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PAPER WAREHOUSE, INC.
As Issuer
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
As Trustee
______________________________
INDENTURE
Dated as of June __, 1999
______________________________
9% Convertible Subordinated Debentures Due June 15, 2005
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INDENTURE
THIS INDENTURE, dated as of June __, 1999, between Paper Warehouse,
Inc., a Minnesota corporation (the "Company"), having its principal office at
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000 and Norwest Bank
Minnesota, National Association, a national banking association with trust
powers (the "Trustee"), having its principal office at Norwest Center, Sixth
and Marquette, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000.
RECITALS
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized an issue of its 9% Convertible Subordinated Debentures due June
___ 2005 (the "Debentures") in the aggregate principal amount of up to Six
Million Dollars ($6,000,000), to be issued as fully registered Debentures
without coupons, to be authenticated by the Certificate of the Trustee, to be
payable and to be redeemable all as hereinafter provided; and
WHEREAS, the Trustee has power to enter into this Indenture and to
accept and execute the trusts herein created; and
WHEREAS, the Company represents that all acts and things necessary to
make the Debentures, when executed and issued by the Company and
authenticated and delivered by the Trustee as provided in this Indenture, the
valid, binding and legal obligations of the Company, and to constitute this
instrument a valid indenture and agreement according to its terms, have been
done and performed, and the execution of this Indenture and the issue
hereunder of the Debentures have in all respects been duly authorized, and
the Company, in the exercise of each and every right and power in it vested,
executes this Indenture and proposes to make, execute, issue and deliver the
Debentures.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, in order to provide for
the payment of the principal of, premium, if any, and interest on the
Debentures issued under this Indenture according to their tenor and effect
and the performance and observance of each and all of the covenants and
conditions herein and therein contained, for and in consideration of the
premises and of the purchase and acceptance of the Debentures by the
respective purchasers thereof and for other good and valuable consideration,
the receipt whereof is hereby acknowledged, the Company has executed and
delivered this Indenture in trust for the equal and proportionate benefit,
security and protection of all of the Holders of Debentures issued or to be
issued under and secured by this Indenture, without preference, priority or
distinction as to lien or otherwise of any of the Debentures over any of the
others;
THIS INDENTURE FURTHER WITNESSETH, that the Company has agreed and
covenanted with the respective Debentureholders from time to time as follows:
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ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act of 1939, as amended (the "TIA"), either directly or by
reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles; and
(4) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act," when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. Without limiting the generality of the foregoing, at the date of
this Indenture, the "Affiliates" of the Company include any Subsidiary.
"Authenticating Agent" means any Person authorized by the Trustee to act
on behalf of the Trustee to authenticate Debentures.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the city in which
the principal office of the Trustee is located are authorized or obligated by
law or executive order to close.
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"Capitalized Lease Obligation" means any lease or other agreement for
the use of property which, in accordance with GAAP, should be capitalized on
the lessee's or user's balance sheet.
"Cash Equivalents" means, with respect to any Person at any date of
determination, any of the following held by such Person on a consolidated
basis, (i) any evidence of Indebtedness with a maturity of 180 days 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 180
days or less of, or a savings account in, any financial institution that is a
member of the Federal Reserve System having combined capital and surplus and
undivided profits of not less than $25,000,000; (iii) commercial paper with a
maturity of 180 days or less issued by a corporation (except any Affiliate of
the Company) organized under the laws of any state of the United States of
America or the District of Columbia and rated at least A-1 by Standard &
Poor's Corporation or at least P-1 by Xxxxx'x Investors Service, Inc.; (iv)
repurchase agreements and reverse repurchase agreements relating to
marketable obligations issued or unconditionally guaranteed by the United
States of America or issued by any agency thereof and backed by the full
faith and credit of the United States of America, in each case maturing
within one year from the date of acquisition; provided, however, that the
terms of such agreements comply 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) instruments backed
by letters of credit issued by financial institutions satisfying the
conditions of (ii) above; and (vi) mutual funds or similar securities, not
less than 80% of the assets of which are invested in securities of the type
referred to in clauses (i) through (v).
"Certificate of Independent Public Accountants" means a certificate
signed by KPMG Peat Marwick, LLP, or any other independent public accountant
or firm of independent public accountants (who may be the independent public
accountants regularly retained by the Company) reasonably acceptable to the
Trustee. Such accountant or firm shall be entitled to rely upon any Opinion
of Counsel as to the interpretation of any legal matters relating to such
certificate. The acceptance by the Trustee of, or its actions on, such a
certificate shall be sufficient evidence that such accountant is reasonably
acceptable to the Trustee. Any certificate or opinion of any independent
firm of public accountants filed with the Trustee shall contain a statement
that such firm is Independent.
"Change of Control" has the meaning specified in Section 1203.
"Closing Price" for any day means the last reported sale price of the
Common Stock regular way on such day or, in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way on such day, in either case on the New York Stock Exchange or, if
the Common Stock is not listed or admitted to trading on such Exchange, on
the principal national securities exchange on which the Common Stock is
listed or
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admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the Nasdaq National Market or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or
quoted on such National Market System, the average of the closing bid and
asked prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the Company for that
purpose. If the Common Stock is not listed or admitted to trading on any
national securities exchange, quoted on such National Market System or listed
in any list of bid and asked prices in the over-the-counter market, "Closing
Price" shall mean the fair market value of the Common Stock as determined in
good faith by the Board of Directors.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Stock" means the Company's Common Stock, par value $0.01,
authorized at the date this Indenture is executed, whether voting or
non-voting, and shares of any class or classes resulting from any
reclassification or reclassifications thereof which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and also
shall include stock of the Company of any other class, whether now or
hereafter authorized, which ranks, or is entitled to a participation, as to
assets or dividends, substantially on a parity with such Common Stock or
other class of stock into which such Common Stock may have been changed;
provided however, that warrants or other rights to purchase Common Stock will
not be deemed to be Common Stock.
"Company" means Paper Warehouse, Inc., a Minnesota corporation, until a
successor Person shall have become such pursuant to the provisions of this
Indenture and thereafter "Company" shall mean such successor Person.
"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by its President or any
Vice President, and by its Chief Financial Officer, Assistant Treasurer,
Secretary or Assistant Secretary, and delivered to the Trustee.
"Company Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors of the Company and to be in full force and effect
on the date of such certification and delivered to the Trustee.
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"Consolidated" when used in conjunction with any other defined term
means the aggregate amount of the items included within the defined term of
the Company on a consolidated basis in accordance with GAAP, eliminating
inter-company items.
"Consolidated Earnings Before Interest and Taxes plus Depreciation and
Amortization" or "Consolidated EBITDA" means with respect to any Person for
any period, without duplication, the sum of (i) income of such Person on a
Consolidated basis, determined in accordance with GAAP before provision for
United States Federal, state and foreign income taxes of such Person paid or
accrued in accordance with GAAP and increased by depreciation and
amortization, (ii) Consolidated Interest Expense, and (iii) interest portion
of operating lease rental expense (excluding the interest portion of
operating lease rental expense included in the definition of Consolidated
Interest Expense).
"Consolidated Interest Expense" means with respect to any Person for any
period, without duplication, all cash and non-cash interest expenses incurred
for Indebtedness of such Person, including the interest portion of rental
expense of such Person and its Subsidiaries, on a consolidated basis
determined in accordance with GAAP, net of deferred financing fees of such
Person and its Subsidiaries.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the net income of such Person and its Subsidiaries,
for such period, on a Consolidated basis, determined in accordance with GAAP,
provided that extraordinary gains and losses (determined in accordance with
GAAP) shall be excluded.
"Consolidated Tangible Net Worth" means, with respect to any Person at
any date of determination, the Consolidated stockholders' equity represented
by the shares of such Person's capitalized stock (other than Disqualified
Stock) outstanding at such date, as determined on a Consolidated basis in
accordance with GAAP less any portion of such stockholders' equity
attributable to intangible assets as determined in accordance with GAAP and
prepaid expenses.
"Conversion Price" has the meaning specified in Section 1301.
"Corporate Trust Office," when used with respect to the Trustee means
the principal office of the Trustee in Minneapolis, Minnesota, at which at
any particular time its corporate trust business shall be administered, which
office is on the date of this Indenture located at Norwest Center, Sixth and
Marquette, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000 or said office of any successor
Trustee.
"Debentureholder" means a Person in whose name a Debenture is registered
on the Debenture Register, or the beneficial owner of such Debentures if
record ownership is held by a nominee.
"Debenture Register" and "Debenture Registrar" have the respective
meanings specified in Section 305.
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"Debentures" means the 9% Convertible Subordinated Debentures due June ___
2005 issued pursuant to this Indenture.
"Defaulted Interest" has the meaning specified in Section 307.
"Defaulted Principal" has the meaning specified in Section 307.
"Disqualified Stock" means, with respect to any Person, any capital stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable
at the option of the holder thereof, in whole or in part, in each case on or
prior to the Stated Maturity of the Debentures.
"Dividends" means payments in respect of the Company's Common Stock in
either cash or property, but shall not include payments solely in Common Stock
or distributions in the form of rights to acquire Common Stock.
