Exhibit 4.2
CELLSTAR CORPORATION, as Issuer
and
The Bank of New York, as Trustee
____________________
INDENTURE
Dated as of [_______ __, 2002]
____________________
$[-------------]
5% Senior Subordinated Convertible Notes
Due November 30, 2002
TABLE OF CONTENTS
Page No.
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ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE .......................... 1
Section 1.01 Definitions ............................................... 1
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Section 1.02 Incorporation by Reference of TIA ......................... 8
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Section 1.03 Rules of Construction ..................................... 8
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ARTICLE II THE NOTES .......................................................... 9
Section 2.01 Form and Dating ........................................... 9
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Section 2.02 Execution and Authentication .............................. 9
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Section 2.03 Registrar and Paying Agent ................................ 10
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Section 2.04 Paying Agent To Hold Assets in Trust ...................... 11
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Section 2.05 Securityholder Lists ...................................... 11
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Section 2.06 Transfer and Exchange ..................................... 12
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Section 2.07 Replacement Notes ......................................... 12
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Section 2.08 Outstanding Notes ......................................... 13
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Section 2.09 Treasury Notes ............................................ 13
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Section 2.10 Temporary Notes ........................................... 13
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Section 2.11 Cancellation .............................................. 14
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Section 2.12 Defaulted Interest ........................................ 14
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Section 2.13 Deposit of Monies and Shares .............................. 14
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Section 2.14 CUSIP Number .............................................. 15
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Section 2.15 Book Entry Provisions for Global Note ..................... 15
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ARTICLE III COVENANTS ......................................................... 16
Section 3.01 Payment of Notes .......................................... 16
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Section 3.02 Maintenance of Office or Agency ........................... 16
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Section 3.03 Corporate Existence ....................................... 17
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Section 3.04 Payment of Taxes and Other Claims ......................... 17
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Section 3.05 Maintenance of Properties and Insurance ................... 17
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Section 3.06 Compliance Certificates; Notice of Default ................ 18
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Section 3.07 Compliance with Laws ...................................... 19
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Section 3.08 SEC Reports and Other Information ......................... 19
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ARTICLE IV SUCCESSOR CORPORATION .............................................. 20
Section 4.01 Consolidation, Merger, Conveyance, Transfer or Lease ...... 20
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Section 4.02 Successor Entity Substituted .............................. 20
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ARTICLE V ..................................................................... 21
DEFAULT AND REMEDIES .......................................................... 21
Section 5.01 Events of Default ......................................... 21
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Section 5.02 Acceleration .............................................. 22
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Section 5.03 Other Remedies ............................................ 23
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Section 5.04 Waiver of Past Defaults ................................... 23
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Section 5.05 Control by Required Holders ............................... 23
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Section 5.06 Limitation on Suits ....................................... 23
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Section 5.07 Rights of Holders To Receive Payment ...................... 24
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Section 5.08 Collection Suit by Trustee ................................ 24
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i
Section 5.09 Trustee May File Proofs of Claim ......................................... 24
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Section 5.10 Priorities ............................................................... 25
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Section 5.11 Undertaking for Costs .................................................... 25
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Section 5.12 Rights and Remedies Cumulative ........................................... 25
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Section 5.13 Delay or Omission Not Waiver ............................................. 25
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ARTICLE VI TRUSTEE ........................................................................... 26
Section 6.01 Duties of Trustee ........................................................ 26
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Section 6.02 Rights of Trustee ........................................................ 27
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Section 6.03 Individual Rights of Trustee ............................................. 28
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Section 6.04 Trustee's Disclaimer ..................................................... 28
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Section 6.05 Notice of Default ........................................................ 28
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Section 6.06 Reports by Trustee to Holders ............................................ 28
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Section 6.07 Compensation and Indemnity ............................................... 29
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Section 6.08 Replacement of Trustee ................................................... 29
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Section 6.09 Successor Trustee by Merger, Etc. ........................................ 31
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Section 6.10 Eligibility; Disqualification ............................................ 31
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Section 6.11 Preferential Collection of Claims Against Company ........................ 31
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ARTICLE VII DISCHARGE OF INDENTURE ........................................................... 31
Section 7.01 Discharge of Indenture ................................................... 31
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Section 7.02 Application of Trust Money ............................................... 32
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Section 7.03 Repayment to the Company ................................................. 32
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Section 7.04 Reinstatement ............................................................ 33
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Section 7.05 Acknowledgment of Discharge by Trustee ................................... 33
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ARTICLE VIII AMENDMENTS, SUPPLEMENTS AND WAIVERS ............................................. 34
Section 8.01 Without Consent of Holders ............................................... 34
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Section 8.02 With Consent of Holders .................................................. 34
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Section 8.03 Compliance with TIA ...................................................... 35
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Section 8.04 Revocation and Effect of Consents ........................................ 35
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Section 8.05 Notation on or Exchange of Notes ......................................... 36
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Section 8.06 Trustee To Sign Amendments, Etc. .......................................... 36
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ARTICLE IX SUBORDINATION ..................................................................... 37
Section 9.01 Notes Subordinated to Senior Indebtedness .................................. 37
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Section 9.02 Suspension of Payment on Notes in Certain Events ........................... 37
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Section 9.03 Notes Subordinated to Prior Payment of All Senior Indebtedness on
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Dissolution, Liquidation or Reorganization of Company ...................... 39
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Section 9.04 Holders to be Subrogated to Rights of Holders of Senior Indebtedness ....... 40
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Section 9.05 Obligations of the Company Unconditional ................................... 40
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Section 9.06 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice .... 41
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Section 9.07 Application by Trustee of Assets Deposited with It ......................... 41
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Section 9.08 No Waiver of Subordination Provisions ...................................... 41
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Section 9.09 Holders Authorize Trustee to Effectuate Subordination of Notes. ............ 42
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Section 9.10 Right of Trustee to Hold Senior Indebtedness ............................... 42
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Section 9.11 This Article IX Not To Prevent Events of Default ........................... 43
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Section 9.12 No Fiduciary Duty of Trustee to Holders of Senior Indebtedness ............. 43
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Section 9.13 Relationship to Senior Subordinated Notes .................................. 43
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ARTICLE X CONVERSION OF NOTES ................................................................ 43
Section 10.01 Right to Convert; Mandatory Conversion. .................................. 43
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Section 10.02 Exercise of Conversion Privilege; Issuance of Common Stock on
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Conversion; No Adjustment for Interest or Dividends ...................... 44
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Section 10.03 Cash Payments in Lieu of Fractional Shares ............................... 45
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Section 10.04 Conversion Price ......................................................... 45
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ii
Section 10.05 Adjustment of Conversion Price ......................................... 45
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Section 10.06 Effect of Reclassification, Consolidation, Merger or Sale .............. 47
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Section 10.07 Voluntary Adjustment ................................................... 48
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Section 10.08 Taxes on Shares Issued ................................................. 48
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Section 10.09 Reservation of Shares; Shares to be Fully Paid; Compliance with
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Governmental Requirements; Listing of Common Stock ..................... 48
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Section 10.10 Responsibility of Trustee .............................................. 49
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Section 10.11 Notice to Holders Prior to Certain Actions ............................. 49
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ARTICLE XI MISCELLANEOUS ................................................................... 50
Section 11.01 TIA Controls ........................................................... 50
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Section 11.02 Notices ................................................................ 50
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Section 11.03 Communications by Holders with Other Holders ........................... 51
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Section 11.04 Certificate and Opinion as to Conditions Precedent ..................... 52
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Section 11.05 Statements Required in Certificate or Opinion .......................... 52
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Section 11.06 Rules by Trustee, Paying Agent, Registrar .............................. 52
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Section 11.07 Legal Holidays ......................................................... 53
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Section 11.08 Governing Law .......................................................... 53
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Section 11.09 No Adverse Interpretation of Other Agreements .......................... 53
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Section 11.10 No Recourse Against Others ............................................. 53
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Section 11.11 Successors ............................................................. 54
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Section 11.12 Counterparts ........................................................... 54
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Section 11.13 Severability ........................................................... 54
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Section 11.14 Table of Contents, Headings. Etc. ...................................... 54
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iii
CROSS REFERENCE TABLE
Reconciliation and tie between the Trust Indenture Act of 1939 and this
Indenture, dated [_________].
TIA Section Indenture Section
Section 310(a)(1) ....................................................6.10
(a)(2) ....................................................6.10
(a)(3) ..........................................Not Applicable
(a)(4) ..........................................Not Applicable
(a)(5) ....................................................6.10
(b) .......................................................6.10
(c) .............................................Not Applicable
Section 311(a) .......................................................6.11
(b) .......................................................6.11
(c) .............................................Not Applicable
Section 312(a) .......................................................2.05
(b) ......................................................11.03
(c) ......................................................11.03
Section 313(a) .......................................................6.06
(b) .......................................................6.06
(c) .......................................................6.06
(d) .......................................................6.06
Section 314(a) .......................................................3.08
(c)(1) ...........................2.02, 4.01, 7.01, 7.05, 11.04
(c)(2) .......................................4.01, 7.01, 11.04
(c)(3) ..........................................Not Applicable
(d) .............................................Not Applicable
(e) ......................................................11.05
(f) .............................................Not Applicable
Section 315(a) .......................................................6.01
(b) .......................................................6.05
(c) .......................................................6.01
(d) .......................................................6.01
(e) .......................................................5.11
Section 316(a)(last sentence) ........................................2.09
(a)(1)(A) .................................................5.05
(a)(1)(B) .................................................5.04
(a)(2) ..........................................Not Applicable
(b) .......................................................8.04
Section 3.17(a)(1) ...................................................5.08
(a)(2) ................................................5.09
(b) ...................................................2.04
Section 3.18(a) .....................................................11.01
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
INDENTURE, dated as of _________ __, 2002, between CellStar Corporation, a
Delaware corporation (the "Company"), and The Bank of New York, a _________, as
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trustee (the "Trustee").
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Each party hereto agrees as follows for the benefit of each other party and
for the equal and ratable benefit of the Holders (as defined below) of the
Company's 5% Senior Subordinated Convertible Notes Due November 30, 2002:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
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"Affiliate" means, with respect to any specified Person, any other Person
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who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar.
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"Agent Members" has the meaning provided in Section 2.15.
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"Bankruptcy Law" means Title 11 of the U.S. Code or any similar federal,
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state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 9.02 hereof.
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"Board of Directors" means, with respect to any Person, the board of
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directors or other applicable governing body of such Person or any committee of
the board of directors or of such other governing body of such Person duly
authorized, with respect to any particular matter, to exercise the power of the
board of directors or other applicable governing body of such Person.
"Board Resolution" means, with respect to any Person, a copy of a
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resolution certified by the Secretary or an Assistant Secretary of such Person,
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Book-Entry Note" means a Note represented by a Global Note and registered
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in the name of the nominee of the Depository.
"Business Day" means any day that is not a Legal Holiday.
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"Capital Lease" means all leases which have been or should be capitalized
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in accordance with GAAP as in effect from time to time, including Statement No.
13 of the Financial Accounting Standards Board and any successor thereof.
"Capitalized Lease Obligation" means any obligation to pay rent or other
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amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified and
accounted for as a Capital Lease and, for the purpose of this Indenture, the
amount of such obligation at any date shall be the capitalized amount thereof at
such date, determined in accordance with GAAP.
"Cash Equivalents" means at any time (i) any evidence of Indebtedness with
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a maturity of one year or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit or acceptances with a
maturity of one year or less of any financial institution that is a member of
the Federal Reserve System having combined capital and surplus and undivided
profits of not less than Five Hundred Million Dollars ($500,000,000); (iii)
commercial paper issued by a corporation (except an Affiliate of the Company)
organized under the laws of any state of the United States or the District of
Columbia and having one of the two highest ratings from Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc.; (iv) repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued
or unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; provided,
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however, that the terms of such agreements comply
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with the guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency; (v) money market funds investing principally in the types of
securities described in clauses (i), (ii) and (iii) above; (vi) investments in
eurodollars placed through any financial institution having combined capital
surplus and undivided profits of not less than $100,000,000; and
(vii) "overnight investments" or similar short-term obligations issued by any
commercial bank located in the U.S. in those areas where the Company or its
Subsidiaries conduct their business whose deposits are insured by the Federal
Deposit Insurance Corporation.
"Common Stock" means Common Stock, par value $.01 per share, of the Company
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and any capital stock of any other class into which any presently authorized
Common Stock may be changed.
"Company" means the party named as such in this Indenture until a successor
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replaces it pursuant to the terms and conditions of this Indenture and
thereafter means such successor.
"Company Order" means a written order or request signed in the name of the
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Company by its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Consolidated Net Worth" means, with respect to any Person at any date, the
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consolidated equity represented by the shares of such Person's capital stock
(other than
2
Disqualified Stock) at such date, as determined on a consolidated basis in
accordance with GAAP.
"Conversion Price" has the meaning provided in Section 10.04 hereof.
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"Credit Agreement" means the Loan and Security Agreement, dated as of
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September 28, 2001, entered into among the Company, certain of its subsidiaries
and Foothill, as agent, and the lenders party thereto, providing for working
capital and other financing, as the same may at any time be amended, amended and
restated, supplemented or otherwise modified, including any refinancing,
refunding, replacement or extension thereof which provides for working capital
and other financing, whether by the same or any other lender or group of
lenders.
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
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or similar official under any Bankruptcy Law.
"Default" means any event that is, or after notice or the passage of time
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or both would be, an Event of Default.
"Default Amount" shall have the meaning set forth in Section 5.02 hereof.
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"Default Notice" has the meaning provided in Section 9.02 hereof.
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"Depository" means, with respect to the Notes issuable or issued in one or
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more Book-Entry Notes, the Person specified in Section 2.02 as the Depository
with respect to the Notes until the successor shall have been appointed and
becomes such pursuant to the applicable provisions of this Indenture, and,
thereafter, "Depository" shall mean or include such successor.
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"Disqualified Stock" means any of the Company's capital stock that is
------------------
required to be redeemed in whole or in part or has a sinking fund payment due
or, at the option of the holder of such capital stock, is required to be
repurchased in whole or in part on or prior to the maturity of the Notes.
"Event of Default" has the meaning provided in Section 5.01.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
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the rules and regulations promulgated by the SEC thereunder.
"Foothill" means Foothill Capital Corporation.
