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TEL-SAVE HOLDINGS, INC.
TO
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
TRUSTEE
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INDENTURE
DATED AS OF SEPTEMBER 9, 1997
4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2002
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions........................................................................................1
SECTION 1.02. Other Definitions..................................................................................6
SECTION 1.03. Incorporation by Reference of Trust Indenture Act..................................................7
SECTION 1.04. Rules of Construction..............................................................................8
ARTICLE II
The Securities
SECTION 2.01. Form and Dating....................................................................................8
SECTION 2.02. Execution, Authentication and Delivery............................................................10
SECTION 2.03. Registrar, Paying Agent and Conversion Agent......................................................10
SECTION 2.04. Paying Agent to Hold Money in Trust...............................................................11
SECTION 2.05. Noteholder Lists..................................................................................11
SECTION 2.06. Transfer and Exchange.............................................................................11
SECTION 2.07. Replacement Securities............................................................................14
SECTION 2.08. Outstanding Securities............................................................................14
SECTION 2.09. Treasury Securities...............................................................................15
SECTION 2.10. Temporary Securities; Exchange of Global Security for Certificated Securities.....................15
SECTION 2.11. Cancellation......................................................................................16
SECTION 2.12. Defaulted Interest................................................................................16
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee................................................................................16
SECTION 3.02. Selection of Securities to be Redeemed............................................................17
SECTION 3.03. Notice of Redemption..............................................................................17
SECTION 3.04. Effect of Notice of Redemption....................................................................18
SECTION 3.05. Deposit of Redemption Price.......................................................................18
SECTION 3.06. Securities Redeemed in Part.......................................................................18
SECTION 3.07. Optional Redemption...............................................................................18
SECTION 3.08. Designated Event Offer............................................................................19
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ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities.............................................................................21
SECTION 4.02. SEC Reports.......................................................................................21
SECTION 4.03. Compliance Certificate............................................................................21
SECTION 4.04. Stay, Extension and Usury Law.....................................................................22
SECTION 4.05. Corporate Existence...............................................................................22
SECTION 4.06. Taxes.............................................................................................23
SECTION 4.07. Designated Event..................................................................................23
ARTICLE V
Conversion
SECTION 5.01. Conversion Privilege..............................................................................23
SECTION 5.02. Conversion Procedure..............................................................................24
SECTION 5.03. Fractional Shares.................................................................................25
SECTION 5.04. Taxes on Conversion...............................................................................25
SECTION 5.05. Company to Provide Stock..........................................................................25
SECTION 5.06. Adjustment of Conversion Price....................................................................25
SECTION 5.07. No Adjustment.....................................................................................29
SECTION 5.08. Other Adjustments.................................................................................29
SECTION 5.09. Adjustments for Tax Purposes......................................................................29
SECTION 5.10. Adjustments by the Company........................................................................29
SECTION 5.11. Notice of Adjustment..............................................................................30
SECTION 5.12. Notice of Certain Transactions....................................................................30
SECTION 5.13. Effect of Reclassifications, Consolidations, Mergers or Sales on Conversion Privilege.............30
SECTION 5.14. Trustee's Disclaimer..............................................................................31
ARTICLE VI
Subordination
SECTION 6.01. Agreement to Subordinate..........................................................................32
SECTION 6.02. No Payment on Securities if Senior Debt in Default................................................32
SECTION 6.03. Distribution on Acceleration of Securities; Dissolution and Reorganization;
Subrogation of Securities.............................................................33
SECTION 6.04. Reliance by Senior Debt on Subordination Provisions...............................................36
SECTION 6.05. No Waiver of Subordination Provisions.............................................................36
SECTION 6.06. Trustee's Relation to Senior Debt.................................................................37
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SECTION 6.07. Other Provisions Subject Hereto...................................................................38
ARTICLE VII
Successors
SECTION 7.01. Merger, Consolidation or Sale of Assets...........................................................38
SECTION 7.02. Successor Corporation Substituted.................................................................39
ARTICLE VIII
Defaults and Remedies
SECTION 8.01. Events of Default.................................................................................39
SECTION 8.02. Acceleration......................................................................................40
SECTION 8.03. Other Remedies....................................................................................41
SECTION 8.04. Waiver of Past Defaults...........................................................................41
SECTION 8.05. Control by Majority...............................................................................41
SECTION 8.06. Limitation on Suits...............................................................................41
SECTION 8.07. Rights of Noteholders to Receive Payment..........................................................42
SECTION 8.08. Collection Suit by Trustee........................................................................42
SECTION 8.09. Trustee May File Proofs of Claim..................................................................42
SECTION 8.10. Priorities........................................................................................43
SECTION 8.11. Undertaking for Costs.............................................................................43
ARTICLE IX
Trustee
SECTION 9.01. Duties of Trustee.................................................................................43
SECTION 9.02. Rights of Trustee.................................................................................44
SECTION 9.03. Individual Rights of Trustee......................................................................45
SECTION 9.04. Trustee's Disclaimer..............................................................................45
SECTION 9.05. Notice of Defaults................................................................................45
SECTION 9.06. Reports by Trustee to Noteholders.................................................................45
SECTION 9.07. Compensation and Indemnity........................................................................45
SECTION 9.08. Replacement of Trustee............................................................................46
SECTION 9.09. Successor Trustee by Merger, Etc..................................................................47
SECTION 9.10. Eligibility; Disqualification.....................................................................47
SECTION 9.11. Preferential Collection of Claims Against Company.................................................47
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ARTICLE X
Discharge of Indenture
SECTION 10.01. Termination of Company's Obligations.............................................................47
SECTION 10.02. Repayment to Company.............................................................................48
ARTICLE XI
Amendments, Supplements and Waivers
SECTION 11.01. Without Consent of Noteholders...................................................................48
SECTION 11.02. With Consent of Noteholders......................................................................49
SECTION 11.03. Compliance with Trust Indenture Act..............................................................50
SECTION 11.04. Revocation and Effect of Consents................................................................50
SECTION 11.05. Notation on or Exchange of Securities............................................................50
SECTION 11.06. Trustee Protected................................................................................51
ARTICLE XII
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls.....................................................................51
SECTION 12.02. Notices..........................................................................................51
SECTION 12.03. Communication by Noteholders with Other Noteholders..............................................51
SECTION 12.04. Certificate and Opinion as to Conditions Precedent...............................................52
SECTION 12.05. Statements Required in Certificate or Opinion....................................................52
SECTION 12.06. Rules by Trustee and Agents......................................................................52
SECTION 12.07. Legal Holidays...................................................................................52
SECTION 12.08. No Recourse Against Others.......................................................................53
SECTION 12.09. Counterparts.....................................................................................53
SECTION 12.10. Variable Provisions..............................................................................53
SECTION 11.11. GOVERNING LAW....................................................................................54
SECTION 12.12. No Adverse Interpretation of Other Agreements....................................................54
SECTION 12.13. Successors.......................................................................................54
SECTION 12.14. Severability.....................................................................................54
SECTION 12.15. Table of Contents, Headings, Etc.................................................................54
iv
EXHIBIT A FORM OF CONVERTIBLE SUBORDINATED NOTE................... A-1
EXHIBIT B FORM OF TRANSFER CERTIFICATE............................ B-1
EXHIBIT C FORM OF ACCREDITED INVESTOR TRANSFEREE
CERTIFICATE.......................................... C-1
EXHIBIT D FORM OF REGISTRATION AGREEMENT.......................... E-1
v
INDENTURE dated as of September 9, 1997 between Tel-Save
Holdings, Inc., a Delaware corporation (the "Company"), and First Trust of New
York, National Association, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Noteholders of the Company's
4 1/2% Convertible Subordinated Notes Due 2002 (the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions. "Affiliate" of any specified person
means any other person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
used with respect to any person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such person, whether through the ownership of voting securities or
by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or Conversion Agent.
"Board of Directors" means the Board of Directors of the
Company or any authorized committee of the Board.
"Board Resolution" means a copy of a resolution of the Board
of Directors certified by the Secretary or an Assistant Secretary of the Company
to be in full force and effect on the date of such certification and delivery to
the Trustee.
"Business Day" means any day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of equity
interests in any entity, including, without limitation, corporate stock and
partnership interests.
"Change of Control" means any event where: (i) any "person" or
"group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act) of shares representing more than 50% of the combined voting
power of the then-outstanding securities entitled to vote generally in elections
of directors of the Company ("Voting Stock"), (ii) the Company consolidates with
or merges into any other corporation, or any other person merges into the
Company, and, in the case of any such transaction, the outstanding Common Stock
of the Company is reclassified into or exchanged for any other property or
security, unless the stockholders of the Company immediately before such
transaction own, directly or indirectly
immediately following such transaction, at least a majority of the combined
voting power of the outstanding voting securities of the corporation resulting
from such transaction in substantially the same proportion as their ownership of
the Voting Stock immediately before such transaction, (iii) the Company conveys,
transfers or leases all or substantially all of its assets to any person (other
than to one or more wholly-owned subsidiaries of the Company) or (iv) any time
the Continuing Directors do not constitute a majority of the Board of Directors
of the Company (or, if applicable, a successor corporation to the Company).
"Common Stock" means the common stock of the Company as the
same exists at the date of the execution of this Indenture or as such stock may
be constituted from time to time.
"Company" means the party named as such above until a
successor replaces it in accordance with Article VII and thereafter means the
successor.
"Continuing Directors" means as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such board at the time of such
nomination or election.
"Daily Market Price" means the price of a share of Common
Stock on the relevant date, determined (a) on the basis of the last reported
sale price regular way of the Common Stock as reported on the Nasdaq Stock
Market's National Market (the "NNM"), or if the Common Stock is not then listed
on the NNM, as reported on such national securities exchange upon which the
Common Stock is listed, or (b) if there is no such reported sale on the day in
question, on the basis of the average of the closing bid and asked quotations
regular way as so reported, or (c) if the Common Stock is not listed on the NNM
or on any national securities exchange, on the basis of the average of the high
bid and low asked quotations regular way on the day in question in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation System, or if not so quoted, as reported by National
Quotation Bureau, Incorporated, or a similar organization.
"Default" means any event that is, or with the passage of time
or the giving of notice or both, would be an Event of Default.
"Depositary" means The Depository Trust Company, its nominees
and their respective successors.
"Designated Event" means the occurrence of a Change of Control
or a Termination of Trading.
"Designated Senior Debt" means (i) any Senior Debt which, as
of the date of this Indenture, has an aggregate principal amount outstanding of
at least $15 million, and (ii) any
2
Senior Debt which, at the date of determination, has an aggregate principal
amount outstanding of, or commitments to lend up to, at least $15 million and is
specifically designated by the Company in the instrument evidencing or governing
such Senior Debt as "Designated Senior Debt" for purposes of this Indenture
(provided, that such instrument may place limitations and conditions on the
right of such Senior Debt to exercise the rights of Designated Senior Debt).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are in effect from time to time.
"Global Securities Legend" means the legend labeled as such
and that is set forth in Exhibit A hereto.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Indebtedness" means, with respect to any person, all
obligations, whether or not contingent, of such person (i)(a) for borrowed money
(including, but not limited to, any indebtedness secured by a security interest,
mortgage or other lien on the assets of such person which is (1) given to secure
all or part of the purchase price of property subject thereto, whether given to
the vendor of such property or to another, or (2) existing on property at the
time of acquisition thereof), (b) evidenced by a note, debenture, bond or
written instrument, (c) under a lease required to be capitalized on the balance
sheet of the lessee under GAAP or under any lease or related document (including
a purchase agreement) which provides that such person is contractually obligated
to purchase or to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances (including
reimbursement obligations with respect to any of the foregoing), (e) with
respect to Indebtedness secured by a mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in an encumbrance to which the
property or assets of such person are subject, whether or not the obligation
secured thereby shall have been assumed or Guaranteed by or shall otherwise be
such person's legal liability, (f) in respect of the balance of the deferred and
unpaid purchase price of any property or assets, and (g) under interest rate or
currency swap agreements, cap, floor and collar agreements, spot and forward
contracts and similar agreements and arrangements; (ii) with respect to any
obligation of others of the type described in the preceding clause (i) or under
clause (iii) below assumed by or guaranteed in any manner by such person or in
effect guaranteed by such person through an agreement to purchase (including,
without limitation, "take or pay" and similar arrangements), contingent or
otherwise (and the obligations of such
3
person under any such assumptions, guarantees or other such arrangements); and
(iii) any and all deferrals, renewals, extensions, refinancings and refundings
of, or amendments, modifications or supplements to, any of the foregoing.
"Indenture" means this Indenture as amended from time to time.
"Initial Purchasers" means Salomon Brothers Inc, Deutsche
Xxxxxx Xxxxxxxx Inc. Bear, Xxxxxxx & Co. Inc., Xxxxx Xxxxxx Inc., Xxxxxxxxx,
Xxxxxxx & Company LLC and First Union Capital Markets Corp.
Bear, Xxxxxxx & Co. Inc., Xxxxx Xxxxxx Inc., Xxxxxxxxx,
Xxxxxxxx & Company LLC and First Union Capital Markets Corp.
"Issuance Date" means the date on which the Securities are
first authenticated and issued.
"Material Subsidiary" means any Subsidiary of the Company
which, at the date of determination, is a "significant subsidiary" as defined in
Rule 1-02(w) of Regulation S-X under the Securities Act and the Exchange Act (as
such Regulation is in effect on the date hereof).
"Noteholder" or "holder" means a person in whose name a
Security is registered.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the offering memorandum relating
to the Securities dated September 3, 1997.
"Officers' Certificate" means a certificate signed by two
Officers, one of whom must be the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer or the Treasurer of the
Company. See Sections 12.04 and 12.05 hereof.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee. See Sections 12.04 and 12.05 hereof.
"person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"principal" of a debt security means the principal of the
security plus the premium, if any, on the security.
4
"Registration Agreement" means the Registration Agreement
relating to the Securities dated September 3, 1997, between the Company and the
Initial Purchasers, a form of which is attached as Exhibit D hereto.
"Representative" means the trustee, agent or representative
(if any) for an issue of Senior Debt.
"Restricted Securities Legend" means the legend labeled as
such and that is set forth in Exhibit A hereto.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described in the preamble
above that are issued, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means the principal of, interest on and other
amounts due on Indebtedness of the Company, whether outstanding on the date of
the Indenture or thereafter created, incurred, assumed or Guaranteed by the
Company; unless, in the instrument creating or evidencing or pursuant to which
Indebtedness is outstanding, it is expressly provided that such Indebtedness is
not senior in right of payment to the Securities. Senior Debt includes, with
respect to the obligations described above, interest accruing, pursuant to the
terms of such Senior Debt, on or after the filing of any petition in bankruptcy
or for reorganization relating to the Company, whether or not post-filing
interest is allowed in such proceeding, at the rate specified in the instrument
governing the relevant obligation. Notwithstanding anything to the contrary in
the foregoing, Senior Debt shall not include: (a) Indebtedness of or amounts
owed by the Company for compensation to employees, or for goods, services or
materials purchased in the ordinary course of business; (b) Indebtedness of the
Company to a Subsidiary of the Company; or (c) any liability for Federal, state,
local or other taxes owed or owing by the Company.