"Eligible Person" means an employee or agent of the Company.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Statements" means the statement of operations, balance sheet,
and/or statement of cash flows of any Person prepared in accordance with GAAP.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Guaranty" by any Person means any obligations, including letters of
credit, both standby and irrevocable in nature, other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection,
guaranteeing any Indebtedness, dividend, or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through an agreement,
contingent or otherwise, by such Person (i) to purchase such Indebtedness or
obligation or any property or assets constituting security therefor; (ii) to
advance or supply funds for the purchase or payment of such Indebtedness or
obligation, or to maintain working capital or other balance sheet condition, or
otherwise to advance or make available funds for the purchase or payment of such
Indebtedness or obligation; (iii) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness or obligation; or (iv) otherwise to assure the owner
of the Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this definition, a
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Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
equal to the principal amount of such Indebtedness which has been guaranteed,
and a Guaranty in respect of any other obligation, liability, or dividend shall
be deemed to be equal to the maximum aggregate amount of such obligation,
liability or dividend.
"Holder" when used with respect to any Debenture means a Debentureholder.
"Indebtedness" means, with respect to any Person at any date, without
duplication, all items of indebtedness which, in accordance with GAAP, would be
included in determining total liabilities as shown on the liabilities side of a
balance sheet of such Person at such date, and in addition shall include
(i) Guaranties by such Person, (ii) all Capitalized Lease Obligations of such
Person, and (iii) all indebtedness secured by any mortgage, lien, pledge, charge
or encumbrance upon property owned by such Person, whether or not the
indebtedness so secured has been assumed by such Person. For the purpose of
computing the "Indebtedness" of any Person, there shall be excluded any
particular Indebtedness to the extent that, upon or prior to the maturity
thereof, there shall have been deposited with the proper depository in trust the
necessary funds, securities, or evidences of such Indebtedness, if permitted by
the instrument creating such Indebtedness, for the payment, redemption, or
satisfaction of such Indebtedness, and thereafter such funds and evidences of
Indebtedness so deposited shall not be included in any computation of the assets
of such Person.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Independent" when used with respect to any specified Person means such a
Person who (i) is in fact independent, (ii) does not have any direct financial
interest or any material indirect financial interest in the Company or in any
other obligor upon the Debentures or in any Affiliate of the Company or of such
other obligor, and (iii) is not connected with the Company or such other obligor
or any Affiliate of the Company or of such other obligor, as an officer,
employee, promoter, organizer, underwriter, trustee, partner, director or Person
performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such Person shall be appointed by a Company Order, and such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning hereof.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Debentures.
"Inventory" means, with respect to any Person, all assets of such Person
classified as inventory on a Consolidated basis in accordance with GAAP.
"Issue Date" means the date on which the Debentures are originally issued
in accordance with the terms of this Indenture.
7
"Lien" means any mortgage, lien (statutory or other), pledge, security
interest, encumbrance, hypothecation, assignment for security or other security
agreement of any kind or nature whatsoever. For purposes of this Indenture, 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 Obligation or other title retention
agreement relating to Indebtedness of such Person.
"Long-Term Debt" means, with respect to any Person at any date, all
Indebtedness classified as "long-term debt" in accordance with GAAP.
"Maturity" when used with respect to any Debenture, means the date on which
the principal of such Debenture becomes due and payable as therein or herein
provided, whether at the Stated Maturity thereof or by declaration of
acceleration, call for redemption or otherwise.
"Nasdaq" means the automated quotation system of the National Association
of Securities Dealers, Inc. or another comparable quotation system.
"Net Income" means, with respect to any Person for any period, the net
income or loss of such Person determined in accordance with GAAP.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors, Chief Executive Officer, President, Chief Financial Officer,
Executive Vice President or any Vice President, and by the Chief Financial
Officer, an Assistant Treasurer, Secretary or an Assistant Secretary of the
Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be (except
as otherwise expressly provided in this Indenture) counsel for the Company, and
who shall be acceptable to the Trustee.
"Original Interest Accrual Date" means __________, 1999 or the most recent
Interest Payment Date, whichever is later.
"Outstanding" when used with respect to Debentures, means, as of the date
of determination, all Debentures theretofore authenticated and delivered under
this Indenture, except: (i) Debentures theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation; (ii) Debentures for whose payment or
redemption money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Debentures, provided that if such Debentures are
to be redeemed notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made and
(iii) Debentures in exchange for or in lieu of which other Debentures have been
authenticated and delivered pursuant to this Indenture; provided, however, that
in determining whether the Debentureholders of the requisite principal amount of
the Outstanding Debentures have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Debentures owned by the Company
or any other obligor
8
upon the Debentures or any Affiliate of the Company or of such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Debentures which the Trustee knows to be so owned shall be so disregarded.
Debentures so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Debentures and that the
pledgee is not the Company or any other obligor upon the Debentures or any
Affiliate of the Company or of such other obligor.
"Parity Debt" means any and all Indebtedness of the Company created,
incurred, assumed, or guaranteed by the Company before, at, or after the date of
execution of the Indenture which (a) matures by its terms, or is renewable at
the option of the Company to a date, more than one year after the date of the
original creation, incurrence, assumption, or guaranty of such Indebtedness by
the Company, (b) contains covenants, conditions and restrictions on the Company
which are not inconsistent with nor violate any of the covenants, conditions and
restrictions in this Indenture, and (c) is neither Senior Debt nor Subordinated
Debt but in no event shall Parity Debt include deferred taxes.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debenture on behalf of the
Company. Unless otherwise specified in a Company Order, the Paying Agent shall
initially be the Trustee.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Debenture" of any particular Debenture means every previous
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular Debenture. For purposes of this definition, any Debenture
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Debenture shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Debenture.
"Principal Payment Date" means the Maturity of the principal on the
Debentures.
"Redemption Date," when used with respect to any Debenture to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Debenture to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the fifteenth day (whether or not a Business Day) of the calendar month
immediately preceding such Interest Payment Date, and "Regular Record Date" for
the principal payable on any Principal Payment Date means the fifteenth day
(whether or not a Business Day) of the calendar month immediately preceding such
Principal Payment Date.
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"Repurchase Date" has the meaning specified in Section 1201.
"Responsible Officer," when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any executive vice president, any vice
president, any assistant vice president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, or any other employee of the Trustee
customarily per-forming functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of such
person's knowledge of and familiarity with the particular subject.
"Senior Debt" means the principal of, premium (if any) and interest on
(i) any and all Indebtedness of the Company (other than the Debentures, Parity
Debt and Subordinated Debt) incurred in connection with the borrowing of money,
all Indebtedness to the extent it is secured by real estate and/or assets of the
Company (including Capitalized Lease Obligations), all Indebtedness evidenced by
bonds, debentures, mortgages, notes or other securities or other instruments,
incurred, assumed or guaranteed by the Company before, at or after the date of
execution of this Indenture, all Indebtedness evidenced by bankers' acceptances
or similar instruments, or by letters of credit, bank guarantees or
reimbursement obligations therefor, all Indebtedness under swap or hedging
transactions, and Indebtedness represented by previously issued and outstanding
debentures which have been called for redemption and (ii) all renewals,
extensions and refundings thereof; provided that any Indebtedness shall not be
Senior Debt if the instrument creating or evidencing any such Indebtedness or
pursuant to which such Indebtedness is outstanding, provides that such
Indebtedness, or such renewal, extension or refunding thereof, is junior or is
not superior in right of payment to the Debentures.
"Special Record Date" for the payment of any Defaulted Interest or
Defaulted Principal means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Debenture or any
installment of interest thereon, means the date specified in such Debenture as
the fixed date on which such Debenture is due and payable or such installment of
interest on such Debenture is due and payable.
"Subordinated Debt" means any and all Indebtedness of the Company (but not
of any Subsidiary) created, incurred, assumed or guaranteed by the Company
before, at or after the date of execution of this Indenture which, by the terms
of the instrument (or any supplemental instrument) creating or evidencing such
Indebtedness or pursuant to which such Indebtedness is outstanding it is
provided that such Indebtedness, or any renewal, extension, or refunding
thereof, (a) is expressly subordinate and junior in right of payment to the
Debentures (whether or not subordinated to any other Indebtedness of the
Company) or (b) is not, by its terms, Senior Debt or Parity Debt. "Subordinated
Debt" shall include any Indebtedness of the Company to Affiliates of the Company
and any Indebtedness incurred by the Company under any agreement to redeem or
repurchase any securities of the Company.
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"Subsidiary" means any corporation, more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors or trustees, whether at all times
or only so long as no senior class of stock has such voting power by reason of
any contingency.
"Total Liabilities" means, with respect to any Person for any period, the
total liabilities of such Person, as presented on such Person's Consolidated
Balance Sheet, for such period on a Consolidated basis, determined in accordance
with GAAP.
"Trading Day" means with respect to the common stock, each Monday, Tuesday,
Wednesday, Thursday and Friday, other than any day on which the securities are
not traded on the exchange or national market for which the common stock is
traded.
"Trust Estate" means all rights, interest and property which has been
collaterally assigned to the Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force of
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means to the extent requested by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of the Indenture, and thereafter "Trustee" shall mean such
successor Trustee.