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"GAAP" means generally accepted accounting principles in the United States
----
of America as in effect as of the date hereof and as such principles may be
amended from time to time, including those 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
3
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States, which are applicable
as of the date of determination.
"Global Note" means a Note evidencing all or a part of the Notes to be
-----------
issued as Book-Entry Notes, issued to the Depository in accordance with Section
2.02.
"Holder" means the person in whose name a Note is registered on the
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Registrar's books.
"Indebtedness" means, with respect to any person, without duplication, (i)
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any liability, contingent or otherwise, of such Person (a) for borrowed money
(whether or not the recourse of the lender is to the whole of the Property of
such Person or only to a portion thereof), (b) evidenced by bonds, notes,
debentures or similar instruments or representing the deferred and unpaid
balance of any part of the purchase price of Property or other assets or for the
cost of Property or other assets constructed or of improvements thereto
(including any obligation under or in connection with any letter of credit
related thereto), (c) under or in connection with any letter of credit issued
for the account of such Person, and all drafts drawn, reimbursement obligations
or demands for payment thereunder, or (d) for the payment of money relating to
any Capitalized Lease Obligations; (ii) any liability of others of the kind
described in the preceding clause (i) which the Person has guaranteed or which
is otherwise its legal liability; (iii) any liability, contingent or otherwise,
secured by any Lien in respect of Property of such Person, whether or not the
obligations secured thereby shall have been assumed by or shall otherwise be
such Person's legal liability, provided, that, solely in the case of any
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Indebtedness of the type described in this clause (iii), recourse for the
payment of which is limited to such Property, the amount of such Indebtedness
shall be deemed to be the lesser of the fair market value of such Property or
the amount of the obligation so secured; and (iv) any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (i), (ii) and (iii). The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of such Person in
respect of any such contingent obligations at such date.
"Indenture" means this Indenture, as amended or supplemented from time to
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time in accordance with the terms hereof.
"Interest Payment Date" means the stated maturity of an installment of
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interest on the Notes.
"Interest Shares" means the number of fully paid and non-assessable shares
---------------
of Common Stock which have a current market price (determined as set forth in
Section 10.05(b) hereof) equal to the amount of interest on the Notes due on
such Interest Payment Date.
4
"Issue Date" means the date of first issuance of the Notes under this
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Indenture.
"Legal Holiday" means, with respect to a particular place of payment, a
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Saturday, a Sunday or a day on which banking institutions in New York, New York
or at such place of payment are authorized or obligated by law, executive order
or governmental decree to be closed.
"Lien" means any mortgage, lien, pledge, charge, security interest,
----
encumbrance, claim, hypothecation, assignment for security, deposit arrangement
or preference or other security agreement of any kind or nature whatsoever,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement and any lease
deemed to constitute a security interest). For purposes hereof, a Person shall
be deemed to own subject to a Lien any Property which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement.
"Material Subsidiary" means, with respect to any person, any Subsidiary of
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such person which would be a "significant subsidiary" pursuant to Article 1-02
of Regulation S-X of the Exchange Act.
"Maturity Date" means November 30, 2002.
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"Notes" means, the Company's 5% Senior Subordinated Convertible Notes Due
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November 30, 2002, as amended or supplemented from time to time in accordance
with the terms hereof, that are issued pursuant to the terms and conditions of
this Indenture.
"Officer" means, with respect to any Person, the Chairman of the Board, the
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Chief Executive Officer, the President, any Vice President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, the Controller, the
Secretary or the Assistant Secretary of such Person.
"Officers' Certificate" means, with respect to any Person, a certificate
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signed by two Officers (one of whom shall be the Chief Financial Officer) or by
an Officer and either an Assistant Treasurer or an Assistant Secretary of such
Person and otherwise complying with the requirements of Sections 11.04 and
11.05.
"Opinion of Counsel" means a written opinion from Xxxxxx and Xxxxx, LLP, or
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in the event Xxxxxx and Xxxxx, LLP is no longer in existence, legal counsel who
is acceptable to the Trustee complying with the requirements of Sections 11.04
and 11.05. Unless otherwise required by the TIA, the legal counsel may be an
employee of or counsel to the Company.
"Paying Agent" has the meaning provided in Section 2.03.
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"Person" means any individual, corporation, partnership, joint venture,
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association, joint-stock company, trust, unincorporated organization or any
other entity or
5
organization including a government or political subdivision or any agency or
instrumentality thereof.
"Physical Notes" has the meaning set forth in Section 2.02.
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"Principal" of any Indebtedness (including the Notes) means the principal
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of such Indebtedness plus the premium, if any, on such Indebtedness.
"Principal Shares" means the number of fully paid and non-assessable shares
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of Common Stock which have a current market price (determined as set forth in
Section 10.05(b) hereof) equal to the amount of Principal on the Notes due on
the Maturity Date.
"Property" or "property" means any assets or property of any kind or nature
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whatsoever, real, personal or mixed (including fixtures), whether tangible or
intangible.
"Record Date" means the Record Dates specified in the Notes; provided that
----------- --------
if any such date is a Legal Holiday, the Record Date shall be the first day
immediately preceding such specified day that is not a Legal Holiday.
"Registrar" has the meaning provided in Section 2.03.
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"Representative" means the trustee, agent or representative in respect of
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any Senior Indebtedness and shall mean (i) with respect to Indebtedness under
the Credit Agreement, Foothill in such capacity, until such time as it is no
longer the representative pursuant to the terms of the Credit Agreement and (ii)
with respect to all other Senior Indebtedness the representative for such Senior
Indebtedness; provided, however, that if, and for so long as, any Senior
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Indebtedness lacks such a representative, then the Representative for such
Senior Indebtedness shall at all times constitute the holders of a majority in
outstanding principal amount of such Senior Indebtedness in respect of any
Senior Indebtedness.
"Required Filing Dates" has the meaning provided in Section 3.08 hereof.
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"Required Holders" means Holders holding at least a majority of the
----------------
aggregate principal amount of the outstanding Notes.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC promulgated thereunder.
"Senior Debt Other Default" has the meaning provided in Section 9.02
-------------------------
hereof.
"Senior Debt Payment Default" has the meaning provided in Section 9.02
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hereof.
"Senior Indebtedness" means, at any date, the Principal of and interest
-------------------
(including any interest accruing subsequent to the filing of a petition in
bankruptcy at a rate
6
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on all Indebtedness arising
under the Credit Agreement and any other Indebtedness of the Company whether
outstanding on the Issue Date or thereafter incurred, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes.
Notwithstanding the foregoing, Senior Indebtedness shall not include (i)
Indebtedness evidenced by the Notes, (ii) any Indebtedness which is subordinated
or junior in right of payment to any other Indebtedness of the Company, (iii) to
the extent it might constitute Indebtedness, any amount owing for goods,
materials or services purchased in the ordinary course of business or
constituting a trade payable, (iv) Indebtedness of the Company to a Subsidiary
of the Company or any other Affiliate of the Company or any of such Affiliates'
Subsidiaries, (v) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Xxxxx 00, Xxxxxx Xxxxxx Code or other
applicable bankruptcy law, is without recourse to the Company, (vi) Indebtedness
that is represented by Disqualified Stock, (vii) Indebtedness of or amounts owed
by the Company for compensation to employees or for services rendered to the
Company, (viii) any liability for federal, state, local or other taxes owed or
owing by the Company, (ix) that portion of any Indebtedness which at the time of
issuance is issued in violation of the Indenture, (x) Indebtedness that is pari
passu with the Notes and (xi) Indebtedness evidenced by the Company's 5%
Subordinated Convertible Notes due 2002.
"Subsidiary" means with respect to any Person (i) a corporation a majority
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of whose capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such Person, by one
or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person or (ii) any other Person (other than a corporation)
in which such Person, one or more Subsidiaries of such Person or such Person and
one or more subsidiaries of such Person, directly or indirectly, individually or
with another Person, at the date of determination thereof, has (a) at least a
majority ownership interest or (b) the power to elect or direct the election of
a majority of the directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. SS 77aaa-77bbbb), as
---
amended, as in effect on the date of the execution of this Indenture.
"Trading Days" has the meaning provided in Section 10.05 hereof.
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"Trustee" means the party named as such in this Indenture until a successor
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replaces it in accordance with the provisions of this Indenture and thereafter
means such successor.
"Trust Officer" means any officer of the Trustee assigned by the Trustee to
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administer its corporate trust matters.
"U.S. Government Obligations" means direct non-callable obligations of, or
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non-callable obligations guaranteed by, the United States of America for the
payment of
7
which obligation or guarantee the full faith and credit of the United States of
America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States of
-----------------
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"voting power" means, with respect to any Person, the power under ordinary
------------
circumstances, pursuant to the ownership of shares of any class or classes of
capital stock, to elect at least a majority of the board of directors, managers
or trustees of such Person (irrespective of whether or not, at the time, stock
of any other class or classes shall have, or might have, voting power by reason
of the happening of any contingency).
Section 1.02 Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such 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:
"Commission" means the SEC.
----------
"indenture securities" means the Notes.
--------------------
"indenture security holder" means a Holder.
-------------------------
"indenture to be qualified" means this Indenture.
-------------------------
"indenture trustee" or "institutional trustee" means the Trustee.
----------------- ---------------------
"obligor" on the indenture securities means the Company or any other
-------
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
Section 1.03 Rules of Construction.
---------------------
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(c) "or" is not exclusive;
8
(d) words in the singular include the plural, and words in the plural
include the singular;
(e) provisions apply to successive events and transactions;
(f) the words "include" and "including" shall be deemed to mean
"include, without limitation," and "including, without limitation";
(g) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision;
(h) references to Sections or Articles means references to such Section
or Article in this Indenture, unless stated otherwise; and
(i) references to sections of or rules under the Securities Act and the
Exchange Act shall be deemed to include substitute, replacement or successor
sections or rules adopted by the SEC from time to time.
ARTICLE II
THE NOTES
Section 2.01 Form and Dating.
---------------
(a) The Notes and the Trustee's certificate of authentication with
respect thereto shall be substantially in the form of Exhibit A hereto. The
---------
Notes may have notations, legends or endorsements required by law, stock
exchange rules, usage or agreement to which the Company is subject, including
the legends set forth in Exhibit A hereto. The Company and the Trustee shall
---------
approve the form of the Notes and any notation, legend or endorsement on them.
Each Note shall be dated the date of its authentication, shall bear interest
from the Issue Date and shall be payable on the Interest Payment Dates and the
Maturity Date.
(b) The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and, to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
Section 2.02 Execution and Authentication.
----------------------------
(a) One Officer shall sign (who shall have been duly authorized by all
requisite corporate actions) the Notes for the Company by manual or facsimile
signature. If an Officer whose signature is on a Note was an Officer at the time
of such execution but no longer holds that office at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid. A Note shall not
be valid until an authorized signatory of the Trustee manually signs the
certificate of authentication on the Note. The signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.
9
(b) The Trustee shall authenticate Notes for original issue up to an
aggregate principal amount of Sixty Million One Hundred Forty-Two Thousand
Dollars ($60,142,000) upon a written order of the Company in the form of an
Officers' Certificate to a Trust Officer directing the Trustee to authenticate
the Notes and certifying that all conditions precedent to the issuance of the
Notes contained herein have been complied with. Upon the written order of the
Company in the form of an Officers' Certificate, the Trustee shall authenticate
Notes in substitution of Notes issued on the Issue Date to reflect any name
change of the Company. The aggregate principal amount of Notes outstanding at
any time may not exceed Sixty Million One Hundred Forty-Two Thousand Dollars
($60,142,000) except as provided in Section 2.07 hereof.
(c) The Principal and interest on Book-Entry Notes shall be payable to
the Depository or its nominee, as the case may be, as the sole registered owner
and the sole holder of the Book-Entry Notes represented thereby. The Principal
of and interest on Notes in certificated form ("Physical Notes") shall be
--------------
payable at the office of the Paying Agent.
(d) The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Notes. Unless otherwise provided
in the appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
(e) The Notes shall be issuable only in registered form without coupons
in denominations of One Thousand Dollars ($1,000) and any integral multiples
thereof.
(f) If the Notes are to be issued in the form of one or more Global
Notes, then the Company shall execute and the Trustee shall authenticate and
deliver one or more Global Notes that (i) shall represent and shall be in
minimum denominations of One Thousand Dollars ($1,000), (ii) shall be registered
in the name of the Depository for such Global Note or Notes or the nominee of
such Depository and (iii) shall be delivered to the Trustee as custodian for
such Depository or pursuant to such Depository's instructions.
(g) The Company initially appoints The Depository Trust Company to act
as Depository with respect to the Book-Entry Notes.
Section 2.03 Registrar and Paying Agent.
--------------------------
(a) The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where (a) Notes may be presented or surrendered
for registration of transfer or for exchange (the "Registrar"), (b) Notes may be
---------
presented or surrendered for payment (the "Paying Agent"), and (c) notices and
------------
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
--------
however, that no such designation or rescission
-------
10
shall in any manner relieve the Company of its obligation to maintain an office
or agency in the Borough of Manhattan, The City of New York, for such purposes.
Neither the Company nor any Affiliate of the Company shall act as Paying Agent.
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company, upon notice to the Trustee, may appoint one or more
co-Registrars and one or more additional paying agents reasonably acceptable to
the Trustee. The term "Paying Agent" includes any additional paying agent. The
------------
Company initially appoints the Trustee as Registrar, Paying Agent and agent for
service of notices or demands in connection with the Notes and this Indenture
until such time as the Trustee has resigned or a successor has been appointed.
Notes, notices and demands may be delivered to the Trustee at [__________].
(b) The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall promptly notify the
Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation in accordance with Section 6.07 hereof.
Section 2.04 Paying Agent To Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to agree
in writing that each Paying Agent shall hold in trust for the benefit of the
Holders or the Trustee all assets held by the Paying Agent for the payment of
Principal of, or interest on, the Notes (whether such assets have been
distributed to it by the Company or any other obligor on the Notes), and shall
notify the Trustee of any Default by the Company (or any other obligor on the
Notes) in making any such payment. The Trustee may at any time during the
continuance of any Default by the Company in making any such payment, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
Section 2.05 Securityholder 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
the Holders and shall otherwise comply with TIA (S)312(a). If the Trustee is not
the Registrar, the Company shall furnish to the Trustee five (5) days before
each Record Date and at such other times as the Trustee may request in writing a
list as of such date and in such form as the Trustee may reasonably require of
the names and addresses of the Holders, which list may be conclusively relied
upon by the Trustee, and the Company shall otherwise comply with TIA (S)312(a).