"Shelf Registration Statement" shall have the meaning set
forth in the Registration Agreement.
"Subsidiary" means any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by any person or one or more of the
other Subsidiaries of that person or a combination thereof.
"Termination of Trading" means an event where the Common Stock
(or other securities into which the Securities are then convertible) is neither
listed for trading on a United
5
States national securities exchange nor approved for trading on an established
automated over-the-counter trading market in the United States.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
xx.xx. 77aaa-77bbbb) as in effect on the date of execution of this Indenture.
"Trading Day" shall mean (A) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or another
national securities exchange, a day on which the New York Stock Exchange or such
other national securities exchange is open for business, (B) if the applicable
security is quoted on the NNM, a day on which trades may be made thereon or (C)
if the applicable security is not so listed, admitted for trading or quoted, any
day other than a Saturday or Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law or executive order to
close.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer this Indenture.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Agent Members".................................................. 2.01
"Bankruptcy Law"................................................. 8.01
"Cedel Bank"..................................................... 2.01
"Commencement Date".............................................. 3.08
"Conversion Agent"............................................... 2.03
"Conversion Date"................................................ 5.02
"Conversion Price"............................................... 5.01
"Conversion Shares".............................................. 5.06
"Current Market.................................................. 5.06
"Custodian"...................................................... 8.01
"Designated Event Offer"......................................... 4.07
"Designated Event Payment"....................................... 4.07
"Designated Event Payment Date".................................. 3.08
"Distribution Date".............................................. 5.06
"Distribution Record Date"....................................... 5.06
"Excess Payment"................................................. 5.06
"Euroclear"...................................................... 2.01
"Event of Default"............................................... 8.01
6
"Global Security"................................................ 2.01
"Legal Holiday".................................................. 12.07
"Non-Global Purchasers".......................................... 2.01
"Offer Amount"................................................... 3.08
"Officer"........................................................ 12.10
"Paying Agent"................................................... 2.03
"Payment Blockage Notice"........................................ 6.02
"Payment Blockage Period"........................................ 6.02
"Payment Default"................................................ 8.01
"Purchase Agreement"............................................. 2.01
"Purchase Date".................................................. 5.06
"QIBs"........................................................... 2.01
"Registrar"...................................................... 2.03
"Regulation S"................................................... 2.01
"Restricted Securities".......................................... 2.01
"Rights"......................................................... 5.06
"Rule 144A"...................................................... 2.01
"Tender Period".................................................. 3.08
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Securities means the Company or any other
obligor on the Securities.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
7
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP consistently applied;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and words in the
plural include the singular; and
(e) provisions apply to successive events and transactions.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. The Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A which is hereby incorporated in and expressly made a part of this
Indenture.
The Securities may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company is
subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). The Company shall furnish
any such legend not contained in Exhibit A to the Trustee in writing. Each
Security shall be dated the date of its authentication. The terms and provisions
of the Securities set forth in Exhibit A are part of the terms of this Indenture
and to the extent applicable, the Company and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions and
to be bound thereby.
(a) Global Securities. The Securities are being offered and
sold by the Company pursuant to a Purchase Agreement relating to the Securities,
dated September 3, 1997, among the Company and the Initial Purchasers (the
"Purchase Agreement").
Securities offered and sold (i) in reliance on Regulation S
under the Securities Act ("Regulation S") shall be issued in the form of one or
more permanent global Securities in definitive, fully registered form without
interest coupons with the Global Securities Legend set forth in Exhibit A hereto
or (ii) to Qualified Institutional Buyers ("QIBs") in reliance on Rule 144A
under the Securities Act ("Rule 144A"), each as provided in the Purchase
Agreement, shall be issued in the form of one or more permanent global
Securities in definitive, fully registered form without interest coupons with
the Global Securities Legend and Restricted Securities Legend set forth in
Exhibit A hereto (together, the "Global Securities"). Each Global Security shall
be deposited on behalf of the purchasers of the Securities represented thereby
with the Trustee, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or a nominee of the Depositary (and, in
the case of Regulation S, for the accounts of
8
designated agents holding on behalf of the Euroclear System ("Euroclear") or
Cedel Bank, societe anonyme ("Cedel Bank")), duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the Global Security may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its nominee
as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply
only to a Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.01(b) and the written order of the Company, authenticate and
deliver initially one or more Global Securities that (i) shall be registered in
the name of Cede & Co. or other nominee of such Depositary and (ii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as custodian for the Depositary pursuant to
a FAST Balance Certificate Agreement between the Depositary and the Trustee.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of such Depositary governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in Section
2.10, owners of beneficial interests in Global Securities will not be entitled
to receive physical delivery of certificated Securities. Purchasers of
Securities who are not QIBs and did not purchase Securities sold in reliance on
Regulation S under the Securities Act (referred to herein as the "Non-Global
Purchasers") will receive certificated Securities bearing the Restricted
Securities Legend set forth in Exhibit A hereto ("Restricted Securities").
Restricted Securities will bear the Restricted Securities Legend set forth on
Exhibit A unless removed in accordance with Section 2.06(b) hereof and may not
be exchanged for a Global Security, or interest therein, at any time.
After a transfer of any Securities during the period of the
effectiveness of a Shelf Registration Statement with respect to the Securities,
all requirements pertaining to legends on such Security will cease to apply, the
requirements requiring any such Security issued to certain holders to be issued
in global form will cease to apply, and a certificated Security without legends
will be available to the holder of such Securities.
9
SECTION 2.02. Execution, Authentication and Delivery. Two
Officers shall sign the Securities for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the
manual signature of an authorized officer of the Trustee. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
Upon a written order of the Company signed by two Officers,
the Trustee shall authenticate the Securities for original issue up to an
aggregate principal amount of $300,000,000 and deliver such authenticated
securities as directed in such order. The aggregate principal amount of
Securities outstanding at any time shall not exceed such amount except as
provided in Section 2.07.
The Trustee may appoint one or more authenticating agents
acceptable to the Company to authenticate Securities. An authenticating agent
may authenticate Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the
Company or an Affiliate.
SECTION 2.03. Registrar, Paying Agent and Conversion Agent.
The Company shall maintain in the Borough of Manhattan, City of New York, State
of New York (i) an office or agency where Securities may be presented for
registration of transfer or for exchange (the "Registrar"), (ii) an office or
agency where Securities may be presented for payment (the "Paying Agent") and
(iii) an office or agency where Securities may be presented for conversion (the
"Conversion Agent"). The Registrar shall keep a register of the Securities and
of their transfer and exchange. The Company has initially appointed the Trustee
as its Registrar, Paying Agent and Conversion Agent in New York. The Company may
appoint one or more co-registrars, one or more additional paying agents and one
or more additional conversion agents in such other locations as it shall
determine. The term "Registrar" includes any co-registrar, the term "Paying
Agent" includes any additional paying agent and the term "Conversion Agent"
includes any additional conversion agent. The Company may change any Paying
Agent, Registrar or Conversion Agent without prior notice to any Noteholder. The
Company shall notify the Trustee of the name and address of any newly-appointed
Agent not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar, Paying Agent or Conversion Agent, the Trustee shall
act as such.
SECTION 2.04. Paying Agent to Hold Money in Trust. The Company
shall require each Paying Agent other than the Trustee to agree in writing that
the Paying Agent will hold in trust for the benefit of Noteholders or the
Trustee all money held by the Paying Agent for
10
the payment of principal or interest on the Securities, and will notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee and to account for any money disbursed by
it. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or an Affiliate of the Company) shall have no further liability for the
money. If the Company or an Affiliate of the Company acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the
Noteholders all money held by it as Paying Agent.
SECTION 2.05. Noteholder Lists. The Trustee shall preserve in
as current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Noteholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee on or before each interest
payment date and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Noteholders.
SECTION 2.06. Transfer and Exchange. Where Securities are
presented to the Registrar with a request to register a transfer or to exchange
them for an equal principal amount of Securities of other denominations, such
Registrar shall register the transfer or make the exchange if its requirements
for such transactions are met. To permit registrations of transfers and
exchanges, the Company shall issue and the Trustee shall authenticate Securities
at the Registrar's request. No service charge shall be made for any registration
of transfer or exchange (except as otherwise expressly permitted herein), but
the Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer tax or similar governmental charge payable upon exchanges pursuant to
Sections 2.10, 3.06, 3.08, 5.02 or 11.05 hereof).
The Company shall not be required (i) to issue, register the
transfer of, or exchange Securities during a period beginning at the opening of
business 15 days before the day of any selection of Securities for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection, or (ii) to exchange or register the transfer of any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
(a) Notwithstanding any provision to the contrary herein, so
long as a Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Section
2.01(b) and this Section 2.06(a); provided, however, that beneficial interests
in a Global Security may be transferred to persons who take delivery thereof in
the form of a beneficial interest in the same Global Security in accordance with
the transfer restrictions set
11
forth under the heading "Notice to Investors" in the Offering Memorandum and, if
applicable, in the Restricted Securities Legend.
(i) Except for transfers or exchanges made in accordance with
any of clauses (ii) through (iv) of this Section 2.06(a), transfers of
a Global Security shall be limited to transfers of such Global Security
in whole, but not in part, to nominees of the Depositary or to a
successor of the Depositary or such successor's nominee.
(ii) Global Security to Restricted Security. If an owner of a
beneficial interest in a Global Security deposited with the Depositary
or with the Trustee as custodian for the Depositary wishes at any time
to transfer its interest in such Global Security to a person who is
required to take delivery thereof in the form of a Restricted Security,
such owner may, subject to the rules and procedures of Euroclear or
Cedel Bank, if applicable, and the Depositary, cause the exchange of
such interest for one or more Restricted Securities of any authorized
denomination or denominations and of the same aggregate principal
amount at maturity. Upon receipt by the Registrar of (1) instructions
from Euroclear or Cedel Bank, if applicable, and the Depositary
directing the Trustee to authenticate and deliver one or more
Restricted Securities of the same aggregate principal amount at
maturity as the beneficial interest in the Global Security to be
exchanged, such instructions to contain the name or names of the
designated transferee or transferees, the authorized denomination or
denominations of the Restricted Securities to be so issued and
appropriate delivery instructions, (2) a certificate substantially in
the form of Exhibit B attached hereto given by the owner of such
beneficial interest and stating that the person transferring such
interest in such Global Security reasonably believes that the person
acquiring the Restricted Securities for which such interest is being
exchanged is an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and is acquiring such Restricted Securities having an aggregate
principal amount of not less than $250,000 for its own account or for
one or more accounts as to which the transferee exercises sole
investment discretion, (3) a certificate in the form of Exhibit C
attached hereto given by the person acquiring the Restricted Securities
for which such interest is being exchanged, to the effect set forth
therein, and (4) such other certifications, legal opinions or other
information as the Company may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act, then Euroclear or Cedel Bank, if applicable, or the
Registrar, as the case may be, will instruct the Depositary to reduce
or cause to be reduced such Global Security by the aggregate principal
amount at maturity of the beneficial interest therein to be exchanged
and to debit or cause to be debited from the account of the person
making such transfer the beneficial interest in the Global Security
that is being transferred, and concurrently with such reduction and
debit the Company shall execute, and the Trustee shall authenticate and
deliver, one or more Restricted Securities of the same aggregate
principal amount at maturity in accordance with the instructions
referred to above.
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(iii) Restricted Security to Restricted Security. If a holder
of a Restricted Security wishes at any time to transfer such Restricted
Security to a person who is required to take delivery thereof in the
form of a Restricted Security, such holder may, subject to the
restrictions on transfer set forth herein and in such Restricted
Security, cause the exchange of such Restricted Security for one or
more Restricted Securities of any authorized denomination or
denominations and of the same aggregate principal amount at maturity.
Upon receipt by the Registrar of (1) such Restricted Security, duly
endorsed as provided herein, (2) instructions from such holder
directing the Trustee to authenticate and deliver one or more
Restricted Securities of the same aggregate principal amount at
maturity as the Restricted Security to be exchanged, such instructions
to contain the name or names of the designated transferee or
transferees, the authorized denomination or denominations of the
Restricted Securities to be so issued and appropriate delivery
instructions, (3) a certificate from the holder of the Restricted
Security to be exchanged in the form of Exhibit B attached hereto, (4)
a certificate in the form of Exhibit C attached hereto given by the
person acquiring the Restricted Securities for which such interest is
being exchanged, to the effect set forth therein, and (5) such other
certifications, legal opinions or other information as the Company may
reasonably require to confirm that such transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then the Registrar,
shall cancel or cause to be canceled such Restricted Security and
concurrently therewith, the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Restricted Securities of
the same aggregate principal amount at maturity, in accordance with the
instructions referred to above.
(iv) Other Exchanges. In the event that a Global Security is
exchanged for Securities in definitive registered form pursuant to
Section 2.10, prior to the effectiveness of a Shelf Registration
Statement with respect to such Securities, such Securities may be
exchanged only in accordance with such procedures as are substantially
consistent with the provisions of clauses (ii) and (iii) above
(including the certification requirements intended to ensure that such
transfers comply with Rule 144A or Regulation S under the Securities
Act, as the case may be) and such other procedures as may from time to
time be adopted by the Company.
(b) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Agreement,
if Securities are issued upon the registration of transfer, exchange or
replacement of Securities bearing the Restricted Securities Legend set forth in
Exhibit A hereto, or if a request is made to remove such Restricted Securities
Legend on Securities, the Securities so issued shall bear the Restricted
Securities Legend, or the Restricted Securities Legend shall not be removed, as
the case may be, unless there is delivered to the Company such satisfactory
evidence, which may include an opinion of counsel licensed to practice law in
the State of New York, as may be reasonably required by the Company, that
neither the legend nor the restrictions on transfer set forth therein are
required to ensure that
13
transfers thereof comply with the provisions of Rule 144A, Rule 144 or
Regulation S under the Securities Act or, with respect to Restricted Securities,
that such Securities are not "restricted" within the meaning of Rule 144 under
the Securities Act. Upon provision to the Company of such satisfactory evidence,
the Trustee, at the written direction of the Company, shall authenticate and
deliver Securities that do not bear the legend.
(c) Neither the Trustee nor any Agent shall have any
responsibility for any actions taken or not taken by the Depositary.
SECTION 2.07. Replacement Securities. If the holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken
or if such Security is mutilated and is surrendered to the Registrar, the
Company shall issue and the Trustee shall authenticate a replacement Security if
the Trustee's and the Company's requirements (as shall have been previously
communicated to the Trustee in a written letter of standing instruction) are
met. If required by the Trustee, the Registrar or the Company, an indemnity bond
must be sufficient in the judgment of each of the foregoing to protect the
Company, the Trustee, any Agent or any authenticating agent from any loss which
any of them may suffer if a Security is replaced. The Company may charge for its
expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, or is about to be redeemed or
purchased by the Company pursuant to Article III hereof or converted into shares
of Common Stock pursuant to Article V hereof, the Company in its discretion may,
instead of issuing a new Security, pay, redeem or convert such Security, as the
case may be.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. The Securities
outstanding at any time are all the Securities authenticated by the Trustee
except for those canceled by it, those delivered to it for cancellation, and
those described in this Section as not outstanding.
