though beneficially owned by the trustee
for the purposes of paragraphs (6), (7) and (8) of this subsection; or
(10) except under circumstances described in paragraphs (1),
(3), (4), (5) or (6) of Section 611(b) hereof, the Trustee shall be or
shall become a creditor of the Company.
Except in the case of a default in the payment of the principal of or interest
on the Bonds, the Trustee shall not be required to resign as provided by this
subsection if the Trustee shall have sustained the burden of proving, on
application to the Commission and after opportunity of hearing thereon, that (i)
the default under the Indenture may be cured or waived during a reasonable
period and under procedures described in such application, and (ii) a stay of
the Trustee's duty to resign will not be inconsistent with the interests of the
Holder. The filing of such application shall automatically stay the performance
of the duty to resign until the Commission orders otherwise.
The specification of percentages in paragraphs (5) to (9) inclusive, of
this subsection, shall not be construed as indicating that the ownership of such
percentages of the securities of a person is or is not necessary or sufficient
to constitute direct or indirect control for the purposes of paragraph (3) or
(7) of this subsection.
For the purpose of paragraph (1) of this subsection, the terms "series
or securities" or "series" means a series, class or group of securities issuable
under that indenture or indentures pursuant to whose terms holders of one such
series may vote to direct the indenture trustee, or otherwise take action
pursuant to a vote of such holders, separately from holders of another such
series; provided, that "series of securities" or "series" shall not include any
series of securities issuable under an indenture if all such series rank equally
and are not wholly unsecured.
For purposes of paragraphs (6), (7), (8) and (9) of this subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay monies lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (ii) an obligation shall be deemed to be "in default"
when a default in payment of principal shall have continued for thirty (30) days
or more and shall not have been cured; and (iii) the Trustee shall not be deemed
to be the owner or holder of (A) any security which it holds as collateral
security, as trustee or otherwise, for an obligation which is not in default as
defined in clause (ii) above, or (B) any security which it holds as collateral
under this Indenture, irrespective of any default thereunder, or (C) any
security which it holds as agent for collection, or as custodian, escrow agent,
or depositary, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) the term "underwriter" when used with reference to the
Company means every person who, within one year prior to the time as of
which the determination is made, was an underwriter of any security of
the Company outstanding at such time.
(2) The term "director" means any director of a corporation or
any individual performing similar functions with respect to any
organization whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization, or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only
a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trustee, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or holder of such security
are presently entitled to vote in the direction or management of the
affairs of a person.
(5) The term "Company" means an obligor upon the Bonds.
(6) The term "executive officer" means the president, every
vice president, every trust officer, the cashier, the secretary, and
the treasurer of a corporation, and any individual customarily
performing similar functions with respect to any organization whether
incorporated or unincorporated, but shall not include the chairman of
the board of directors.
(e) The percentages of voting securities and other securities specified
in this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the
Trustee, the Company or any person referred to in this Section (each of
whom is referred to as a "person" in this paragraph) means such amount
of the outstanding voting securities of such person as entitles the
holder or holders thereof to cast such specified percentage of the
aggregate votes which the holders of all the outstanding voting
securities of such person are entitled to cast in the direction or
management of the affairs of such person.
(2) A specified percentage of a class of securities of a
person means such percentage of the aggregate amount of securities of
the class outstanding.
(3) The term "amount" when used in regard to securities, means
the principal amount if relating to evidences of indebtedness, the
number of shares if relating to capital shares, and the number of units
if relating to any other kind of security.
(4) The term "outstanding" means issued and not held by or for
the account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund
relating to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund
relating to another class of securities of the issuer, if the
obligation evidenced by such other class of securities is not
in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as
security for an obligation of the issuer not in default as to
principal or interest or otherwise; and
(iv) securities held in escrow if placed in escrow by
the issuer thereof; provided, however, that any voting
securities of an issuer shall be deemed outstanding if any
person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or holders
thereof substantially the same rights and privileges; provided,
however, that, in the case of secured evidences of indebtedness, all of
which are issued under a single indenture, differences in the interest
rates or maturity dates of various series thereof shall not be deemed
sufficient to constitute such series different classes and provided,
further, that, in the case of unsecured evidences of indebtedness,
differences in the interest rates or maturity dates thereof shall not
be deemed sufficient to constitute them securities of different
classes, whether or not they are issued under a single indenture.
Section 607B. Corporate Trustee Required; Eligibility.
There shall at times be a Trustee hereunder which shall be a national
association, bank or corporation organized and doing business under the laws of
the United States of America or of any State thereof, or the District of
Columbia, authorized under such laws to exercise corporate trust powers, having
(or the holding company having) a combined capital and surplus of at least
Fifteen Million Dollars ($15,000,000), subject to supervision or examination by
Federal or State authority, and having its principal office in the places
specified above. If such national association, bank, holding company or
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
national association, bank, holding company or corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. Neither the Company, nor any person directly or
indirectly controlling, controlled by, or under common control with the Company
shall serve as Trustee. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
Section 608. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 609.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within thirty (30) days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by (i) Act of the Company by
a Board Resolution, or (ii) an act by Holders of sixty-six and two-thirds
percent (66-2/3%) in principal amount of the Outstanding Bonds, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee, after this Indenture shall been qualified
under TIA, shall fail to comply with Section 607A after written request
therefor by the Company or by any Bondholder who has been a bona fide
Holder of a Bond for at least six months, or
(2) the Trustee shall cease to be eligible under Section 607B
and shall fail to resign after written request therefor by the Company
or by any such Bondholder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, subject to Section 514, any Bondholder who has been a
bona fide Holder of a Bond for at least six months may, on behalf of himself or
herself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution shall promptly appoint a successor Trustee. If,
within one (1) year after such resignation, removal or incapability, or the
occurrence of such vacancy, the Company has not appointed a successor Trustee, a
successor Trustee shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Bonds delivered to the Company and the
retiring Trustee. In either event, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Bondholders and
accepted appointment in the manner hereinafter provided, any Bondholder who has
been a bona fide Holder of a Bond or at least six (6) months, may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of
Bonds as their names and addresses appear in the Bond Register. Each notice
shall include the name of the successor Trustee and the address of its Principal
Corporate Trust Office.
Section 609. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed, or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee, and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 610. Merger, Conversion or Succession to Business.
Any national association, bank or corporation into which the Trustee
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any national association, bank or corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such national
association, bank or corporation shall be otherwise qualified and eligible under
this Article, to the extent operative, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. In case any
Bonds shall have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Bonds so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Bond.
Section 611. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee shall be
or shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within three (3) months prior to a default, as defined in Subsection (c)
of this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the Bonds
and the holders of other indenture securities (as defined in Subsection (c) of
this Section):
(1) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of principal
or interest, effected after the beginning of such three (3) month
period and valid as against the Company and its other creditors, except
any such reduction resulting from the receipt or disposition of any
property described in paragraph (2) of this Subsection, or from the
exercise of any right of set-off which the Trustee could have exercised
if a petition in bankruptcy had been filed by or against the Company
upon the date of such default; and
(2) all property received by the Trustee in respect of any
claim as such creditor, either as security therefor, or in satisfaction
or composition thereof, after the beginning of such three (3) months
period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of the Company
and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account
of any such claim by any Person (other than the Company) who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim
by the Trustee to a third person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Code or applicable
State law;
(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so held prior
to the beginning of such three (3) month period;
(C) to realize, for its own account, but only to the extent of
the claim hereinafter mentioned, upon any property held by it as
security for any such claim, if such claim was created after the
beginning of such three (3) month period and such property was received
as security therefor simultaneously with the creation thereof, and if
the Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee has no reasonable cause to believe
that a default as defined in Subsection (c) of this Section would occur
within three (3) months; or
(D) to receive payment on any claim referred to in paragraph
(b) or (c), against the release of any property held as security for
such claims as provided in paragraph (b) or (c), as the case may be, to
the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such three (3) month period for property held as security
at the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned
between the Trustee, the Bondholders and the holders of other indenture
securities in such manner that the Trustee, the Bondholders and the holders of
other indenture securities realize, as a result of payments from such special
account and payments of dividends on claims filed against the Company in
bankruptcy or receivership or in proceedings for reorganization pursuant to the
Federal Bankruptcy Code or applicable State law, the same percentage of their
respective claims, figured before crediting to the claim of the Trustee anything
on account of the receipt by it from the Company of the funds and property in
such special account and before crediting to the respective claims of the
Trustee and the Bondholders and the holders of other indenture securities
dividends on claims filed against the Company in bankruptcy or receivership or
in proceedings for reorganization pursuant to the Federal Bankruptcy Code or
applicable State law, but after crediting thereon receipts on account of the
indebtedness represented by their respective claims from all sources other than
from such dividends and from the funds and property sol held in such special
accounts. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or proceedings for reorganization pursuant to the
Federal Bankruptcy Code or applicable State law, whether such distribution is
made in cash, securities, or other property, but shall not include any such
distribution with respect to the secured portion, if any, of such claim. The
court in which such bankruptcy, receivership or proceedings for reorganization
is pending shall have jurisdiction (i) to apportion between the Trustee and the
Bondholders and the holders of other indenture securities, in accordance with
the provisions of this paragraph, the funds and property held in such special
account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or
in part, to give the provisions of this paragraph due consideration in
determining the fairness of the distributions to be made to the Trustee and the
Bondholders and the holders of other indenture securities with respect to their
respective claims, in which event it shall not be necessary to liquidate or to
appraise the value of any securities or other property held in such special
account or as security for any such claim, or to make a specific allocation of
such distributions as between the secured and unsecured portions of such claims,
or otherwise to apply the provisions of this paragraph as a mathematical
formula.