11
Section 2.06 Transfer and Exchange.
---------------------
(a) When Notes in certificated form are presented to the Registrar or a
co-Registrar with a request from the Holder thereof to register the transfer of
such Notes or to exchange such Notes for an equal principal amount of Notes of
other authorized denominations, the Registrar or co-Registrar, as the case may
be, shall register the transfer or make the exchange as requested if its
requirements for such transaction are met; provided, however, that the Notes
-------- -------
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar, or co-Registrar, as the case may be, duly executed by
the Holder thereof or such Holder's attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute by
manual or facsimile signature and issue, and the Trustee shall authenticate new
Notes evidencing such transfer or exchange at the Registrar's or co-Registrar's
request, as the case may be. No service charge shall be made for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchanges or transfers pursuant to Section
2.02, 2.07, 2.10 or 8.05).
(b) Notwithstanding any other provision of this Section 2.06, a Global Note
representing a Book-Entry Note may not be transferred in whole except by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor depository or a nominee of such successor
depository.
(c) Notwithstanding the foregoing, no Global Note shall be registered for
transfer or exchange, or authenticated and delivered, whether pursuant to this
Section 2.06, Section 2.07 or 2.10 or otherwise, in the name of a person other
than the Depository for such Global Note or its nominee until (i) the Depository
notifies the Company that it is unwilling or unable to continue as Depository
for such Global Note or if at any time the Depository ceases to be a clearing
agency registered under the Exchange Act, and a successor depository is not
appointed by the Company within thirty (30) days, (ii) the Company executes and
delivers to the Trustee a Company Order that all such Global Notes shall be
exchangeable or (iii) there shall have occurred and be continuing an Event of
Default.
(d) Except as provided above, any Note authenticated and delivered upon
registration of transfer or, or in exchange for, or in lieu of, any Global Note,
whether pursuant to this Section 2.06, Section 2.07 or 2.10 or otherwise, shall
also be a Global Note.
Section 2.07 Replacement Notes.
-----------------
If a mutilated Note is surrendered to the Trustee or the Registrar or if
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of a Company
12
Order, shall authenticate a replacement Note if the Trustee's requirements are
met. If required by the Trustee or the Company, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Note is replaced. The Company and the
Trustee may charge such Holder for their respective reasonable, out-of-pocket
expenses in replacing a Note, including reasonable fees and expenses of counsel.
Every replacement Note shall constitute an additional obligation of the Company
and shall be entitled to all benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08 Outstanding Notes.
-----------------
(a) Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Except
as set forth in Section 2.09, a Note does not cease to be outstanding because
the Company or any of its Affiliates holds the Note.
(b) If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to Section 2.07.
(c) If the principal amount of any Note is considered paid under Section
3.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
(d) If on the Maturity Date the Paying Agent holds (i) Principal Shares and
(ii) U.S. Legal Tender or Interest Shares sufficient to pay all of the Principal
and interest due on the Notes payable on that date and is not prohibited from
paying such Principal and interest due on such date, then on and after such date
such Notes cease to be outstanding and interest on them ceases to accrue.
Section 2.09 Treasury Notes.
--------------
In determining whether the Holders of the required principal amount of
Notes have concurred in any declaration of acceleration or notice of default or
direction, waiver or consent or any amendment, modification or other change to
this Indenture, the Notes owned by the Company or an Affiliate of the Company
shall be disregarded as though they were not outstanding, except that, for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes that the Trustee knows are so
owned shall be disregarded.
Section 2.10 Temporary Notes.
---------------
Until definitive Notes are prepared and ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon receipt of a
written
13
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate, upon
receipt of a written order of the Company pursuant to Section 2.02, definitive
Notes in exchange for temporary Notes. Until such exchange, Holders of temporary
Notes shall be entitled to the same rights, benefits and privileges as
definitive Notes.
Section 2.11 Cancellation.
------------
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or a Subsidiary), and no one else, shall cancel and,
pursuant to a Company Order, shall dispose of all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
certification of their destruction (subject to the record retention requirements
of the Exchange Act) shall be delivered to the Company unless, by a Company
Order, the Company shall direct that canceled Notes be returned to it. Subject
to Section 2.07, the Company may not issue new Notes to replace Notes that it
has paid or delivered to the Trustee for cancellation. If the Company shall
acquire any of the Notes, such acquisition shall not operate as a redemption or
satisfaction of the Indebtedness represented by such Notes unless and until the
same are surrendered to the Trustee for cancellation pursuant to this Section
2.11.
Section 2.12 Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Notes, it shall,
unless the Trustee fixes another record date pursuant to Section 5.10, pay the
defaulted interest, plus (to the extent lawful) any interest payable on the
defaulted interest to the persons who are Holders on a subsequent special record
date, which date shall be a Business Day at least five (5) Business Days prior
to the payment date, in each case at the rate provided in the Notes and in
Section 3.01 hereof. The Company shall fix or cause to be fixed such special
record date and payment date in a manner reasonably satisfactory to the Trustee.
At least fifteen (15) days before the subsequent special record date, the
Company shall mail or cause to be mailed to each Holder, with a copy to the
Trustee, a notice that states the subsequent special record date, the payment
date and the amount of defaulted interest, and interest payable on such
defaulted interest, if any, to be paid. The Company may also pay defaulted
interest in any other lawful manner.
Section 2.13 Deposit of Monies and Shares.
----------------------------
On or before 10:00 a.m. on each Interest Payment Date and the Maturity
Date, as the case may be, the Company shall deposit or cause to be deposited
with the Paying
14
Agent (a) U.S. Legal Tender, in immediately available funds, or Interest Shares,
due on such Interest Payment Date or (b) Principal Shares due on the Maturity
Date, as the case may be, in a timely manner that permits the Trustee to remit
payment to the Holders on such Interest Payment Date or the Maturity Date, as
the case may be.
Section 2.14 CUSIP Number.
------------
The Company in issuing the Notes may use one or more CUSIP numbers, and if
so, the Trustee shall use the CUSIP numbers in notices of redemption or exchange
as a convenience to Holders; provided, that any such notice may state that no
--------
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes.
Section 2.15 Book Entry Provisions for Global Note.
-------------------------------------
(a) Members of, or participants in, the Depository ("Agent Members") shall
-------------
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Notes, and the Depository may be treated by the Company, the Trustee and
any Agent of the Company or the Trustee as the absolute owner of such Global
Note 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 Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers in whole, but
not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in a Global Note may be transferred or exchanged
for Physical Notes in accordance with the rules and procedures of the
Depository. In addition, Physical Notes shall be transferred to all beneficial
owners in exchange for their beneficial interests in a Global Note if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for the Global Notes and a successor depositary is not appointed by
the Company within ninety (90) days of such notice or (ii) an Event of Default
has occurred and is continuing and the Registrar has received a written request
from the Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b) of this Section 2.15, the Registrar shall (if one or more Physical Notes are
to be issued) reflect on its books and records the date and a decrease in the
principal amount of such Global Notes in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and amount.
15
(d) In connection with the transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b) of this Section 2.15, such Global
Note shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Note, an equal aggregate principal amount of Physical
Note of authorized denominations.
(e) The Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold interest
through Agent Members, to take any action which a Holder is entitled to take
under this Indenture or the Notes.
ARTICLE III
COVENANTS
Section 3.01 Payment of Notes.
----------------
(a) The Company shall pay the Principal of and interest on the Notes on
the dates and in the manner provided in the Notes and this Indenture. Principal
on the Notes shall be considered paid on the date it is due if the Trustee or
Paying Agent holds on that date Principal Shares designated for and sufficient
to pay Principal due and is not prohibited from paying such Principal on such
date. An installment of interest on the Notes shall be considered paid on the
date it is due if the Trustee or Paying Agent holds on that date U.S. Legal
Tender or Interest Shares designated for and sufficient to pay the interest then
due (together with U.S. Legal Tender in lieu of any fractional Interest Shares)
and it is not prohibited from paying such interest on such date.
(b) The Company shall pay interest on (i) overdue Principal at the rate
set forth in the Notes for such overdue Principal, and (ii) overdue installments
of interest at the same rate, to the extent lawful. Interest may be paid at the
Company's election, in U.S. Legal Tender, Interest Shares or pro-rata to
Holders, in a combination of U.S. Legal Tender and Interest Shares; provided
that no fractional shares of Common Stock shall be issued.
Section 3.02 Maintenance of Office or Agency.
-------------------------------
(a) The Company shall maintain in the Borough of Manhattan, The City of
New York, the office or agency required under Section 2.03. The Company shall
give prior notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
described in such Section 2.03 may be made or served at the address of the
Trustee set forth in Section 2.03.
(b) The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that
16
no such designation or rescission shall in any manner relieve the Company of
its obligation to maintain an office or agency in the Borough of Manhattan, The
City of New York, for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. The Company hereby initially
designates the corporate trust office of the Trustee set forth in Section 2.03
as such office.
Section 3.03 Corporate Existence.
-------------------
Except as permitted by Article IV, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence and the existence of each of its Subsidiaries, in accordance with the
respective organizational documents of each of them and the rights (charter and
statutory) and franchises of the Company and its Subsidiaries; provided,
however, that the Company shall not be required to preserve, with respect to
itself, any right or franchise, and with respect to any of its Subsidiaries, any
such existence, right or franchise, if (a) the Board of Directors of the Company
shall determine reasonably and in good faith that the preservation thereof is no
longer desirable in the conduct of the business of the Company and (b) the loss
thereof is not adverse in any material respect to the Holders.
Section 3.04 Payment of Taxes and Other Claims.
---------------------------------
The Company shall and shall cause each of its Subsidiaries to, pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges (including
withholding taxes and any penalties, interest and additions to taxes) levied or
imposed upon it or any of its Subsidiaries or properties of it or any of its
Subsidiaries, and (ii) all lawful claims for labor, materials and supplies that,
if unpaid, might by law become a Lien upon the property of it or any of its
Subsidiaries; provided, however, that the Company shall not be required to pay
-------- -------
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim if either (a) the amount, applicability or validity thereof is being
contested in good faith by appropriate proceedings and an adequate reserve has
been established therefor to the extent required by GAAP, or (b) the failure to
make such payment or effect such discharge (together with all other such
failures) would not have a material adverse effect on the financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole.
Section 3.05 Maintenance of Properties and Insurance.
---------------------------------------
(a) The Company shall cause all Properties used or useful in the
conduct of its business or the business of any of its Subsidiaries to be
maintained and kept in satisfactory condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
its judgment may be necessary, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times unless the
failure to so maintain such properties (together with all other such failures)
would not have a material adverse effect on the financial condition or
17
results of operations of the Company and its Subsidiaries, taken as a whole;
provided, however, that nothing in this Section 3.05 shall prevent the Company
-------- -------
or any of its Subsidiaries from discontinuing the operation or maintenance of
any of such properties or disposing of any of them if such discontinuance or
disposal is (i) in the ordinary course of business, (ii) in the good faith
judgment of the Board of Directors of the Company or the Subsidiary concerned,
or of the senior officers of the Company or such Subsidiary, as the case may be,
desirable in the conduct of the business of the Company or such Subsidiary, as
the case may be, or (iii) otherwise permitted by this Indenture.
(b) The Company shall provide or cause to be provided, for itself and
each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company are adequate and appropriate for the conduct of the business of
the Company and such Subsidiaries in a prudent manner, with reputable insurers
or with the government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the reasonable, good faith opinion of the
Company, for companies similarly situated in the industry, unless the failure to
provide such insurance (together with all other such failures) would not have a
material adverse effect on the financial condition or results of operations of
the Company and its Subsidiaries, taken as a whole.
(c) The Company shall and shall cause each of its Subsidiaries to keep
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Company
and each Subsidiary in accordance with GAAP consistently applied to the Company
and its Subsidiaries, taken as a whole.
Section 3.06 Compliance Certificates; Notice of Default.
------------------------------------------
(a) The Company shall deliver to the Trustee, within sixty (60) days
after the end of each of the Company's first three (3) fiscal quarters and
within one hundred twenty (120) days after the end of the Company's fiscal year,
an Officers' Certificate stating that a review of the Company's activities and
the activities of its Subsidiaries during the preceding fiscal period has been
made under the supervision of the signing Officers with a view to determining
whether it has kept, observed, performed and fulfilled its obligations under
this Indenture and further stating, as to each such Officer signing such
certificate, that to the best of his knowledge, the Company during such
preceding fiscal period has kept, observed, performed and fulfilled each and
every such covenant and no Default or Event of Default occurred during such
period and at the date of such certificate there is no Default or Event of
Default that has occurred and is continuing or, if such signers do know of such
Default or Event of Default, the certificate shall describe the Default or Event
of Default and its status with particularity and what action the Company has
taken or proposes to take with respect thereto. The Officers' Certificate shall
also include all calculations necessary to show covenant compliance, if any. The
Officers' Certificate shall also notify the Trustee should the Company elect to
change the manner in which it fixes its fiscal year end.
18
(b) So long as (and to the extent) not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
Company shall deliver to the Trustee within one hundred twenty (120) days after
the end of each fiscal year a written statement by a nationally recognized firm
of independent public accountants stating (i) that their audit examination has
included a review of the terms of this Indenture and the Notes as they relate to
accounting matters, and (ii) whether, in connection with their audit
examination, any Default or Event of Default has come to their attention and if
such a Default or Event of Default has come to their attention, specifying the
nature and period of existence thereof; provided, however, that such accounting
firm shall not be liable to the Holders for failure to obtain knowledge of any
Default or Event of Default.
(c) The Company will deliver to the Trustee promptly, and in any event
within ten (10) days after the Company becomes aware of the occurrence of any
Default or Event of Default, an Officers' Certificate describing such Default or
Event of Default and its status with particularity and what action the Company
is taking or proposes to take with respect thereto.
Section 3.07 Compliance with Laws.
--------------------
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with the respective organizational documents of each of them and all
applicable statutes, rules, regulations, orders and restrictions of the United
States of America, all states, provinces and municipalities thereof, and of any
governmental department, commission, board, regulatory authority, bureau, agency
and instrumentality of the foregoing, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
such noncompliance with which would not in the aggregate have a material adverse
effect on the financial condition or results of operations of the Company and
its Subsidiaries, taken as a whole.
Section 3.08 SEC Reports and Other Information.