If a Security is replaced, paid, redeemed or converted
pursuant to Section 2.07 hereof, it ceases to be outstanding unless, in the case
of a replaced Security, the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01 hereof,
they cease to be outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Security.
SECTION 2.09. Treasury Securities. In determining whether the
Noteholders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or an Affiliate of
the Company shall be considered as though
14
they are not outstanding, except that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, waiver or
consent, only Securities which a Trust Officer knows are so owned shall be so
disregarded.
SECTION 2.10. Temporary Securities; Exchange of Global
Security for Certificated Securities. (a) Until definitive Securities are ready
for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities.
(b) A Global Security deposited with the Depositary or with
the Trustee as custodian for the Depositary pursuant to Section 2.01 shall be
transferred to the beneficial owners thereof in the form of certificated
securities only if such transfer complies with Section 2.06 and (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security or if at any time such Depositary ceases to
be a "clearing agency" registered under the Exchange Act and a successor
Depositary is not appointed by the Company within 90 days of such notice, or
(ii) an Event of Default has occurred and is continuing.
(c) Any Global Security that is transferable to the beneficial
owners thereof in the form of certificated Securities pursuant to this Section
2.10 shall be surrendered by the Depositary to the Trustee located in the
Borough of Manhattan, The City of New York, to be so transferred, in whole or
from time to time in part, without charge, and the Trustee shall authenticate
and deliver, upon such transfer of each portion of such Global Security, an
equal aggregate principal amount at maturity of Securities of authorized
denominations in the form of certificated Securities. Any portion of a Global
Security transferred pursuant to this Section shall be executed, authenticated
and delivered only in denominations of $1,000 and any integral multiple thereof
and registered in such names as the Depositary shall direct. Any Securities in
the form of certificated Securities delivered in exchange for an interest in the
Global Security shall, except as otherwise provided by Section 2.06(b), bear the
Restricted Securities Legend set forth in Exhibit A hereto.
(d) Prior to any transfer pursuant to Section 2.10(b), the
registered holder of a Global Security may grant proxies and otherwise authorize
any person, including Agent Members and persons that may hold interests through
Agent Members, to take any action which a holder is entitled to take under this
Indenture or the Securities.
(e) In the event of the occurrence of either of the events
specified in Section 2.10(b), the Company will promptly make available to the
Trustee a reasonable supply of certificated Securities in definitive form
without interest coupons.
15
SECTION 2.11. Cancellation. The Company at any time may
deliver Securities to the Registrar for cancellation. The Registrar, Paying
Agent and Conversion Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, redemption, conversion,
exchange or payment. The Trustee shall promptly cancel all Securities
surrendered for registration of transfer, redemption, conversion, exchange,
payment, replacement or cancellation and shall destroy all canceled Securities
unless the Company otherwise directs. The Company may not issue new Securities
to replace Securities that it has paid or that have been delivered to the
Registrar for cancellation or that any holder has converted.
SECTION 2.12. Defaulted Interest. If the Company fails to make
a payment of interest on the Securities, it shall pay such defaulted interest
plus any interest payable on the defaulted interest, in any lawful manner. It
may pay such defaulted interest, plus any such interest payable on it, to the
persons who are Noteholders on a subsequent special record date. The Company
shall fix any such record date and payment date. At least 15 days before any
such record date, the Company shall mail to Noteholders a notice that states the
record date, payment date, and amount of such interest to be paid.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to Section 3.07 hereof, it shall notify the Trustee
of the redemption date and the principal amount of Securities to be redeemed.
The Company shall give each notice provided for in this Section 3.01 at least 45
days before the redemption date (unless a shorter notice period shall be
satisfactory to the Trustee).
SECTION 3.02. Selection of Securities to be Redeemed. If less
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed by a method that complies with the requirements of the
principal national securities exchange, if any, on which the Securities are
listed, or, if the Securities are not so listed, on a pro rata basis, by lot or
by such other method as the Trustee considers fair and appropriate. The Trustee
shall make the selection not more than 60 days and not less than 30 days before
the redemption date from Securities outstanding not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them it selects shall be in amounts of $1,000 or integral multiples of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be called for redemption.
If any Security selected for partial redemption is converted
in part after such selection, the converted portion of such Security shall be
deemed (so far as may be) to be the portion to be selected for redemption. The
Securities (or portions thereof) so selected shall be
16
deemed duly selected for redemption for all purposes hereof, notwithstanding
that any such Security is converted in whole or in part before the mailing of
the notice of redemption. Upon any redemption of less than all the Securities,
the Company and the Trustee may treat as outstanding any Securities surrendered
for conversion during the period 15 days next preceding the mailing of a notice
of redemption and need not treat as outstanding any Security authenticated and
delivered during such period in exchange for the unconverted portion of any
Security converted in part during such period.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a redemption date, the Company shall mail a notice of
redemption to each holder whose Securities are to be redeemed at such holder's
registered address.
The notice shall identify the Securities to be redeemed and
shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after
the redemption date, upon cancellation of such Security, a new Security
or Securities in principal amount equal to the unredeemed portion will
be issued in the name of the holder thereof;
(d) the name and address of the Paying Agent;
(e) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price plus accrued
interest;
(f) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, by law or otherwise,
interest on Securities called for redemption ceases to accrue on and
after the redemption date; and
(g) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed.
Such notice shall also state the current Conversion Price and
the date on which the right to convert such Securities or portions thereof into
Common Stock of the Company will expire.
At the Company's request, the Trustee shall give notice of
redemption in the Company's name and at its expense.
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SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date at the price set forth in the Security.
SECTION 3.05. Deposit of Redemption Price. On or before the
redemption date, the Company shall deposit with the Trustee or the Paying Agent
money sufficient to pay the redemption price of and accrued interest up to but
not including the redemption date on all Securities to be redeemed on that date
(subject to the right of holders of record on the relevant record date to
receive interest due on an interest payment date) unless theretofore converted
into Common Stock pursuant to the provisions hereof. The Trustee or such Paying
Agent shall return to the Company any money not required for that purpose.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall issue and the Trustee shall
authenticate for the holder at the expense of the Company a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
SECTION 3.07. Optional Redemption. The Company may redeem all
or any portion of the Securities, upon the terms and at the redemption prices
set forth in each of the Securities. Any redemption pursuant to this Section
3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06
hereof.
SECTION 3.08. Designated Event Offer. (a) In the event that,
pursuant to Section 4.07 hereof, the Company shall commence a Designated Event
Offer, the Company shall follow the procedures in this Section 3.08.
(b) The Designated Event Offer shall remain open for a period
specified by the Company which shall be no less than 30 calendar days and no
more than 40 calendar days following its commencement on the date of the mailing
of notice in accordance with Section 4.07(b) hereof (the "Commencement Date"),
except to the extent that a longer period is required by applicable law (the
"Tender Period"). Upon the expiration of the Tender Period (the "Designated
Event Payment Date"), the Company shall purchase the principal amount of
Securities required to be purchased pursuant to Section 4.07 hereof (the "Offer
Amount").
(c) If the Designated Event Payment Date is on or after an
interest payment record date and on or before the related interest payment date,
any accrued interest to the related interest payment date will be paid to the
person in whose name a Security is registered at the close of business on such
record date, and no additional interest will be payable to Noteholders who
tender Securities pursuant to the Designated Event Offer.
(d) The Company shall provide the Trustee with written notice
of the Designated Event Offer at least 10 Business Days before the Commencement
Date.
18
(e) Subject to Section 4.07(b), on or before the Commencement
Date, the Company or the Trustee (at the request and expense of the Company)
shall send, by first class mail, a notice to each of the Noteholders, which
shall govern the terms of the Designated Event Offer and shall state:
(i) that the Designated Event Offer is being made pursuant to
this Section 3.08 and Section 4.07 hereof and that all Securities
tendered will be accepted for payment;
(ii) the Offer Amount, the purchase price (as determined in
accordance with Section 4.07 hereof), the length of time the Designated
Event Offer will remain open and the Designated Event Payment Date;
(iii) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the
Designated Event Payment, any Security or portion thereof accepted for
payment pursuant to the Designated Event Offer shall cease to accrue
interest after the Designated Event Payment Date;
(v) that Noteholders electing to have a Security or portion
thereof purchased pursuant to any Designated Event Offer will be
required to surrender the Security, with the form entitled "Option of
Noteholder To Elect Purchase" on the reverse of the Security completed,
to the Paying Agent at the address specified in the notice prior to the
close of business on the third Business Day preceding the Designated
Event Payment Date;
(vi) that Noteholders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Designated Event
Payment Date, or such longer period as may be required by law, a letter
or a telegram, telex, facsimile transmission (receipt of which is
confirmed and promptly followed by a letter) setting forth the name of
the Noteholder, the principal amount of the Security or portion thereof
the Noteholder delivered for purchase and a statement that such
Noteholder is withdrawing his election to have the Security or portion
thereof purchased; and
(vii) that Noteholders whose Securities are being purchased
only in part will be issued new Securities equal in principal amount to
the unpurchased portion of the Securities surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof.
In addition, the notice shall contain all instructions and
materials that the Company shall reasonably deem necessary to enable such
Noteholders to tender Securities pursuant to the Designated Event Offer.
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(f) At least one Business Day prior to the Designated Event
Payment Date, the Company shall irrevocably deposit with the Trustee or the
Paying Agent in immediately available funds an amount equal to the Offer Amount
to be held for payment in accordance with the terms of this Section 3.08. On the
Designated Event Payment Date, the Company shall, to the extent lawful, (i)
accept for payment the Securities or portions thereof tendered pursuant to the
Designated Event Offer, (ii) deliver or cause to be delivered to the Trustee
Securities so accepted and (iii) deliver to the Trustee an Officers' Certificate
stating such Securities or portions thereof have been accepted for payment by
the Company in accordance with the terms of this Section 3.08. The Paying Agent
shall promptly (but in any case not later than five calendar days after the
Designated Event Payment Date) mail or deliver to each tendering Noteholder an
amount equal to the purchase price of the Securities tendered by such
Noteholder, and the Trustee shall promptly authenticate and mail or deliver to
such Noteholders a new Security equal in principal amount to any unpurchased
portion of the Security surrendered, if any; provided, that each new Security
shall be in a principal amount of $1,000 or an integral multiple thereof. Any
Securities not so accepted shall be promptly mailed or delivered by or on behalf
of the Company to the holder thereof. The Company will publicly announce the
results of the Designated Event Offer on, or as soon as practicable after, the
Designated Event Payment Date.
(g) The Designated Event Offer shall be made by the Company in
compliance with all applicable provisions of the Exchange Act, and all
applicable tender offer rules promulgated thereunder, and shall include all
instructions and materials that the Company shall reasonably deem necessary to
enable such Noteholders to tender their Securities.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities. Principal and interest shall be considered paid on
the date due if the Paying Agent (other than the Company or an Affiliate of the
Company) holds on that date money designated for and sufficient to pay all
principal and interest then due and such Paying Agent is not prohibited from
paying such money to the Noteholders on that date pursuant to the terms of this
Indenture. To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) at the
rate borne by the Securities, compounded semiannually.
SECTION 4.02. SEC Reports. Whether or not required by the
rules and regulations of the SEC, so long as any Securities are outstanding, the
Company will file with the SEC and furnish to the Trustee and to the holders of
Securities all quarterly and annual financial information required to be
contained in a filing with the SEC on Forms 10-Q and 10-K, including a
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations"
20
and, with respect to annual information only, a report thereon by the Company's
certified independent accountants.
SECTION 4.03. Compliance Certificate. The Company shall
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company, an Officers' Certificate stating that a review of the activities of the
Company and its subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Company has kept, observed, performed and fulfilled its obligations under,
and complied with the covenants and conditions contained in, this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of such Officer's knowledge the Company has kept, observed, performed and
fulfilled each and every covenant, and complied with the covenants and
conditions contained in this Indenture and is not in default in the performance
or observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which such Officer may have knowledge) and that to the best
of such Officer's knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal or of interest, if any, on
the Securities are prohibited.
One of the Officers signing such Officers' Certificate shall
be either the Company's principal executive officer, principal financial officer
or principal accounting officer.
The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon becoming aware of:
(a) any Default, Event of Default or default in the
performance of any covenant, agreement or condition contained in this
Indenture; or
(b) any event of default under any other mortgage, indenture
or instrument as that term is used in Section 8.01(e),
an Officers' Certificate specifying such Default, Event of Default or default.
Immediately upon the occurrence of any event giving rise to an
increase in the interest rate on the Securities in accordance with paragraph 11
of the form thereof or the termination of any such increase, the Company shall
give the Trustee notice of such increase or termination, of the interest rate
borne by the Securities after giving effect to such increase or termination and
of the event giving rise to such increase or termination (such notice to be
contained in an Officers' Certificate), and prior to receipt of such Officers'
Certificate the Trustee shall be entitled to assume that no such increase or
termination has occurred, as the case may be.
SECTION 4.04. Stay, Extension and Usury Law. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any
21
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 4.05. Corporate Existence. Except as provided in
Article VII hereof, the Company will do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence and the
corporate, partnership or other existence of each Subsidiary of the Company in
accordance with the respective organizational documents of each Subsidiary and
the rights (charter and statutory), licenses and franchises of the Company and
its Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any Subsidiary, if the Board of Directors shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries taken as a whole and that the loss
thereof is not adverse in any material respect to the Noteholders.
SECTION 4.06. Taxes. The Company shall, and shall cause each
of its Subsidiaries to, pay prior to delinquency all taxes, assessments and
governmental levies, except as contested in good faith and by appropriate
proceedings.
SECTION 4.07. Designated Event. (a) Upon the occurrence of a
Designated Event, each holder of Securities shall have the right, in accordance
with this Section 4.07 and Section 3.08 hereof, to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such holder's Securities pursuant to the terms of Section 3.08 (the "Designated
Event Offer") at a purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest thereon to the Designated Event Payment Date
(the "Designated Event Payment").
(b) Within 30 days following any Designated Event, the Company
shall mail to each holder the notice provided by Section 3.08(e).
ARTICLE V
Conversion
SECTION 5.01. Conversion Privilege. A holder of a Security may
convert the principal amount thereof (or any portion thereof that is an integral
multiple of $1,000) into fully paid and nonassessable shares of Common Stock of
the Company at any time after 90 days following the Issuance Date and prior to
the close of business on the Business Day immediately preceding the maturity
date of the Security at the Conversion Price then in effect, except that,
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with respect to any Security called for redemption, such conversion right shall
terminate at the close of business on the Business Day immediately preceding the
redemption date (unless the Company shall default in making the redemption
payment when it becomes due, in which case the conversion right shall terminate
on the date such default is cured). The number of shares of Common Stock
issuable upon conversion of a Security is determined by dividing the principal
amount of the Security converted by the conversion price in effect on the
Conversion Date (the "Conversion Price").