"Vice President" when used with respect to the Trustee or the Company,
means any vice president, whether or not designated by a word or words added
before or after the title "vice president."
"Wholly-Owned" when used in connection with any Subsidiary, means a
Subsidiary of which all of the issued and outstanding shares of voting stock,
except shares required as directors' qualifying shares, are owned by the Company
and/or one or more of its Wholly-Owned Subsidiaries. For purposes of this
definition, "voting stock" shall have the same meaning as in the definition of
Subsidiary.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee upon request an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with,
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except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of
this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished. Every certificate or
opinion with respect to compliance with a condition or covenant provided for
in this Indenture shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, such
individual has made such examination or investigation as is necessary to enable
such individual to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows or in the exercise of
reasonable prudence should know that the certificate or opinion or
representations with respect to the matters upon which such Officer's
Certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows or in the exercise of
reasonable prudence should know that the certificate or opinion or
representations with respect to such matters are erroneous.
Any certificate or opinion of an officer of the Company or any Opinion of
Counsel may be based, insofar as it relates to accounting matters, upon a
certificate, statement or opinion of an accountant or firm of accountants,
unless such officer or counsel, as the case may be, knows or in the exercise of
reasonable prudence should know that the certificate, statement or opinion with
respect to the accounting matters upon which such certificate or opinion is
based is erroneous.
12
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may be consolidated and form one
instrument.
SECTION 104. ACTS OF HOLDERS.
(1) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by
Debentureholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Debentureholders in person or by an
agent duly appointed in writing. Except as therein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Debentureholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(2) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such witness, notary public or other
officer the execution thereof. Where such execution is by a signer acting in a
capacity other than such person's individual capacity, such certificate or
affidavit shall also constitute sufficient proof of such person's authority.
The fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.
(3) The ownership of Debentures shall be proved by the Debenture Register.
(4) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Debenture shall bind every future Holder of
the same Debenture and the Holder of every Debenture issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Debenture.
(5) The Company may set any day as a record date for the purpose of
determining the Holders of Debentures entitled to give, make or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Debentures, provided that the Company may not set a record date for,
and the provisions of this paragraph shall not apply with respect to the giving
or making of any notice, declaration, request or direction referred to in the
next paragraph. Such record date shall be the later of 30 days prior to the
first solicitation of Holders of Debentures entitled to
13
give, make or take any request, demand, authorization, direction, notice,
consent, waiver, or other action or the date of the most recent list of
holders furnished to the Trustee pursuant to Section 701. If any record date
is set pursuant to this paragraph, the Holders of Debentures on such record
date, and no other Holders shall be entitled to take relevant action, whether
or not such Holders remain Holders after the record date, and no other
Holders shall be entitled to take the relevant action, whether or not such
Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
expiration date by Holders of the requisition principal amount of outstanding
Debentures on such record date. Nothing in this paragraph shall be construed
to prevent the Company from setting a new record date for any action for
which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no
action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by
Holders of the requisite principal amount of Debentures on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its expense, shall cause otice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Trustee in writing and to each Holder of Debentures in the
manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Debentures entitled to join in the giving or making of (i) any
Notice of Default (as defined in Section 501), (ii) any declaration of
acceleration referred to in Xxxxxxx 000, (xxx) any request to institute
proceedings referred in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Debentures. If any record date is set
pursuant to this paragraph, the Holders of Debentures on such record date, and
no other Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable expiration date by Holders of the requisite principal
amount of Debentures on such record date. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be canceled and of no effect), and nothing in this paragraph shall
be construed to render ineffective any action taken by Holders of the requisite
principal amount of Debentures on the date such action is taken. Promptly after
any record date is set pursuant to this paragraph, the Trustee, at the Company's
expense, shall cause notice of such record date, the proposed action by the
Holders and the applicable expiration date to be given to the Company in writing
and to each Holder of Debentures in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no Expiration Date shall be later than the 180th day
after the applicable record date; and provided, further, that no such change
shall be effective unless notice of the proposed new Expiration Date is given to
the other party hereto in writing, and to each Holder of Debentures in the
manner set forth in Section 106, on or prior to the existing Expiration Date.
If an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the party hereto which set such record date shall
14
be deemed to have initially designated the 180th day after such record date
as the Expiration Date with respect thereto, subject to its right to change
the Expiration Date as provided in this paragraph.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any Debenture may do so with regard to all or
any part of the principal amount of such Debenture or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Debentureholders or other document provided or permitted by this
Indenture to be made upon, given or furnished to or filed with the Trustee by
any Holder or by the Company, or the Company by the Trustee or any Holder, shall
be sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and delivered personally, transmitted by facsimile
transmission (provided a confirming copy is sent by mail), delivered by
overnight courier or mailed, first-class postage prepaid:
(1) if to the Trustee by any Holder or by the Company at its Corporate
Trust Office, or
(2) if to the Company by the Trustee or by any Holder at the address of
its principal office specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the Trustee by the Company.
Any communication contemplated herein shall be deemed to have been made,
given, furnished and filed if personally delivered, on the date of delivery, if
transmitted by facsimile transmission, telex or other direct written electronic
means, on the date of transmission, and if transmitted by registered mail, on
the date of receipt.
SECTION 106. NOTICE TO DEBENTUREHOLDERS; WAIVER.
Where this Indenture or any Debenture provides for notice to
Debentureholders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder, or if the terms herein provide for notice to
less than all Debentureholders, then to such Debentureholders as to whom notice
may be required to be sent, at each such Holder's address as it appears on the
Debenture Register, not later than the latest date and not earlier than the
earliest date prescribed for the giving of such notice. In any case where
notice to Debentureholders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Debentureholders.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Debentureholders shall be filed with the Trustee, but such
filing
15
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
notification for every purpose hereunder.
Notwithstanding anything else to the contrary in this Indenture, notice to
Debentureholders shall be sufficiently given in all cases if it is given to the
Person in whose name a Debenture is registered on the Debenture Register and in
no event shall notice be required to be given to a Person who is not registered
on the Debenture Register.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Debentures shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 110. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Debentures, expressed or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders of Debentures, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW.
This Indenture and the Debentures shall be governed by and construed in
accordance with the laws of the State of Minnesota, without giving effect to the
conflict of laws principles thereof.
SECTION 112. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Principal Payment Date,
Redemption Date, Repurchase Date or Stated Maturity of any Debenture shall not
be a Business Day, then (notwithstanding any other provision of this Indenture
or of the Debentures) payment of interest or principal (and premium, if any)
need not be made on such date, but may be made on the next
16
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, Principal Payment Date, Redemption Date, Repurchase
Date or at the Stated Maturity; provided that no interest shall be payable on
such next succeeding Business Day for the period from and after any such
Interest Payment Date, Principal Payment Date, Redemption Date, Repurchase
Date or Stated Maturity.
SECTION 113. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS.
No recourse shall be had for the payment of the principal of, or the
premium, if any, or interest on, any Debenture, or for any claim based thereon
or otherwise in respect thereof or of the indebtedness represented thereby, or
upon any obligation, covenant or agreement of this Indenture, against any
incorporator, stockholder, employee, officer or director, as such, past, present
or future, of the Company, either directly or through the Company, whether by
virtue of any constitutional provision, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise. It is expressly agreed
and understood that this Indenture and the Debentures are solely corporate
obligations, and that no personal liability whatsoever shall attach to, or be
incurred by, any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company, either directly or through the Company,
because of the incurring of the indebtedness hereby authorized or under or by
reason of any of the obligations, covenants, promises or agreements contained in
this Indenture or in any of the Debentures or to be implied herefrom or
therefrom. All liability, if any, of that character against every such
incorporator, stockholder, officer and director, by the acceptance of the
Debentures and as a condition of, and as part of the consideration for the
execution of this Indenture and the issue of the Debentures, is expressly waived
and released.
END OF ARTICLE ONE.
17
ARTICLE TWO
DEBENTURE FORM
SECTION 201. FORM GENERALLY.
The Debentures and the Trustee's Certificate of Authentication shall be in
substantially the form set forth in Section 204 of this Article, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Debentures,
as evidenced by their execution of the Debentures. Any portion of the text of
any Debenture may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Debenture.
The definitive Debentures shall be printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders or may be
produced in any other manner permitted by the rules of any securities exchange
or other market on which the Debentures may be listed or included, all as
determined by the officers executing such Debentures, as evidenced by their
execution of such Debentures.
SECTION 202. FORM OF FACE OF DEBENTURES.
PAPER WAREHOUSE, INC.