Any Trustee which has resigned or been removed after the beginning of
such three (3) month period shall be subject to the provisions of this
Subsection as though such resignation or removal had not occurred. If any
Trustee has resigned or been removed prior to the beginning of such three (3)
month period, it shall be subject to the provisions of this Subsection if and
only if the following conditions exist:
(i) the receipt of property or reduction of claim,
which would have given rise to the obligation to account, if
such Trustee had continued as Trustee, occurred after the
beginning of such three (3) month period; and
(ii) such receipt of property or reduction of claim
occurred within three (3) months after such resignation or
removal.
(b) There shall be excluded from the operation of Subsection (a) of
this Section a creditor relationship arising from
(1) the ownership or acquisition of securities issued under
any indenture, or any security or securities having a maturity of one
(1) year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction, or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien
of this Indenture or of discharging tax liens or other prior lines or
encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the
Bondholders at the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or similar
capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in Subsection (c) of
this Section;
(5) the ownership of stock or other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, which is directly or indirectly a
creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper as defined in
Subsection (c) of this Section.
(c) For the purposes of this Section only:
(1) The term "default" means any failure to make payment in
full of the principal of or interest on any of the Bonds or upon the
other indenture securities when and as such principal or interest
becomes due and payable.
(2) The term "other indenture securities" means securities
upon which the Company is an obligor outstanding under any other
indenture (i) under which the Trustee is also trustee, (ii) which
contains provisions substantially similar to the provisions of this
Section, and (iii) under which a default exists at the time of the
apportionment of the funds and property held in such special account.
(3) The term "cash transaction" means any transaction in which
full payment for goods and securities sold is made within seven (7)
days after delivery of the goods or securities in currency or in checks
or other orders drawn upon banks or bankers and payable upon demand.
(4) The term "self-liquidating paper" means any draft, xxxx of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security
is received by the Trustee simultaneously with the creation of the
creditor relationship with the Company arising from the making,
drawing, negotiating or incurring of the draft, xxxx of exchange,
acceptance or obligation.
(5) The term "Company" means any obligor upon the Bonds.
(6) The term "Federal Bankruptcy Code" means the Bankruptcy
Act or Title 11 of the United States Code.
ARTICLE SEVEN
BONDHOLDERS' LISTS AND
REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of
Bondholders.
The Company will furnish or cause to be furnished to the Trustee:
(1) semi-annually, not more than fifteen (15) days after each
Regular Record Date, information in the possession or control of the
Company or any Paying Agent (if other than Trustee), in such form as
the Trustee may reasonably require, of the names and addresses of the
Holders of Bonds as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing,
within thirty (30) days after the receipt by the Company of any such
request, information of similar form and content as of a date not more
than fifteen (15) days prior to the time such information is furnished.
Section 702. Preservation of Information: Communications to
Bondholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Bonds contained in the most
recent information furnished to the Trustee as provided in Section 701 and the
names and addresses of Holders of Bonds received by the Trustee in its capacity
as Bond Registrar or Paying Agent. The Trustee may destroy any list furnished to
it as provided in Section 701 upon receipt of a new list so furnished.
(b) If three (3) or more Holders of Bonds (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Bond for a period of at
least six (6) months preceding the date of such application, and such
application states that the applicants desire to communicate with the Holders of
Bonds with respect to their rights under this Indenture or under the Bonds and
is accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five (5) business
days after the receipt of such application, at its election, either
(1) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 702(a), or
(2) inform such applicants as to the approximate number of
Holders of Bonds whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with Section 702(a),
and as to the approximate cost of mailing (including applicable service
charges) to such Bondholders the form of proxy or other communication,
if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Bondholder whose name and address appear in the information
preserved at the time by the Trustee in accordance with Section 702(a), a copy
of the form of proxy or other communication which is specified in such request,
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five (5) days after such tender, the Trustee shall
mail to such applicants and file with the Commission, together with a copy of
the material to be mailed, a written statement to the effect that, in the
opinion of the Trustee, such mailing would be contrary to the best interests of
the Holders of Bonds or would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If the Commission, after
opportunity for a hearing upon the objections specified in the written statement
so filed, shall enter an order refusing to sustain any of such objections of if,
after the entry of an order sustaining one or more of such objections, the
Commission shall find, after notice and opportunity for hearing, that all the
objections so sustained have been met and shall enter an order so declaring, the
Trustee shall mail copies of such material to all such Bondholders with
reasonable promptness after the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of any obligation or duty to
such applicants respecting their application.
(c) Every Holder of Bonds, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee shall
be held accountable by reason of the disclosure of any such information as to
the names and addresses of the Holders of Bonds in accordance with Section
702(b), regardless of the source from which such information was derived, and
that the Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under Section 702(b).
Section 703. Reports by Company.
The Company will:
(1) file with the Trustee, within fifteen (15) days after the
Company is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may,
from time to time, by rules and regulations prescribe) which the
Company may be required to file with the Commission pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of the said Sections, then it will file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may
be acquired pursuant to Section 13 of the Securities Exchange Act of
1934 in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such
rules and regulations (it is understood that the Trustee has no
obligation to review the contents of information and/or documents
received pursuant to this clause (1) or to take any action based on the
information in such documents).
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations.
(3) transmit by mail to all Bondholders, as their names and
addresses appear in the Bond Register and otherwise to the extent
provided in Section 313(c) of the TIA, within thirty (30) days after
the filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraphs (1) and (2) of this Section, as may be required by rules and
regulations prescribed from time to time by the Commission.
(4) furnish to the Trustee, not less than annually, a
certificate from the principal executive officer, principal financial
officer or principal accounting officer of the Company as to his or her
knowledge of the Company's compliance with all conditions and covenants
under this Indenture, without regard to any period of grace or
requirement of notice provided under this Indenture.
(5) furnish annually to the Trustee a certificate of the
principal financial officer of the Company setting forth the then
current Conversion Price.
Section 703A. Reports and Opinions of Fair Value Regarding
Security Interest.
(a) Promptly after the execution and delivery of this Indenture, the
Company shall furnish to the Trustee an opinion of counsel (who may be of
counsel for the Company) either stating that in the opinion of such counsel the
Indenture has been properly recorded and filed so as to make effective the lien
intended to be created hereby covering the Collateral Stock, and reciting the
details of such action, or stating that in the opinion of such counsel no such
action is necessary to make such lien effective.
(b) Within thirty (30) days after each anniversary of this Indenture,
the Company shall furnish to the Trustee an opinion of counsel (who may be of
counsel for the Company) effective as of the anniversary of this Indenture
either stating that in the opinion of such counsel such action has been taken
with respect to the recording, filing, re-recording, and re-filing of the
Indenture as is necessary to maintain the lien of this Indenture covering the
Collateral Stock, and reciting the details of such action, or stating that in
the opinion of such counsel no such action is necessary to maintain such lien.
(c) Upon the execution of this Indenture, the Company shall deliver to
the Trustee a certificate or opinion of an independent appraiser or other expert
as to the fair value to the Company of the Collateral Stock.