The initial Conversion Price is stated in paragraph 10 of the
Securities and is subject to adjustment as provided in this Article V.
Provisions of this Indenture that apply to conversion of all
of a Security also apply to conversion of a portion of it. A holder of
Securities is not entitled to any rights of a holder of Common Stock until such
holder of Securities has converted such Securities into Common Stock, and only
to the extent that such Securities are deemed to have been converted into Common
Stock under this Article 5.
SECTION 5.02. Conversion Procedure. To convert a Security, a
holder must satisfy the requirements in paragraph 10 of the Securities. The date
on which the holder satisfies all of those requirements is the conversion date
(the "Conversion Date"). As soon as practicable after the Conversion Date, the
Company shall deliver to the holder through the Conversion Agent a certificate
for the number of whole shares of Common Stock issuable upon the conversion and
a check for any fractional share determined pursuant to Section 5.03. The person
in whose name the certificate is registered shall become the stockholder of
record on the Conversion Date and, as of such date, such person's rights as a
Noteholder with respect to the converted Security shall cease; provided,
however, that no surrender of a Security on any date when the stock transfer
books of the Company shall be closed shall be effective to constitute the person
entitled to receive the shares of Common Stock upon such conversion as the
stockholder of record of such shares of Common Stock on such date, but such
surrender shall be effective to constitute the person entitled to receive such
shares of Common Stock as the stockholder of record thereof for all purposes at
the close of business on the next succeeding day on which such stock transfer
books are open; provided further, however, that such conversion shall be at the
Conversion Price in effect on the date that such Security shall have been
surrendered for conversion, as if the stock transfer books of the Company had
not been closed.
No payment or adjustment will be made for accrued and unpaid
interest on a converted Security or for dividends or distributions on shares of
Common Stock issued upon conversion of a Security, but if any holder surrenders
a Security for conversion after the close of business on the record date for the
payment of an installment of interest and prior to the opening of business on
the next interest payment date, then, notwithstanding such conversion, the
interest payable on such interest payment date shall be paid to the holder of
such Security on such record date. In such event, unless such Security has been
called for redemption on or prior to such interest payment date, such Security,
when surrendered for conversion, must be accompanied by
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payment in funds
acceptable to the Company of an amount equal to the interest payable on such
interest payment date on the portion so converted.
If a holder converts more than one Security at the same time,
the number of whole shares of Common Stock issuable upon the conversion shall be
based on the total principal amount of Securities converted.
Upon surrender of a Security that is converted in part, the
Trustee shall authenticate for the holder a new Security equal in principal
amount to the unconverted portion of the Security surrendered.
SECTION 5.03. Fractional Shares. The Company will not issue
fractional shares of Common Stock upon conversion of a Security. In lieu
thereof, the Company will pay an amount in cash based upon the Daily Market
Price of the Common Stock on the trading day prior to the date of conversion.
SECTION 5.04. Taxes on Conversion. The issuance of
certificates for shares of Common Stock upon the conversion of any Security
shall be made without charge to the converting Noteholder for such certificates
or for any tax in respect of the issuance of such certificates, and such
certificates shall be issued in the respective names of, or in such names as may
be directed by, the holder or holders of the converted Security; provided,
however, that in the event that certificates for shares of Common Stock are to
be issued in a name other than the name of the holder of the Security converted,
such Security, when surrendered for conversion, shall be accompanied by an
instrument of assignment or transfer, in form satisfactory to the Company, duly
executed by the registered holder thereof or his duly authorized attorney; and
provided further, however, that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificates in a name other than that of the holder of the
converted Security, and the Company shall not be required to issue or deliver
such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid or is
not applicable.
SECTION 5.05. Company to Provide Stock. The Company shall at
all times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, solely for the purpose of issuance upon
conversion of Securities as herein provided, a sufficient number of shares of
Common Stock to permit the conversion of all outstanding Securities for shares
of Common Stock.
All shares of Common Stock which may be issued upon conversion
of the Securities shall be duly authorized, validly issued, fully paid and
nonassessable when so issued.
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SECTION 5.06. Adjustment of Conversion Price. The Conversion
Price shall be subject to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend in shares of
Common Stock to holders of Common Stock, (2) make a distribution in shares of
Common Stock to holders of Common Stock, (3) subdivide its outstanding shares of
Common Stock into a greater number of shares of Common Stock or (4) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any Security thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock
which he would have owned immediately following such action had such Securities
been converted immediately prior thereto. Any adjustment made pursuant to this
subsection (a) 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 or combination.
(b) In case the Company shall issue rights or warrants to
substantially all holders of Common Stock entitling them (for a period
commencing no earlier than the record date for the determination of holders of
Common Stock entitled to receive such rights or warrants and expiring not more
than 45 days after such record date) to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price per share
less than the Current Market Price (as determined pursuant to subsection (f)
below) of the Common Stock on such record date, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to such record date by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
on such record date, plus the number of shares of Common Stock which the
aggregate offering price of the offered shares of Common Stock (or the aggregate
conversion price of the convertible securities so offered) would purchase at
such Current Market Price, and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock offered (or into which the convertible
securities so offered are convertible). Such adjustments shall become effective
immediately after such record date.
(c) In case the Company shall distribute to all holders of
Common Stock shares of any class of Capital Stock of the Company other than
Common Stock, evidences of indebtedness or other assets (other than cash
dividends out of current or retained earnings), or shall distribute to
substantially all holders of Common Stock rights or warrants to subscribe for
securities (other than those Securities referred to in subsection (b) above),
then in each such case the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the date of such distribution by a fraction of which the
numerator shall be the Current Market Price (determined as provided in
subsection (f) below) of the Common Stock on the record date mentioned below
less the then fair market value (as determined by the Board of Directors, whose
determination shall be conclusive evidence of such fair market value and
described in a Board Resolution) of the portion of the
25
assets so distributed or of such subscription rights or warrants applicable to
one share of Common Stock, and of which the denominator shall be such Current
Market Price of the Common Stock. Such adjustment shall become effective
immediately after the record date for the determination of the holders of Common
Stock entitled to receive such distribution. Notwithstanding the foregoing, in
case the Company shall issue rights or warrants to subscribe for additional
shares of the Company's capital stock (other than those referred to in
subsection (b) above) ("Rights") to substantially all holders of Common Stock,
the Company may, in lieu of making any adjustment pursuant to this Section 5.06,
make proper provision so that each holder of a Security who converts such
Security (or any portion thereof) after the record date for such distribution
and prior to the expiration or redemption of the Rights shall be entitled to
receive upon such conversion, in addition to the shares of Common Stock issuable
upon such conversion (the "Conversion Shares"), a number of Rights to be
determined as follows: (i) if such conversion occurs on or prior to the date for
the distribution to the holders of Rights of separate certificates evidencing
such Rights (the "Distribution Date"), the same number of Rights to which a
holder of a number of shares of Common Stock equal to the number of Conversion
Shares is entitled at the time of such conversion in accordance with the terms
and provisions of and applicable to the Rights; and (ii) if such conversion
occurs after the Distribution Date, the same number of Rights to which a holder
of the number of shares of Common Stock into which the principal amount of the
Security so converted was convertible immediately prior to the Distribution Date
would have been entitled on the Distribution Date in accordance with the terms
and provisions of and applicable to the Rights.
(d) In case the Company shall, by dividend or otherwise, at
any time distribute to all holders of its Common Stock cash (including any
distributions of cash out of current or retained earnings of the Company but
excluding any cash that is distributed as part of a distribution requiring a
Conversion Price adjustment pursuant to paragraph (c) of this Section) in an
aggregate amount that, together with the sum of (x) the aggregate amount of any
other distributions to all holders of its Common Stock made in cash plus (y) all
Excess Payments, in each case made within the 12 months preceding the date fixed
for determining the stockholders entitled to such distribution (the
"Distribution Record Date") and in respect of which no Conversion Price
adjustment pursuant to paragraphs (c) or (e) of this Section or this paragraph
(d) has been made, exceeds 15% of the product of the Current Market Price per
share (determined as provided in paragraph (f) of this Section) of the Common
Stock on the Distribution Record Date multiplied by the number of shares of
Common Stock outstanding on the Distribution Record Date (excluding shares held
in the treasury of the Company), the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying such Conversion Price
in effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this paragraph (d) by a fraction of which the
numerator shall be the Current Market Price per share (determined as provided in
paragraph (f) of this Section) of the Common Stock on the Distribution Record
Date less the amount of such cash and other consideration
26
(including any Excess Payments) so distributed applicable to one share of Common
Stock (equal to the aggregate amount of such cash and other consideration
(including any Excess Payments) divided by the number of shares of Common Stock
outstanding on the Distribution Record Date) and the denominator shall be such
Current Market Price per share (determined as provided in paragraph (f) of this
Section) of the Common Stock on the Distribution Record Date, such reduction to
become effective immediately prior to the opening of business on the day
following the Distribution Record Date.
(e) In case a tender offer or other negotiated transaction
made by the Company or any Subsidiary of the Company for all or any portion of
the Common Stock shall be consummated, if an Excess Payment is made in respect
of such tender offer or other negotiated transaction and the amount of such
Excess Payment, together with the sum of (x) the aggregate amount of all Excess
Payments plus (y) the aggregate amount of all distributions to all holders of
the Common Stock made in cash (including any distributions of cash out of
current or retained earnings of the Company), in each case made within the 12
months preceding the date of payment of such current negotiated transaction
consideration or expiration of such current tender offer, as the case may be
(the "Purchase Date"), and as to which no adjustment pursuant to paragraph (c)
or paragraph (d) of this Section or this paragraph (e) has been made, exceeds
15% of the product of the Current Market Price per share (determined as provided
in paragraph (f) of this Section) of the Common Stock on the Purchase Date
multiplied by the number of shares of Common Stock outstanding (including any
tendered shares but excluding any shares held in the treasury of the Company or
any Subsidiary of the Company) on the Purchase Date, the Conversion Price shall
be reduced so that the same shall equal the price determined by multiplying such
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this paragraph (e) by a fraction of
which the numerator shall be the Current Market Price per share (determined as
provided in paragraph (f) of this Section) of the Common Stock on the Purchase
Date less the amount of such Excess Payments and such cash distributions, if
any, applicable to one share of Common Stock (equal to the aggregate amount of
such Excess Payments and such cash distributions divided by the number of shares
of Common Stock outstanding on the Purchase Date) and the denominator shall be
such Current Market Price per share (determined as provided in paragraph (f) of
this Section) of the Common Stock on the Purchase Date, such reduction to become
effective immediately prior to the opening of business on the day following the
Purchase Date.
(f) The "Current Market Price" per share of Common Stock on
any date shall be deemed to be the average of the Daily Market Prices for the
shorter of (i) 30 consecutive Business Days ending on the last full Trading Day
on the exchange or market referred to in determining such Daily Market Prices
prior to the time of determination or (ii) the period commencing on the date
next succeeding the first public announcement of the issuance of such rights or
such warrants or such other distribution or such negotiated transaction through
such last full trading day on the exchange or market referred to in determining
such Daily Market Prices prior to the time of determination.
(g) "Excess Payment" means the excess of (A) the aggregate of
the cash and fair market value of other consideration paid by the Company or any
of its Subsidiaries with respect
27
to the shares acquired in a tender offer or other negotiated transaction over
(B) the Daily Market Price on the Trading Day immediately following the
completion of such tender offer or other negotiated transaction multiplied by
the number of acquired shares.
(h) In any case in which this Section 5.06 shall require that
an adjustment be made immediately following a record date for an event, the
Company may elect to defer, until such event, issuing to the holder of any
Security converted after such record date the shares of Common Stock and other
Capital Stock of the Company issuable upon such conversion over and above the
shares of Common Stock and other Capital Stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to adjustment; and,
in lieu of the shares the issuance of which is so deferred, the Company shall
issue or cause its transfer agents to issue due bills or other appropriate
evidence of the right to receive such shares.
SECTION 5.07. No Adjustment. No adjustment in the Conversion
Price shall be required until cumulative adjustments amount to 1% or more of the
Conversion Price as last adjusted; provided, however, that any adjustments which
by reason of this Section 5.07 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article V shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. No adjustment need be made for
rights to purchase Common Stock pursuant to a Company plan for reinvestment of
dividends or interest. No adjustment need be made for a change in the par value
or no par value of the Common Stock.
SECTION 5.08. Other Adjustments. (a) In the event that, as a
result of an adjustment made pursuant to Section 5.06 above, the holder of any
Security thereafter surrendered for conversion shall become entitled to receive
any shares of Capital Stock of the Company other than shares of its Common
Stock, thereafter the Conversion Price of such other shares so receivable upon
conversion of any Securities shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in this Article V.
(b) In the event that shares of Common Stock are not delivered
after the expiration of any of the rights or warrants referred to in Section
5.06(b) and Section 5.06(c) hereof, the Conversion Price shall be readjusted to
the Conversion Price which would otherwise be in effect had the adjustment made
upon the issuance of such rights or warrants been made on the basis of delivery
of only the number of shares of Common Stock actually delivered.
SECTION 5.09. Adjustments for Tax Purposes. The Company may,
at its option, make such reductions in the Conversion Price, in addition to
those required by Section 5.06 above, as it determines to be advisable in order
that any stock dividend, subdivision of shares, distribution of rights to
purchase stock or securities or distribution of securities convertible into or
exchangeable for stock made by the Company to its stockholders will not be
taxable to the recipients thereof.
28
SECTION 5.10. Adjustments by the Company. The Company from
time to time may, to the extent permitted by law, reduce the Conversion Price by
any amount for any period of at least 20 days, in which case the Company shall
give at least 15 days' notice of such reduction in accordance with Section 5.11,
if the Board of Directors has made a determination that such reduction would be
in the best interests of the Company, which determination shall be conclusive.
SECTION 5.11. Notice of Adjustment. Whenever the Conversion
Price is adjusted, the Company shall promptly mail to Noteholders at the
addresses appearing on the Registrar's books a notice of the adjustment and file
with the Trustee an Officers' Certificate briefly stating the facts requiring
the adjustment and the manner of computing it. The certificate shall be
conclusive evidence of the correctness of such adjustment.
SECTION 5.12. Notice of Certain Transactions. In the event
that:
(1) the Company takes any action which would require an
adjustment in the Conversion Price;
(2) the Company takes any action that would require a
supplemental indenture pursuant to Section 5.13; or
(3) there is a dissolution or liquidation of the Company;
a holder of a Security may wish to convert such Security into shares of Common
Stock prior to the record date for or the effective date of the transaction so
that he may receive the rights, warrants, securities or assets which a holder of
shares of Common Stock on that date may receive. Therefore, the Company shall
mail to Noteholders at the addresses appearing on the Registrar's books and the
Trustee a notice stating the proposed record or effective date, as the case may
be. The Company shall mail the notice at least 15 days before such date;
however, failure to mail such notice or any defect therein shall not affect the
validity of any transaction referred to in clause (1), (2) or (3) of this
Section 5.12.