Incorporated Under the Laws of Minnesota
9% CONVERTIBLE SUBORDINATED DEBENTURES DUE JUNE ___ 2005
Registered No.: Registered Principal
______________ Amount: $ 1,000
Original Interest Accrual CUSIP: _______
Date: __________________
Paper Warehouse, Inc., a corporation created under the laws of the State of
Minnesota (herein called the "Company," which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to _____________________ or registered assigns, the
principal sum of ____________ Thousand Dollars ($_________) on June 15, 2005
(the "Final Maturity Date") and to pay interest hereon from the Original
Interest Accrual Date set forth above, or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, beginning on
September 15, 1999 ("Initial Interest Payment Date") and on the 15th day of each
December, March, June and September thereafter until fully paid, tendered or if
this Debenture is not presented for principal or conversion, on the Final
Maturity Date (each such date being an "Interest Payment Date"), at the rate of
nine percent (9%) per annum, until the principal hereof is paid or made
available for payment. The principal hereof is subject to optional redemption
by the Company, in whole but
18
not in part, and repurchase by the Company at the option of the Holder, and
optional conversion by the Holder, as provided in the Indenture. If the
principal hereof is not so redeemed, repurchased or converted, the principal
shall be due and payable in full on the Final Maturity Date (any date set for
principal payment is the "Principal Payment Date"). The principal and
interest so payable and punctually paid or duly provided for on any Principal
Payment Date or Interest Payment Date, as provided in the Indenture, will be
paid to the Person in whose name this Debenture (or one or more Predecessor
Debentures) is registered (the "Holder") at the close of business on the
Regular Record Date for such principal or interest, which shall be the
fifteenth day (whether or not a Business Day) of the calendar month next
preceding such Principal Payment Date or Interest Payment Date. Any such
principal or interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name this Debenture (or one or more
Predecessor Debentures) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Principal or Defaulted Interest
to be fixed by the Trustee, notice whereof shall be given to Debentureholders
of Debentures not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
applicable requirements of any securities exchange or market on which the
Debentures may be listed or included, and upon such notice as may be required
by such exchange or market, all as more fully provided in the Indenture.
Payment of the principal of and interest (and premium, if any) on this
Debenture will be made at the office or agency maintained by the Company for
such purpose in Minneapolis, Minnesota, or in such other office or agency as
may be selected by the Company in accordance with the Indenture, in such coin
or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts, provided, however, that
at the option of the Company payment of interest may be made in United States
dollars by check mailed to the address of the Person entitled thereto as such
address shall appear in the Debenture Register. THE HOLDER MUST PRESENT THIS
DEBENTURE TO COLLECT PRINCIPAL; AND WHEN FULLY PAID, THE DEBENTURE SHALL BE
SURRENDERED AND CANCELLED.
Reference is hereby made to the further provisions of this Debenture set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee referred to on the reverse hereof by manual signature,
this Debenture shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
No recourse shall be had for the payment of the principal or interest of
this Debenture against any Company stockholder, officer, director, employee or
agent by virtue of any statute or by enforcement of any assessment or otherwise;
and any and all liability of stockholders, directors, officers, employees and
agents of the Company being released hereby.
19
IN WITNESS WHEREOF, the Company has caused this 9% Convertible Subordinated
Debenture to be signed in its name by the manual or facsimile signature of its
President and attested to by the manual or facsimile signature of its Secretary.
Dated: PAPER WAREHOUSE, INC.
---------------
By
-------------------------------------
Yale X. Xxxxxxxx, President
Attest:
----------------------------------
Xxxxx X. Xxxxxxxx, Secretary
SECTION 203. FORM OF REVERSE SIDE OF DEBENTURE.
This Debenture is one of a duly authorized Debentures of the Company
designated as its 9% Convertible Subordinated Debentures due June ___ 2005 (the
"Debentures") in the maximum aggregate principal amount of up to $6,000,000,
issued and to be issued under an Indenture, dated as of June __, 1999 (the
"Indenture"), between the Company and ________________________, as Trustee (the
"Trustee", which term includes any successor Trustee under the Indenture).
Reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitation of rights, duties
and immunities thereunder of the Company, the Trustee and the Debentureholders,
and for a statement of the terms upon which the Debentures are, and are to be,
authenticated and delivered. Capitalized and certain other terms used herein
and not otherwise defined have the meanings set forth in the Indenture.
The Debentures are general unsecured obligations of the Company. The
payment of the principal of and interest (and premium, if any) on this Debenture
is expressly subordinated, as provided in the Indenture, to the payment of all
Senior Debt, as defined in the Indenture, and, by the acceptance of this
Debenture, the Holder hereof agrees, expressly for the benefit of the present
and future holders of Senior Debt, to be bound by the provisions of the
Indenture relating to such subordination and authorizes and appoints as such
Holder's attorney-in-fact the Trustee to take such action on such Holder's
behalf as may be necessary or appropriate to effectuate such subordination.
Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Debenture has the right, at the option of the Holder, at any time
on or before the close of business on June 15, 2005, or in case this Debenture
is called for redemption or is to be repurchased, then in respect of this
Debenture or such portion hereof until and including, but (unless the Company
20
defaults in making the payment due upon redemption or repurchase) not after,
the close of business on the Redemption Date or the Repurchase Date, to
convert this Debenture (or any portion of the principal amount hereof which
is $1,000 or an integral multiple thereof, if the remaining principal amount
of any Debenture issued after such conversion exceeds $1,000), into fully
paid and non-assessable shares (calculated as to each conversion to the
nearest 1/100 of a share) of Common Stock of the Company at a conversion
price equal to $______ aggregate principal amount of Debentures per share of
Common Stock (or at the current adjusted conversion price if an adjustment
has been made as provided in the Indenture) by surrender of this Debenture,
together with written notice, duly executed, that the Holder elects to
convert, or if less than the entire principal amount hereof is to be
converted, the portion hereof to be converted, at the office or agency of the
Company to be maintained for that purpose in St. Xxxx or Minneapolis, or at
such other office or agency as may be established by the Company for such
purpose pursuant to the Indenture (initially the principal Corporate Trust
Office of the Trustee located in St. Xxxx or Minneapolis, Minnesota is the
office so established by the Company).
No fractions of shares or scrip representing fractions of shares will be
issued on conversion, but instead of any fractional interest the Company shall
pay a cash adjustment as provided in the Indenture. The conversion price is
subject to adjustment as provided in the Indenture. In addition, the Indenture
provides that in case of certain consolidations or mergers to which the Company
is a party or the transfer of substantially all of the assets of the Company,
the Indenture shall be amended, without the consent of any Holders of
Debentures, so that this Debenture, if then outstanding, will be convertible
thereafter during the period this Debenture shall be convertible as specified
above, only into the kind and amount of Debentures, cash and other property
receivable upon the consolidation, merger or transfer by a holder of the number
of shares of Common Stock into which this Debenture might have been converted
immediately prior to such consolidation, merger or transfer (assuming such
holder of Common Stock failed to exercise any rights of election and received
per share the kind and amount received per share by a plurality of non-electing
shares).
21
The Company may, at its option, at any time on or after June __, 2002,
redeem the Debentures , in whole but not in part, at the following Redemption
Prices (expressed as percentages of the principal amount) (the "Redemption
Price"); together with interest accrued and unpaid thereon to the Redemption
Date, if redeemed during the 12-month period beginning June __, of the years
indicated,
Year Redemption Price
2002 108%
2003 104%
and thereafter at a Redemption Price equal to 100% of the principal amount.
Notice of Redemption will be mailed at least 30 days, but not more than 60
days, before the Redemption Date to each Holder at the registered address
thereof.
Interest installments whose Stated Maturity is on or prior to such
Redemption Date or Repayment Date will be payable to the Holders of such
Debentures, or one or more Predecessor Debentures, of record at the close of
business on the relevant Regular or Special Record Dates referred to on the face
hereof, all as provided in the Indenture.
If, at any time prior to June 15, 2005 there occurs any Change of
Control (as defined in the Indenture) of the Company then each Holder of
Debentures shall have the right, at the Holder's Option, to require the
Company to repurchase all of such Holder's Debentures, or any portion thereof
which is $1,000 or any integral multiple thereof, on the date (the
"Repurchase Date") that is 45 days after the date that the Company gives
notice of the Change of Control, at a purchase price, payable in cash, equal
to 102% of the principal amount of Debentures to be repurchased (a
"Repurchase Price"), together with accrued interest to the Repurchase Date.
22
Notwithstanding the above, interest installments whose Stated Maturity are
on or prior to a Repurchase Date will be payable to the Holders of repurchased
Debentures, or one or more Predecessor Debentures, of record at the close of
business on the relevant Regular or Special Record Dates referred to on the face
hereof, all as provided in the Indenture.
In the event of conversion of this Debenture in part only, a new Debenture
or Debentures for the unconverted portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
If this Debenture shall be redeemed, or any portions repurchased or
converted and payment be duly provided therefor or shares of Common Stock issued
as specified in the Indenture, interest shall cease to accrue on this Debenture.
If an Event of Default as defined in the Indenture shall occur and be
continuing, the outstanding principal of all the Debentures may be declared due
and payable in the manner and with the effect provided in the Indenture. The
Company shall pay all costs of collection, whether or not judicial proceedings
are instituted, in the manner provided in the Indenture. The Indenture provides
that such declaration and its consequences may, in certain events, be annulled
by the Holders of a majority in principal amount of the Outstanding Debentures.