(d) In the event of any release of all or any portion of the Collateral
Stock, and as a condition precedent thereto, the Company shall deliver to the
Trustee a certificate or opinion of an appraiser or other qualified expert
reasonably acceptable to the Trustee that as to the Collateral Stock to be
released from the lien of the Indenture, the proposed release will not impair
the security in contravention of the provisions of this Indenture, and requiring
further that such certificate or opinion shall be made by an independent
appraiser, or other expert, if the fair value of such Collateral Stock to be
released, together with all Collateral Stock released since the commencement of
the then current calendar year, as set forth in the certificates or opinions
required by this Section, is ten percent (10%) or more of the aggregate
principal amount of the Bonds at the time Outstanding; provided that such
opinion of an independent expert shall not be required in the case of any
release of Collateral Stock if the fair value thereof as set forth in the
certificate or opinion required by this Section is less than $25,000 or less
than one percent (1%) of the aggregate principal amount of the Outstanding
Bonds.
Section 704. Reports by Trustee.
(a) Within sixty (60) days after [insert anniversary date] of each
year, the Trustee shall transmit by mail to all Bondholders, as their names and
addresses appear in the Bond Register and otherwise as described in Section
313(c) of the TIA, a brief report dated as of [insert anniversary date] with
respect to any of the following events that have occurred within the twelve (12)
month period from the date of the previous report, provided that if no such
event has occurred no report will be transmitted:
(1) any change to its eligibility under Section 607B and its
qualifications under Section 607A;
(2) the creation of or any material change to a relationship
specified in paragraph (1) through (10) of Section 607A(c);
(3) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) which remain unpaid on the date
of such report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Bonds, on any property or
funds held or collected by it as Trustee, except that the Trustee shall
not be required (but may elect) to report such advances if such
advances so remaining unpaid aggregate not more than one-half of one
percent of the principal amount of the Bonds Outstanding on the date of
such report;
(4) the amount, interest rate and maturity date of all other
indebtedness owing by the Company to the Trustee in its individual
capacity, on the date of such report, with a brief description of any
property held as collateral security therefor, except an indebtedness
based upon a creditor relationship arising in any manner described in
Sections 611(b)(2), (3), (4) or (6);
(5) any change to the property and funds, if any, physically
in the possession of the Trustee as such on the date of such report;
(6) any change to any release, or release and substitution, of
Collateral Stock subject to the lien of this Indenture (and the
consideration therefore, if any) which the Trustee has not previously
reported;
(7) any additional issue of Bonds which the Trustee has not
previously reported; and
(8) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in its
opinion materially affects the Bonds, except action in respect of a
Default, notice of which has been or is to be withheld by the Trustee
in accordance with Section 602, as authorized by Section 315(b) of the
TIA.
(b) The Trustee shall transmit by mail to all Bondholders, as their
names and addresses appear in the Bond Register and to such other Bondholders in
accordance with Section 313(c) of the TIA, a brief report with respect to (1)
the release, or release and substitution, of any or all of the Collateral Stock
(and the consideration therefore, if any) unless the fair value of such
Collateral Stock, as set forth in the certificate or opinion required by Section
703A(c), is less than ten percent (10%) of the principal amount of Bonds
Outstanding at the time of such release, or such release and substitution, such
report to be so transmitted within ninety (90) days after such time; and (2) the
character and amount of any advances (and if the Trustee elects so to state, the
circumstances surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to subsection (a) of this
Section (or if no such report has yet been so transmitted, since the date of
execution of this Indenture) for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Bonds, on property or funds held or
collected by it as Trustee, and which it has not previously reported pursuant to
this subsection, except that the Trustee shall not be required (but may elect)
to report such advances if such advances remaining unpaid at any time aggregate
one percent (1%) or less of the principal amount of the Bonds Outstanding at
such time, such report to be transmitted within ninety (90) days after such
time.
(c) A copy of each such report shall, at the time of such transmission
to Bondholders, be filed by the Trustee with each stock exchange upon which the
Bonds are listed, and also with the Commission. The Company will notify the
Trustee when the Bonds are listed on any stock exchange.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company May Consolidate, Etc.. on Certain Terms.
The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets as, or
substantially as, an entirety to any Person unless:
(1) the corporation formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Company substantially as an
entirety shall be a corporation organized and existing under the laws
of the United States of America or any State or the District of
Colombia, and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Bonds and
the performance of every covenant of this Indenture on the part of the
Company to be performed or observed;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time, or
both, would become an Event of Default, shall have happened and be
continuing;
(3) immediately after giving effect to such transaction, the
corporation formed by such consolidation or into which the Company is
merged shall have equity securities listed on a Quotation System or a
national securities exchange, and immediately after giving affect to
such transaction the Bonds are convertible into such securities;
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel as required by Section 102 each
stating that such consolidation, merger, conveyance or transfer and
such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction
have been complied with, provided that such Opinion of Counsel may rely
upon a certificate of the Company's auditors as to all financial
matters.
Section 802. Successor Corporation Substituted.
Upon any consolidation or merger, or any conveyance, transfer or lease
of the properties and assets of the Company as, or substantially as, an entirety
to any person in accordance with Section 801, the successor corporation formed
by such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease 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 as the Company
herein; provided, however, that except in the case of a lease to another Person,
no such conveyance or transfer shall have the effect of releasing the Person
named as the "Company" in the first paragraph of this instrument or any
successor corporation which shall theretofore have become such in the manner
prescribed in this Article from its liability as obligor and maker on any of the
Bonds.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of Bondholders.
Without the consent of the Holders of any Bonds, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the
Company, and the assumption by any such successor of the covenants of
the Company herein and in the Bonds contained; or
(2) to add to the covenants of the Company, for the benefit of
the Holders of the Bonds, or to surrender any right or power herein
conferred upon the Company; or
(3) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Bond Outstanding created prior to the
execution of such supplemental indenture which is entitled to the
benefit of such provision; or
(4) to secure the Bonds; or
(5) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture, provided such action shall not
adversely affect the interest of the Holders of the Bonds.
Section 902. Supplemental Indentures with Consent of Bondholders.
With the consent of the Holders of not less than a majority in
principal amount of the outstanding Bonds, by Act of said Holders delivered to
the Company and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of modifying in any manner
the rights of the Holders of the Bonds under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Bond affected thereby,
(1) impair or affect the right of the Holders of Bonds to
receive payment of the principal amount of, or any installment of
interest on, the Bond on or after the Stated Maturity of the principal
or any interest installment, as appropriate, or
(2) impair or affect the right of the Holders of Bonds to
institute suit for the enforcement of any payment of principal of (or
premium, if any) or interest on any Bond on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the
Redemption Date) on or after the Repayment Date, except as to a
postponement of an interest payment consented to as provided in Section
512, or
(3) modify any of the provisions of parts (1) or (2) of this
Section.
It shall not be necessary for any Act of Bondholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not
(except to the extent required in the case of a supplemental indenture entered
into under Section 901(4) be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Bonds theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
Section 905. Reference in Bonds to Supplemental Indentures.
Bonds authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article shall bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Bonds so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Bonds.
Section 906. Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the rights of any
holder of Senior Indebtedness under Article Twelve without the consent of such
holder.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of (and premium,
if any) and interest on the Bonds in accordance with the terms of the Bonds and
this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment an office or agency
where Bonds may be presented or surrendered for payment, conversion,
registration of transfer or exchange, which may be the Principal Corporate Trust
Office of the Trustee, and will maintain in Phoenix, Arizona an office or agency
where notices and demands to or upon the Company in respect of the Bonds and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and of any change in the location, of such office or
agency. If at any time the Company shall fail to maintain such office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
principal corporate trust office of the Trustee, and the Company hereby appoints
the Trustee its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate by notice to the
Trustee as provided herein one or more other offices or agencies where the Bonds
may be presented or surrendered for any or all such purposes and may from time
to time by similar notice rescind such designations; provided, however, that no
such designation or recision shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Place of Payment for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
Section 1003. Money for Bond Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of (and premium, if any) or interest
on any of the Bonds, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due until such sums shall be paid to such persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, on
or before each due date of the principal of (and premium, if any) or interest on
any Bonds, deposit with a Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest, so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal, (and premium, if any)
or interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will
(1) hold all sums held by it for the payment of principal of
(and premium, if any) or interest on Bonds in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Bonds) in the making of any such payment of
principal (and premium, if any) or interest on the Bonds; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
monies.
Any monies deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Bond and remaining unclaimed for five (5) years after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Bond shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
Company's sole option and at the expense of the Company cause to be published
once, in a newspaper of general circulation in Phoenix, Arizona or, if
different, in the Place of Payment, notice that such monies remains unclaimed
and that, after the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
Section 1004. Payment of Taxes.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, all taxes, assessments and governmental
charges levied or imposed upon it or upon its income, profits or property;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
Section 1005. Maintenance of Properties.