SECTION 5.13. Effect of Reclassifications, Consolidations,
Mergers or Sales on Conversion Privilege. If any of the following shall occur,
namely: (i) any reclassification or change of outstanding shares of Common Stock
issuable upon conversion of Securities (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation or merger to
which the Company is a party other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification of, or
change (other than a change in name, or par value, or from par value to no par
value, or from no par value to par value or as a result of a subdivision or
combination) in, outstanding shares of Common Stock or (iii) any sale or
conveyance of all or substantially all of the property or business of the
Company as an entirety, then the Company, or such successor or purchasing
corporation, as the case may be, shall, as a
29
condition precedent to such reclassification, change, consolidation, merger,
sale or conveyance, execute and deliver to the Trustee a supplemental indenture
in form satisfactory to the Trustee providing that the holder of each Security
then outstanding shall have the right to convert such Security into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock deliverable upon
conversion of such Security immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Such supplemental indenture shall
provide for adjustments of the Conversion Price which shall be as nearly
equivalent as may be practicable to the adjustments of the Conversion Price
provided for in this Article V. The foregoing, however, shall not in any way
affect the right a holder of a Security may otherwise have, pursuant to clause
(ii) of the last sentence of subsection (c) of Section 5.06, to receive Rights
upon conversion of a Security. If, in the case of any such consolidation,
merger, sale or conveyance, the stock or other securities and property
(including cash) receivable thereupon by a holder of Common Stock includes
shares of stock or other securities and property of a corporation other than the
successor or purchasing corporation, as the case may be, in such consolidation,
merger, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the holders of the Securities as the Board of
Directors of the Company shall reasonably consider necessary by reason of the
foregoing. The provision of this Section 5.13 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental
indenture pursuant to this Section 5.13, the Company shall promptly file with
the Trustee an Officers' Certificate briefly stating the reasons therefor, the
kind or amount of shares of stock or securities or property (including cash)
receivable by holders of the Securities upon the conversion of their Securities
after any such reclassification, change, consolidation, merger, sale or
conveyance and any adjustment to be made with respect thereto.
SECTION 5.14. Trustee's Disclaimer. The Trustee has no duty to
determine when an adjustment under this Article V should be made, how it should
be made or what such adjustment should be, but may accept as conclusive evidence
of the correctness of any such adjustment, and shall be protected in relying
upon the Officers' Certificate with respect thereto which the Company is
obligated to file with the Trustee pursuant to Section 5.11. The Trustee makes
no representation as to the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
Company's failure to comply with any provisions of this Article V.
The Trustee shall not be under any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
executed pursuant to Section 5.13, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 5.13.
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ARTICLE VI
Subordination
SECTION 6.01. Agreement to Subordinate. The Company, for
itself and its successors, and each Noteholder, by his acceptance of Securities,
agree that the payment of the principal of or interest on or any other amounts
due on the Securities is subordinated in right of payment, to the extent and in
the manner stated in this Article VI, to the prior payment in full of all
existing and future Senior Debt.
SECTION 6.02. No Payment on Securities if Senior Debt in
Default. Anything in this Indenture to the contrary notwithstanding, no payment
on account of principal of or redemption of, interest on or other amounts due on
the Securities (including the making of a deposit pursuant to Section 3.05), and
no redemption, purchase, or other acquisition of the Securities, shall be made
by or on behalf of the Company (i) unless full payment of amounts then due for
principal and interest and of all other amounts then due on all Senior Debt has
been made or duly provided for pursuant to the terms of the instrument governing
such Senior Debt, (ii) if, at the time of such payment, redemption, purchase or
other acquisition, or immediately after giving effect thereto, there shall exist
under any Senior Debt, or any agreement pursuant to which any Senior Debt is
issued, any default, which default shall not have been cured or waived and which
default shall have resulted in the full amount of such Senior Debt being
declared due and payable or (iii) if, at the time of such payment, redemption,
purchase or other acquisition, the Trustee shall have received written notice
from the Representative of the holders of Designated Senior Debt (a "Payment
Blockage Notice") that there exists under such Designated Senior Debt, or any
agreement pursuant to which such Designated Senior Debt is issued, any default,
which default shall not have been cured or waived, permitting the holders
thereof to declare any amounts of such Designated Senior Debt due and payable,
but only for the period (the "Payment Blockage Period") commencing on the date
of receipt of the Payment Blockage Notice and ending (unless earlier terminated
by notice given to the Trustee by the Representative of the holders of such
Designated Senior Debt) on the earlier of (a) the date on which such event of
default shall have been cured or waived or (b) 180 days from the receipt of the
Payment Blockage Notice. Notwithstanding the provisions described in the
immediately preceding sentence (other than in clauses (i) and (ii)), unless the
holders of such Designated Senior Debt or the Representative of such holders
shall have accelerated the maturity of such Designated Senior Debt, the Company
may resume payments on the Securities after the end of such Payment Blockage
Period. Not more than one Payment Blockage Notice may be given in any
consecutive 365-day period, irrespective of the number of defaults with respect
to Senior Debt during such period.
In the event that, notwithstanding the provisions of this
Section 6.02, payments are made by or on behalf of the Company in contravention
of the provisions of this Section 6.02, such payments shall be held by the
Trustee, any Paying Agent or the holders, as applicable, in trust for the
benefit of, and shall be paid over to and delivered to, the Representative of
the
31
holders of Senior Debt or the trustee under the indenture or other agreement (if
any), pursuant to which any instruments evidencing any Senior Debt may have been
issued for application to the payment of all Senior Debt ratably according to
the aggregate amounts remaining unpaid to the extent necessary to pay all Senior
Debt in full in accordance with the terms of such Senior Debt, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
The Company shall give prompt written notice to the Trustee
and any Paying Agent of any default or event of default under any Senior Debt or
under any agreement pursuant to which any Senior Debt may have been issued.
SECTION 6.03. Distribution on Acceleration of Securities;
Dissolution and Reorganization; Subrogation of Securities. (a) If the Securities
are declared due and payable because of the occurrence of an Event of Default,
the Company shall give prompt written notice to the holders of all Senior Debt
or to the trustee(s) for such Senior Debt of such acceleration. The Company may
not pay the principal of or interest on or any other amounts due on the
Securities until five Business Days after such holders or trustee(s) of Senior
Debt receive such notice and, thereafter, the Company may pay the principal of
or interest on or any other amounts due on the Securities only if the provisions
of this Article VI permit such payment.
(b) Upon (i) any acceleration of the principal amount due on
the Securities because of an Event of Default or (ii) any direct or indirect
distribution of assets of the Company upon any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or any other dissolution, winding up, liquidation or reorganization of the
Company):
(1) the holders of all Senior Debt shall first be entitled to
receive payment in full of the principal thereof, the interest thereon and any
other amounts due thereon before the holders are entitled to receive payment on
account of the principal of or interest on or any other amounts due on the
Securities;
(2) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted or securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Article with respect to the Securities, to the payment in full
without diminution or modification by such plan of all Senior Debt), to which
the holders or the Trustee would be entitled (other than in respect of amounts
payable to the Trustee pursuant to Section 9.07) except for the provisions of
this Article, shall be paid by the liquidating trustee or agent or other person
making such a payment or distribution, directly to the holders of Senior Debt
(or their representative(s) or trustee(s) acting on their behalf), ratably
according to the aggregate amounts remaining unpaid on account of the principal
of or interest on and other amounts due on the Senior Debt held or represented
by each, to the extent necessary to make payment in full of all
32
Senior Debt remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt; and
(3) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (other than securities of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Article with respect to the
Securities, to the payment in full without diminution or modification by such
plan of Senior Debt), shall be received by the Trustee (other than in respect of
amounts payable to the Trustee pursuant to Section 9.07) or the holders before
all Senior Debt is paid in full, such payment or distribution shall be held in
trust for the benefit of, and be paid over to upon request by a holder of the
Senior Debt, the holders of the Senior Debt remaining unpaid (or their
representatives) or trustee(s) acting on their behalf, ratably as aforesaid, for
application to the payment of such Senior Debt until all such Senior Debt shall
have been paid in full, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt.
Subject to the payment in full of all Senior Debt, the holders
shall be subrogated to the rights of the holders of Senior Debt to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Debt until the principal of and interest on the
Securities shall be paid in full and, for purposes of such subrogation, no such
payments or distributions to the holders of Senior Debt of cash, property or
securities which otherwise would have been payable or distributable to holders
shall, as between the Company, its creditors other than the holders of Senior
Debt, and the holders, be deemed to be a payment by the Company to or on account
of the Senior Debt, it being understood that the provisions of this Article are
and are intended solely for the purpose of defining the relative rights of the
holders, on the one hand, and the holders of Senior Debt, on the other hand.
Nothing contained in this Article or elsewhere in this
Indenture or in the Securities is intended to or shall (i) impair, as between
the Company and its creditors other than the holders of Senior Debt, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders the principal of and interest on the Securities as and when the same
shall become due and payable in accordance with the terms of the Securities,
(ii) affect the relative rights of the holders and creditors of the Company
other than holders of Senior Debt or, as between the Company and the Trustee,
the obligations of the Company to the Trustee, or (iii) prevent the Trustee or
the holders from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Debt in respect of cash, property and
securities of the Company received upon the exercise of any such remedy.
Upon distribution of assets of the Company referred to in this
Article, the Trustee, subject to the provisions of Section 9.01 hereof, and the
holders shall be entitled to rely upon a certificate of the liquidating trustee
or agent or other person making any distribution to the
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Trustee or to the holders for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Debt and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article. The Trustee, however, shall not be deemed to owe any fiduciary
duty to the holders of Senior Debt. Nothing contained in this Article or
elsewhere in this Indenture, or in any of the Securities, shall prevent the good
faith application by the Trustee of any moneys which were deposited with it
hereunder, prior to its receipt of written notice of facts which would prohibit
such application, for the purpose of the payment of or on account of the
principal of or interest on, the Securities unless, prior to the date on which
such application is made by the Trustee, the Trustee shall be charged with
actual notice under Section 6.03(d) hereof of the facts which would prohibit the
making of such application.
(c) The provisions of this Article shall not be applicable to
any cash, properties or securities received by the Trustee or by any holder when
received as a holder of Senior Debt and nothing in Section 9.11 hereof or
elsewhere in this Indenture shall deprive the Trustee or such holder of any of
its rights as such holder.
(d) The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the making of any
payment of money to or by the Trustee in respect of the Securities pursuant to
the provisions of this Article. The Trustee, subject to the provisions of
Section 9.01 hereof, shall be entitled to assume that no such fact exists unless
the Company or any holder of Senior Debt or any trustee therefor has given
notice thereof to the Trustee. Notwithstanding the provisions of this Article or
any other provisions of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any fact which would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Securities pursuant to
the provisions in this Article, unless, and until three Business Days after, the
Trustee shall have received written notice thereof from the Company or any
holder or holders of Senior Debt or from any trustee therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 9.01 hereof, shall be entitled in all respects conclusively to assume
that no such facts exist; provided that if on a date not less than three
Business Days immediately preceding the date upon which, by the terms hereof,
any such moneys may become payable for any purpose (including, without
limitation, the principal of or interest on any Security), the Trustee shall not
have received with respect to such moneys the notice provided for in this
Section 6.03(d), then anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such moneys and to
apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such prior date.
The Trustee shall be entitled to rely conclusively on the
delivery to it of a written notice by a person representing himself to be a
holder of Senior Debt (or a trustee on behalf of such holder) to establish that
such notice has been given by a holder of Senior Debt (or a trustee on behalf of
any such holder or holders). In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any person
as a holder of Senior Debt
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to participate in any payment or distribution pursuant to this Article, the
Trustee may request such person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt held by such person,
the extent to which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such person under
this Article, and, if such evidence is not furnished, the Trustee may defer any
payment to such person pending judicial determination as to the right of such
person to receive such payment; nor shall the Trustee be charged with knowledge
or the curing or waiving of any default of the character specified in Section
6.02 hereof or that any event or any condition preventing any payment in respect
of the Securities shall have ceased to exist, unless and until the Trustee shall
have received written notice to such effect.
(e) The provisions of this Section 6.03 applicable to the
Trustee shall (unless the context requires otherwise) also apply to any Paying
Agent for the Company.
SECTION 6.04. Reliance by Senior Debt on Subordination
Provisions. Each holder of any Security by his acceptance thereof acknowledges
and agrees that the foregoing subordination provisions are, and are intended to
be, an inducement and a consideration for each holder of any Senior Debt,
whether such Senior Debt was created or acquired before or after the issuance of
the Securities, to acquire and continue to hold, or to continue to hold, such
Senior Debt, and such holder of Senior Debt shall be deemed conclusively to have
relied on such subordination provisions in acquiring and continuing to hold, or
in continuing to hold, such Senior Debt. Notice of any default in the payment of
any Senior Debt, except as expressly stated in this Article, and notice of
acceptance of the provisions hereof are hereby expressly waived. Except as
otherwise expressly provided herein, no waiver, forbearance or release by any
holder of Senior Debt under such Senior Debt or under this Article shall
constitute a release of any of the obligations or liabilities of the Trustee or
holders of the Securities provided in this Article.
SECTION 6.05. No Waiver of Subordination Provisions. Except as
otherwise expressly provided herein, no right of any present or future holder of
any Senior Debt to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of, or notice to, the Trustee or the holders of the
Securities, without incurring responsibility to the holders of the Securities
and without impairing or releasing the subordination provided in this Article VI
or the obligations hereunder of the holders of the Securities to the holders of
Senior Debt, do any one or more of the following: (i) change the manner, place
or terms of payment of, or renew or alter, Senior Debt, or otherwise amend or
supplement in any manner Senior Debt or any instrument evidencing the same or
any agreement under which Senior Debt is outstanding; (ii) sell,
35
exchange, release or otherwise dispose of any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any person liable in any manner
for the collection of Senior Debt; and (iv) exercise or refrain from exercising
any rights against the Company or any other person.
SECTION 6.06. Trustee's Relation to Senior Debt. The Trustee
in its individual capacity shall be entitled to all the rights set forth in this
Article in respect of any Senior Debt at any time held by it, to the same extent
as any holder of Senior Debt, and nothing in Section 9.11 hereof or elsewhere in
this Indenture shall deprive the Trustee of any of its rights as such holder.
Anything in this Indenture to the contrary notwithstanding, amounts payable to
the Trustee from time to time pursuant to Section 9.07 shall be treated for
purposes of this Article as if such amounts constituted Senior Debt hereunder.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations,
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not owe any fiduciary duty to
the holders of Senior Debt but shall have only such obligations to such holders
as are expressly set forth in this Article.