---------------------------------
To the extent permitted by applicable law or regulation, whether or not
the Company is subject to Section 13(a) or 15(d) of the Exchange Act, the
Company shall file with the SEC the annual reports, quarterly reports and other
documents which the Company would have been required to file with the SEC
pursuant to such Sections 13(a) and 15(d) if the Company were so subject, such
documents to be filed with the SEC on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required so to
---------------------
file such documents if the Company were so subject. In addition, the Company
shall comply with its reporting and filing obligations under the applicable
federal securities laws. The Company shall also in any event (a) within fifteen
(15) days after each Required Filing Date (i) transmit by mail to all Holders,
as their names and addresses appear in the register of Notes maintained by the
Registrar, without cost to such Holders and (ii) file with the Trustee, copies
of the annual reports, quarterly reports and other documents which the Company
would have been required to file with the SEC pursuant to Sections 13(a) and
15(d) of the Exchange Act if the Company were subject to such Sections and (b)
if filing such documents by the Company with the SEC is not permitted under the
Exchange Act, promptly upon written request, supply copies of such documents to
any prospective Holder. In any event, such annual reports will contain
19
consolidated financial statements and notes thereto, together with an opinion
thereon expressed by an independent public accounting firm with an established
national reputation and management's discussion and analysis of financial
condition and results of operations, and such quarterly reports will contain
unaudited consolidated financial statements for the first three (3) quarters of
each fiscal year. Upon qualification of this Indenture under the TIA, the
Company shall also comply with the provisions of TIA (S)314(a).
ARTICLE IV
SUCCESSOR CORPORATION
Section 4.01 Consolidation, Merger, Conveyance, Transfer or Lease.
----------------------------------------------------
The Company shall not consolidate with or merge with or into or sell,
assign, convey, lease, transfer or otherwise dispose of all or substantially all
of its properties and assets (determined on a consolidated basis for the Company
and its Subsidiaries, taken as a whole) to another Person or Persons, in a
single transaction or through a series of related transactions, or cause or
permit any of its Subsidiaries to do any of the foregoing, unless:
(a) the Company is the continuing Person, or the Person formed by or
surviving such consolidation or merger or the Person to which such sale,
assignment, conveyance, lease, transfer or other disposition is made (the
"surviving entity") is a corporation organized and validly existing under the
----------------
laws of the United States, any State thereof or the District of Columbia;
(b) the surviving entity shall expressly assume, by a supplemental
indenture executed and delivered to the Trustee, in form and substance
reasonably satisfactory to the Trustee, all of the obligations of the Company
under the Notes and this Indenture;
(c) the surviving entity shall have a Consolidated Net Worth
immediately after such transaction equal to or greater than the Consolidated Net
Worth of the Company immediately prior to such transaction; and
(d) the Company or the surviving entity shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
(i) such consolidation, merger, sale, assignment, conveyance, lease, transfer or
other disposition complies with this Section 4.01, (ii) if a supplemental
indenture is required in connection with such transaction or series of
transactions, such supplemental indenture complies with this Section 4.01, and
(iii) all conditions precedent in this Indenture relating to the transaction or
series of transactions have been satisfied.
Section 4.02 Successor Entity Substituted.
----------------------------
Upon any consolidation, merger or any transfer of all or substantially
all of the assets of the Company in accordance with Section 4.01, the surviving
entity formed by such consolidation or into or with which the Company is merged
or to which such transfer is made shall succeed to, and be substituted for, and
may exercise every right and
20
power of, the Company under this Indenture with the same effect as if such
surviving entity had been named as the Company herein and the Company shall be
discharged from all obligations and covenants under the Indenture and the Notes.
ARTICLE V
DEFAULT AND REMEDIES
Section 5.01 Events of Default.
-----------------
An "Event of Default" occurs if:
----------------
(a) the Company defaults in the payment of the Principal of any Note as
and when due and payable; or
(b) the Company defaults in the payment of interest on any Note when
the same becomes due and payable and continuance of any
such default for a period of thirty (30) days;
(c) the Company defaults in the performance, or breach, of any material
covenant, obligation or agreement in the Notes or this Indenture (other than
defaults specified in clause (a) or (b) above), and such default or breach
continues for a period of sixty (60) days after written notice to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least
twenty-five percent (25%) in aggregate principal amount of the outstanding
Notes;
(d) failure by the Company or any of its Subsidiaries (i) to make any
payment when due with respect to any other Indebtedness under one or more
classes or issues of Indebtedness which one or more classes or issues of
Indebtedness are in an aggregate principal amount of Twenty Million Dollars
($20,000,000) or more and, with respect to Indebtedness under the Credit
Agreement, such failure results in acceleration of the maturity thereof; or (ii)
to perform any term, covenant, condition, or provision of one or more classes or
issues of Indebtedness which one or more classes or issues of Indebtedness are
in an aggregate principal amount of Twenty Million Dollars ($20,000,000) or
more, which failure, in the case of this clause (ii), results in an acceleration
of the maturity thereof;
(e) one or more judgments, orders or decrees for the payment of money
in excess of Fifteen Million Dollars ($15,000,000) (to the extent not covered by
insurance), either individually or in an aggregate amount, shall be entered
against the Company or any of its Subsidiaries or any of their respective
properties and shall not be discharged and there shall have been a period of
sixty (60) days during which a stay of enforcement of such judgment or order, by
reason of pending appeal or otherwise, shall not be in effect;
(f) the Company or any Material Subsidiary of the Company pursuant to
or within the meaning of any Bankruptcy Law: (i) commences a voluntary case or
proceeding with respect to itself, (ii) consents to the entry of an order for
relief against it
21
in an involuntary case or proceeding, (iii) consents to the appointment of a
Custodian of it or for all or any material part of its property, (iv) makes a
general assignment for the benefit of its creditors, (v) consents to or
acquiesces in the institution of bankruptcy or insolvency proceedings against
it, (vi) shall generally not pay its debts when such debts become due or shall
admit in writing its inability to pay its debts generally, or (vii) takes any
corporate action in furtherance of or to facilitate, conditionally or otherwise,
any of the foregoing;
(g) a court of competent jurisdiction enters a decree, judgment or
order under any Bankruptcy Law that: (i) is for relief against the Company or
any Material Subsidiary of the Company in an involuntary case or proceeding,
(ii) appoints a Custodian of the Company or any Material Subsidiary of the
Company for all or substantially all of its properties, or (iii) orders the
winding-up or liquidation of the Company or any Material Subsidiary of the
Company, and in each case the order or decree remains unstayed and in effect for
sixty (60) days; or
(h) this Indenture ceases to be in full force and effect or ceases
to give the Trustee, in any material respect, the liens, rights, powers and
privileges purported to be created thereby, in each case, as determined by a
court of competent jurisdiction.
Section 5.02 Acceleration.
------------
(a) If an Event of Default (other than an Event of Default
specified in clause (f) or (g) of Section 5.01 with respect to the Company or
any Material Subsidiary of the Company) occurs and is continuing, then the
Trustee or the Holders of at least twenty-five percent (25%) in aggregate
principal amount of the outstanding Notes may, by written notice to the Company
and the Trustee, and the Trustee upon the request of the Holders of not less
than twenty-five percent (25%) in aggregate principal amount of the outstanding
Notes shall, subject in each case to Section 9.02(e), declare the Principal of
and accrued and unpaid interest, if any, on all the Notes on the date of such
declaration to be due and payable immediately (the "Default Amount"). Upon any
--------------
such declaration, the Default Amount shall become due and payable immediately in
that number of fully paid and non-assessable shares of Common Stock obtained by
dividing the Default Amount by the Conversion Price. If an Event of Default
specified in clause (f) or (g) of Section 5.01 with respect to the Company
occurs and is continuing, then the Default Amount on all of the Notes shall ipso
----
facto become and be immediately due and payable in that number of fully paid and
-----
non-assessable shares of Common Stock obtained by dividing the Default Amount by
the Conversion Price, without any declaration or other act on the part of the
Trustee or any Holder.
(b) After a declaration of acceleration, the Required Holders may,
by notice to the Trustee, rescind such declaration of acceleration if all
existing Events of Default have been cured or waived, other than nonpayment of
the Default Amount on the Notes that have become due solely as a result of such
acceleration and if the rescission of acceleration would not conflict with any
judgment, order or decree by a court of competent jurisdiction. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
22
Section 5.03 Other Remedies.
--------------
(a) If an Event of Default occurs and is continuing, the Trustee may,
subject to Section 9.02(e), pursue any available remedy by proceeding at law or
in equity to collect the payment of Principal of, or interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture as may
be required or permitted thereunder.
(b) The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.
Section 5.04 Waiver of Defaults.
------------------
Subject to Sections 5.02, 5.07 and 8.02, the Required Holders by
notice to the Trustee may waive an existing or potential Default or Event of
Default and its consequences, except a Default in the payment of Principal of or
interest on any Note as specified in clauses (a) and (b) of Section 5.01 or in
respect of any provision hereof which cannot be modified or amended without the
consent of the Holder so affected pursuant to Section 8.02. When a Default or
Event of Default is so waived, it shall be deemed cured and ceases to exist, but
no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereon.
Section 5.05 Control by Required Holders.
---------------------------
The Required Holders 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 including any remedies provided for in
Section 5.03. Subject to Section 6.01, however, the Trustee may refuse to follow
any direction that conflicts with any law or this Indenture that the Trustee
determines may be unduly prejudicial to the rights of another Holder, or that
may involve the Trustee in personal liability unless the Trustee has asked for
and received indemnification reasonably satisfactory to it against any loss,
liability or expense caused by its following such direction; provided, that the
--------
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 5.06 Limitation on Suits.
-------------------
(a) A Holder may not pursue any remedy with respect to this Indenture
or the Notes unless (i) the Holder gives to the Trustee notice of a continuing
Event of Default, (ii) Holders of at least twenty-five percent (25%) in
principal amount of the outstanding Notes make a written request to the Trustee
to pursue the remedy, (iii) such Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense to be
incurred in compliance with such request, (iv) the Trustee does not comply with
the
23
request within thirty (30) days after receipt of the request and the offer of
indemnity and (v) during such thirty (30) day period the Required Holders do not
give the Trustee a direction which, in the opinion of the Trustee, is
inconsistent with the request.
(b) A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
Section 5.07 Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, except as set
forth in Article IX, the right of any Holder to receive payment of Principal of
and interest on a Note, on or after the respective due dates expressed in such
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 5.08 Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of Principal or interest specified
in clause (a) or (b) of Section 5.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Notes for the whole amount of Principal and
accrued interest remaining unpaid, together with interest on overdue Principal
and, to the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum borne by the Notes
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
Section 5.09 Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other securities or property payable or deliverable upon the
conversion or exchange of the Notes or upon any such claims and to distribute
the same, and any Custodian in any such judicial proceedings is hereby
authorized by each Holder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to first pay to the Trustee any amount due to it for the reasonable
compensation, expenses, taxes, disbursements and advances of the Trustee, its
agent and counsel, and any other amounts due the Trustee under Section 6.07.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Note holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
24
Section 5.10 Priorities.
----------
(a) If the Trustee collects any money pursuant to this Article V, it
shall pay out the money in the following order: (i) first, to the Trustee for
amounts due under Section 6.07, (ii) second, to Holders for Principal and
interest owing under the Notes, ratably, according to the amounts due and
payable on the Notes, in the following order of priority: first to interest and
lastly to Principal; and (iii) third, to the Company or any other obligor on the
Notes, as their interests may appear, or as a court of competent jurisdiction
may direct.
(b) The Trustee, upon prior notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Section 5.10.
Section 5.11 Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, 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 5.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 5.07, or a suit by a Holder or Holders of more than ten
percent (10%) in principal amount of the outstanding Notes.
Section 5.12 Rights and Remedies Cumulative.
------------------------------
No right or remedy herein conferred upon or reserved to the Trustee or
to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.13 Delay or Omission Not Waiver.
----------------------------
No delay or omission by the Trustee or by any Holder of any Note to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this Article V or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
25
ARTICLE VI
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
Section 6.01 Duties of Trustee.
-----------------
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no covenants
or obligations shall be implied in this Indenture that are adverse to
the Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture but need not verify the accuracy of the contents thereof.
(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 6.01;
(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 5.05.
(d) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity reasonably satisfactory to it against any
loss, liability or expense.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its
26
duties hereunder or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(f) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c), (d) and (e) of this Section 6.01.
(g) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree with the Company. Assets
held in trust by the Trustee need not be segregated from other assets except to
the extent required by law.
Section 6.02 Rights of Trustee.
-----------------
Subject to Section 6.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
which shall conform to Sections 11.04 and 11.05 hereof. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such certificate or opinion.
(c) The Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(d) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent (other than the
negligence or misconduct of an agent who is an employee of the Trustee)
appointed with due care.
(e) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, that the Trustee's conduct does not constitute
--------
negligence or bad faith.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, upon reasonable notice to the Company, to
examine the books, records, and premises of the Company, personally or by agent
or attorney.
27
(g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred by
it in compliance with such request, order or direction.
Section 6.03 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company or their respective Affiliates with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 6.10 and 6.11 hereof.
Section 6.04 Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes. Further, the Trustee shall not be accountable for
the Company's use of the proceeds from the Notes, nor be responsible for any
statement in the Notes other than the Trustee's certificate of authentication.
Section 6.05 Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Holder, as their names
and addresses appear on the Holder list described in Section 2.05 hereof, notice
of the Default or Event of Default within thirty (30) days after such Default or
Event of Default has occurred, unless such Default or Event of Default shall
have been cured or waived. Except in the case of a Default or an Event of
Default in payment of Principal of or interest on, any Note, and a Default or
Event of Default that resulted from the failure to comply with Section 4.01
hereof, the Trustee may withhold the notice if and so long as its Board of
Directors, the executive committee of its Board of Directors or a committee of
its directors and/or Trust Officers in good faith determines that withholding
the notice is in the interest of the Holders.
Section 6.06 Reports by Trustee to Holders.
-----------------------------
(a) If required by law, within sixty (60) days after each May 15
beginning with the May 15 following the date of this Indenture, the Trustee
shall mail to the Company and the Holders, at the Company's expense, a brief
report dated as of such reporting date that complies with TIA (S)313(a) (but if
no event described in TIA (S)313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA (S)313(b)(2) to the extent applicable. The Trustee shall
also transmit by mail all reports as required by TIA (S)313(c).