The Indenture permits the amendment thereof and the modification of the
rights and obligations of the Company and the rights of the Debentureholders
under the Indenture at any time by the Company and the Trustee with the consent
of a majority of the Holders of all Outstanding Debentures, provided however,
certain amendments and modifications require the consent of the Holders of all
Outstanding Debentures. The Indenture also contains provisions permitting the
Debentureholders of not less than a majority in aggregate principal amount of
the Outstanding Debentures, on behalf of the Debentureholders of all of the
Debentures, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debenture shall be conclusive
and binding upon such Holder and upon all future Debentureholders of this
Debenture and of any Debenture issued upon the registration of transfer hereof
or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture or amendment or modification hereof or thereof shall alter or
impair the obligation of the Company to pay the principal of and interest (and
premium, if any) on this Debenture at the times, place and rate and in the coin
or currency herein prescribed or to convert this Debenture as provided in the
Indenture.
In the event of a consolidation or merger of the Company into, or of the
transfer of its assets substantially as an entirety to, a successor corporation
in accordance with the Indenture, such successor corporation shall assume
payment of the Debentures and the performance of
23
every covenant of the Indenture on the part of the Company, and in the event
of any such transfer, the predecessor corporation shall be discharged from
all obligations and covenants in respect of the Debentures and the Indenture
and may be dissolved and liquidated, all as more fully set forth in the
Indenture.
The Debentures are issuable only in registered form without coupons in
denominations of $1,000 or any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Debentures
are exchangeable for a like aggregate principal amount of Debentures of a
different authorized denomination, as requested by the Holder surrendering the
same; and, the transfer of this Debenture is registerable in the Debenture
Register, upon surrender of this Debenture for registration of transfer at the
office or agency of the Company in any place where the principal of and interest
on this Debenture are payable, duly endorsed by or accompanied by a written
instrument of transfer in the form printed on this Debenture or in another form
satisfactory to the Company and the Debenture Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Debentures, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Debenture for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Debenture is registered as the owner hereof for
all purposes, whether or not this Debenture be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
This Debenture shall be governed by and construed in accordance with the
laws of the State of Minnesota, without giving effect to the conflict of law
provisions thereof.
All terms used in this Debenture which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
24
SECTION 204. FORM OF CERTIFICATE OF AUTHENTICATION .
[Form of Certificate of Authentication]
Norwest Bank Minnesota, National Association, as Trustee, certifies that
this Debenture is one of the 9% Convertible Subordinated Debentures issued by
Paper Warehouse, Inc., a Minnesota corporation, referred to in the
within-mentioned Indenture.
Dated:
--------------- ---------------------------------,
as Trustee
By
-------------------------------
Authorized Signature
25
SECTION 205. FORM OF ASSIGNMENT.
[Form of Assignment]
(To be executed by the registered holder if such holder desires to
transfer this Debenture)
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Debenture, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ___________________, as Attorney, to
transfer the within Debenture on the books kept for registration thereof, with
full power of substitution.
Dated: ______________
Signature: ___________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Note)
Social Security
or Other Identifying
Number of Transferee: _____________
Signature Guaranteed:
SECTION 206. FORM OF CONVERSION NOTICE.
[Form of Conversion Notice]
CONVERSION NOTICE
The undersigned hereby elects to convert all or a portion of the principal
amount the attached 9% Convertible Subordinated Debenture Due June 15, 2005 into
fully paid and non-assessable shares of Paper Warehouse, Inc. Common Stock.
26
I elect to convert: (check) ______ All the principal amount of the
Debenture.
______ A portion of the principal amount of
the Debenture. $________ Write in the
portion of the principal amount you
wish to convert. (if you elect to
convert a portion, such portion must
be an integral multiple of $1,000)
Please issue a certificate or certificates for such Common Stock in the name of,
and pay any cash for fractional share to:
Name:
______________________________________
(please print name)
Address:_______________________________________
_______________________________________
_______________________________________
Tax Identification No.
or Social Security No._______________________________________
Signature:_______________________________________
Date:_______________________________________
If you elect to convert less than all the principal amount of the Debenture, you
will be issued a new Debenture for the balance of the principal amount.
END OF ARTICLE TWO.
27
ARTICLE THREE
THE DEBENTURES
SECTION 301. TITLE AND TERMS GENERALLY.
The Debentures shall be known and designated as the 9% Convertible
Subordinated Debentures due June ____, 2005 of the Company. The maximum
aggregate principal amount of Debentures to be authenticated and delivered under
this Indenture is limited to $6,000,000, excluding accrued interest, except for
Debentures authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Debentures pursuant to Sections 304, 305,
306, 906, 1202, and 1302(b) hereof. The Maturity of the Debentures shall be
June 15, 2005, and each Debenture shall bear interest at the rate of 9% per
annum on the outstanding balance, until the principal thereof is paid or made
available for payment.
The Debentures shall be dated as provided in Section 303 hereof, shall bear
interest from the Original Interest Accrual Date of such Debenture, or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, as the case may be, payable on each March 15, June 15, September
15 and December 15, commencing on September 15, 1999, until the principal
thereof is paid or made available for payment.
The principal of (and premium, if any) and interest on the Debentures shall
be payable at the office or agency maintained by the Company in Minneapolis,
Minnesota (initially the principal corporate trust office of the Trustee), or in
any other city or cities as the Company may maintain additional such offices or
agencies pursuant to Section 1002, maintained for such purpose, provided that,
at the option of the Company, payment of interest may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Debenture Register.
The Debentures shall be subject to optional redemption by the Company as
provided in Article Eleven.
The Debentures shall be repurchased by the Company if required by the
Holder thereof, as provided in Article Twelve.
The Debentures shall be convertible as provided in Article Thirteen.
The Debentures are unsecured obligations of the Company and shall be
subordinated in right of payment to Senior Debt of the Company as provided in
Article Fourteen. The Debentures shall be equal in right of payment to certain
Indebtedness of the Company defined as Parity Debt. The Debentures shall be
senior in right of payment to all Subordinated Debt.
The Debentures are an obligation of the Company but not of any Affiliate.
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SECTION 302. DENOMINATIONS.
The Debentures shall be issuable only in registered form without coupons
and in denominations of $1,000 or any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Debentures shall be executed on behalf of the Company by its President
or any Vice President and attested by its Secretary or Assistant Secretary. The
signature of any of these officers on the Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Debentures executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Debentures. The Trustee in accordance with such Company
Order shall authenticate and deliver such Debentures as in this Indenture
provided and not otherwise.
Upon the initial issuance, each Debenture shall be dated June __, 1999, and
thereafter, Debentures issued hereunder shall be dated the date of their
authentication.
No Debenture shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Debenture a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Debenture shall be conclusive evidence, and the only evidence, that such
Debenture has been duly authenticated and delivered hereunder and is entitled to
the benefits of the Indenture.
SECTION 304. TEMPORARY DEBENTURES.
Pending the preparation of definitive Debentures, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Debentures which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Debentures, in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Debentures may determine, as evidenced by their
execution of such Debentures.
If temporary Debentures are issued, the Company will cause definitive
Debentures to be prepared without unreasonable delay. After the preparation of
definitive Debentures, the temporary Debentures shall be exchangeable for
definitive Debentures upon surrender of the temporary Debentures at any office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more
29
temporary Debentures, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Debentures of authorized denominations. Until so exchanged the
temporary Debentures shall in all respects be entitled to the same benefits
under this Indenture as definitive Debentures.
SECTION 305. REGISTRATION, TRANSFER, AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office or any other office
or agency pursuant to Section 1002 being herein sometimes referred to as the
"Debenture Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Debentures and of
transfers of Debentures. The Trustee is hereby appointed "Debenture Registrar"
for the purpose of registering Debentures and transfers of Debentures as herein
provided.
Upon surrender for registration of transfer of any Debenture at an office
or agency of the Company designated pursuant to Section 1002 for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Debentures
of any authorized denomination, of a like aggregate principal amount.
At the option of the Holder, Debentures may be exchanged for other
Debentures of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Debentures to be exchanged at such office or
agency. Whenever any Debentures are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Debentures
which the Holder making the exchange is entitle to receive.
All Debentures issued upon any registration of transfer or exchange of
Debentures shall be valid obligations of the Company, evidencing the same debt
and entitled to the same benefits under this Indenture as the Debentures
surrendered upon such registration of transfer or exchange.
Every Debenture presented or surrendered for registration of transfer or
for exchange shall be duly endorsed for transfer (if so required by the Company
or the Trustee), or shall be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Debenture Registrar duly executed by
the Holder thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Debentures, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Debentures, other than
exchanges pursuant to Section 304 or 905 not involving any transfer.
The Company shall not be required to issue or register the transfer or
exchange of any Debenture during a period beginning at the opening of business
15 days before the day of the
30
mailing of a notice of redemption of Debentures selected for redemption
pursuant to Section 1105 and ending at the close of business on the day of
such mailing.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES.
If any mutilated Debenture is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Debenture of like series, tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Debenture and
(ii) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that such
Debenture has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Debenture, a new Debenture of like series, tenor
and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Debenture has become
or is about to become due and payable, the Company in its discretion, may
instead of issuing a new Debenture, may pay such Debenture.
Upon the issuance of any new Debenture under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Debenture issued pursuant to this Section in lieu of any
destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures.
SECTION 307. PAYMENTS OF PRINCIPAL AND INTEREST; RIGHTS PRESERVED.