Each holder of a Security by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding up or liquidation or
reorganization under any applicable bankruptcy law of the Company (whether in
bankruptcy, insolvency or receivership proceedings or otherwise), the timely
filing of a claim for the unpaid balance of such holder's Securities in the form
required in such proceedings and the causing of such claim to be approved. If
the Trustee does not file a claim or proof of debt in the form required in such
proceedings prior to 30 days before the expiration of the time to file such
claims or proofs, then any holder or holders of Senior Debt or their
representative or representatives shall have the right to demand, xxx for,
collect, receive and receipt for the payments and distributions in respect of
the Securities which are required to be paid or delivered to the holders of
Senior Debt as provided in this Article and to file and prove all claims
therefor and to take all such other action in the name of the holders or
otherwise, as such holders of Senior Debt or representative thereof may
determine to be necessary or appropriate for the enforcement of the provisions
of this Article. Anything in this Indenture to the contrary notwithstanding,
amounts payable to the Trustee from time to time pursuant to Section 9.07 shall
be treated for purposes of this Article as if such amounts constituted Senior
Debt hereunder.
SECTION 6.07. Other Provisions Subject Hereto. Except as
expressly stated in this Article, notwithstanding anything contained in this
Indenture to the contrary, all the provisions of this Indenture and the
Securities are subject to the provisions of this Article. However, nothing in
this Article shall apply to or adversely affect the claims of, or payment to,
the Trustee pursuant to Section 9.07. Notwithstanding the foregoing, the failure
to make a
36
payment on account of principal of or interest on the Securities by reason of
any provision of this Article VI shall not be construed as preventing the
occurrence of an Event of Default under Section 8.01.
ARTICLE VII
Successors
SECTION 7.01. Merger, Consolidation or Sale of Assets. The
Company may not consolidate or merge with or into any person (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets
unless:
(a) the Company is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia;
(b) the corporation formed by or surviving any such
consolidation or merger (if other than the Company) or the corporation
to which such sale, assignment, transfer, lease, conveyance or other
disposition will have been made assumes all the Obligations of the
Company, pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under the Securities and the Indenture;
(c) any such sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the Company's
properties or assets shall be as an entirety or virtually as an
entirety to one corporation;
(d) immediately after such transaction no Default or Event of
Default exists; and
(e) the Company or such corporation shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such transaction and the supplemental indenture comply
with the Indenture and that all conditions precedent in the Indenture
relating to such transaction have been satisfied.
SECTION 7.02. Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 7.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or the corporation to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for and may exercise every right and
37
power of, the Company under this Indenture with the same effect as if such
successor person has been named as the Company herein; provided, however, that
the predecessor Company in the case of a sale, assignment, transfer, lease,
conveyance or other disposition shall not be released from the obligation to pay
the principal of and interest on the Securities.
ARTICLE VIII
Defaults and Remedies
SECTION 8.01. Events of Default. An "Event of Default" occurs
if:
(a) the Company defaults in the payment of interest on any
Security when the same becomes due and payable, and the Default
continues for a period of 30 days after the date due and payable;
(b) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at maturity, upon
redemption or otherwise;
(c) the Company fails to observe or perform any covenant or
agreement contained in Section 4.07 hereof;
(d) the Company fails to observe or perform any other covenant
or agreement contained in this Indenture or the Securities required by
it to be performed and the Default continues for a period of 60 days
after the receipt of written notice from the Trustee to the Company or
from the holders of 25% in aggregate principal amount of the then
outstanding Securities to the Company and the Trustee stating that such
notice is a "Notice of Default";
(e) there is a default under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company
or any Material Subsidiary of the Company (or the payment of which is
guaranteed by the Company or any Material Subsidiary of the Company),
whether such Indebtedness or guarantee now exists or is created after
the Issuance Date, which default (i) is caused by a failure to pay when
due principal of or interest on such Indebtedness within the grace
period provided for in such Indebtedness (which failure continues
beyond any applicable grace period) (a "Payment Default") or (ii)
results in the acceleration of such Indebtedness prior to its express
maturity (without such acceleration being rescinded or annulled) and,
in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which
there is a Payment Default or the maturity of which has been so
accelerated, aggregates $10 million or more;
(f) a final, non-appealable judgment or final non-appealable
judgments (other than any judgment as to which a reputable insurance
company has accepted full liability)
38
for the payment of money are entered by a court or courts of competent
jurisdiction against the Company or any Material Subsidiary of the
Company and remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the
aggregate of all such judgments exceeds $5 million;
(g) the Company or any Material Subsidiary pursuant to or
within the meaning of any Bankruptcy Law: (i) commences a voluntary
case, (ii) consents to the entry of an order for relief against it in
an involuntary case in which it is the debtor, (iii) consents to the
appointment of a Custodian of it or for all or substantially all of its
property, (iv) makes a general assignment for the benefit of its
creditors, or (v) makes the admission in writing that it generally is
unable to pay its debts as the same become due; or
(h) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (i) is for relief against the
Company or any Material Subsidiary of the Company in an involuntary
case, (ii) appoints a Custodian of the Company or any Material
Subsidiary of the Company or for all or substantially all of its
property, and the order or decree remains unstayed and in effect for 60
days or (iii) orders the liquidation of the Company or any Material
Subsidiary of the Company, and the order or decree remains unstayed and
in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
SECTION 8.02. Acceleration. If an Event of Default (other than
an Event of Default specified in clauses (g) and (h) of Section 8.01 hereof)
occurs and is continuing, the Trustee by notice to the Company, or the
Noteholders of at least 25% in principal amount of the then-outstanding
Securities by notice to the Company and the Trustee, may declare all the
Securities to be due and payable. Upon such declaration, the principal of,
premium, if any, and accrued and unpaid interest on the Securities shall be due
and payable immediately. If an Event of Default specified in clause (g) or (h)
of Section 8.01 hereof occurs, such an amount shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Noteholder. The Noteholders of a majority in aggregate
principal amount of the then-outstanding Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree, if all amounts payable to the Trustee
pursuant to Section 9.07 hereof have been paid and if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of the acceleration.
SECTION 8.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal or
39
interest on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Noteholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 8.04. Waiver of Past Defaults. The Noteholders of a
majority in aggregate principal amount of the then-outstanding Securities by
notice to the Trustee may waive an existing Default or Event of Default and its
consequences except a continuing Default or Event of Default in the payment of
the Designated Event Payment or the principal of, or interest on, any Security.
When a Default or Event of Default is waived, it is cured and ceases; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 8.05. Control by Majority. The Noteholders of a
majority in principal amount of the then-outstanding Securities may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on it. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture, is unduly prejudicial to the rights of other Noteholders, or would
involve the Trustee in personal liability.
SECTION 8.06. Limitation on Suits. A Noteholder may pursue a
remedy with respect to this Indenture or the Securities only if:
(a) the Noteholder gives to the Trustee notice of a continuing
Event of Default;
(b) the Noteholders of at least 25% in principal amount of the
then-outstanding Securities make a request to the Trustee to pursue the
remedy;
(c) such Noteholder or Noteholders offer to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Noteholders of a majority in
principal amount of the then-outstanding Securities do not give the
Trustee a direction inconsistent with the request.
40
A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or priority over another
Noteholder.
SECTION 8.07. Rights of Noteholders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Noteholder of a Security to receive payment of principal and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Noteholder
made pursuant to this Section.
SECTION 8.08. Collection Suit by Trustee. If an Event of
Default specified in Section 8.01(a) or (b) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount of principal and interest remaining
unpaid on the Securities and interest on overdue principal and interest and such
further amount as shall be sufficient to cover the costs and, to the extent
lawful, expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 8.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Noteholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property. Nothing contained herein shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Noteholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Noteholder thereof, or to authorize the Trustee
to vote in respect of the claim of any Noteholder in any such proceeding.
SECTION 8.10. Priorities. If the Trustee collects any money
pursuant to this Article, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 9.07
hereof;
Second: to the holders of Senior Debt to the extent required
by Article VI;
Third: to the Noteholders, for amounts due and unpaid on the
Securities for principal and interest, ratably, according to the
amounts due and payable on the Securities for principal and interest,
respectively; and
Fourth: to the Company.
Except as otherwise provided in Section 2.12 hereof, the
Trustee may fix a record date and payment date for any payment to Noteholders
made pursuant to this Section.
41
SECTION 8.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a holder pursuant to Section 8.07 hereof, or a
suit by Noteholders of more than 10% in principal amount of the then-outstanding
Securities.
ARTICLE IX
Trustee
SECTION 9.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default: (i)
the Trustee need perform only those duties that are specifically set forth in
this Indenture and no others and (ii) in the absence of bad faith on its part,
the Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and, if required by the terms hereof, conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture. During the continuance of an event of Default,
the Trustee may consult with its legal counsel and rely upon advice from such
counsel with respect to legal matters.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that: (i) this paragraph does not limit the effect of
paragraph (b) of this Section 9.01; (ii) the Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts and (iii) the
Trustee shall not be liable with respect to any action it takes or omits to take
in good faith in accordance with a direction received by it pursuant to Section
8.05 hereof.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 9.01.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
42
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 9.02. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
(e) The Trustee shall not be charged with knowledge of any
Event of Default under subsection (c), (d), (e), (f), (g) or (h) of Section 8.01
unless either (1) a Trust Officer assigned to its corporate trust department
shall have actual knowledge thereof, or (2) the Trustee shall have received
notice thereof in accordance with Section 12.02 hereof from the Company or any
holder.
SECTION 9.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or an Affiliate with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 9.10 and 9.11 hereof.
SECTION 9.04. Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in the Indenture or any statement in the Securities (other than its
authentication) or for compliance by the Company with the Registration
Agreement.
SECTION 9.05. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if it is known to the Trustee, the Trustee
shall mail to Noteholders a notice of the Default or Event of Default within 90
days after it occurs. Except in the case of a Default or Event of Default in
payment on any Security, the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Noteholders.
43
SECTION 9.06. Reports by Trustee to Noteholders. Within 60
days after the reporting date stated in Section 12.10, the Trustee shall mail to
Noteholders a brief report dated as of such reporting date that complies with
TIA ss. 313(a) if and to the extent required by such ss. 313(a). The Trustee
also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to
Noteholders shall be filed with the SEC and each stock exchange on which the
Securities are listed. The Company shall notify the Trustee when the Securities
are listed on any stock exchange.
SECTION 9.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time reasonable compensation for its services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it. Such disbursements and expenses may include the
reasonable disbursements, compensation and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee against any loss or
liability incurred by it except as set forth in the next paragraph. The Trustee
shall notify the Company promptly of any claim for which it may seek indemnity.
The Company shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees, disbursements and expenses of such counsel. The Company need
not pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through the Trustee's
negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien equivalent to that of Senior Debt and prior to the
Securities on all money or property held or collected by the Trustee, except
money or property held in trust to pay principal and interest on particular
Securities.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 8.01(g) or (h) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 9.08. Replacement of Trustee. A resignation or removal
of the Trustee and appointment of a successor Trustee shall become effective
only upon the successor Trustee's acceptance of appointment as provided in this
Section.
44
The Trustee may resign by so notifying the Company. The
Noteholders of a majority in principal amount of the then-outstanding Securities
may remove the Trustee by so notifying the Trustee and the Company.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 9.10 hereof,
unless the Trustee's duty to resign is stayed as provided in TIA ss.
310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Noteholders of a majority in principal amount of the then-outstanding Securities
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Noteholders of at least 10% in principal amount of the
then-outstanding Securities may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 9.10 hereof,
unless the Trustee's duty to resign is stayed as provided in TIA ss. 310(b), any
Noteholder who has been a bona fide holder of a Security for at least six months
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 9.07 hereof. Notwithstanding the resignation or
replacement of the Trustee pursuant to this Section 9.08, the Company's
obligations under Section 9.07 hereof shall continue for the benefit of the
retiring trustee with respect to expenses and liabilities incurred by it prior
to such resignation or replacement.
SECTION 9.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to,
45
another corporation, the successor corporation without any further act shall be
the successor Trustee.
SECTION 9.10. Eligibility; Disqualification. This Indenture
shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1)
and (5). The Trustee shall always have a combined capital and surplus as stated
in Section 12.10 hereof. The Trustee is subject to TIA ss. 310(b).
SECTION 9.11. Preferential Collection of Claims Against
Company. The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE X
Discharge of Indenture
SECTION 10.01. Termination of Company's Obligations. This
Indenture shall cease to be of further effect (except that the Company's
obligations under Sections 9.07 and 10.02 hereof shall survive) when all
outstanding Securities theretofore authenticated and issued have been delivered
to the Trustee for cancellation and the Company has paid all sums payable
hereunder.
Thereupon, the Trustee upon request of the Company, shall
acknowledge in writing the discharge of the Company's obligations under this
Indenture, except for those surviving obligations specified above.
SECTION 10.02. Repayment to Company. The Trustee and the
Paying Agent shall promptly pay to the Company upon request any excess money or
securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of principal or interest
that remains unclaimed for two years after the date upon which such payment
shall have become due; provided, however, that the Company shall have first
caused notice of such payment to the Company to be mailed to each Noteholder
entitled thereto no less than 30 days prior to such payment. After payment to
the Company, the Trustee and the Paying Agent shall have no further liability
with respect to such money and Noteholders entitled to the money must look to
the Company for payment as general creditors unless any applicable abandoned
property law designates another person.
ARTICLE XI
Amendments, Supplements and Waivers
46
SECTION 11.01. Without Consent of Noteholders. The Company and
the Trustee may amend or supplement this Indenture or the Securities without the
consent of any Noteholder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Sections 5.13 and 7.01 hereof;
(c) to provide for uncertificated Securities in addition to
certificated Securities;
(d) to make any change that does not adversely affect the
legal rights hereunder of any Noteholder;
(e) to qualify this Indenture under the TIA or to comply with
the requirements of the SEC in order to maintain the qualification of
the Indenture under the TIA; or
(f) to make any change that provides any additional rights or
benefits to the holders of Securities.
An amendment under this Section may not make any change that
adversely affects the rights under Article VI of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to give a consent) consent to such change.
SECTION 11.02. With Consent of Noteholders. Subject to Section
8.07 hereof, the Company and the Trustee may amend or supplement this Indenture
or the Securities with the written consent (including consents obtained in
connection with any tender or exchange offer for Securities) of the Noteholders
of at least a majority in principal amount of the then-outstanding Securities.
Subject to Sections 8.04 and 8.07 hereof, the Noteholders of a majority in
principal amount of the Securities then outstanding may also by their written
consent (including consents obtained in connection with any tender offer or
exchange offer for Securities) waive any existing Default as provided in Section
8.04 or waive compliance in a particular instance by the Company with any
provision of this Indenture or the Securities. However, without the consent of
each Noteholder affected, an amendment, supplement or waiver under this Section
may not (with respect to any Securities held by a nonconsenting Noteholder):
(a) reduce the amount of Securities whose Noteholders must
consent to an amendment, supplement or waiver;
(b) reduce the rate of or change the time for payment of
interest on any Security;
(c) reduce the principal of or change the fixed maturity of
any Security or alter the redemption provisions with respect thereto;
47
(d) make any Security payable in money other than that stated
in the Security;
(e) make any change in Section 8.04, 8.07 or 11.02 hereof
(this sentence);
(f) waive a default in the payment of the Designated Event
Payment or principal of, or interest on, any Security (other than as
provided in Section 8.04);
(g) waive a redemption payment payable on any Security; or
(h) make any change that adversely affects the right of
Noteholders to convert Securities into Common Stock of the Company.