28
(b) A copy of each report at the time of its mailing to Holders
shall be filed with the SEC and each stock exchange or market on which the Notes
are listed or quoted. The Company shall notify the Trustee when the Notes are
listed on any stock exchange or quoted on any market.
Section 6.07 Compensation and Indemnity.
--------------------------
(a) The Company shall pay to the Trustee from time to time
reasonable compensation for all services rendered by it 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 tax
obligations imposed on the Trustee related to this Indenture and all reasonable
out-of-pocket expenses incurred or made by it. Such expenses shall include the
reasonable fees and expenses of the Trustee's agents and counsel.
(b) The Company shall indemnify the Trustee and its agents for, and
hold them harmless against, any loss, liability or expense incurred by them
without negligence, bad faith or willful misconduct on their part, arising out
of or in connection with the administration of this trust including the
reasonable costs and expenses of enforcing this Indenture against the Company
(including this Section 6.07) and of defending themselves against any claim
(whether asserted by any Holder or the Company) or liability in connection with
the exercise or performance of any of their rights, powers or duties hereunder.
The Trustee shall notify the Company promptly of any claim asserted against the
Trustee 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 and expenses of such
counsel; provided that the Company will not be required to pay such fees and
--------
expenses if they assume the Trustee's defense and there is no conflict of
interest between the Company and the Trustee in connection with such defense as
reasonably determined by the Trustee. The Company need not pay for any
settlement made without its written consent. The Company need not reimburse any
expense or indemnify against any loss or liability to the extent incurred by the
Trustee through its negligence, bad faith or willful misconduct.
(c) To secure the Company's payment obligations in this Section
6.07, the Trustee shall have a lien prior to the Notes on all assets or money
held or collected by the Trustee, in its capacity as Trustee, except assets or
money held in trust to pay Principal of or interest on Notes.
(d) When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 5.01(f) or (g) occurs, such expenses and
the compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 6.08 Replacement of Trustee.
----------------------
29
(a) 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 6.08.
(b) The Trustee may resign by so notifying the Company in writing at
least thirty (30) days prior to the date of the proposed resignation; provided,
--------
however, that no such resignation shall be effective until a successor Trustee
-------
has accepted its appointment pursuant to this Section 6.08. The Required Holders
may remove the Trustee by so notifying the Company and the Trustee and may
appoint a successor Trustee with the Company's consent. The Company may remove
the Trustee if: (i) the Trustee fails to comply with Section 6.01 or 6.10, (ii)
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, (iii) a receiver
Custodian or other public officer takes charge of the Trustee or its property or
(iv) the Trustee becomes incapable of acting.
(c) If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall notify each Holder of
such event and shall promptly appoint a successor Trustee. Within one (1) year
after the successor Trustee takes office, the Required Holders may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
(d) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 6.07, 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. A successor Trustee shall mail notice of its succession to each
Holder.
(e) If a successor Trustee does not take office within sixty (60)
days after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least ten percent (10%) in principal amount of the
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) If the Trustee fails to comply with Section 6.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
(g) Notwithstanding replacement of the Trustee pursuant to this
Section 6.08, the Company's obligations under Section 6.07 shall continue for
the benefit of the retiring Trustee.
30
Section 6.09 Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
Section 6.10 Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirement of TIA (S)(S)310(a)(1) and 310(a)(5). The Trustee (or in the case of
a corporation included in a bank holding company system, the related bank
holding company) shall always have a combined capital and surplus of at least
Five Hundred Million Dollars ($500,000,000) as set forth in its most recent
published annual report of condition. In addition, if the Trustee is a
corporation included in a bank holding company system, the Trustee,
independently of such bank holding company, shall meet the capital requirements
of TIA (S)310(a)(2). The Trustee shall comply with TIA (S)310(b) including the
optional provision permitted by the second sentence of TIA (S)309(b)(9);
provided, however, that there shall be excluded from the operation of TIA
-------- -------
(S)310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA
(S)310(b)(1) are met.
Section 6.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA (S)311(a), excluding any creditor
relationship listed in TIA (S)311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S)311(a) to the extent indicated therein.
ARTICLE VII
DISCHARGE OF INDENTURE
Section 7.01 Discharge of Indenture.
----------------------
(a) This Indenture shall cease to be of further effect (except
that the Company's obligations under Sections 6.07, 7.03 and 7.04 shall survive)
as to all outstanding Notes when all such Notes theretofore authenticated and
delivered (except lost, stolen or destroyed Notes which have been replaced or
paid and Notes for the payment of which money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust) have been delivered to the Trustee
for cancellation and the Company has paid all sums, Principal Shares and
Interest Shares payable hereunder. In addition, the Company may terminate all of
its obligations under this Indenture (except the Company's obligations under
Sections 6.07, 7.03 and 7.04) if:
31
(i) all Notes have otherwise become due and payable in
accordance with the terms of this Indenture (including the provisions
of Article IX) or in accordance with the terms of this Indenture shall
become due and payable within one (1) year under arrangements
satisfactory to the Trustee upon delivery of notice;
(ii) the Company shall have irrevocably deposited or caused to
be deposited with the Trustee or a trustee satisfactory to the Trustee,
under the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the
benefit of the Holders for that purpose, U.S. Legal Tender, Principal
Shares and Interest Shares sufficient to pay Principal of and interest,
if any, on the outstanding Notes then due; provided that the Trustee
shall have been irrevocably instructed to apply such U.S. Legal Tender,
Principal Shares and Interest Shares to the payment of said Principal
and interest with respect to the Notes;
(iii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent providing for the termination of the Company's
obligation under the Notes and this Indenture have been complied with;
and
(iv) the Company shall have paid all sums, Principal Shares and
Interest Shares payable by it hereunder.
(b) Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 3.01, 3.02, 6.07, 6.08,
7.02, 7.03 and 7.04 hereof shall survive until the Notes are no longer
outstanding. After the Notes are no longer outstanding, the Company's
obligations in Sections 6.07, 7.03 and 7.04 hereof shall survive.
(c) After such delivery or irrevocable deposit the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under the Notes and this Indenture except for those surviving obligations
specified above.
Section 7.02 Application of Trust Money.
--------------------------
The Trustee shall hold in trust U.S. Legal Tender, Principal Shares and
Interest Shares deposited with it pursuant to Section 7.01 and shall apply the
deposited U.S. Legal Tender, Principal Shares and Interest Shares in accordance
with this Indenture to the payment of Principal of and interest on the Notes.
Section 7.03 Repayment to the Company.
------------------------
Subject to Sections 6.07 and 7.01, the Trustee shall, subject to
Article IX, promptly pay to the Company, upon receipt by the Trustee of an
Officers' Certificate, any money, Principal Shares or Interest Shares,
determined, without consideration of the reinvestment of such money and after
payment of all federal, state and local taxes or
32
other charges or assessments in respect thereof payable by the Trustee, by a
nationally recognized firm of independent public accountants expressed in a
written certification thereof (in form and substance reasonably satisfactory to
the Trustee) delivered to the Trustee, to be in excess of such that is
sufficient to pay the Principal of and interest on the outstanding Notes on the
dates on which any such payments are due and payable in accordance with the
terms of this Indenture and of the Notes. The Trustee and the Paying Agent shall
pay to the Company upon receipt by the Trustee or the Paying Agent, as the case
may be, of an Officers' Certificate, any money, Principal Shares or Interest
Shares held by it for the payment of Principal or interest that remains
unclaimed for two (2) years; provided, however, that the Trustee and the Paying
-------- -------
Agent before being required to make any payment may, but need not, at the
expense of the Company, cause to be published once in a newspaper of general
circulation in The City of New York or mail to each Holder entitled to such
money, Principal Shares or Interest Shares notice that such money, Principal
Shares or Interest Shares remain unclaimed and that after a date specified
therein, which shall be at least thirty (30) days from the date of such
publication or mailing, any unclaimed balance of such money, Principal Shares or
Interest Shares then remaining will be repaid to the Company. After payment to
the Company, Holders entitled to money, Principal Shares or Interest Shares must
look solely to the Company for payment as general creditors unless an applicable
abandoned property law designates another person.
Section 7.04 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender, Principal Shares or Interest Shares in accordance with this Indenture by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then and only then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
been made pursuant to this Indenture until such time as the Trustee is permitted
to apply all such U.S. Legal Tender, Principal Shares or Interest Shares in
accordance with this Indenture; provided, however, that if the Company has made
-------- -------
any payment of Principal of or interest on of any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the U.S. Legal Tender,
Principal Shares or Interest Shares held by the Trustee or Paying Agent.
Section 7.05 Acknowledgment of Discharge by Trustee.
--------------------------------------
After (i) the Company has paid or caused to be paid all other sums
payable hereunder by the Company and (ii) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in Section 7.01 relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in Section 7.01.
33
ARTICLE VIII
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01 Without Consent of Holders.
--------------------------
The Company, when authorized by its Board Resolution, and the Trustee,
together, may without notice to or the consent of any Holder amend, waive or
supplement this Indenture or the Notes:
(a) to cure any ambiguity, defect or inconsistency or to make any
other provisions with respect to matters or questions arising under this
Indenture; provided that such action does not materially adversely affect the
--------
rights of any Holder;
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company,
or to provide any additional rights or benefits to the Holders;
(c) to evidence the succession of another person to the Company,
and the assumption by any such successor of the obligations of the Company
herein and in the Notes in accordance with Article IV;
(d) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(e) to make any other change that does not adversely affect the
rights of any Holders hereunder;
(f) to comply with the TIA; or
(g) to comply with any requirements of the SEC in connection with
the qualification of this Indenture under the TIA;
provided that the Company has delivered to the Trustee an Opinion of
--------
Counsel and an Officers' Certificate, each stating that such amendment or
supplement complies with the provisions of this Section 8.01.
Section 8.02 With Consent of Holders.
-----------------------
(a) Subject to Section 5.07, the Company when authorized by its
Board Resolution, and the Trustee, together, may amend or supplement this
Indenture or the Notes, without notice to any Holders. However, without the
consent of each Holder affected, no amendment, supplement or waiver, including a
waiver pursuant to Section 5.04, may:
(i) reduce the principal amount of any Note or premium, if
any, with respect thereto;
34
(ii) change the Maturity Date of, or alter the redemption or
repurchase or other provisions of the Notes, in a manner that adversely
affects the rights of any Holder;
(iii) impair the right to institute suit for the enforcement of
any payment on or with respect to the Notes;
(iv) make any changes in the provisions concerning waivers of
Defaults or Events of Default by Holders of the Notes or the rights of
Holders to recover the Principal of or interest on, with respect to,
any Note;
(v) make any change in or affecting the ranking of the Notes
with respect to any other obligation of the Company or any Subsidiary
in a way that adversely affects the rights of any Holder;
(vi) reduce the interest rate or extend the time for payment of
interest, if any, on the Notes;
(vii) make the Principal of or the interest on, any Note payable
with anything, at any place of payment or in any manner other then as
provided for in this Indenture and the Note as in effect on the date
hereof; or
(viii) make any changes in this Section 8.02 in a manner that
adversely affects the rights of any Holder.
(b) It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
(c) After an amendment, supplement or waiver under this Section
8.02 becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
Section 8.03 Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
Section 8.04 Revocation and Effect of Consents.
---------------------------------
(a) Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, prior to becoming effective, any such Holder or subsequent Holder
may revoke the consent as to his Note or portion of his Note by notice to the
Trustee or the Company if such notice is received by
35
the Trustee or the Company before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Notes have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver. Notwithstanding the above, nothing in this
paragraph shall impair the right of any Holder under (S)316(b) of the TIA.
(b) The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then notwithstanding
the last sentence of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies), and only those
persons, shall be entitled to revoke any consent previously given, whether or
not such persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than ninety (90) days after such record
date unless consents from Holders of the principal amount of Notes required
hereunder for such amendment, supplement or waiver to be effective shall have
been given and not revoked within such ninety (90) day period.
(c) After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it makes a change described in any of clauses
(i) through (viii) of Section 8.02(a), in which case, the amendment, supplement
or waiver shall bind only each Holder of a Note who has consented to it and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note; provided, however, that any such waiver
-------- -------
shall not impair or affect the right of any Holder to receive payment of
Principal of and interest on a Note, on or after the respective dates set for
such amounts to become due and payable expressed in such Note, or to bring suit
for the enforcement of any such payment on or after such respective dates.
Section 8.05 Notation on or Exchange of Notes.
--------------------------------
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver the Note to the Trustee.
The Trustee may place an appropriate notation on the Note about the changed
terms and return the Note to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Note shall issue and the
Trustee shall authenticate a new Note that reflects the changed terms. Failure
to make the appropriate notation or issue a new Note shall not affect the
validity and effect of such amendment, supplement or waiver.
Section 8.06 Trustee To Sign Amendments, Etc.
-------------------------------
Subject to the next sentence, the Trustee shall execute any amendment,
supplement or waiver authorized pursuant to this Article VIII; provided,
--------
however, that the Trustee may, but shall not be obligated to, execute any such
-------
amendment, supplement or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture. The Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel and an
Officers' Certificate each stating that the execution of any amendment,
supplement or waiver is authorized or permitted by this Indenture.
36
ARTICLE IX
SUBORDINATION
Section 9.01 Notes Subordinated to Senior Indebtedness.
-----------------------------------------
The Company covenants and agrees, and each Holder (and each Person
holding any Note, whether upon original issue, or upon transfer, assignment or
exchange thereof) of the Notes, by its acceptance thereof, likewise covenants
and agrees that: (i) all Notes shall be issued subject to the provisions of this
Article IX; (ii) the payment of the Principal of, and interest on, the Notes by
the Company shall, to the extent and in the manner herein set forth, be
subordinated and junior in right of payment to the prior payment in full, in
cash or Cash Equivalents, of the Senior Indebtedness; and (iii) the
subordination is for the benefit of, and shall be relied upon and be enforceable
directly by, the holders of Senior Indebtedness. The Company and each Holder
hereby agree not to amend, modify or change in any manner any provision of this
Article IX (and any defined term used in this Article IX) so that the terms and
conditions hereof, as so amended, modified or changed, are less favorable to the
holders of the Senior Indebtedness and their Representative than the terms
hereof on the Issue Date, without the prior written consent of the necessary
holders of Senior Indebtedness as required under the Credit Agreement.
Section 9.02 Suspension of Payment on Notes in Certain Events.