Any installment of interest or interest and principal under any Debenture
which is payable, and is punctually paid or duly provided for, on any Interest
Payment Date or Principal Payment Date, as the case may be, shall be paid to the
Person in whose name that Debenture (or one or more Predecessor Debentures) is
registered at the close of business on the Regular Record Date for such
installment.
Any installment of interest or principal and interest on any Debenture
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") or on any Principal
Payment Date (herein called "Defaulted Principal"), as the case may be, shall
forthwith cease to be payable to the Holder on the relevant Regular Record
31
Date by virtue of having been such Holder, and such Defaulted Interest or
Default Principal, as the case may be, shall be paid by the Company, at its
election in each case, as provided in paragraph (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest or
Defaulted Principal to the Persons in whose names the Debentures (or their
respective Predecessor Debentures) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest or Defaulted
Principal, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest or Defaulted
Principal proposed to be paid on each Debenture and the date of the proposed
payment and, at the same time, the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or Defaulted Principal or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest or Defaulted Principal as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest or Defaulted Principal which shall be not
more than 15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the notice
of the proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest or Defaulted
Principal and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of an affected Debenture at such Holder's address as it
appears in the Debenture Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest or
Defaulted Principal and the Special Record Date therefor having been so mailed,
such Defaulted Interest or Defaulted Principal shall be paid to the Persons in
whose names the Debentures (or their respective Predecessor Debentures) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following Paragraph (2).
(2) The Company may make payment of any Defaulted Interest or Defaulted
Principal in any other lawful manner not inconsistent with the requirements of
any securities exchange or market on which the Debentures may be listed or
included and, upon such notice as may be required by such exchange or market if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such manner of payment shall be deemed practicable by
the Trustee and the Trustee shall have sent written notification to the Company
to such effect.
If any installment of interest whose Stated Maturity is on or prior to the
Redemption Date or Repurchase Date for any Debentures called for redemption or
repurchase pursuant to Article Eleven or Article Twelve is not paid or duly
provided for on or prior to the Redemption Date in accordance with the foregoing
provisions of this Section, such interest shall be payable as part of the
Redemption Price or Repurchase Price, as the case may be, of such Debentures.
Subject to the foregoing provisions of this Section, each Debenture
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Debenture shall carry the rights to interest accrued
and unpaid and to accrue which were carried by such other Debenture.
32
All payments of interest on the Debentures to the person entitled thereto,
whether made by the Company, the Trustee or any Paying Agent, as authorized
pursuant to this Indenture, shall be made (subject to collection) by check
mailed to the address of the person entitled thereto as such address shall
appear on the Debenture Register, unless the Trustee determines such methods to
be inappropriate in the circumstances.
In the case of any Debenture which is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date, the interest
falling due on such Interest Payment Date shall be payable on such Interest
Payment Date notwithstanding such Conversion, and such interest (whether or not
punctually paid or duly provided for) shall be paid to the Person in whose name
the Debenture (or any Predecessor Debenture or Debentures) is registered at the
close of business on such Regular Record Date.
Holders must present and surrender the Debentures to collect the principal
of such Debentures.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Debenture for registration of transfer, the
Company, the Trustee, the Debenture Registrar and any agent of the Company or
the Trustee may treat the Person in whose name such Debenture is registered as
the owner of such Debenture for the purpose of receiving payment (subject to
Section 307) of principal of (and premium, if any) and interest on such
Debenture and for all other purposes whatsoever, whether or not such Debenture
be overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Debentures surrendered for payment, redemption, repurchase, conversion,
registration of transfer or exchange if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee and shall be promptly cancelled by
it. The Company may at any time deliver to the Trustee for cancellation any
Debentures previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Debentures so delivered
shall be promptly cancelled by the Trustee. No Debentures shall be
authenticated in lieu of or in exchange for any Debentures cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Debentures held by the Trustee shall be disposed of and a destruction
certificate shall be delivered to the Company.
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Debentures shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
SECTION 311. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE.
Forthwith upon the execution and delivery of this Indenture, or from time
to time thereafter, Debentures up to the aggregate principal amount of
$6,000,000 may be executed by
33
the Company and delivered to the Trustee for authentication and delivered by
the Trustee upon Company Order, without any further action by the Company.
END OF ARTICLE THREE.
34
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Debentures herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(a) all Debentures theretofore authenticated and delivered (other
than (i) Debentures which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 and (ii) Debentures for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter paid to the Company or discharged from such
trust, as provided in Section 1003 have been delivered to the Trustee for
cancellation; or
(b) all such Debentures not theretofore delivered to the Trustee for
cancellation (i) have become due and payable, or (ii) will become due and
payable at their Stated Maturity within one year, or (iii) are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name, and at the
expense, of the Company; and the Company, in the case of this subsection (b)
(i), (ii) or (iii) above, has deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Debentures not theretofore delivered
to the Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Debentures which have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
(3) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel to the effect that such deposit does
not violate (a) the provisions of Article Twelve hereof or (b) any provisions of
any Senior Debt; and
(4) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 shall survive, and,
if the money shall have been
35
deposited with the Trustee pursuant to subclause (b) of clause (1) of this
Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
All money deposited with the Trustee pursuant to Section 401 shall be held
in trust and applied by it, in accordance with the provisions of the Debentures
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
END OF ARTICLE FOUR.
36
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any installment interest upon any Debenture
when it becomes due and payable and continuance of such default for a period of
30 days (whether or not such payment is prohibited under the provisions of
Article Twelve); or
(2) default in the payment of the principal of or premium, if any, on any
Debenture at its Maturity (whether or not such payment is prohibited under the
provisions of Article Twelve); or
(3) breach of a covenant of the Company contained in Sections 1007, 1009
or 1010 hereof and the continuance of such breach for a period of 30 days after
the due date for filing of the report pursuant to section 703(5) which reports
such breach, provided, however, that prior to the expiration of the 30 day
period referred to above, the Company shall have filed with the Trustee a
certification of KPMG Peat Marwick, LLP, or such other certified independent
public auditor, certifying that such breach has been cured, then such breach
shall be deemed cured; or
(4) default in the performance, or breach, of any covenant or warranty of
the Company in this Indenture (other than a covenant or warranty default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of 30 days
after there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Debentureholders of at
least 25% in principal amount of the Outstanding Debentures, a written notice
(and the Trustee shall give such written notice to the Company upon the request
of the Debentureholders of at least 25% in principal amount of the Outstanding
Debentures) specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(5) except for a default under the Mortgage Note dated April 8, 1999
between the Company and Fortis Insurance Company (the "Fortis Note"), a default
under any bond, debenture, note or other evidence of Indebtedness of the Company
or any Subsidiary (including Capital Lease Obligations), or, except for a
default under the Mortgage and Security Agreement dated April 8, 1999 between
the Company and Fortis Insurance Company, a default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness of the Company, (including such Capital
Lease Obligations), whether such Indebtedness now exists or shall hereafter be
created, which default
37
shall have resulted in such Indebtedness in excess of $500,000 becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable or such obligations in excess of $500,000 being
accelerated, without such acceleration having been rescinded or annulled or
such Indebtedness shall not have been discharged within a period of 60 days
after such default or acceleration; provided, however, that this Section
501(5) shall not apply to (a) a default under any purchase money obligation
of the Company if, and so long as, the Company is in good faith and in the
exercise of its reasonably prudent business judgment, contesting its
obligations thereunder in accordance with a reasonable interpretation of the
documentation of such obligation; or (b) a default in a contractual
obligation not otherwise constituting Indebtedness if and so long as, the
Company is in good faith contesting such obligation and has posted a bond
sufficient to pay such obligation in the event it is determined to be due and
payable; or
(6) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company or any Subsidiary a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or any Subsidiary,
under Federal bankruptcy law, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Subsidiary or of any substantial part of
its property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
sixty (60) consecutive days; or
(7) the commencement by the Company or any Subsidiary of a voluntary case
under Federal bankruptcy law, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency, or other similar law, or the
consent by it to the institution of bankruptcy or insolvency proceedings against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under Federal bankruptcy law or any other applicable
Federal or State law, or the consent by it to the filing of such petition or to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Company or any Subsidiary or of any substantial part of
its property, or the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company or any
Subsidiary in furtherance of any such action; or
(8) except with respect to the Fortis Note, the rendering of a final
judgment or judgments (not subject to appeal) for the payment of money against
the Company or any Subsidiary not fully insured against in an aggregate amount
in excess of $500,000 (net of insurance proceeds received by the Company with
respect to such judgment) by a court or courts of competent jurisdiction, which
judgment or judgments remain unsatisfied for a period of 30 days after the right
to appeal all such judgments has expired or otherwise terminated.