To secure a consent of the Noteholders under this Section
11.02, it shall not be necessary for the Noteholders to approve the particular
form of any proposed amendment, supplement or waiver, but it shall be sufficient
if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to Noteholders a notice briefly
describing the amendment or waiver.
SECTION 11.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
SECTION 11.04. Revocation and Effect of Consents. Until an
amendment, supplement or waiver becomes effective, a consent to it by a
Noteholder of a Security is a continuing consent by the Noteholder and every
subsequent Noteholder of a Security or portion of a Security that evidences the
same debt as the consenting Noteholder's Security, even if notation of the
consent is not made on any Security. However, any such Noteholder or subsequent
Noteholder may revoke the consent as to such Noteholder's Security or portion of
a Security if the Trustee receives the notice of revocation before the date on
which the Trustee receives an Officers' Certificate certifying that the
Noteholders of the requisite principal amount of Securities have consented to
the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Noteholders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then notwithstanding
the provisions of the immediately preceding paragraph, those persons who were
Noteholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such persons
continue to be Noteholders after such record date. No consent shall be valid or
effective for more than 90 days after such record date unless consents from
Noteholders of the principal amount of Securities required hereunder for such
amendment or waiver to be effective shall have also been given and not revoked
within such 90-day period.
48
After an amendment, supplement or waiver becomes effective it
shall bind every Noteholder, unless it is of the type described in any of
clauses (a) through (h) of Section 11.02 hereof. In such case, the amendment or
waiver shall bind each Noteholder who has consented to it and every subsequent
Noteholder that evidences the same debt as the consenting Noteholder's Security.
SECTION 11.05. Notation on or Exchange of Securities. The
Trustee may place an appropriate notation about an amendment or waiver on any
Security thereafter authenticated. The Company in exchange for all Securities
may issue and the Trustee shall authenticate new Securities that reflect the
amendment or waiver.
SECTION 11.06. Trustee Protected. The Trustee shall sign all
supplemental indentures, except that the Trustee may, but need not, sign any
supplemental indenture that adversely affects its rights. As a condition to
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trust
created by this Indenture, the Trustee shall be entitled to receive (in addition
to those documents required by Section 12.04), and (subject to Section 315 of
the TIA) 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.
ARTICLE XII
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies, or conflicts with another provision which
is automatically deemed to be incorporated in this Indenture by the TIA, the
incorporated provision shall control.
SECTION 12.02. Notices. Any notice or communication by the
Company or the Trustee to the other is duly given if in writing and delivered in
person or mailed by first-class mail to the other's address stated in Section
12.10 hereof. The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication to a Noteholder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any defect in it
shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
49
If the Company mails a notice or communication to Noteholders,
it shall mail a copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice as
required by the Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
SECTION 12.03. Communication by Noteholders with Other
Noteholders. Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or the Securities.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA ss. 312(c).
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Section 4.03)
shall include:
(a) a statement that the person signing such certificate or
rendering such opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such person, such
person has made such examination or investigation as is necessary to
enable such person to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
50
SECTION 12.06. Rules by Trustee and Agents. The Trustee may
make reasonable rules for action by, or a meeting of, Noteholders. The Registrar
or Paying Agent may make reasonable rules and set reasonable requirements for
its functions.
SECTION 12.07. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions in the State of New
York are not required to be open. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period. If any other operative date for purposes of this Indenture shall occur
on a Legal Holiday then for all purposes the next succeeding day that is not a
Legal Holiday shall be such operative date.
SECTION 12.08. No Recourse Against Others. A director,
Officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Noteholder by accepting a Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
SECTION 12.09. Counterparts. This Indenture may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
SECTION 12.10. Variable Provisions. "Officer" means the
Chairman of the Board, the Chief Executive Officer, the President, any
Vice-President, the Chief Financial Officer, the Treasurer, the Secretary, any
Assistant Treasurer, any Assistant Secretary or the Controller of the Company.
The Company initially appoints the Trustee as Paying Agent,
Registrar and Conversion Agent, and the Trustee hereby accepts such appointments
The first certificate pursuant to Section 4.03 hereof shall be
for the fiscal year ending on December 31, 1997.
The reporting date for Section 9.06 hereof is April 15 of each
year. The first reporting date is April 15, 1998.
The Trustee shall always have a combined capital and surplus
of at least $50,000,000 as set forth in its most recent published annual report
of condition.
51
The Company's address for purposes of the Indenture is:
Tel-Save Holdings, Inc.
0000 Xxxxx 000
Xxx Xxxx, Xxxxxxxxxxxx 00000
The Trustee's address is:
First Trust of New York, National Association
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
The Company or the Trustee may change its address for purposes
of this Indenture by written notice to the other.
SECTION 12.11. GOVERNING LAW. THE INTERNAL LAWS OF THE STATE
OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE SECURITIES, WITHOUT REGARD TO
THE CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 12.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or an Affiliate. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 12.13. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successor. All agreements of
the Trustee in this Indenture shall bind its successor.
SECTION 12.14. Severability. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 12.15. Table of Contents, Headings, Etc. The Table of
Contents and headings of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
52
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
Tel-Save Holdings, Inc., as Company,
by
----------------------------
Name:
Title:
First Trust of New York, National
Association, as Trustee,
by
----------------------------
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
Personally appeared before me, the undersigned authority in
and for the said county and state, on this day of September, 1997, within my
jurisdiction, the within named ____________________, who acknowledged that he is
a __________________ of ___________________, and that for and on behalf of the
said corporation, and as its act and deed he executed the above and foregoing
instrument, after first having been duly authorized by said corporation so to
do.
-----------------------------
NOTARY PUBLIC
[Notarial Seal]
EXHIBIT A
FORM OF CONVERTIBLE SUBORDINATED NOTE
[FORM OF FACE OF NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY
OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE
A-1
BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S
UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT
IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND
A CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR
HOLDING THIS SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE
SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND
AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.
A-2
No. _________
Cusip No.
TEL-SAVE HOLDINGS, INC.
__% CONVERTIBLE SUBORDINATED NOTE
DUE 2002
TEL-SAVE HOLDINGS, INC.
Tel-Save Holdings, Inc., a Delaware corporation (the
"Company") promises to pay to ______________________________________________ or
registered assigns, the principal sum [indicated on Schedule A hereof]* [of
___________ Dollars]** on __________, 2002.
Interest Payment Dates: March ___ and September __, commencing March __, 1998.
Record Dates: ________ and __________.
Reference is hereby made to the further provisions of this
Convertible Note set forth on the reverse hereof which further provisions shall
for all purposes have the same effect as if set forth at this place.
------------------------
* Applicable to Global Securities only.
** Applicable to certificated Securities only.
A-3
IN WITNESS WHEREOF, Tel-Save Holdings, Inc. has caused this
Convertible Note to be signed manually or by facsimile by its duly authorized
Officers and a facsimile of its corporate seal to be affixed hereto or imprinted
hereon.
Dated:__________________
TEL-SAVE HOLDINGS, INC.,
by
by
[Seal]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the
__% Convertible Subordinated Notes Due 2002
described in the within-
mentioned Indenture.
_____________, as Trustee,
by
Authorized Officer
A-4
TEL-SAVE HOLDINGS, INC.
__% Convertible Subordinated Note Due 2002
1. Interest. TEL-SAVE HOLDINGS, INC., a Delaware corporation
(the "Company"), is the issuer of the __% Convertible Subordinated Notes Due
2002 (the "Convertible Notes"), of which this Convertible Note is a part. The
Company promises to pay interest on the Convertible Notes in cash semiannually
on each March___ and September___, commencing on March__, 1998, to holders of
record on the immediately preceding _________ and
---------.
Interest on the Convertible Notes will accrue from the most
recent date to which interest has been paid, or if no interest has been paid,
from __________, 1997. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. To the extent lawful, the Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable grace period)
at the rate borne by the Convertible Notes, compounded annually.
2. Method of Payment. The Company will pay interest on the
Convertible Notes (except defaulted interest) to the persons who are registered
holders of the Convertible Notes at the close of business on the record date for
the next interest payment date even though Convertible Notes are canceled after
the record date and on or before the interest payment date. The Noteholder
hereof must surrender Convertible Notes to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a holders' registered
address.
3. Paying Agent and Registrar. The Trustee will act as Paying
Agent, Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar, or Conversion Agent without prior notice.
4. Indenture. The Company issued the Convertible Notes under
an indenture, dated as of September , 1997 (the "Indenture"), between the
Company and First Trust of New York, National Association, as Trustee. The terms
of the Convertible Notes include those stated in the Indenture and those made
part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code xx.xx.
77aaa-77bbbb) as in effect on the date of the Indenture. The Convertible Notes
are subject to, and qualified by, all such terms, certain of which are
summarized hereon, and Noteholders are referred to the Indenture and such Act
for a statement of such terms. The Convertible Notes are general unsecured
obligations of the Company limited to an aggregate principal amount of
$___________. The Indenture does not limit the ability of the Company or any of
its Subsidiaries to incur indebtedness or to grant security interests or liens
in respect of their assets.
A-5
5. Optional Redemption. The Convertible Notes are not
redeemable at the Company's option prior to _________, 2000. Thereafter, the
Convertible Notes will be subject to redemption at the option of the Company, in
whole or in part (in any integral multiple of $1,000), at the following
redemption prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning ____________ of the years
indicated:
Redemption
Year Price
---- -----
2000................................. %
2001................................. %
and at 100% at __________, 2002, in each case together with
accrued interest to the redemption date (subject to the right of holders of
record on the relevant record date to receive interest due on an interest
payment date). On or after the redemption date, interest will cease to accrue on
the Convertible Notes, or portion thereof, called for redemption.
6. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the redemption date to each
holder of the Convertible Notes to be redeemed at his address of record. The
Convertible Notes in denominations larger than $1,000 may be redeemed in part
but only in integral multiples of $1,000. In the event of a redemption of less
than all of the Convertible Notes, the Convertible Notes will be chosen for
redemption by the Trustee in accordance with the Indenture. Unless the Company
defaults in making such redemption payment, or a Paying Agent is prohibited from
making such payment pursuant to the Indenture, by law or otherwise, interest
ceases to accrue on the Convertible Notes or portions of them called for
redemption on and after the redemption date.
If this Convertible Note is redeemed subsequent to a record
date with respect to any interest payment date specified above and on or prior
to such interest payment date, then any accrued interest will be paid to the
person in whose name this Convertible Note is registered at the close of
business on such record date.
7. Mandatory Redemption. The Company will not be required to
make mandatory redemption payments with respect to the Convertible Notes. There
are no sinking fund payments with respect to the Convertible Notes.
8. Repurchase at Option of Holder. If there is a Designated
Event, the Company shall be required to offer to purchase on the Designated
Event Payment Date all outstanding Convertible Notes at a purchase price equal
to 101% of the principal amount thereof on the date of purchase, plus accrued
and unpaid interest to the Designated Event Payment Date. Holders of Convertible
Notes that are subject to an offer to purchase will receive a Designated Event
Offer from the Company prior to any related Designated Event Payment Date and
may elect to have such Convertible Notes or portions thereof in authorized
denominations purchased by completing the form entitled "Option of Noteholder To
Elect Purchase" appearing below. Noteholders have
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the right to withdraw their election by delivering a written notice of
withdrawal to the Company or the Paying Agent in accordance with the terms of
the Indenture.
9. Subordination. The payment of the principal of, interest on
or any other amounts due on the Convertible Notes is subordinated in right of
payment to all existing and future Senior Debt of the Company, as described in
the Indenture. Each Noteholder, by accepting a Convertible Note, agrees to such
subordination and authorizes and directs the Trustee on its behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and appoints the Trustee as its attorney-in-fact for such purpose.
10. Conversion. The holder of any Convertible Note has the
right, exercisable at any time after 90 days following the Issuance Date and
prior to the close of business (New York City time) on the Business Day
immediately preceding the date of the Convertible Note's maturity, to convert
the principal amount thereof (or any portion thereof that is an integral
multiple of $1,000) into shares of Common Stock at the initial Conversion Price
of $___ per share, subject to adjustment under certain circumstances, except
that if a Convertible Note is called for redemption, the conversion right will
terminate at the close of business (New York City time) on the Business Day
immediately preceding the date fixed for redemption.
To convert a Convertible Note, a holder must (1) complete and
sign a notice of election to convert substantially in the form set forth below,
(2) surrender the Convertible Note to a Conversion Agent, (3) furnish
appropriate endorsements or transfer documents if required by the Registrar or
Conversion Agent and (4) pay any transfer or similar tax, if required. Upon
conversion, no adjustment or payment will be made for interest or dividends, but
if any Noteholder surrenders a Convertible Note for conversion after the close
of business on the record date for the payment of an installment of interest and
prior to the opening of business on the next interest payment date, then,
notwithstanding such conversion, the interest payable on such interest payment
date will be paid to the registered holder of such Convertible Note on such
record date. In such event, unless such Security has been called for redemption
on or prior to such interest payment date, such Convertible Note, when
surrendered for conversion, must be accompanied by payment in funds acceptable
to the Company of an amount equal to the interest payable on such interest
payment date on the portion so converted. The number of shares of Common Stock
issuable upon conversion of a Convertible Note is determined by dividing the
principal amount of the Convertible Note converted by the Conversion Price in
effect on the Conversion Date. No fractional shares will be issued upon
conversion but a cash adjustment will be made for any fractional interest.
A Convertible Note in respect of which a holder has delivered
an "Option of Noteholder to Elect Purchase" form appearing below exercising the
option of such holder to require the Company to purchase such Convertible Note
may be converted only if the notice of exercise is withdrawn as provided above
and in accordance with the terms of the Indenture. The above description of
conversion of the Convertible Notes is qualified by reference to, and is subject
in its entirety by, the more complete description thereof contained in the
Indenture.