The Company will cause all its properties used or useful in the conduct
of its business to be maintained and kept in good conditions, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation and maintenance of any of its
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business and not disadvantageous in any material respect
to the Bondholders.
Section 1006. Statement as to Compliance.
The Company will deliver to the Trustee, within one hundred twenty
(120) days after the end of each fiscal year, a written statement signed by the
President or a Vice President of the Company, stating, as to each signer
thereof, the matters required by Section 703(4) hereof. The Company acknowledges
that its fiscal year ends on December 31 of each year.
Section 1007. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any right if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company or that the loss thereof is not
disadvantageous in any material respect to the Bondholders.
Section 1008. Insurance.
Subject to the right to sell, abandon or otherwise dispose of any
building or property whenever in the opinion of the Board of Directors the
retention thereof is inadvisable or not necessary to the business of the Company
and its Subsidiaries, the Company will at all times cause all buildings, plants,
equipment and other insurable properties owned or operated by it or any
Subsidiary to be properly insured and kept insured with insurance carriers
acceptable to the Board of Directors in its reasonable judgement, or adequately
insured by means of property inter-insurance contracts, against loss or damage
by fire and other hazards, in amounts deemed appropriate by the Board of
Directors.
Section 1009. Life Insurance on Key Personnel.
The Company shall obtain and maintain in full force and effect "key
person" life insurance policy covering Xxxxxx X. Xxxxxxx. Such insurance shall
be in the aggregate face amount of $5,000,000.00, shall be placed with an
insurance carrier reasonably chosen by the Board of Directors, and shall name
the Company as the beneficiary thereof. Any net proceeds from such policy, to
the extent of the principal amount of the Bonds Outstanding, plus interest
accrued and unpaid, shall be set aside by the Company and held in trust for the
purpose of either paying the principal amount of the Bonds upon Maturity or, at
the discretion of the Board of Directors, to redeem a portion of the Bonds as
provided in this Indenture.
Section 1010. Particular Covenants as to Certain of Company's Affairs.
The Company at all times will keep, and will cause each Subsidiary to
keep, true and complete books of record and account, all in reasonable detail,
with respect to all transactions between the Company or such Subsidiary, as the
case may be, and any Affiliate of the Company, other than a Subsidiary. The
Company shall furnish to the Trustee summaries of such transactions as the same
may reasonably be requested by the Trustee from time to time.
Section 1011. Limitations on Dividends and Other Distributions.
For such time as at least fifty percent (50%) of the principal amount
of the Bonds are outstanding, the Company will not declare or pay to holders of
its Common Stock any cash dividends or dividends in kind other than dividends
payable solely in shares of Common Stock.
Section 1012. Limitation on Liquidation.
The Board of Directors or the holders of Common Stock of the Company
shall not adopt a plan of liquidation which provides for, contemplates or the
effectuation of which is preceded by (i) the sale, lease, conveyance or other
disposition of all of the assets of the Company, otherwise than substantially as
an entirety, and (ii) the distribution of all or substantially all of the
proceeds of such sale, lease, conveyance or other disposition and of the
remaining assets of the Company, to the holders of Common Stock or Preferred
Stock unless the Company, prior to making any liquidating distribution pursuant
to such plan, makes provision for the satisfaction of its respective obligations
hereunder and under the Bonds as to the payment of principal and interest on
such Bonds.
Section 1013. Overhead Allocation Limitation.
The Company shall maintain its annual expenditures for general and
administrative costs at an amount not to exceed 16% of the Company's gross
revenue.
Section 1014. Limitation on Change of Control.
Subject to the second paragraph of this Section 1014, the Company shall
not experience a change in control, where "Change in Control" means (a) when any
person, or any persons acting together which would constitute a "group" for
purposes of Section 13(d) of the Exchange Act (other than a person or group
including or comprised of the Company, an entity in which Xxxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxxx or, Xxxxxxx Enterprises Incorporated owns an interest (or any
of them individually), any Subsidiary, any employee stock purchase plan, stock
option plan or other incentive plan or program, retirement plan or automatic
dividend reinvestment plan or any substantially similar plan of the Company or
any Subsidiary or any person holding securities of the Company for or pursuant
to the terms of any such plan, together with any affiliates thereof), shall
acquire beneficial ownership (as defined in Rule 13d-3 under the Exchange Act)
of at least a majority of all classes of capital stock of the Company, or (b)
all or substantially all of the Company's assets (defined for purposes of this
Section 1014 as greater than 75% of the fair market value of the Company's
assets) are sold as an entirety to any Person or related group of Persons in any
one transaction or series of related transactions.
A "Change in Control" shall not be contrary to the foregoing covenant
if (i) the Sale Price of the Common Stock on the date of the Change in Control
occurred is at least 105% of the Conversion Price of the Bonds in effect
immediately preceding the time of such Change in Control, or (ii) all of the
consideration (excluding cash payments for fractional shares) in the transaction
giving rise to such Change in Control to the holders of Common Stock consists of
securities that are, or are immediately upon issuance will be, listed on a
national exchange or quoted on a Quotation System, and as a result of such
transaction the securities become convertible into such security, or (iii) the
consideration in the transaction giving rise to such Change in Control to the
holders of the Common Stock consists of cash, securities that are, or
immediately upon issuance will be, listed on a national securities exchange or
quoted on a Quotation System, or a combination of cash and such securities and
the aggregate fair value of such consideration is at least 105% of the
Conversion Price of the Bonds in effect on the date immediately preceding such
transaction, or (iv) the Bonds or the shares of Common Stock into which the
Bonds are converted pursuant to Article Thirteen hereof are freely tradeable
without restriction in time or quantity with respect to sales of Bonds or shares
of Common Stock.
Section 1015. Waiver of Certain Covenants.
Without limiting the rights of the Holders and the Company with respect
to waivers and amendments set forth in Section 513 and 902, the Company may
fail, in any particular instance, to comply with any covenant or condition set
forth in Section 1001 to 1015, which otherwise does not have a specific waiver
provision, if before or after the time for such compliance the Holders of at
least a majority in principal amounts of the Bonds Outstanding shall, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company
and the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF BONDS
Section 1101. Right of Redemption.
The Company may, at its option, redeem (provided that at the time of
first publication of notice of redemption it is not in default in the payment of
any Senior Indebtedness and that at such time the making of such redemption
would not result in a default in any covenant contained in any indenture or
other instrument pursuant to which Senior Indebtedness is outstanding) the
Bonds, at any time as a whole or from time to time in part as set forth herein
for a "Redemption Price" equal to one hundred twenty percent (120%) of the then
principal amount of the Bonds plus, in each case, any interest accrued on the
Bonds so redeemed to the Redemption Date, exclusive of installments of interest
whose Stated Maturity is on or prior to the Redemption Date, payment of which
shall have been made or duly provided for to the registered Holders of Bonds on
the relevant Record Dates in accordance with Section 307. Such redemption right
may be exercised from and after the date on which the Sale Price per share of
Common Stock for any twenty (20) consecutive Trading Days equaled or exceeded
four dollars ($4.00) per share (the "Redemption Xxxx").
If the Company (i) subdivides its outstanding shares of Common Stock,
(ii) pays a dividend in shares of Common Stock or makes a distribution on its
Common Stock in shares of Common Stock, or (iii) issues by reclassification of
its Common Stock any shares of capital stock of the Company, the Redemption Xxxx
shall be proportionately decreased. If the Company combines the outstanding
shares of Common Stock, then the Redemption Xxxx shall be proportionately
increased. Any adjustment shall be effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, reclassification or combination.
Notice of any redemption shall be mailed by first-class mail, postage
prepaid to the registered Holders of the Bonds designated for redemption at
their addresses as the same shall appear on the Bond Register not less than
fifteen (15) days but not more than sixty (60) days prior to the Redemption
Date, subject to all the conditions and provisions of the Indenture.
Section 1102. Applicability of Article.
Redemption of Bonds at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Bonds shall be evidenced by a
Board Resolution. In case of any redemption at the election of the Company of
less than all of the Bonds, the Company shall, at least thirty (30) days prior
to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee) notify the Trustee of such Redemption Date and of
the principal amount of Bonds to be redeemed.
Section 1104. Selection by Trustee of Bonds to be Redeemed.
If less than all the Bonds are to be redeemed, the particular Bonds to
be redeemed shall be selected not more than fifteen (15) days prior to the
Redemption Date by the Trustee, from the Outstanding Bonds not previously called
for redemption, by such method as the Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions (equal to
$1,000 or any integral multiple thereof) of the principal of Bonds of a
denomination larger than $1,000.