------------------------------------------------
(a) If (i) any default occurs and is continuing after the expiration of
any applicable cure period (each a "Senior Debt Payment Default"), in the
---------------------------
payment when due, whether at maturity, upon any redemption, by declaration or
otherwise, of any Principal of, or interest on the Senior Indebtedness, or fees
or other amounts due under the terms of the Credit Agreement, and (ii) the
Representative of the holders of the Senior Indebtedness gives written notice (a
"Default Notice") of such Senior Debt Payment Default to the Trustee, then no
--------------
payment of any kind or character shall be made by or on behalf of the Company or
any other Person on its behalf with respect to any Principal of, or interest on
or fees or other amounts due with respect to, the Notes or to redeem, repurchase
or otherwise acquire any of the Notes for cash or property or otherwise, until
such payment is made in full or the Senior Debt Payment Default has been cured
to the satisfaction of the Representative of the Holders of the Senior
Indebtedness or waived to the satisfaction of the Representative of the Holders
of the Senior Indebtness.
(b) If (i) any event of default other than a Senior Debt Payment
Default (a "Senior Debt Other Default") occurs and is continuing with respect to
-------------------------
the Senior Indebtedness, as such Senior Debt Other Default is defined in the
instrument creating or evidencing such Senior Indebtedness, permitting the
holders of such Senior Indebtedness to accelerate the maturity thereof, and (ii)
the Representative of the holders of the Senior Indebtedness gives a Default
Notice to the Trustee, then until the earlier of (A) the Trustee receiving
notice from the Representative of the holders of the Senior Indebtedness
terminating the Blockage Period (as defined below), (B) the date on which the
Senior Debt Other Default giving rise to the Blockage Period is cured to the
satisfaction of the Representative of the Holders of the Senior
Indebtness or waived to the satisfaction of the Representative of the Holders of
the Senior Indebtness, or (C) one hundred eighty (180) days after the delivery
of such Default Notice (the "Blockage Period"), neither the Company nor any
---------------
other Person on its behalf shall make
37
any payment of any kind or character with respect to any Principal of, or
interest on, or fees or other amounts due with respect to the Notes, or redeem,
repurchase or otherwise acquire any of the Notes for cash or property or
otherwise; provided, however, that if such Senior Indebtedness has not been
-------- -------
accelerated or becomes the subject of judicial proceedings within the Blockage
Period, then the Company shall resume making any and all required payments in
respect of the Notes upon expiration of the Blockage Period. At the expiration
or termination, as applicable, of such Blockage Period, the Company shall
promptly pay to the Trustee all sums not paid during such Blockage Period as a
result of this subsection (b). Notwithstanding anything herein to the contrary,
in no event will a Blockage Period extend beyond one hundred eighty (180) days
from the date of delivery of a Default Notice of the Senior Debt Other Default
and only one such Blockage Period may be commenced within any period of three
hundred sixty (360) consecutive days. No Senior Debt Other Default or event
which, with the giving of notice and/or lapse of time or otherwise, would become
a Senior Debt Other Default which existed on the date of the commencement of
such Blockage Period, may be used as the basis for declaring any subsequent
Blockage Period unless such Senior Debt Other Default or event, as the case may
be, shall in the interim have been cured or waived for a period of not less than
ninety (90) consecutive days.
(c) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Sections 9.02(a) and (b), then unless and until such payment is no longer
prohibited by this Section 9.02, such payment shall be held in trust for the
benefit of, and shall as soon as practicable be paid over or delivered to, the
Representative of the holders of the Senior Indebtedness. No amount paid by the
Company, or any other Person on its behalf, to the Trustee or any Holder of the
Notes, and paid over by such Person to the Representative of the holders of the
Senior Indebtedness pursuant to this Article IX shall, as between the Company
and the Holders of the Notes, be deemed a payment by the Company to or on
account of any payments due in respect of the Notes.
(d) The Company shall give prompt written notice to the Trustee of
any Senior Debt Payment Default or any Senior Debt Other Default, under the
Senior Indebtedness or under any agreement pursuant to which Senior Indebtedness
may have been issued. Failure to give such notice shall not affect the
subordination of the Notes to the Senior Indebtedness provided in this Article
IX.
(e) Nothing contained in this Article IX shall limit the right of
the Trustee or the Holders of Notes to take any action to accelerate the
maturity of the Notes pursuant to Section 5.02 or to pursue any rights or
remedies available under this Indenture or otherwise; provided that the Trustee
--------
or the Holders shall, prior to commencing any such action, provide the
Representative of the holders of the Senior Indebtedness with five (5) days
prior written notice of its intention to take such action; provided further that
-------- -------
all Senior Indebtedness thereafter due or declared to be due shall first be paid
in full, in cash or Cash Equivalents, before the Holders are entitled to receive
any payment of any kind or character with respect to Principal of, or interest
on or fees or other amounts due with respect to, the Notes.
38
Section 9.03 Notes Subordinated to Prior Payment of All Senior Indebtedness
--------------------------------------------------------------
on Dissolution, Liquidation or Reorganization of Company.
--------------------------------------------------------
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors or marshaling of assets of the Company or in a bankruptcy,
reorganization, insolvency, receivership or other similar proceeding relating to
the Company or its property, whether voluntary or involuntary, all Senior
Indebtedness shall first be paid in full in, cash or Cash Equivalents (or such
payment shall be duly provided for), before any payment or distribution of any
kind or character is made on account of any Principal of, or interest on, or
fees or other amounts due with respect to, the Notes, or for the acquisition of
any of the Notes for cash or property or otherwise. Upon any such dissolution,
winding-up, liquidation, reorganization, receivership or similar proceeding, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of the Notes or
the Trustee under this Indenture would be entitled, except for the provisions
hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders or by the Trustee under this Indenture if received by them, to
the Representative of the holders of the Senior Indebtedness, for application to
the payment of Senior Indebtedness remaining unpaid until all such Senior
Indebtedness has been paid in full, in cash or Cash Equivalents, after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or
on behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment has not occurred.
(c) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article IV hereof and as long as permitted under the terms of the Senior
Indebtedness shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as a part of such consolidation, merger, conveyance or transfer, assume in
writing, to the reasonable satisfaction of the Representative, the Company's
obligations hereunder in accordance with Article IV hereof.
(d) The Company shall give prompt written notice to the Trustee of
any dissolution, winding-up, liquidation or reorganization of the Company, but
failure to give
39
such notice shall not affect the subordination of the Notes to the Senior
Indebtedness provided in this Article IX.
Section 9.04 Holders to be Subrogated to Rights of Holders of Senior
-------------------------------------------------------
Indebtedness.
------------
Subject to the payment in full, in cash or Cash Equivalents, of the
Senior Indebtedness, the Holders shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Indebtedness
until the Notes shall be paid or converted in full. For the purposes of such
subrogation, no such payments or distributions of cash, property or securities
of the Company to the holders of the Senior Indebtedness by or on behalf of the
Company or by or on behalf of the Holders by virtue of this Article IX which
otherwise would have been made to the Holders shall, as between the Company and
the Holders, be deemed to be a payment by the Company to or on account of the
Senior Indebtedness, it being understood that the provisions of this Article IX
are and are intended solely for the purpose of defining the relative rights of
the Holders of the Notes, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
Section 9.05 Obligations of the Company Unconditional.
----------------------------------------
Nothing contained in this Article IX or elsewhere in this Indenture or
in the Notes, is intended to or shall impair, as between the Company and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the Principal of, and interest on, the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders and creditors of the
Company other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article IX of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy. Upon any payment or distribution of cash,
property or securities of the Company referred to in this Article IX, the
Trustee, subject to the provisions of Sections 6.01 and 6.02, and the Holders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any liquidation, dissolution, winding-up or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee or agent or other Person making any
payment or distribution to the Trustee or to the Holders for the purpose of
ascertaining (i) the Persons entitled to participate in such payment or
distribution, (ii) the holders of Senior Indebtedness and other Indebtedness of
the Company, (iii) the amount thereof or payable thereon, (iv) the amount or
amounts paid or distributed thereon, and (iv) all other facts pertinent thereto
or to this Article IX. Nothing in this Article IX shall apply to the claims of,
or payments to, the Trustee under or pursuant to Section 6.07. The Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be the Representative of the holders of the
Senior Indebtedness. In the event that the Trustee determines in good faith that
any evidence is required with respect to the right of any Person as a
Representative of the holders of the Senior Indebtedness, the Trustee may
request such Person to furnish evidence thereof to the reasonable
40
satisfaction of the Trustee, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to right
of such Person to receive such payment on behalf of the holders of the Secured
Indebtedness.
Section 9.06 Trustee Entitled to Assume Payments Not Prohibited in Absence of
----------------------------------------------------------------
Notice.
------
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 to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article IX.
Regardless of anything to the contrary contained in this Article IX or elsewhere
in this Indenture, the Trustee shall not be charged with knowledge of the
existence of any Senior Debt Payment Default or Senior Debt Other Default or of
any other facts which would prohibit the making of any payment to or by the
Trustee unless and until the Trustee shall have received notice in writing from
the Company, or from a holder of Senior Indebtedness or a Representative
thereof, together with proof satisfactory to the Trustee of such holding of
Senior Indebtedness or of the authority of such Representative, and, prior to
the receipt of any such written notice, the Trustee shall be entitled to assume
(in the absence of actual knowledge to the contrary), subject to the provisions
of Section 6.01 and 6.02, that no such facts exist.
Section 9.07 Application by Trustee of Assets Deposited with It.
--------------------------------------------------
U.S. Legal Tender, U.S. Government Obligations, Principal Shares or
Interest Shares deposited in trust with the Trustee shall be for the sole
benefit of the Holders of the Notes and, to the extent allocated for the payment
of Notes, shall not be subject to the subordination provisions of this Article
IX unless delivered in violation of this Article IX. Otherwise, any deposit of
assets, property or securities by or on behalf of the Company with the Trustee
or any Paying Agent (whether or not in trust) for the payment of Principal of,
or interest on, any Notes shall be subject to the provisions of this Article IX;
provided, however, that if prior to the second Business Day preceding the date
on which by the terms of this Indenture any such assets may become distributable
for any purpose (including the payment of either Principal of, or interest on,
any Note) the Trustee or such Paying Agent shall not have received with respect
to such assets the notice provided for in Section 9.06, then the Trustee or such
Paying Agent shall have full power and authority to receive such assets and to
apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary received by it on or after such date.
Nothing contained in this Section 9.07 shall limit the right of the holders of
Senior Indebtedness to recover payments as contemplated by this Article IX.
Section 9.08 No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior Indebtedness
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
non-compliance by the Company with
41
the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section 9.08,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustees or the Holders, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article IX or the obligations hereunder of the
Holders to the holders of Senior Indebtedness, do any one or more of the
following: (i) change the manner, place, terms or time of payment of, or renew
or alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iii) release any Person liable in any manner for
the collection or payment of Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Company and any other Person.
Section 9.09 Holders Authorize Trustee to Effectuate Subordination of Notes.
--------------------------------------------------------------
Each Holder of the Notes by such Holders' acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate, as between the Holders and the holders
of Senior Indebtedness, the subordination provisions contained in this Article
IX, and appoints the Trustee such Holders' attorney-in-fact for such purpose,
including, in the event of any liquidation, dissolution, winding-up,
reorganization, assignment for the benefit of creditors or marshaling of assets
of the Company (whether in bankruptcy, insolvency or receivership proceedings or
upon assignment for the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of the Company, the immediate filing of a
claim for the unpaid balance of such Holder's Notes in the form required in said
proceedings and cause said claim to be approved. If the Trustee does not file a
proper claim or proof of debt in the form required in such proceeding prior to
thirty (30) days before the expiration of the time to file such claim or proof,
then any of the holders of the Senior Indebtedness or their Representative is
hereby authorized, but is not obligated, to file an appropriate claim for and on
behalf of the Holders of said Notes. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
Representative to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorized the
Trustee or the holders of Senior Indebtedness or their Representative to vote in
respect of the claim of any Holder in any such proceeding.
Section 9.10 Right of Trustee to Hold Senior Indebtedness.
--------------------------------------------
(a) The Trustee and any agent of the Company shall be entitled to all the
rights set forth in this Article IX with respect to any Senior Indebtedness
which may at any time be held by it in its individual or any other capacity to
the same extent as any other holder of Senior Indebtedness and nothing in this
Indenture shall deprive the Trustee or any such agent of any of its rights as
such holder.
42
(b) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article IX, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee.
(c) Whenever a distribution is to be made or a notice given to holders or
owners of Senior Indebtedness, the distribution will be made and the notice will
be given to their Representative.
Section 9.11 This Article IX Not To Prevent Events of Default.
------------------------------------------------
(a) The failure to make a payment on account of Principal of, or interest
on, the Notes by reason of any provision of this Article IX will not be
construed as preventing the occurrence of an Event of Default.
(b) Nothing contained in this Article IX shall limit the right of the
Trustee or the Holders of the Notes to take any action to accelerate the
maturity of the Notes pursuant to Article V or to pursue any rights or remedies
hereunder or under applicable law, subject to the rights, if any, under this
Article IX of the holders, from time to time, of Senior Indebtedness.
Section 9.12 No Fiduciary Duty of Trustee to Holders of Senior Indebtedness.
--------------------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness, and it undertakes to perform or observe such of its
covenants and obligations as are specifically set forth in this Article IX, and
no implied covenants or obligations with respect to the Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
liable to any such holders (other than for its willful misconduct or gross
negligence) if it shall pay over or deliver to the Holders or the Company or any
other Person money or assets in compliance with the terms of this Indenture.
Nothing in this Section 9.12 shall affect the obligation of any Person other
than the Trustee to hold such payment for the benefit of, and to pay such
payment over to, the holders of Senior Indebtedness or their Representative.
Section 9.13 Relationship to Senior Subordinated Notes.
-----------------------------------------
The Notes are pari passu with the Company's 12% Senior Subordinated Notes
due 2007.
ARTICLE X
CONVERSION OF NOTES
Section 10.01 Right to Convert; Mandatory Conversion.