38
SECTION 502. ACCELERATION OF MATURITY, RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and in every such
case the Trustee or the Debentureholders of not less than 25% in principal
amount of the Outstanding Debentures may, and the Trustee upon request of the
Debentureholders of not less than 25% in principal amount of the Outstanding
Debentures shall, declare the principal of all the Debentures to be due and
payable immediately, by notice in writing to the Company (and to the Trustee if
given by Debentureholders), and upon any such declaration such entire principal
amount and all interest shall become immediately due and payable. Collection
actions or judicial proceedings may be commenced as set forth in Section 503.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Debentureholders of a
majority in principal amount of the Outstanding Debentures, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient to
pay
(a) all overdue installments of interest on all Debentures,
(b) the principal of (and premium, if any, on) any Debentures which
have become due otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Debentures,
(c) to the extent that payment of such interest is lawful, interest
upon overdue installments of interest at the rate borne by the Debentures, and
(d) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and the Holders and their agents and counsel if such
Holders have initiated action in accordance with this Section 502; and
(2) all Events of Default, other than the non-payment of the principal of
Debentures which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
39
The Company covenants that if:
(1) default is made in the payment of any installment of interest on any
Debenture when such interest becomes due and payable and such default continues
for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Debenture at its Maturity,
the Company will, subject to the provisions of Article Twelve, upon demand of
the Trustee or Debentureholders of not less than 25% in aggregate principal
amount of the Outstanding Debentures, pay to the Trustee, for the benefit of all
the Debentureholders of such Debentures, the whole amount then due and payable
on such Debentures for principal, premium, if any, and interest, with interest
upon the overdue principal (and premium, if any) and, to the extent that payment
of such interest shall be legally enforceable, upon overdue installments of
interest, at the rate borne by the Debentures and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel or the Holders as set forth
herein, their agents and counsel, as the case may be, whether or not judicial
proceedings are commenced.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, or the Holders of not
less than 25% in principal amount of the Outstanding Debentures, on behalf of
all Holders, may institute a judicial proceeding for the collection of the sums
so due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Debentures and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Debentureholders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in the
exercise of any power granted herein, or to enforce any other proper remedy.
Holders of not less than 25% in principal amount of Outstanding Debentures, on
behalf of all Holders, may initiate such appropriate judicial proceedings in the
same manner as the Trustee. The Trustee or the Holders initiating action
hereunder, as the case may be, shall be reimbursed for the costs of collection
incurred as provided for above in this Section 503.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Debentures or the property of the Company or of such other obligor, the Trustee
(irrespective of whether the principal of the Debentures shall then be
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due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise to:
(1) file and prove a claim for the whole amount of principal, premium, if
any, and interest owing and unpaid in respect of the Debentures and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
of the Debentureholders allowed in such judicial proceeding, and
(2) collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding 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 Debentureholders, to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 607 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBENTURES.
All rights of action and claims under this Indenture or the Debentures may
be prosecuted and enforced by the Trustee without the possession of any of the
Debentures or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Debentureholders of the Debentures in respect of which such judgment has
been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee or the Holders directly pursuant to this
Article shall be applied in the following order, at the date or dates fixed by
the Trustee and, in case of the distribution of such money on account of
principal, premium, if any, or interest, upon presentation of the Debentures and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid.
FIRST: to the payment of all amounts due the Trustee under Section 607
hereof;
SECOND: to the payment of the amounts then due and unpaid for costs of
collection, principal, premium, if any, and interest on the Debentures in
respect of which or for the benefit of
41
which such money has been collected, ratably, without preference or priority
of any kind, according to the amounts due and payable on such Debentures for
principal, premium, if any, and interest, respectively; and
THIRD: to the payment of the remainder, if any, to the Company or any
other person lawfully entitled thereto.
SECTION 507. LIMITATION ON SUITS.
(a) Prior to the declaration of acceleration provided for in Section 502
hereof, no Holder of any Debenture shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(2) the Debentureholders of not less than 25% in principal amount of the
Outstanding Debentures shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Debentureholders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 45 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 45-day period by the Debentureholders of a majority in
principal amount of the Outstanding Debentures;
it being understood and intended that no one or more Debentureholders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Debentureholders, or to obtain or to seek to obtain priority or preference over
any other Debentureholders or to enforce any right under this Indenture, except
in the manner herein provided and for the equal and ratable benefit of all the
Debentureholders.
(b) After the declaration of acceleration provided for in Section 502
hereof, Holders of 25% or more in principal amount of Outstanding Debentures may
institute judicial proceedings in respect to such Event of Default which
triggers the declaration of acceleration in their own name in the manner
provided in Section 503 if the Trustee has not instituted such proceedings
within 60 days after such declaration, it being understood that such Holders
shall not have any right in any manner whatever by virtue of, or by availing of,
any provision of the
42
Indenture to affect, disturb or prejudice the rights of any other Holders of
Debentures, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any rights under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Holders of Debentures.
SECTION 508. UNCONDITIONAL RIGHT OF DEBENTUREHOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of any
Debenture shall have the right to receive payment (subject to Section 307) of
the principal of (and premium, if any) and interest on such Debenture on the
Stated Maturity thereof (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment, and such rights
shall not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the
Debentureholders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Debentureholders shall continue as though no such proceeding had been
instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debentures in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Debentureholders 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 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Debenture to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Debentureholders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the Debentureholders,
as the case may be.
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SECTION 512. CONTROL BY DEBENTUREHOLDERS.
The Holders of a majority in principal amount of the Outstanding Debentures
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Debentures may on behalf of the Holders of all the Debentures
waive any past default hereunder and its consequences, provided that a default
in the payment of the principal of, premium, if any, or interest on any
Debenture, or in respect of certain other covenants or provisions hereof cannot
be modified or amended except as set forth in Section 902 hereof.
Upon any such waiver, such default shall cease to exist and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Debenture by
such Holder's acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant. The
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Debentureholders,
holding in the aggregate more than 10% in principal amount of the Outstanding
Debentures, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of, premium, if any, or interest on any Debenture on or
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date).
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may
44
affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such
law had been enacted.
END OF ARTICLE FIVE.
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ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(1) Except during the continuance of an Event of Default,
(a) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(b) 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, but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture.
(2) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(3) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(a) this Subsection shall not be construed to limit the effect of
Subsection (1) (a) of this Section;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders of a majority in principal amount of the Outstanding Debentures
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture; and
(d) 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 duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for
46
believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(4) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
Within 60 days after the occurrence of any default hereunder, the Trustee
shall transmit by mail to all Debentureholders, as their names and addresses
appear in the Debenture Register, notice of such default hereunder known to a
Responsible Officer of Trustee, unless such default shall have been cured or
waived, provided that (i) except in the case of a default in the payment of the
principal of (or premium, if any) or interest on any Debenture, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interests of the Debentureholders, and (ii) in the case
of any default of the character specified in Section 501(4), no such notice to
Debentureholders shall be given until at least 30 days after the Company has
been notified of such default by the Trustee or the Debentureholders in
accordance with Section 502. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 601:
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the board of directors of the Company may be sufficiently evidenced by a
Company Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel (who may be counsel to the
Company) 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;
47
(5) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Debentureholders pursuant to this Indenture, unless such Debentureholders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) prior to the occurrence of an Event of Default hereunder and after the
curing of all Events of Default, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note or other paper or document unless requested to do
so by the Holders of not less than a majority in aggregate principal amount of
the Outstanding Debentures, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, provided that if the payment within a reasonable time to the Trustee of the
costs, expenses and liabilities likely to be incurred in the making of such
investigation is not, in the opinion of the Trustee, reasonably assured to the
Trustee by the terms of this Indenture, the Trustee may require reasonable
indemnity against such expense or liability as a condition to so proceeding; and
(7) the Trustee shall have no duty to inquire as to the performance of the
Company's covenants in Article Ten or Section 1102 hereof. In addition, the
Trustee shall not be deemed to have knowledge of any Default or Event of
Default, except (i) any Default or Event of Default occurring pursuant to
Section 501(l), 501(2) or 1001, or (ii) any Default or Event of Default of which
the Trustee shall have received written notification or obtained actual
knowledge.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES.
The recitals contained herein and in the Debentures, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Debentures. The Trustee shall not be accountable for the use or
application by the Company of Debentures or the proceeds thereof.
SECTION 605. TRUSTEE MAY HOLD DEBENTURES.
The Trustee, any Authenticating Agent, any Paying Agent, any Debenture
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Debentures and, subject to Section
612, may otherwise deal with the Company with the same rights it would have it
if were not Trustee, Authenticating Agent, Paying Agent, Debenture Registrar or
such other agent.
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SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided for herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
trust, including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Debentures upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of, premium, if any or interest on
Debentures.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
(1) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section 608, then, within 90 days after ascertaining that it has
such conflicting interest, and if the default (as defined in Section 608(3)) to
which such conflicting interest relates has not been cured or duly waived or
otherwise eliminated before the end of such 90-day period, the Trustee shall
either eliminate such conflicting interest or resign in the manner and with the
effect hereinafter specified in this Article.
(2) In the event that the Trustee shall fail to comply with the provisions
of Subsection (1) of this Section, within ten (10) days after the expiration of
such 90-day period, the Trustee shall transmit by mail to all Debentureholders,
as their names and addresses appear in the Debenture Register, notice of such
failure.