The Trustee shall promptly notify the Company in writing of the Bonds
selected for redemption and, in the case of any Bond selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Bonds shall relate, in
the case of any Bond redeemed or to be redeemed only in part, to the portion of
the principal of such Bond which has been or is to be redeemed.
Section 1105. Notice of Redemption.
Notice of any redemption shall be given by first-class mail, postage
prepaid, mailed not less than thirty (30) nor more than sixty (60) days prior
to the Redemption Date, to each Holder of Bonds to be redeemed, at his address
appearing in the debenture Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all Outstanding Bonds are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principal amounts) of the Bonds to be redeemed;
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Bond (together with accrued
interest to the Redemption Date payable as provided in Section 307 and
1107), and that interest thereon shall cease to accrue from and after
said date; and
(5) the place where such Bonds are to be surrendered for
payment of the Redemption Price, which shall be the office or agency of
the Company in the Place of Payment (which may be the corporate trust
office of the Trustee).
Notice of redemption of Bonds to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 1106. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as it own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price on all the Bonds which are to be
redeemed on that date.
Section 1107. Bonds Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Bonds so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Bonds
shall cease to bear interest. Upon surrender of such Bonds for redemption in
accordance with said notice, such Bonds shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date.
Installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Bonds registered as such on the
relevant Record Dates according to their terms and the provisions of Section
307.
If any Bond called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Bond.
Section 1108. Bonds Redeemed in Part.
Any Bond which is to be redeemed only in part shall be surrendered at a
Place of Payment (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Bond without service charge, a
new Bond or Bonds, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Bond so surrendered.
ARTICLE TWELVE
SUBORDINATION OF BONDS
Section 1201. Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Bonds by his
acceptance thereof (whether upon original issue or upon transfer or assignment)
likewise covenants and agrees, that the indebtedness represented by the Bonds
and the payment of the principal of (and premium, if any) and interest on each
and all of the Bonds is hereby expressly subordinated, and junior to the extent
and in the manner hereinafter set forth, in right of payment to the prior
payment in full of all Senior Indebtedness.
Section 1202. Distribution of Assets, Other than Collateral Stock.
Upon any distribution of assets of the Company upon any dissolution,
winding-up, liquidation or reorganization of the Company, whether in bankruptcy,
insolvency, reorganization or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or upon any acceleration or maturity or the Bonds or otherwise,
subject in all events to any rights of the Trustee and the Holders of the Bonds
to proceed against the Collateral Stock:
(1) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full of the principal thereof (and
premium, if any) and interest due thereon, or adequate provisions shall
be made for such payment, before the Holders or the Bonds are entitled
to receive any payment on account of the principal of (or premium, if
any) or interest on the Indebtedness evidenced by the Bonds; and
(2) any payment by, or distribution of assets of, the Company
of any kind or character, whether in cash, property or securities, to
which the Holders of the Bonds or the Trustee would be entitled except
for the provisions of this Article shall be paid or delivered by the
person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to
the holders of Senior Indebtedness which may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness held or represented by each, to the extent
necessary to make payment in full of all Senior Indebtedness remaining
unpaid after giving effect to any concurrent payment or distribution
(or provision therefore) to the holders of such Senior Indebtedness.
Section 1203. No Payment to Bondholders if Senior Indebtedness is in
Default.
(a) Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal thereof (and premium, if any) and
interest due thereon shall first be paid in full, or such payment duly provided
for in cash or in a manner satisfactory to the holder or holders of such Senior
Indebtedness before any payment is made on account of the principal of or
interest on the Bonds or to acquire or redeem any of the Bonds.
(b) Upon the happening of an event of default with respect to any
Senior Indebtedness, as such event of default is defined therein or in the
instrument under which it is outstanding, permitting the holders to accelerate
the maturity thereof, and, if the default is other than a default in payment of
the principal of (or premium, if any) or interest on such Senior Indebtedness,
upon written notice thereof given to the Company and the Trustee by the holder
or holders of such Senior Indebtedness or their representative or
representatives, unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no payment shall be made by the Company
with respect to the principal or interest on the Bonds or to acquire or redeem
any of the Bonds.
Section 1204. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the Holders
of the Bonds shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness (other than the
Collateral Stock) until all amounts owing on the Bonds shall be paid in full,
and, as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Bonds, no such payment or distribution made
to the holders of Senior Indebtedness by virtue of this Article which otherwise
would have been made to the Holders of the Bonds shall be deemed to be a payment
by the Company on account of the Senior Indebtedness, it being understood that
the provisions of this Article are intended solely for the purpose of defining
the relative rights of the Holders of the Bonds, on the one hand, and the
holders of Senior Indebtedness, on the other hand.
Section 1205. Obligation of Company Unconditional.
Nothing contained in this Article or elsewhere in this Indenture or in
the Bonds is intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the Holders of the Bonds, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Bonds such principal (and premium, if any) of and interest on the
Bonds as and when the same shall become due and payable in accordance with their
terms, or affect the relative rights of the Holders of the Bonds and creditors
of the Company other than the holders of Senior Indebtedness, nor shall anything
herein or exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
Twelve of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercises of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article , the Trustee and the Holders of the Bonds shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which any such dissolution, winding-up, liquidation or reorganization proceeding
affecting the affairs of the Company is pending or upon a certificate of the
liquidating trustee or agent or other person making any payment or distribution
to the Trustee or to the Holders of the Bonds for the purpose of ascertaining
the persons entitled to participate in such payment or distribution, the holders
of the Senior Indebtedness and other Indebtedness or the Company, the amount
thereof or payable thereon, the amount paid or distributed thereon and all other
facts pertinent thereto or to this Article Twelve.
Section 1206. Payments on Bonds Permitted.
Nothing contained in this Article Twelve or elsewhere in this
Indenture, or in any of the Bonds, shall (a) affect the obligation of the
Company to make, or prevent the Company from making, at any time except during
the pendency of any dissolution, winding-up, liquidation or reorganization
proceeding, and except during the continuance of any even of default specified
in Section 1203 (not cured or waived), payments at the time of principal of (and
premium, if any) or interest on the Bonds, or (b) prevent the application by the
Trustee or any Paying Agent of any moneys held by the Trustee or such Paying
Agent, in trust for the benefit of the Holders of Bonds as to which notice of
redemption shall have been mailed or published at least once prior to the
happening of an event of default specified in Section 1203, to the payment of or
on account of the principal (and premium, if any) and interest on such Bonds, or
(c) prevent the application by the Trustee or any Paying Agent of any moneys
deposited prior to the happening of any event of default specified in Section
1203, with the Trustee or such Paying Agent in trust for the purpose of paying a
specified installment or installments or interest on the Bonds, to the payment
of such installments of interest on the Bonds; or (d) prevent the exercise by
the Trustee or the Bondholders of their respective rights with respect to the
Collateral Stock.
Section 1207. Effectuation of Subordination by Trustee.
Each Holder of Bonds, by his acceptance thereof, authorizes and directs
the Trustee in his behalf (subject to Section 601) to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee his attorney-in-fact for any and all such
purposes.
Section 1208. Notice to Trustee.
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 Bonds pursuant to the provisions of this
Article. Notwithstanding the provisions of this Article or any other provisions
of this Indenture, but subject to section 601, the Trustee shall not be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment or distribution to or by the Trustee in respect of the Bonds
pursuant to the provisions of this Article, unless and until the Trustee shall
have received written notice thereof from the Company, any Bondholder, any
Paying Agent or a holder or holders of Senior Indebtedness or from any trustee
therefor; and prior to the receipt of any such written notice, the Trustee,
subject to the provisions of Section 601, shall be entitled in all respects to
assume that no such facts exist.
Subject to the provisions of Section 601, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself or herself to be a holder of Senior Indebtedness (or a trustee on behalf
of such holder) to establish that such notice has been given by a holder of
Senior Indebtedness or a trustee on behalf of any such holder. 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 Indebtedness to
participate in any payment or distribution pursuant to this Article, the Trustee
may request such Person furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and any other fact pertinent to the rights of such Person under this Article;
and if such evidence is not furnished, the Trustee may defer any payment or
distribution to such Person pending judicial determination as to the right of
such Person to receive such payment or distribution.
Section 1209. Rights of Holders of Senior Indebtedness Not Impaired.
No right of any present or future holder of any Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company with the
terms, provisions and covenants of this Indenture.