--------------------------------------
(a) Subject to and upon compliance with the provisions of this Article X, a
Holder shall have the right, at its option, at any time on or before the
Maturity Date to convert the principal amount of any Note or any portion of such
principal amount which
43
is One Thousand Dollars ($1,000) or an integral multiple thereof, into that
number of fully paid and non-assessable shares of Common Stock (as such shares
shall then be constituted) obtained by dividing the principal amount of the Note
or portion thereof surrendered for conversion by the Conversion Price, by
surrender of the Note so to be converted in whole or in part in the manner
provided in Section 10.02. A Holder is not entitled to any rights of a holder of
Common Stock until such Holder has converted such Notes.
(b) Upon the Maturity Date, any outstanding Principal on the Note shall
convert into the right to receive that number of fully paid and non-assessable
shares of Common Stock (as such shares shall then be constituted) obtained by
dividing the principal amount of the Note by the Conversion Price. A Holder may
exercise such right by surrendering the Note to the Company as set forth in
Section 10.02. A Holder is not entitled to any rights of a holder of Common
Stock until such Notes have been converted.
Section 10.02 Exercise of Conversion Privilege; Issuance of Common Stock on
-------------------------------------------------------------
Conversion; No Adjustment for Interest or Dividends.
---------------------------------------------------
(a) In order to exercise the conversion privilege, the Holder of any Note
to be converted in whole or in part shall surrender such Note at an office or
agency maintained by the Company pursuant to Section 3.02, and shall give
written notice of conversion in the form provided on Exhibit B hereto (or such
other notice which is acceptable to the Company) to the Company at such office
or agency that the Holder elects to convert such Note or the portion thereof
specified in said notice. Such notice shall also state the name or names (with
address) in which the certificates for shares of Common Stock which shall be
issuable on such conversion shall be issued, and shall be accompanied by
transfer taxes, if required pursuant to Section 10.08. Each Note surrendered for
conversion shall, unless the shares issuable on conversion are to be issued in
the same name as the registration of such Note, be duly endorsed by, or be
accompanied by instruments of transfer in form satisfactory to the Company duly
executed by, the holder or his duly authorized attorney.
(b) As promptly as practicable after the surrender of such Note and the
receipt of such notice and funds, if any, as aforesaid, the Company shall issue
and shall deliver at such office or agency to such Holder, or on his written
order, a certificate or certificates for the number of full shares issuable upon
the conversion of such Note or portion thereof in accordance with the provisions
of this Article X and a check or cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion, as provided in
Section 10.03. In case any Note of a denomination greater than One Thousand
Dollars ($1,000) shall be surrendered for partial conversion, the Company shall
execute and the Trustee shall authenticate and deliver to or upon the written
order of the Holder of the Note so surrendered, without charge to him, a new
Note or Notes in authorized denomination in an aggregate principal amount equal
to the unconverted portion of the surrendered Note.
(c) Each conversion shall be deemed to have been effected on the date on
which such Note shall have been surrendered and such notice shall have been
received by
44
the Company, as aforesaid, and the person in whose name any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become on said date the holder or record of the shares
represented thereby; provided, however, that any such surrender on any date when
-------- -------
the stock transfer books of the Company shall be closed shall constitute the
person in whose name the certificates are to be issued as the record holder
thereof for all purposes on the next succeeding day on which such stock transfer
books are open, but such conversion shall be at the Conversion Price in effect
on the date upon which such Note shall have been surrendered.
(d) The Holder of any Note or portion thereof surrendered for conversion
during the period from the close of business on the Record Date for any Interest
Payment Date to the opening of business on such Interest Payment Date shall be
paid by the Company on such Interest Payment Date any interest due on such date
with respect to such surrendered Note or portion thereof.
Section 10.03 Cash Payments in Lieu of Fractional Shares.
------------------------------------------
No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same holder, the number of full
shares which shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Notes (or specified portions thereof to
the extent permitted hereby) so surrendered. If any fractional shares of stock
would be issuable upon the conversion of any Note or Notes the Company shall
make an adjustment therefor in cash at the current market value thereof. The
market value of a share of Common Stock shall be the closing price on the first
Business Day immediately preceding the day on which the Notes (or specified
portions thereof) are deemed to have been converted and such closing price shall
be determined as provided in subsection (b) of Section 10.05.
Section 10.04 Conversion Price.
----------------
The Conversion Price shall be as specified in the form of Note set forth in
Exhibit A hereto, subject to adjustment as provided in this Article X.
---------
Section 10.05 Adjustment of Conversion Price.
------------------------------
The Conversion Price shall be adjusted from time to time by the Company as
follows:
(a) In case the Company shall (i) declare a dividend, or make a
distribution, in shares of its Common Stock, on its Common Stock, (ii) subdivide
or reclassify its outstanding Common Stock into a greater number of shares,
(iii) combine its outstanding Common Stock into a small number of shares, (iv)
make a distribution on its Common Stock in shares of its capital stock other
than Common Stock or (v) issue by reclassification of its Common Stock shares of
its capital stock, the conversion privilege and the Conversion Price in effect
immediately prior thereto shall be adjusted so that the Holder of any Note
thereafter surrendered for conversion shall be entitled to receive the
45
number of shares of Common Stock or other capital stock of the Company which
such Holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Note been converted
immediately prior to the happening of such event. An 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 subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any event
listed above shall occur. In the event such dividend, issue or distribution is
not so made, the conversion privilege and the Conversion Price then in effect
shall be readjusted to the conversion privilege and the Conversion Price which
would then be in effect if such dividend, issue or distribution had not been
declared or made shall remain in effect.
(b) The current market price per share of Common Stock at any date
shall be deemed to be the average of the last reported sale prices for the
twenty (20) consecutive Trading Days (as defined below) next preceding the day
five (5) days prior to the day in question. The last reported sale price for
each day shall be (i) the last reported sale price of Common Stock on the
National Market of the National Association of Securities Dealers, Inc.,
Automated Quotation System, or any similar system of automated dissemination of
quotations of securities prices then in common use, if so quoted, or (ii) if not
quoted as described in clause (i), the means between the high bid and low asked
quotations for Common Stock as reported by the National Quotation Bureau
Incorporated if at least two securities dealers have inserted both bid and asked
quotations for such class of stock on at least five (5) of the ten (10)
preceding days or (iii) if the Common Stock is listed or admitted for trading on
any national securities exchange, the last sale price, or the closing bid price
if no sale occurred, of such class of stock on the principal securities exchange
on which class of stock is listed. If the Common Stock is quoted on a national
securities or central market system, in lieu of a market or quotation system
described above, the closing price shall be determined in the manner set forth
in clause (ii) of the preceding sentence if bid and asked quotations are
reported but actual transactions are not, and in the manner set forth in clause
(iii) of the preceding sentence if actual transactions are reported. If none of
the conditions set forth above is met, the closing price of Common Stock on any
day or the average of such closing prices for any period shall be the fair
market value of such class of stock as determined by a member firm of the New
York Stock Exchange, Inc. selected by the Company. As used herein the term
"Trading Days" with respect to Common Stock means (i) if the Common Stock is
------------
quoted on the National Market of the National Association of Securities Dealers,
Inc., Automated Quotation System or any similar system of automated
dissemination of quotations of securities prices, days on which trades may be
made on such system or (ii) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which such national
securities exchange is open for business.
(c) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in such price; provided, however, that any adjustment which by reason of
-------- -------
this subsection (c) is not required to be made shall be carried forward and
taken into account in any subsequent adjustment. Anything in this Section 10.05
to the contrary notwithstanding, the
46
Company shall be entitled to make such reductions in the Conversion Price,
in addition to those required by this Section 10.05, as it in its discretion
shall determine to be advisable in order that any stock dividends, subdivision
of shares, distribution of rights to purchase stock or securities, or a
distribution of securities convertible into or exchangeable for stock hereafter
made by the company to its stockholders shall not be taxable.
(d) Whenever the Conversion Price is adjusted, as herein provided,
the Company shall promptly file with the Trustee and any Agent other than the
Trustee an Officers' Certificate setting forth the Conversion Price after such
adjustment and setting forth in reasonable detail the facts requiring such
adjustment. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which such adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to the holder of any Note at his last address appearing on the registration
books of the Registrar.
(e) In any case in which this Section 10.05 provides that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
holder of any Note converted after such record date and before the occurrence of
such event the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above the Common
Stock issuable upon such conversion before giving effect to such adjustment and
(ii) paying to such holder any amount in cash in lieu of any fraction pursuant
to Section 10.03.
(f) If after an adjustment a Holder of a Note upon conversion of
such Note receives shares of two or more classes of capital stock of the
Company, the Company shall determine on a fair basis the allocation of the
adjusted Conversion Price between the classes of capital stock.
Section 10.06 Effect of Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------
(a) If any of the following events occur, namely (i) any
reclassification or change of outstanding shares of Common Stock issuable upon
conversion of the Notes (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 of the Company with another
corporation shall be effected as a result of which holders of Common Stock
issuable upon conversion of the Notes shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock or (iii) any sale or conveyance of the properties
and assets of the Company as, or substantially as, an entirety to any other
corporation, then the Company or such successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall conform to the TIA) providing that such Note shall be convertible into the
kind and amount of shares of stock and other securities or property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, sale or conveyance by a holder of a number of shares of Common Stock
issuable upon conversion of such Notes immediately
47
prior to such reclassification, change, consolidation, merger, sale or
conveyance. Such supplemental indenture shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article X. The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each Holder at his address appearing on
the registration books of the Registrar. If securities deliverable upon
conversion of Notes as provided above are themselves convertible into the
securities of an Affiliate of the formed surviving transferee corporation, the
issuer shall join in the supplemental indenture which shall so apply.
(b) If this Section applies with respect to a transaction, Section
10.05 shall not apply with respect to that transaction.
(c) The above provisions of this Section shall similarly apply to
successive reclassifications, consolidations, mergers and sales.
Section 10.07 Voluntary Adjustment.
--------------------
(a) The Company at any time may decrease the Conversion Price,
temporarily or otherwise, but in no event shall such decrease result in a
Conversion Price less than the par value of the Common Stock at the time such
decrease is made.
(b) Whenever the Conversion Price is decreased pursuant to this
Section 10.07, the Company shall mail to the Holders a notice of the decrease.
The Company shall mail the notice at least fifteen (15) days before the date the
decreased Conversion Price takes effect. The notice shall state the decreased
Conversion Price and the period it will be in effect.
Section 10.08 Taxes on Shares Issued.
----------------------
The issue of stock certificates on conversions of Notes shall be made
without charge to the converting Holder for any tax in respect of the issue
thereof. The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of stock
in any name other than that of the holder of any Note converted, and the Company
shall not be required to issue or deliver any such stock certificate unless and
until the person or persons requesting the issue thereof shall have been 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.
Section 10.09 Reservation of Shares; Shares to be Fully Paid; Compliance with
---------------------------------------------------------------
Governmental Requirements; Listing of Common Stock
--------------------------------------------------
(a) The Company shall provide, free from preemptive rights, out of
its authorized but unissued shares, or out of shares held in its treasury,
sufficient shares to provide for the conversion of the Notes, from time to time
as such Notes are presented for conversion.
48
(b) Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value, if any, of the shares of
Common Stock issuable upon conversion of the Notes, the Company will take all
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue shares of such Common Stock at
such adjusted Conversion Price. In no event, however, shall shares of Common
Stock be issued at below par value.
(c) The Company covenants that all shares of Common Stock which may
be issued upon conversion of Notes will upon issue be fully paid and
nonassessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.
(d) The Company further covenants that at any time the Common Stock
is listed on the New York Stock Exchange or any other national securities
exchange the Company will, if permitted by the rules of such exchange, list and
keep listed so long as the Common Stock shall be so listed on such exchange, all
Common Stock issuable upon conversion of the Notes.
Section 10.10 Responsibility of Trustee.
-------------------------
The Trustee and any Agent shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist which may
require any adjustment of the Conversion Price, or with respect to the nature or
extent or calculation of any such adjustment when made, or with respect to the
method employed, or herein or in any supplemental indenture provided to be
employed, in making the same. The Trustee and any Agent shall not be accountable
with respect to the validity or value (or the kind or amount) of any shares of
Common Stock, or of any securities or property, which may at any time be issued
or delivered upon the conversion of any Note and the Trustee and any Agent make
no representations with respect thereto. Subject to the provisions of Section
6.01, neither the Trustee nor any Agent shall be responsible for any failure of
the Company to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property or cash upon the surrender of any
Note for the purpose of conversion or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article X.
Section 10.11 Notice to Holders Prior to Certain Actions.
------------------------------------------
In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock (other than in cash paid from retaining earnings (other than
extraordinary cash dividends)), subdivide or reclassify its outstanding Common
Stock into a greater number of shares or combine its outstanding Common Stock
into a smaller number of shares; or
(b) the Company shall effect any reclassification or change of the
Common Stock of the Company (other than a subdivision or combination of its
outstanding Common Stock, or a change in par value, or from par value to no par
value, or from no
49
par value to par value), or, of any consolidation or merger to which the
Company is a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the Company shall cause notice of such proposed action or event to be filed with
the Trustee and to be mailed to each Holder at his address appearing on the
registration books of the Registrar, as promptly as possible but in any event at
least thirty (30) days prior to the record date or expected effective date
provided, however, that in the event that the Company provides public notice of
such proposed action or event specifying the information set forth below at
least ten (10) days prior to the record date or expected effective date, the
Company shall be deemed to have satisfied its obligation to provide notice
pursuant to this Section 10.11. In any event, such notice shall specify (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distribution or rights or warrants are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give such notice, or any
defect therein, shall not affect the legality of validity or such dividend,
distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation, winding-up or termination.
ARTICLE XI
MISCELLANEOUS
Section 11.01 TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
Section 11.02 Notices.
-------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, or overnight courier addressed as follows:
50
if to the Company:
CellStar Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: General Counsel
Fax: 000-000-0000
with a copy to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx, III
Fax: 000-000-0000
if to the Trustee:
The Bank of New York
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: [_____________]
Fax: [______________]
Each of the Company and the Trustee by written notice to each other may
designate additional or different addresses for notices. Any notice or
communication to the Company or the Trustee shall be deemed to have been given
or made as of the date so delivered, if personally delivered; when answered
back, if telexed; when receipt is acknowledged, if faxed; five (5) calendar days
after mailing, if sent by registered or certified mail, postage prepaid (except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee); and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.
Any notice or communication mailed to a Holder, including any notice
delivered in connection with TIA (S)310(b), TIA (S)313(c), TIA (S)314(a) and TIA
(S)315(b) shall be mailed to him by first class mail or other equivalent means
at his address as it appears on the registration books of the Registrar and
shall be sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
Section 11.03 Communications by Holders with Other Holders.