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11. Registration Agreement. The holder of this Convertible
Note is entitled to the benefits of a Registration Agreement, dated September ,
1997, between the Company and the Initial Purchasers (the "Registration
Agreement"). Pursuant to the Registration Agreement the Company has agreed for
the benefit of the holders of the Convertible Notes, that (i) it will, at its
cost, within 120 days after the closing of the sale of the Convertible Notes
(the "Closing"), file a shelf registration statement (the "Shelf Registration
Statement") with the Securities and Exchange Commission (the "Commission") with
respect to resales of the Convertible Notes and the Common Stock issuable upon
conversion thereof, (ii) within 180 days after the Closing, such Shelf
Registration Statement shall be declared effective by the Commission and (iii)
the Company will use its best efforts to keep such Shelf Registration Statement
continuously effective under the Securities Act until the earliest of (a) the
second anniversary of the date of the Closing, (b) the date on which the
Convertible Notes or the Common Stock issuable upon conversion thereof may be
sold pursuant to paragraph (k) of Rule 144 (or any successor provision)
promulgated by the Commission under the Securities Act and (c) the date as of
which all the Convertible Notes or the Common Stock issuable upon conversion
thereof have been sold pursuant to such Shelf Registration Statement (the "Shelf
Registration Period"). If the Company fails to comply with clause (i) above
then, at such time, the per annum interest rate on the Convertible Notes will
increase by 25 basis points. Such increase will remain in effect until the date
on which such Shelf Registration Statement is filed, on which date the interest
rate on the Convertible Notes will revert to the interest rate originally borne
by the Convertible Notes plus any increase in such interest rate pursuant to the
following sentence. If the Shelf Registration Statement is not declared
effective as provided in clause (ii) above, then, at such time and on each date
that would have been the successive 30th day following such time, the per annum
interest rate on the Convertible Notes (which interest rate will be the original
interest rate on the Convertible Notes plus any increase or increases in such
interest rate pursuant to the preceding sentence and this sentence) will
increase by an additional 25 basis points; provided that the interest rate will
not increase by more than 50 basis points pursuant to this sentence and will not
increase by more than 75 basis points pursuant to this sentence and the
preceding sentence. Such increase or increases will remain in effect until the
date on which such Shelf Registration Statement is declared effective, on which
date the interest rate on the Convertible Notes will revert to the interest rate
originally borne by the Convertible Notes. Pursuant to clause (iii) above,
however, if the Company fails to keep the Shelf Registration Statement
continuously effective for the period specified above, then at such time as the
Shelf Registration Statement is no longer effective and on each date thereafter
that is the successive 30th day subsequent to such time and until the earlier of
(i) the date that the Shelf Registration Statement is again deemed effective or
(ii) the termination of the Shelf Registration Period, the per annum interest
rate on the Convertible Notes will increase by an additional 25 basis points;
provided, however, that the interest rate will not increase by more than 50
basis points pursuant to this sentence.
Pursuant to the Registration Agreement, the Company may
suspend the use of the prospectus which is a part of the Shelf Registration
Statement for a period not to exceed 30 days in any three-month period or three
periods not to exceed an aggregate of 90 days in any twelve-
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month period under certain circumstances. The holders of Convertible Notes will
not be entitled to additional interest as set forth in the preceding paragraph
solely because of such suspension.
12. Denominations, Transfer, Exchange and Replacement. The
Convertible Notes are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. The transfer of Convertible Notes may
be registered, and Convertible Notes may be exchanged, as provided in the
Indenture. The Registrar may require a Noteholder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
exchange or register the transfer of any Convertible Note or portion of a
Convertible Note selected for redemption (except the unredeemed portion of any
Convertible Note being redeemed in part). Also, it need not exchange or register
the transfer of any Convertible Note for a period of 15 days before a selection
of Convertible Notes to be redeemed. Replacement Convertible Notes for lost,
stolen or mutilated Convertible Notes may be issued in accordance with the terms
of the Indenture.
13. Persons Deemed Owners. The registered Noteholder of a
Convertible Note may be treated as its owner for all purposes.
14. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent shall
pay the money back to the Company at its request. After that, Noteholders of
Convertible Notes entitled to the money must look to the Company for payment,
unless an abandoned property law designates another person, and all liability of
the Trustee and such Paying Agent with respect to such money shall cease.
15. Defaults and Remedies. The Convertible Notes shall have
the Events of Default as set forth in Section 8.01 of the Indenture. Subject to
certain limitations in the Indenture, if an Event of Default occurs and is
continuing, the Trustee by notice to the Company or the Noteholders of at least
25% in aggregate principal amount of the then-outstanding Convertible Notes by
notice to the Company and the Trustee may declare all the Convertible Notes to
be due and payable immediately, except that in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all unpaid principal
and interest accrued on the Convertible Notes shall become due and payable
immediately without further action or notice. Upon acceleration as described in
either of the preceding sentences, the subordination provisions of the Indenture
preclude any payment being made to Noteholders for at least 5 Business Days
except as otherwise provided in the Indenture.
The Noteholders of a majority in principal amount of the
Convertible Notes then outstanding by written notice to the Trustee may rescind
an acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration. Noteholders may not enforce the Indenture or the
Convertible Notes except as provided in the Indenture. Subject to certain
limitations, Noteholders of a majority in principal amount of the
then-outstanding Convertible Notes issued under the Indenture may direct the
Trustee in its exercise of any trust or power. The Company
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must furnish compliance certificates to the Trustee annually. The above
description of Events of Default and remedies is qualified by reference to, and
subject in its entirety by, the more complete description thereof contained in
the Indenture.
16. Amendments, Supplements and Waivers. Subject to certain
exceptions, the Indenture or the Convertible Notes may be amended or
supplemented with the consent of the Noteholders of at least a majority in
principal amount of the then-outstanding Convertible Notes (including consents
obtained in connection with a tender offer or exchange offer for Convertible
Notes), and any existing default may be waived with the consent of the
Noteholders of a majority in principal amount of the then-outstanding
Convertible Notes, including consents obtained in connection with a tender offer
or exchange offer for Convertible Notes. Without the consent of any Noteholder,
the Indenture or the Convertible Notes may be amended, among other things, to
cure any ambiguity, defect or inconsistency, to provide for assumption of the
Company's obligations to Noteholders, to make any change that does not adversely
affect the rights of any Noteholder, to qualify the Indenture under the TIA, or
to comply with the requirements of the SEC in order to maintain the
qualification of the Indenture under the TIA.
17. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of the
Convertible Notes and may otherwise deal with the Company or an Affiliate with
the same rights it would have, as if it were not Trustee, subject to certain
limitations provided for in the Indenture and in the TIA. Any Agent may do the
same with like rights.
18. No Recourse Against others. A director, Officer, employee
or stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Notes or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Noteholder, by accepting a Convertible Note, waives and releases
all such liability. The waiver and release are part of the consideration for the
issue of the Convertible Notes.
19. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THE INDENTURE AND THE CONVERTIBLE NOTES WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.
20. Authentication. The Convertible Notes shall not be valid
until authenticated by the manual signature of an authorized officer of the
Trustee or an authenticating agent.
21. Abbreviations. Customary abbreviations may be used in the
name of a Noteholder or an assignee, such as: TEN COM (for tenants in common),
TEN ENT (for tenants by the entireties), JT TEN (for joint tenants with right of
survivorship and not as tenants in common), CUST (for Custodian), and U/G/M/A
(for Uniform Gifts to Minors Act).
22. Definitions. Capitalized terms not defined in this
Convertible Note have the meaning given to them in the Indenture.
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The Company will furnish to any Noteholder of the Convertible
Notes upon written request and without charge a copy of the Indenture and the
Registration Agreement. Request may be made to:
Tel-Save Holdings, Inc.
Attn: General Counsel and Secretary
0000 Xxxxx 000
Xxx Xxxx, Xxxxxxxxxxxx 00000
(000) 000-0000
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ASSIGNMENT FORM
To assign this Convertible Note, fill in the form below:
(I) or (we) assign and transfer this Convertible Note to
-----------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________ agent to
transfer this Convertible Note on the books of the Company. The agent may
substitute another to act for him.
Your Signature: _____________________________________________
(Sign exactly as your name appears on the
other side of this Convertible Note)
Date: ___________________
Medallion Signature Guarantee: _____________________________
In connection with any transfer of any of the Convertible
Notes evidenced by this certificate occurring prior to the date that is two
years after the later of the date of original issuance of such Convertible Notes
and the last date, if any, on which such
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Convertible Notes were owned by the Company or any Affiliate of the Company, the
undersigned confirms that such Convertible Notes are being transferred:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to and in compliance with Rule 144A under the Securities
Act of 1933; or
(3) [ ] pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) [ ] to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that
has furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(5) [ ] pursuant to an exemption from registration under the Securities Act
of 1933 provided by Rule 144 thereunder.
Unless one of the boxes is checked, the Registrar will refuse to register
any of the Convertible Notes evidenced by this certificate in the name of
any person other than the registered holder thereof; provided, however, that
if box (3), (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Convertible Notes such legal opinions,
certifications and other information as the Company has reasonably requested
in writing, by delivery to the Trustee of a standing letter of instruction,
to confirm that such transfer is being made pursuant to an exemption from,
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or in a transaction not subject to, the registration requirements of the
Securities Act of 1933.
--------------------------
Signature
Medallion Signature Guarantee:
------------------------ --------------------------
Signature
--------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Convertible Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:____________________ ___________________________
NOTICE: To be executed by
an executive officer
-----------------------------
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[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The initial principal amount at maturity of this Global
Security shall be $ . The following increases or decreases in the principal
amount of this Global Security have been made:
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Amount of increase
in Principal Amount
of this Global Amount of decrease in Principal Amount of Signature of
Security including Principal Amount of this Global Security authorized officer
Date Made upon exercise of this Global Security following such of Trustee or
over-allotment option decrease or increase Securities Custodian
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OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have this Convertible Note or a
portion thereof repurchased by the Company pursuant to Section 3.08 or 4.07 of
the Indenture, check the box: |_|
If the purchase is in part, indicate the portion ($1,000 or
any integral multiple thereof) to be purchased: ____________
Your Signature: _____________________________________________
(Sign exactly as your name appears on the
other side of this Convertible Note)
Date: ____________
Medallion Signature Guarantee: _______________________
A-16
ELECTION TO CONVERT
To Tel-Save Holdings, Inc.:
The undersigned owner of this Convertible Note hereby
irrevocably exercises the option to convert this Convertible Note, or the
portion below designated, into Common Stock of TEL-SAVE HOLDINGS, INC. in
accordance with the terms of the Indenture referred to in this Convertible Note,
and directs that the shares issuable and deliverable upon conversion, together
with any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
The undersigned agrees to be bound by the terms of the
Registration Agreement relating to the Common Stock issuable upon conversion of
the Convertible Notes.
Date:
In whole ____ or Portion of Convertible Note to be
converted ($1,000 or any integral
multiple thereof):
$
--------------
Your Signature: ____________________________________
(Sign exactly as your name appears on
the other side of this Convertible
Note.)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or other Identifying
Number
Medallion Signature Guarantee:*
-------------------------------
------------------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange
A-17
EXHIBIT B
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL SECURITY OR RESTRICTED SECURITY
TO RESTRICTED SECURITY
(Transfers pursuant to ss. 2.06(a)(ii) or ss. 2.06(a)(iii) of the Indenture)
__________, as Registrar
Attn: [ ] Department
Re: Tel-Save Holdings, Inc. __% Convertible Subordinated Notes
Due 2002 (the "Convertible Notes")
Reference is hereby made to the Indenture dated as of
September __, 1997 (the "Indenture") between Tel-Save Holdings, Inc., as Issuer,
and First Trust of New York, National Association, as Trustee. Capitalized terms
used but not defined herein shall have the meanings given them in the Indenture.
This letter relates to U.S. $ aggregate principal
amount of Convertible Notes which are held [in the form of the [Restricted]
[Global] Security (CUSIP No. ) with the Depositary]* in the name of
[name of transferor] (the "Transferor") to effect the transfer of the
Securities.
In connection with such request, and in respect of such
Convertible Notes, the Transferor does hereby certify that such Convertible
Notes are being transferred in accordance with (i) the transfer restrictions set
forth in the Convertible Notes and (ii) to a transferee that the Transferor
reasonably believes is an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of
1933, as amended) and is acquiring at least $250,000 principal amount of
Convertible Notes for its own account or for one or more accounts as to which
the transferee exercises sole investment discretion and (iii) in accordance with
applicable securities laws of any state of the United States.
[Name of Transferor],
by ________________________________
Name:
Title:
Dated:
cc: Tel-Save Holdings, Inc.
Attn: Secretary
------------------------------
* Insert, if appropriate.
B-1
EXHIBIT C
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
(Transfers pursuant to ss. 2.06(a)(ii) and ss. 2.06(a)(iii))
__________, as Registrar
Attn: [ ] Department
Re: Tel-Save Holdings, Inc.
__% Convertible Subordinated Notes
Due 2002 (the "Convertible Notes")
Reference is hereby made to the Indenture dated as of
September __, 1997 (the "Indenture") between Tel-Save Holdings, Inc., as Issuer,
and First Trust of New York, National Association, as Trustee. Capitalized terms
used but not defined herein shall have the meanings given them in the Indenture.
This letter relates to U.S. $________ aggregate principal
amount of Convertible Notes which are held in the form of the [Restricted]
[Global] Security (CUSIP No. _________) with the Depositary in the name of [name
of transferor] (the "Transferor") to effect the transfer of the Convertible
Notes to the undersigned.
In connection with such request, and in respect of such
Convertible Notes we confirm that:
1. We understand that the Convertible Notes have not been and
will not be registered under the U.S. Securities Act of 1933 (the
"Securities Act"), and are being sold to us in a transaction that is
exempt from the registration requirements of the Securities Act.
2. We are a corporation, partnership or other entity having
such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of an investment in the
Convertible Notes, and we are (or any account for which we are
purchasing under paragraph 4 below is) an institutional accredited
investor as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, able to bear the economic risk of our proposed
investment in the Convertible Notes.
3. We are acquiring the Convertible Notes for our own account
(or for accounts as to which we exercise sole investment discretion and
have authority to make, and do make, the statements contained in this
letter) and not with a view to any
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distribution of the Convertible Notes, subject, nevertheless, to the
understanding that the disposition of our property shall at all times
be and remain within our control.
4. We are, and each account (if any) for which we are
purchasing Convertible Notes is, purchasing Convertible Notes having an
aggregate principal amount of not less than $250,000.
5. We understand that (a) the Convertible Notes will be
delivered to us in registered form only and that the certificate
delivered to us with respect to the Convertible Notes will bear a
legend substantially to the following effect:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY
OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER
THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING
THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A
CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE TRANSFEREE
TO THE COMPANY AND THE TRUSTEE, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE
SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
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SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED
INVESTOR HOLDING THIS SECURITY AGREES IT WILL FURNISH TO THE COMPANY AND THE
TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE
TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND
AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT."
and (b) such certificates will be reissued without the foregoing legend
only in accordance with the terms of the Indenture.
6. We agree that in the event that at some future time we wish
to dispose of any of the Convertible Notes, we will not do so unless
the Convertible Notes are being transferred:
(a) to the Company or any Subsidiary thereof;
(b) pursuant to and in compliance with Rule 144A under
the Securities Act;
(c) pursuant to and in compliance with Regulation S
under the Securities Act;
(d) to an institution that is an "accredited investor"
as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, that is acquiring at least $250,000 principal
amount of the Convertible Notes for investment purposes and
not for distribution and that, prior to such transfer,
furnishes to the Trustee a signed letter containing certain
representations and agreements relating to the restrictions on
transfer of the Convertible Notes (the form of which letter
can be obtained from such Trustee);
(e) pursuant to an exemption from registration under
the Securities Act provided by Rule 144 under the Securities
Act; or
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(f) pursuant to an effective registration statement
under the Securities Act.
Very truly yours
[PURCHASER]
by __________________________
Name:
Title:
Dated:
cc: Tel-Save Holdings, Inc.
Attn: General Counsel and Secretary
0000 Xxxxx 000
Xxx Xxxx, Xxxxxxxxxxxx 00000
Attn: Secretary
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EXHIBIT D
FORM OF REGISTRATION AGREEMENT
D-1