Section 1210. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith pay over or distribute to the Holders of the Bonds, to the
Company or to any other Person cash, property or securities to which any holders
of Senior Indebtedness shall be entitled by virtue of this Article or otherwise.
Section 1211. Rights of Trustee as Holder of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Section 1212. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully for all intents and purposes as if such Paying Agent were named
in this Article in addition to or in place of the Trustee; provided, however,
that Section 1210 and 1211 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
Section 1213. Rights and Obligations Subject to Power of Court.
The rights of the holders of Senior Indebtedness and the obligations of
the Trustee and the Bondholders set forth in this Article are subject to the
power of a court of competent jurisdiction to make other equitable provision
reflecting the rights conferred in this Indenture upon the Senior Indebtedness
and the holders thereof with respect to the Bonds and the Holders thereof by a
plan or reorganization under applicable bankruptcy law.
Section 1214. No Effect on Secured Interest.
Nothing contained in this Article shall impair the rights of the
Bondholders or the Trustee with respect to the Collateral Stock, as and to the
extent such Collateral Stock is pledged to secure the payment of principal and
interest on the Bonds under Article Fourteen hereof, including without
limitation the rights of the Trustee and Bondholders to receive payment upon the
sale or other disposition of the Collateral Stock or upon an Event of Default.
ARTICLE THIRTEEN
CONVERSION OF BONDS
Section 1301. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Bond or any portion of the principal
amount thereof which is $1,000 or an integral multiple thereof may be converted
at the principal amount thereof, or of such portion thereof, into fully paid and
nonassessable shares (calculated as to each conversion to the nearest 1/100 of a
share) of Common Stock of the Company, at the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. Such conversion right
shall begin thirty (30) calendar days from the closing of the public offering of
the Bonds and shall expire at the close of business on _______________, 2000. In
case a Bond or portion thereof is called for redemption or is delivered for
repurchase, such conversion right in respect of the Bond or portion so called
shall expire at the close of business on the last business day prior to the
Redemption Date, unless the Company defaults in making the payment due upon
redemption.
The price at which shares of Common Stock shall be delivered upon
conversion (the "Conversion Price") shall be $3.00 per share of Common Stock, as
adjusted in certain instances as provided in Section 1304 and 1305.
Section 1302. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of any Bond to be
converted shall surrender such Bond, duly endorsed or assigned to the Company or
in blank, at any office or agency of the Company maintained for that purpose
pursuant to Section 1002, accompanied by written notice to the Company at such
office or agency that the Holder elects to convert such Bond or, if less than
the entire principal amount thereof is to be converted, the portion thereof to
be converted. Bonds surrendered for conversion during the period from the close
of business on any Regular Record Date next preceding any Interest Payment Date
to the opening of business on such Interest Payment Date (the "Interest Period")
shall be accompanied by payment of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of Bonds being surrendered
for conversion unless the Bond or the portion thereof being converted has been
called for redemption prior to such Interest Payment Date. Except as provided in
the preceding sentence and subject to the last paragraph of Section 307, no
payment or adjustment shall be made upon any conversion on account of any
interest accrued on the Bonds surrendered for conversion or on account of any
dividends on the Common Stock issued upon conversion. All payments required by
this paragraph to be made by a Holder upon the surrender of Bonds for conversion
shall be made in same-day funds or other funds acceptable to the Company.
Bonds shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Bonds for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Bonds as Holders shall cease, and the Person or Persons entitled
to receive the Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such Common Stock at such time. As
promptly as practicable on or after the conversion date, the Company shall issue
and shall deliver at such office or agency a certificate or certificates for the
number of full shares of Common Stock issuable upon conversion, together with
payment in lieu of any fraction of a share, as provided in Section 1303.
In the case of any Bond which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Bond or
Bonds of authorized denominations in aggregate principal amount equal to the
unconverted portion of the principal amount of such Bond.
Section 1303. Fractions of Shares.
No fractional shares of Common stock shall be issued upon conversion of
Bonds. If more than one Bond shall be surrendered for conversion at one time by
the same Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate principal
amount of the Bonds (or specified portions thereof) so surrendered. Instead of
any fractional share of Common Stock which would otherwise be issuable upon
conversion of any Bond or Bonds (or specified portions thereof), the Company
shall pay a cash adjustment in respect of such fraction in an amount equal to
the same fraction of the Conversion Price per share of Common Stock.
Section 1304. Adjustment of Conversion Price.
(1) In case the Company shall hereafter (i) pay a dividend in
shares of Common Stock or make a distribution on its Common Stock in
shares of Common Stock, (ii) subdivide its outstanding shares of Common
Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares or (iv) issue by
reclassification of its Common Stock any shares of capital stock of the
Company, the Conversion Price in effect immediately prior to such
action shall be adjusted so that the Holder of any Bond thereafter
surrendered for conversion shall be entitled to receive the number of
shares of Common Stock or other capital stock of the Company which he
or she would have owned immediately following such action had such Bond
been converted immediately prior thereto. An adjustment made pursuant
to this Subsection (1) shall become effective immediately after the
record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this Subsection (1), the Holder of any Bond
thereafter surrendered for conversion shall become entitled to receive
shares of two or more classes of capital stock (including shares of
Common Stock and other capital stock) of the Company, the Board of
Directors (whose determination shall be conclusive and shall be
described in a statement filed with the Trustee) shall determine in
good faith the allocation of the adjusted Conversion Price between or
among shares of such classes of capital stock or shares of Common Stock
and other capital stock.
(2) In any case in which this Section shall require that an
adjustment be made immediately following a record date, the Company may
elect to defer (but only until five (5) Trading Days following the
filing by the Company with the Trustee of the certificate described in
(a)) issuing to the Holder of any Bond converted after such record date
the shares of Common Stock issuable upon such conversion over and above
the shares of Common Stock issuable upon such conversion on the basis
of the Conversion Price prior to adjustment.
(3) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least one percent (1%) of such price; provided, however, that any
adjustments which by reason of this Subsection (3) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment and, provided further, that adjustment shall be
required and made in accordance with the provisions of this Article
Thirteen (other than this Subsection (3)) not later than such time as
may be required in order to preserve the tax-free nature of a
distribution to the holders of Bonds or Common Stock. All calculations
under this Section 1304 shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be. Anything in this
Section to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Conversion Price, in addition to those
required by this Section, as it in its discretion shall determine to be
advisable in order that any stock dividend, subdivision of shares,
distribution or rights to purchase stock or securities, or distribution
of securities convertible into or exchangeable for stock hereafter made
by the Company to its stockholders shall not be taxable.
Section 1305. Adjustment Based on Market Price.
In addition to the adjustments provided in Section 1304, the Conversion
Price shall be adjusted on [insert 30th calendar day after second anniversary],
1997 and [insert 30th calendar day after fourth anniversary], 1999 as follows:
At 5:00 p.m. local Phoenix, Arizona time on [insert 30th calendar day
after second anniversary]_________, 1997, the Conversion Price for all
Bonds Outstanding shall be adjusted to the higher of: (1) seventy-five
percent (75%) of the "Xxxx Xxxxx" of Common Stock, where the "Xxxx
Xxxxx" is defined as a price equal to the average of the Sale Price of
Common Stock as of the close of business each day for the period
beginning [insert date of second anniversary] ______________, 1997 and
ending [insert 29th calendar day after second anniversary]
______________, 1997; or (2) $2.50 per share of Common Stock;
At 5:00 p.m. local Phoenix, Arizona time on [insert 30th calendar day
after fourth anniversary]_______, 1999 the Conversion Price for all
Bonds Outstanding shall be adjusted to the higher of: (1) seventy-five
percent (75%) of the "Xxxx Xxxxx" of Common Stock, where the "Xxxx
Xxxxx" is defined as a price equal to the average of the Sale Price of
Common Stock as of the close of business each day for the period
beginning [insert date of fourth anniversary]______________, 1999 and
ending [insert 29th calendar day after fourth anniversary]
_____________, 1999; or (2) $2.50 per share of Common Stock.
Section 1306. Notice of Adjustments of Conversion Price.
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price in
accordance with Section 1304 and 1305 and shall prepare a certificate
signed by the Treasurer of the Company setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall forthwith be filed
with the Trustee and at each office or agency maintained for the
purpose of conversion of Bonds pursuant to Section 1002; and
(b) a notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion Price shall
forthwith be required, and as soon as practicable after it is required,
such notice shall be mailed by the Company to all Holders at their last
addresses as they shall appear in the Bond Register.