--------------------------------------------
51
Holders may communicate pursuant to TIA (S)312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and any other person shall have the protection of TIA
(S)312(c).
Section 11.04 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 at the
request of the Trustee:
(a) an Officers' Certificate (in form and substance reasonably satisfactory
to the Trustee) stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(b) an Opinion of Counsel (in form and reasonably satisfactory to the
Trustee) stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Section 11.05 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(a) a statement that the person making such certificate or opinion has read
such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him or her to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of each such person,
such condition or covenant has been complied with; provided, however, that, with
-------- -------
respect to certain matters of fact not involving any legal conclusion, an
Opinion of Counsel may, upon the consent of the parties relying on such opinion,
rely on an Officers' Certificate or certificates of public officials.
Section 11.06 Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules and set reasonable requirements for its
functions.
52
Section 11.07 Legal Holidays.
--------------
If a payment date is a Legal Holiday at such place, payment may be made at
such place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
Section 11.08 Governing Law.
-------------
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE PARTIES HERETO AGREE TO IRREVOCABLY SUBMIT TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPT FOR
THEMSELVES AND IN RESPECT OF THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY
JURY AND ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OR THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE TRUSTEE OR ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
Section 11.09 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries, except to the extent
necessary to interpret the meanings of provisions or defined terms specifically
incorporated by reference. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture, except to the extent necessary to interpret
the meanings of provisions or defined terms specifically incorporated by
reference.
Section 11.10 No Recourse Against Others.
--------------------------
A director, officer, employee, stockholder or Affiliate, as such, of the
Company and each of its Subsidiaries shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by
53
reason of such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
Section 11.11 Successors.
----------
All agreements of the Company in this Indenture and the Notes shall bind
its successors and assigns. All agreements of the Trustee in this Indenture
shall bind its successors and assigns.
Section 11.12 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 and original and all of which taken together shall constitute one
and the same agreement.
Section 11.13 Severability.
------------
In case any provision in this Indenture or in the Notes shall be held
invalid, illegal or unenforceable, in any respect for any reason, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby; it being intended that all of the provisions
hereof shall be enforceable to the full extent of the law.
Section 11.14 Table of Contents, Headings. Etc.
--------------------------------
The table of contents, cross-reference sheet and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, and are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
54
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
CELLSTAR CORPORATION, as Issuer
By:_____________________________
Name:
Title:
The Bank of New York, as Trustee
By:_____________________________
Name:
Title:
Exhibit A
THIS NOTE IS SUBORDINATED TO THE PRIOR PAYMENT IN CASH OF ALL SENIOR
INDEBTEDNESS, AS DEFINED IN THAT CERTAIN INDENTURE DATED AS OF [___], 2001, AS
THE SAME MAY BE AMENDED FROM TIME TO TIME IN THE MANNER PROVIDED IN THE
INDENTURE.
CELLSTAR CORPORATION
5% SENIOR SUBORDINATED CONVERTIBLE PROMISSORY NOTE
DUE NOVEMBER 30, 2002
$[________] New York, New York
[________], 2002
FOR VALUE RECEIVED, the undersigned, CELLSTAR CORPORATION, a Delaware
corporation (the "Borrower," which term includes any successor entity), hereby
promises to pay to the order of [__________] (together with its registered
assigns, the "Holder"), the principal sum of [__________ Dollars ($__________)]
on November 30, 2002 (the "Maturity Date"), with interest thereon from time to
time as provided herein.
Interest Payment Date: August 15
Record Date: August 1
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
CELLSTAR CORPORATION
By:
--------------------------
Name:
Title:
Attest:
By:
---------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes in the within-mentioned Indenture.
[_______________], as Trustee
By: -----------------------------------
Authorized Signatory
1
[FORM OF REVERSE OF NOTE]
CELLSTAR CORPORATION
5% SENIOR SUBORDINATED CONVERTIBLE PROMISSORY NOTE
DUE NOVEMBER 30, 2002
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Indenture, dated as of [________] (the
"Indenture"), as amended from time to time, by and between CellStar Corporation,
a Delaware corporation (the "Company"), and The Bank of New York, as trustee
(the "Trustee").
1. Interest.
--------
The Company promises to pay interest on the unpaid principal amount of
this Note at a rate of five percent (5%) per annum (the "Interest Rate")
commencing on the date hereof. The Company will pay interest in arrears on
August 15, 2002 or if such day is not a Business Day, on the next succeeding
Business Day (the "Interest Payment Date"). Interest on the Notes will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the date of issuance; provided, however, that if there is no
-------- -------
existing Default in the payment of interest, and if this Note is authenticated
between a Record Date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date. Interest shall accrue with respect to principal on this Note to,
but not including the date of repayment of such principal; provided, however,
-------- -------
that if payment to the Paying Agent occurs after 10:00 a.m., New York City time,
interest shall be deemed to accrue until the following Business Day. On each
Interest Payment Date, interest on the Notes will be paid for the immediately
preceding accrual period. Any accrued and unpaid interest outstanding on the
Maturity Date shall be paid on the Maturity Date concurrently with payment of
the Principal.
To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i)
overdue Principal, if any, at a rate equal to the sum of the Interest Rate and
an additional two percent (2%) per annum (such sum being referred to herein as
the "Default Rate"), compounded semiannually; and (ii) overdue installments of
interest, if any (without regard to any applicable grace period) at the Default
Rate, compounded semiannually. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment.
-----------------
The Company shall pay interest on the Notes to the persons who are the
registered Holders at the close of business on the Record Date immediately
preceding the Interest Payment Date even if the Notes are canceled on
registration of transfer or registration of exchange after such Record Date.
Interest on the Notes shall be paid on the Interest Payment Dates and on the
Maturity Date in cash or in Interest Shares, at the option of the Company.
Except as set forth in the Indenture, Holders must surrender Notes to the Paying
Agent to collect principal payments.
2
The Principal on the Notes shall be paid on the Maturity Date in Principal
Shares. The Notes will be payable as to Principal and interest at the office or
agency of the Company maintained for such purpose within the City and State of
New York, or, at the option of the Company, payment of interest may be made by
check or stock certificates, as appropriate, mailed to the Holders of the Notes
at their addresses set forth in the register of Holders. If this Note is a
Global Note, all payments in respect of this Note will be made to the Depository
or its nominee in immediately available funds in accordance with customary
procedures established from time to time by the Depository.
3. Paying Agent and Registrar.
--------------------------
Initially, the Trustee under the Indenture will act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or co-
Registrar without notice to the Holders. The Company or any of its Subsidiaries
may act as Registrar.
4. Indenture.
---------
The Company issued the Notes under an Indenture, dated as of
[________, 2002] (the "Indenture"), between the Company and the Trustee. This
Note is one of a duly authorized issue of Notes of the Company designated as its
5% Senior Subordinated Convertible Notes Due November 30, 2002 (the "Notes").
Each Holder, by accepting the Notes, agrees to be bound by all the terms and
provisions of the Indenture, as the same may be amended from time to time in
accordance with its terms. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code xx.xx. 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of such terms. The Notes are unsecured
obligations of the Company limited (except as otherwise provided in the
Indenture) in aggregate principal amount to Sixty Million One Hundred Forty-Two
Thousand Dollars ($60,142,000) plus amounts, if any, sufficient to pay interest
and premium, if any, on outstanding Notes as set forth in Paragraph 2 hereof.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture. Requests may be made to: CellStar
Corporation, 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx 00000, Attn.: General
Counsel.
5. Subordination.
-------------
The Indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness, and this Note is issued
subject to such provisions. Each Holder of this Note, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture, and
(c) appoints the Trustee attorney-in-fact of such Holder for such purpose.
6. Denominations; Transfer; Exchange.
---------------------------------
The Notes are in registered form, without coupons, in denominations of
One Thousand Dollars ($1,000) and integral multiples of One Thousand Dollars
($1,000). A Holder shall register the transfer of or exchange Notes in
accordance with the Indenture. The Xxxxxxxxx
0
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay certain taxes or similar governmental charges
required by law and as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Notes. No service charge shall be
made for any registration of transfer or exchange of Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. The Company need not exchange or
register the transfer of any Note.
7. Discharge Prior to Maturity; Defeasance.
---------------------------------------
The Company's obligations pursuant to the Indenture will be
discharged, except for obligations pursuant to certain sections thereof, subject
to the terms of the Indenture, upon the payment of all the Notes or upon the
irrevocable deposit with the Trustee of U.S. Legal Tender, Principal Shares or
Interest Shares sufficient to pay when due Principal of and interest, if any, on
the Notes to maturity.
8. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the written consent of the Holders, and any
existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Required Holders. Without notice to or consent of
any Holder, the parties thereto may amend or supplement the Indenture or the
Notes to, cure among other things, any ambiguity, defect or inconsistency,
provide for uncertificated Notes in addition to or in place of certificated
Notes, comply with Article IV of the Indenture or comply with any requirements
of the SEC in connection with the qualification of the Indenture under the TIA,
or make any other change that does not adversely affect the rights of any Holder
of a Note.
9. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least twenty-five percent (25%) in the aggregate principal amount
of Notes then outstanding may declare all the Notes to be due and payable in the
manner, at the time and with the effect provided in the Indenture. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee is not obligated to enforce the Indenture or the Notes unless it has
received indemnity reasonably satisfactory to it. The Indenture permits, subject
to certain limitations therein provided, the Required Holders to direct the
Trustee in its exercise of any trust or power.
10. Conversion.
----------
Pursuant to the procedures set forth in Article X of the Indenture,
the Holder may convert the outstanding Principal on the Note into shares of
Common Stock at any time prior to the Maturity Date. The Conversion Price shall
be 1,000 shares of Common Stock to $1,000, subject to adjustment as set forth in
Article X of the Indenture.
4
11. Trustee Dealings with Company.
-----------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates, as if it were not the Trustee.
12. No Recourse Against Others.
--------------------------
A stockholder, director, officer, employee or Affiliate, as such, of
the Company or any of its Subsidiaries shall not have any liability for any
obligation of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation,
including with respect to any certificates delivered hereunder or thereunder
from any such person. Each Holder of a Note by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
13. Authentication.
--------------
This Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on this Note.
14. Governing Law.
-------------
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts made
and performed within the State of New York without regard to principles of
conflicts of laws.
15. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a Note
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
16. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company may cause CUSIP numbers to be
printed on the Notes immediately prior to the qualification of the Indenture
under the TIA as a convenience to the Holders of the Notes. No representation is
made as to the accuracy of such numbers as printed on the Notes and reliance may
be placed only on the other identification numbers printed hereon.
5
17. Successors.
----------
When a successor assumes all the obligations of its predecessor under
the Notes and the Indenture and the transaction complies with the terms of
Article IV of the Indenture, the predecessor will be released from those
obligations.
18. Unclaimed Money.
---------------
If money, Principal Shares or Interest Shares for the payment of
Principal or interest remains unclaimed for two (2) years, the Trustee or Paying
Agent shall return such money, Principal Shares or Interest Shares to the
Company upon its request. After that, all liability of the Trustee and Paying
Agent with respect to such money, Principal Shares or Interest Shares shall
cease and Holders entitled to money, Principal Shares or Interest Shares must
look to the Company for payment.
6
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
CELLSTAR CORPORATION
By:
--------------------------------------------
Name:
Title:
7
[FORM OF ASSIGNMENT]
I or we assign this Note to
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
-------------------------------
and irrevocably appoint ___________________________ agent to transfer this Note
on the books of the Company. The agent may substitute another to act for it.
In connection with any transfer of any of the Notes evidenced by this
certificate occurring prior to (x) the date which is two years after the date
the undersigned acquired such Notes, and (y) such later date, if any, as may be
required by any subsequent change in applicable law (the "Resale Restriction
Termination Date"), if the undersigned is an affiliate of the Company, the
undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer and that such Notes are
being transferred:
CHECK ONE BOX BELOW
(1) [_] to the Company; or
(2) [_] pursuant to a registration statement which has been declared
effective under the Securities Act; or
(3) [_] pursuant to and in compliance with Rule 144A under the Securities
Act; or
(4) [_] pursuant to and in compliance with Regulation S under the Securities
Act; or
(5) [_] to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Company and the Trustee the Transferee Certificate
in the form attached as Exhibit C to the Indenture (such Transferee
Certificate can be obtained from the Trustee); or
(6) [_] pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered holder thereof; provided, however, that if box (3), (4), (5) or (6)
-------- -------
is checked, the Company and the Trustee may require, prior to registering any
such transfer of the Notes, in their sole discretion, such opinions of counsel,
certifications and/or other information satisfactory to each of them to confirm
that such
8
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.06 of the Indenture shall have been satisfied.
Dated: Signed:
--------------- ----------------------------------------------
(Sign exactly as your name appears on the front of
this Note)
Signature Guarantee:
------------------------------------------------------------
NOTICE: Signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Bond
Registrar which requirements will include membership or
participation in the Securities Transfer Agents Medallion
Program or such other "signature guarantee program" as may
be determined by the Bond Registrar in addition to, or in
substitution for, the Securities Transfer Agents Medallion
Program, all in accordance with the Securities Exchange Act
of 1934, as amended.
9
[FORM OF LEGEND FOR BOOK-ENTRY NOTES]
Any Global Note authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT
EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS
NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), 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.
10
Exhibit B
[FORM OF CONVERSION NOTICE]
-------------------------
CONVERSION NOTICE
To: CELLSTAR CORPORATION
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 principal amount or an integral multiple thereof) below designated, into
shares of Common Stock of the Company in accordance with the terms of the
Indenture referred to in this Note, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Notes representing any unconverted principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this Note
not converted are to be issued in the name of a person other than the
undersigned, the undersigned will check the appropriate box below and pay all
transfer taxes payable with respect thereto. Any amount required to be paid to
the undersigned on account of interest accompanies this Note.
Dated:
------------------ ------------------------
Signature
Principal amount to be converted (if less than all):
--------------------
Signature(s) must be guaranteed by an eligible guarantor institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or
Notes to be delivered, other than to and in the name of the registered holder.
------------------------
Signature Guarantee
Fill in for registration of shares if to be issued, and Notes if to be
delivered, other than to and in the name of the registered holder:
---------------------
(Name)
---------------------
(Street Address)
---------------------
(City, State and Zip Code)
11