Section 1307. Notice of Certain Corporate Action.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable (i) otherwise than
exclusively, in cash or (ii) exclusively in cash in an amount that
would require any adjustment pursuant to Section 1304; or
(b) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(d) the Company or any Subsidiary shall commence a tender
offer for all or a portion of the Company's outstanding shares of
Common stock (or shall amend any such tender offer);
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Bonds pursuant to Section 1002, and shall cause to
be mailed to all Holders at their last addresses as they shall appear in the
Bond Register, at least ten (10) days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which
record is to be taken for the purpose of such dividend or distribution or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend or distribution are to be determined, or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Section 1308. Company to Reserve Common Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Bonds, the full number of shares of
Common Stock then issuable upon the conversion of all outstanding debentures.
Section 1309. Taxes on Conversions.
The Holder will pay any and all taxes that may be payable in respect of
the issue or delivery of shares of Common Stock on conversion of Bonds pursuant
hereto, and no such issue or delivery shall be made unless and until the Person
requesting such issue or delivery has paid to the Company the amount of any such
tax, or has established to the satisfaction of the Company that such tax has
been paid.
Section 1310. Covenant as to Common Stock.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Bonds will upon issue be fully paid and nonassessable.
Section 1311. Cancellation of Converted Bonds.
All Bonds delivered for conversion shall be delivered to the Trustee to
be canceled by or at the direction of the Trustee, which shall dispose of the
same as provided in Section 309.
Section 1312. Provisions in Case of Consolidation, Merger or Sale of
Assets.
Notwithstanding any other provision herein to the contrary, in case of
any consolidation or merger to which the Company is a party other than a merger
or consolidation in which the Company is the continuing corporation, or in case
of any sale or conveyance to another corporation of the property of the Company
as an entirety or substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any exchange effected
in connection with a merger of a third corporation into the Company), there
shall be no adjustment under Section 1304 but the Holder of each Bond then
outstanding shall have the right thereafter to convert such Bond into the kind
and amount of securities, cash or other property which he or she would have
owned or have been entitled to receive immediately after such consolidation,
merger, statutory exchange, sale or conveyance had such Bond been converted
immediately prior to the effective date of such consolidation, merger, statutory
exchange, sale or conveyance and in any such case, if necessary, appropriate
adjustment shall be made in the application of the provisions set forth in this
Article Thirteen with respect to the rights and interests thereafter of the
Holders of the Bond, to the end that the provisions set forth in this Article
Thirteen shall thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the conversion of the Bonds. Any such
adjustment shall be made by and set forth in the supplemental indenture executed
by the Company and the Trustee, evidenced by a certificate to that effect; and
any adjustment so approved shall for all purposes hereof conclusively be deemed
to be an appropriate adjustment.
The above provisions of this Section shall similarly apply to
successive consolidations, mergers, statutory exchanges, sales or conveyances.
The Company shall give notice of the execution of such a supplemental
indenture to the Holders of Bonds in the manner provided in Section 106 within
thirty (30) days after the execution thereof.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in such supplemental indenture relating
either to the kind or amount of shares of stock or securities or property
receivable by Holders upon the conversion of their Bonds after any such
consolidation, merger, statutory exchange, sale or conveyance, or to any
adjustment to be made with respect thereto.
ARTICLE FOURTEEN
SECURITY FOR PAYMENT OF BONDS
Section 1401. Pledge of Collateral Stock.
a. As security for the prompt and complete payment when due of all the
Bonds, the Company hereby pledges to the Trustee, for and on behalf of Holders
on a pro rata basis, a security interest in and to all of the Collateral Stock
owned by the Company, except as may be set forth hereunder.
b. Trustee shall hold the certificate representing said Collateral
Stock on behalf of the Holders. The Company, by its execution and delivery
hereof, expressly acknowledges and agrees that, to the extent provided by law,
such possession by the Trustee shall constitute perfection of this security
interest in the Collateral Stock created hereunder and thereunder and under the
Indenture.
Section 1402. Event of Default and Remedies.
Upon the occurrence of an "Event of Default" hereunder, a majority in
principal amount of the Bonds, determined through any method established by the
Trustee, will have the authority to declare an Event of Default and take such
action as is necessary to redeem, liquidate, dispose of or otherwise realize
upon any and all rights in the Collateral Stock.
Section 1403. Method of Realizing Upon the Collateral Stock.
Except to the extent prohibited by applicable law that cannot be
waived, the following provisions shall govern the Holders' rights to realize
upon the Collateral Stock upon the occurrence of an Event of Default:
a. The Collateral Stock may be redeemed, sold, assigned, transferred or
otherwise disposed of by the Trustee, in the manner the Trustee deems
appropriate in its discretion, upon the direction of a majority in principal
amount of Bonds Outstanding acting for all of the Holders, for cash or other
value in any number of lots at public auction or private sale and may be sold or
disposed of without demand, advertisement or notice (excepting only that the
Trustee shall give the Company ten (10) business days prior written notice of
the time and place of any public sale or of the time after which a private sale
may be made, which notice the Company and Trustee hereby agree to be
reasonable). At any sale or sales of the Collateral Stock, the Trustee may bid
for and purchase the whole or any part of the property and rights sold and upon
compliance with the terms of such sale may hold, exploit and dispose of such
property and rights as provided for herein. The Company will execute and
deliver, or cause to be executed and delivered, such instruments, documents,
assignments, waivers, certificates, and affidavits and supply or cause to be
supplied such further information and take such further action as the Trustee
shall require in connection with such sale.
b. Any deficit realized upon disposition of the Collateral Stock will
be shared among the Holders on a pro rata basis in relation to their
proportional interests (in dollar amount) as evidenced by the Bond.
Section 1404. Further Assurances.
The Company will from time to time, at the Trustee's request, make,
execute, acknowledge, deliver and file all such instruments and take all such
action as the Trustee may reasonably request for assuring and confirming the
security interest in the Pledged Collateral Stock created hereunder.
Section 1405. Rights Regarding Stock.
Unless and until an Event of Default occurs and is continuing, the
Company shall have all rights of ownership of the Collateral Stock, including
without limitation the right to vote such shares of stock and receive dividends
in respect thereof.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and the Trustee has caused its corporate seal to be hereunto
affixed and attested, all as of the day and year first written above.
ILX Incorporated
By:_____________________________________
Its_____________________________________
ATTEST:
----------------------------------
Secretary
U.S. Trust Company of California, N.A.
as Trustee
By:_____________________________________
Its_____________________________________
ILX INCORPORATED
10% CONVERTIBLE ADJUSTABLE SECURED BOND, DUE 2000
No._____ $__________
ILX Incorporated, an Arizona corporation (herein called the "Company,"
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to [Insert Name of
Holder]_____________, or registered assigns, the sum of ______________________
Dollars ($__________) on __________, 2000 and to pay interest thereon from the
Initial Interest Accrual Date (as defined in said Indenture) or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually on January 1 and July 1 in each year, commencing January 1,
1996, at the rate of 10% per annum, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture
hereinafter referred to, be paid to the person in whose name this Bond (or one
or more Predecessor Bonds, as defined in said Indenture) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the December 15 or June 15 next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Registered Holder on such Regular Record Date, and may be paid to
the person in whose name this Bond (or one or more Predecessor Bonds) is
registered at the close of business on a Special Record Date for the payment of
such defaulted interest to be fixed by the Trustee, notice whereof shall be
given to the Holders not less than ten (10) days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Bonds may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture. Payments of the principal of (and premium, if
any) and interest on this Bond will be made at the office or agency of the
Company maintained for that purpose, which may be the Principal Corporate Trust
Office, or in such other office or agency as may be established by the Company
pursuant to said Indenture, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made (subject to collection) by check mailed to the address of
the person entitled thereto as such address shall appear on the Bond Register.
Reference is hereby made to the further provisions of this Bond set
forth on the reverse side hereof and such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Bond shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee under the Indenture.
IN WITNESS WHEREOF, ILX Incorporated has caused this Bond to be signed
in its name by the manual or facsimile signature of its President or one of its
Vice Presidents and attested by the manual or facsimile signature of its
Secretary or one of its Assistant Secretaries.
Dated:___________ ILX Incorporated
By:___________________________________
Its_________________________________
ATTEST:
----------------------------------
Secretary
ILX Incorporated
10% CONVERTIBLE ADJUSTABLE SECURED BOND, DUE 2000
This Bond is one of duly authorized issue of the Bonds of the Company
designated as its 10% Convertible Adjustable Secured Bonds, Due 2000 (herein
called the "Bonds"), limited in aggregate principal amount of $10,000,000
(except for such additional principal amounts, not to exceed $1,500,000, of
Bonds issued pursuant to an option granted to the Underwriter in the initial
public offering of the Bonds) issued and to be issued under an Indenture dated
as of ______________, 1995 (herein called the "Indenture"), between the Company
and U.S. Trust Company of California, N.A. as Trustee (herein called the
"Trustee," which term includes any successor Trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
of a statement of the respective rights thereunder of the Company, the Trustee
and the Holders of the Bonds, and the terms upon which the Bonds are, and are to
be, authenticated and delivered.
The payment of the principal of (and premium, if any) and interest on
this Bond is expressly subordinated, as provided in the Indenture, to the
payment of all Senior Indebtedness, as defined in the Indenture, and, by the
acceptance of this Bond, the Holder hereof agrees, expressly for the benefit of
the present and future holders of Senior Indebtedness, to be bound by the
provisions of the Indenture relating to such subordination and authorizes and
appoints as his attorney-in-fact the Trustee to take such action in his behalf
as may be necessary or appropriate to effectuate such subordination.
Subject to and upon compliance with the provisions of the Indenture,
the Holder hereof is entitled, at the Holder's option, from and after
___________, at any time on or before the close of business on ____________,
2000, or in case this Bond or a portion hereof is called for redemption or is to
be repurchased, then in respect of this Bond or such portion hereof until and
including, but (unless the Company defaults in making the payment due upon
redemption) not after, the close of business on the Redemption Date, to convert
this Bond (or any portion of the principal amount hereof which is $1,000 or an
integral multiple thereof), at the principal amount hereof, or of such portion,
into fully paid and nonassessable shares (calculated as to each conversion to
the nearest 1/100 of a share) of Common Stock of the Company at a Conversion
Price equal to an aggregate principal amount of Bonds for each share of Common
Stock as set, or in the event of an adjustment under the Indenture, at the
current adjusted Conversion Price as provided in the Indenture. The initial
Conversion Price under the Indenture is $3.00 per share. The Conversion Price is
subject to adjustment on ______________, 1997 and _____________, 1999, and
otherwise upon the occurrence of certain events described in the Indenture. The
Bond may be converted by surrender of this Bond, duly endorsed or assigned to
the Company or in blank, to the Company at the Principal Corporate Trust Office
of the Trustee and in such other cities, if any, as the Company may designate in
writing to the Trustee, accompanied by written notice to the Company that the
Holder hereof elects to convert this Bond, or if less than the entire principal
amount hereof is to be converted, the portion hereof to be converted, and, in
case such surrender shall be made during the period from the close of business
on any Regular Record Date next preceding any Interest Payment Date to the
opening of business on such Interest Payment Date (the "Interest Period")
(unless this Bond or the portion hereof being converted has been called for
redemption prior to such Interest Payment Date), also accompanied by payment in
same-day funds or other funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
this Bond then being converted. Subject to the aforesaid requirement for payment
and, in the case of a conversion after the Regular Record Date next preceding
any Interest Payment Date and on or before such Interest Payment Date, to the
right of the Holder of this Bond (or any Predecessor Bond) of record at such
Regular Record Date to receive an installment of interest (with certain
exceptions provided in the Indenture), no payment or adjustment is to be made on
conversion for interest accrued hereon or for dividends on the Common Stock
issued on conversion. No fractions of shares or scrip representing fractions of
shares will be issued on conversion, but instead of any fractional interest the
Company shall pay a cash adjustment as provided in the Indenture. In addition to
the adjustments to the conversion price provided in the Indenture, the Indenture
provides that in case of certain consolidations or mergers to which the Company
is a party or the transfer of substantially all of the assets of the Company,
the Indenture shall be amended, without the consent of any Holder of Bonds, so
that this Bond, if then outstanding, will be convertible thereafter, during the
period this Bond shall be convertible as specified above, only into the kind and
amount of securities, cash and other property receivable upon the consolidation,
merger or transfer by a holder of the number of shares of Common Stock into
which this Bond might have been converted immediately prior to such
consolidation, merger, statutory exchange, sale or conveyance.
The Company may, at its option, redeem the Bonds, either in whole or
from time to time in part, for a price equal to One Hundred Twenty percent
(120%) of the principal amount of the Bonds, together with interest accrued and
unpaid thereon to the Redemption Date, at any time after the date on which the
Sale Price of Common Stock for any twenty (20) consecutive Trading Days equaled
or exceeded Four Dollars ($4.00) per share (the "Redemption Xxxx") of the
Conversion Price then in effect. The Redemption Xxxx is subject to adjustment as
provided in the Indenture. Notice of any redemption shall be mailed by
first-class mail, postage prepaid to the registered Holders of the Bonds
designated for redemption at their addresses as the same shall appear on the
Bond Register not less than thirty (30) days, but not more than sixty (60) days
prior to the Redemption Date, subject to all the conditions and provisions of
the Indenture.
If this Bond, or a portion hereof, shall be redeemed by call for
redemption or shall be accepted for repayment upon the death of the Holder, and
payment be duly provided therefore as specified in the Indenture, interest shall
cease to accrue on this Bond or such portion hereof, as the case may be.
The indebtedness evidenced by this Bond is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Bond is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Bond, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordinate so provided and (c)
appoints the Trustee as the Holder's attorney-in-fact for any and all such
purposes.
Interest installments whose Stated Maturity is on or before the
Redemption Date or Repayment Date will be payable to the Holders of such Bonds,
or one or more Predecessor Bonds, of record at the close of business on the
relevant Record Date referred to on the face hereof, all as provided in the
Indenture. In the event of redemption or repayment of this Bond in part only, a
new Bond or Bonds for the unredeemed or unrepaid portion hereof shall be issued
in the name of the Holder hereof upon the cancellation hereof.
In the event of redemption or conversion of this Bond in part only, a
new Bond or Bonds for the unredeemed or unconverted portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.
This Indebtedness is secured by the Collateral Stock, as provided in
the Indenture. The Indenture contains certain provisions permitting the Holders
of specified percentages in aggregate principal amount of the Bonds at the time
Outstanding, as defined in the Indenture, on behalf of the Holders of all Bonds,
to enforce the security interest of the Holders, or to waive such enforcement or
to release all or any portion of the Collateral Stock. Each Holder agrees to be
bound by such provisions, authorizes Trustee to take such actions as may be
approved or directed by the Holders of the specified percentage in aggregate
principal amounts of the Bonds at the time Outstanding, as defined in the
Indenture, and appoints Trustee as the Holder's attorney in fact for all such
purposes.
If an Event of Default as defined in the Indenture shall occur and be
continuing, the principal of all the Bonds may be declared due and payable in
the manner and with the effect provided in the Indenture. The Company shall pay
all reasonable costs of collection in the manner provided in the Indenture. The
Indenture provides that such declaration and its consequences may, in certain
events, be annulled by the Holders of a majority in principal amount of the
Bonds Outstanding.
The Indenture permits, with certain exceptions, as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Bonds under the Indenture at any
time by the Company with consent of the Holders of a majority in aggregate
principal amount of the Bonds at the time Outstanding, as defined in the
Indenture. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Bonds at the time
Outstanding, as defined in the Indenture, on behalf of the Holders of all Bonds,
to waive compliance by the Company with certain provisions of the Indenture and
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Bond shall be conclusive and binding upon such
Holder and upon all future Holders of this Bond and of any Bond issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Bond.
No reference herein to the Indenture and no provisions of this Bond or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Bond at the time, places and rate, and in the coin and
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, this Bond is transferable on the Bond Register of the Company, upon
surrender of this Bond for registration of transfer at the office or agency of
the Company to be maintained for that purpose, which may be the Principal
Corporate Trust Office, or at such other office or agency as may be established
by the Company for such purpose pursuant to the Indenture, duly endorsed by, or
accompanied by written instrument of transfer in form satisfactory to the
company and the Bond Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Bonds, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The debentures are issuable only in registered form, without coupons,
in denominations of $1,000 and any integral multiple thereof, as provided in the
Indenture and subject to certain limitations therein set forth. Bonds are
exchangeable for a like aggregate principal amount of Bonds of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such transfer or exchange, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
All terms used in this Bond which are defined in the Indenture have the
meanings assigned to them in the Indenture.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name this Bond is registered as the owner hereof
for all purposes, whether or not this Bond be overdue, and neither the Company,
the Trustee, nor any such agent shall be affected by notice to the contrary.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds referred to in the within-mentioned Indenture.
--------------------------,
as Trustee
By --------------------------
Authorized Signature