49
(3) For the purposes of this Section, the Trustee shall be deemed to have
a conflicting interest if:
(a) the Trustee is trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the Company are outstanding, unless such other indenture is a
collateral trust indenture under which the only collateral consists of
Debentures issued under this Indenture, provided that there shall be excluded
from the operation of this paragraph any indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if
(i) this Indenture and such other indenture or indentures are
wholly unsecured and such other indenture or indentures are hereafter qualified
under the Trust Indenture Act, unless the Commission shall have found and
declared by order pursuant to Section 306(b) or Section 307(1) of the Trust
Indenture Act that differences exist between the provisions of this Indenture
and the provisions of such other indenture or indentures which are so likely to
involve a material conflict of interest as to make it necessary in the public
interest or for the protection of investors to disqualify the Trustee from
acting as such under this Indenture and such other indenture or indentures, or
(ii) the Company shall have sustained the burden of proving, on
application to the Commission and after opportunity for hearing thereon, that
trusteeship under this Indenture and such other indenture or indentures is not
so likely to involve a material conflict of interest as to make it necessary in
the public interest or for the protection of investors to disqualify the Trustee
from acting as such under one of such indentures;
(b) the Trustee or any of its directors or executive officers is an
underwriter for the Company;
(c) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with an
underwriter for the Company;
(d) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the Company
who is currently engaged in the business of underwriting, except that the
Trustee may be designated by the Company or by any underwriter for the Company
to act in the capacity of transfer agent, registrar, custodian, paying agent,
fiscal agent, escrow agent or depositary, or in any other similar capacity or,
subject to the provisions of paragraph (a) of this Subsection, to act as
trustee, whether under an indenture or otherwise;
(e) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director or executive officer
thereof, or 20% or more of such voting securities is beneficially owned,
collectively, by any two or more of such persons; or 10% or more of the voting
securities of the Trustee is beneficially owned either by an underwriter for
50
the Company or by any director, partner or executive officer of any such
underwriter, or is beneficially owned, collectively, by any two or more such
persons;
(f) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), (i) 5% or more of the voting securities, or 10% or more of
any other class of security of the Company not including the Debentures issued
under this Indenture and securities issued under any other indenture under which
the Trustee is also trustee, or (ii) 10% or more of any class of security of an
underwriter for the Company;
(g) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 5% or more of the voting securities of any person who, to
the knowledge of the Trustee, owns 10% or more of the voting securities of, or
controls directly or indirectly or is under direct or indirect common control
with, the Company;
(h) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 10% or more of a class of security of any person who, to
the knowledge of the Trustee, owns 50% or more of the voting securities of the
Company;
(i) the Trustee owns, on the date of default upon the Debentures or
on any anniversary of such default while the default upon the Debentures remains
outstanding, in the capacity of executor, administrator, testamentary or inter
vivos trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or of any class
of security, of any person, the beneficial ownership of a specified percentage
of which would have constituted a conflicting interest under paragraph (f), (g)
or (h) of this Subsection. As to any such securities of which the Trustee
acquired ownership through becoming executor, administrator or testamentary
trustee of an estate which included them, the provisions of the preceding
sentence shall not apply, for a period of two years from the date of such
acquisition, to the extent that such securities included in such estate do not
exceed 25% of such voting securities or 25% of any such class of security.
Promptly after the date of any such default and annually each succeeding year
that the Debentures remain in default, the Trustee shall make a check of its
holdings of such securities in any of the above-mentioned capacities as of such
dates. If the Company fails to make payment in full of the principal of (or
premium, if any) or interest on any of the Debentures when and as the same
becomes due and payable, and such failure continues for 30 days thereafter, the
Trustee shall make a prompt check of its holdings of such securities in any of
the above-mentioned capacities as of the date of the expiration of such 30-day
period, and after such date, notwithstanding the foregoing provisions of this
paragraph, all such securities so held by the Trustee, with sole or joint
control over such securities vested in it, shall, but only so long as such
failure shall continue, be considered as though beneficially owned by the
Trustee for the purposes of paragraphs (f), (g) and (h) of this Subsection; or
51
(j) except under the circumstances described in paragraphs (1), (3),
(4), (5) or (6) of Section 311(b) of the Trust Indenture Act, the Trustee shall
be or become a creditor of the Company.
The specification of percentages in paragraphs (e) to (i), inclusive, of
this Subsection shall not be construed as indicating that the ownership of such
percentage of the securities of a person is or is not necessary or sufficient to
constitute direct or indirect control for the purposes of paragraph (c) or (g)
of this Subsection.
For the purposes of paragraphs (f), (g), (h) and (i) of this Subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (ii) an obligation shall be deemed to be "in default"
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (iii) the Trustee shall not be deemed to be
the owner or holder of (A) any security which it holds as collateral security,
as trustee or otherwise, for an obligation which is not in default as defined in
clause (ii) above, or (B) any security which it holds as collateral security
under this Indenture, irrespective of any default hereunder, or (C) any security
which it holds as agent for collection, or as custodian, escrow agent or
depositary, or in any similar representative capacity.
(4) For the purposes of this Section:
(a) The term "underwriter," when used with reference to the Company
means every person who, within one year prior to the time as of which the
determination is made, has purchased from the Company with a view to, or has
offered or sold for the Company in connection with, the distribution of any
security of the Company outstanding at such time, or has participated or has had
a direct or indirect participation in any such undertaking, or has participated
or has had a participation in the direct or indirect underwriting of any such
undertaking, but such term shall not include a person whose interest was limited
to a commission from an underwriter or dealer not in excess of the usual and
customary distributors' or sellers' commission.
(b) The term "director" means any director of a corporation or any
individual performing similar functions with respect to any organization,
whether incorporated or unincorporated.
(c) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an unincorporated
organization or a government or political subdivision thereof. As used in this
paragraph, the term "trust" shall include only a trust where the interest or
interests of the beneficiary or beneficiaries are evidenced by a security.
(d) The term "voting security" means any security presently entitling
the owner or holder thereof to vote in the direction or management of the
affairs of a person, or any
52
security issued under or pursuant to any trust, agreement or arrangement
whereby a trustee or trustees or agent or agents for the owner or holder of
such security are presently entitled to vote in the direction or management
of the affairs of a person.
(e) The term "Company" means any obligor upon the Debentures.
(f) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary and the treasurer of
a corporation, and any individual customarily performing similar functions with
respect to any organization whether incorporated or unincorporated, but shall
not include the chairman of the board of directors.
(g) The term "default" shall mean an Event of Default or an event
which with notice or passage of time, or both, would constitute an Event of
Default.
(5) The percentages of voting securities and other securities specified in
this Section shall be calculated in accordance with the following provisions:
(a) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section (each of whom is
referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or holders
thereof to cast such specified percentage of the aggregate votes which the
holders of all the outstanding voting securities of such person are entitled to
cast in the direction or management of the affairs of such person.
(b) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class outstanding.
(c) The term "amount," when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of shares
if relating to capital shares and the number of units if relating to any other
kind of security.
(d) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed outstanding
within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating
to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating
to another class of securities of the issuer, if the obligation evidenced by
such other class of securities is not in default as to principal or interest or
otherwise;
(iii) securities pledged by the issuer thereof as security for
an obligation of the issuer not in default as to principal or interest or
otherwise; and
53
(iv) securities held in escrow if placed in escrow by the
issuer thereof, provided, that any voting securities of an issuer shall be
deemed outstanding if any person other than the issuer is entitled to exercise
the voting rights thereof.
(e) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges, provided, that, in the case of
secured evidences of indebtedness, all of which are issued under a single
indenture, differences in the interest rates or maturity dates of various series
thereof shall not be deemed sufficient to constitute such series different
classes and provided, further, that, in the case of unsecured evidences of
indebtedness, differences in the interest rates or maturity dates thereof shall
not be deemed sufficient to constitute them securities of different classes,
whether or not they are issued under a single indenture.
SECTION 609. TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall (a) be a
corporation or trust company organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, and (b) have a
combined capital and surplus of at least $25,000,000, subject to supervision or
examination by Federal or State authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of such supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(1) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(2) The Trustee may resign at any time by giving written notice thereof to
the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee. Such court may
thereupon after such notice, if any, as it may deem proper and prescribe, remove
the Trustee and appoint a successor Trustee.
(3) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Debentures, delivered to the
Trustee and to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of removal, the Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
54
(4) If at any time:
(a) the Trustee shall fail to comply with Section 608(l) after
written request therefor by the Company or by any Holder who has been a bona
fide Holder of a Debenture for at least six months, or
(b) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Debenture for at least six months,
or
(c) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, THEN, in any such case, (i) the Company by a Company Resolution may
remove the Trustee, or (ii) subject to Section 514, any Holder who has been a
bona fide Holder of a Debenture for at least six months, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
(5) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Company Resolution, shall promptly appoint a successor Trustee. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the
Debentureholders of a majority in principal amount of the Outstanding Debentures
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed, forthwith upon its acceptance of such appointment, shall become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Debentureholders and accepted appointment in the manner hereinafter provided,
any Holder who has been a bona fide holder of a Debenture for at least six
months, on behalf of himself and all others similarly situated, may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(6) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to all
Debentureholders as their names and addresses appear in the Debenture Register.
Each notice shall include the name of the successor Trustee and the address of
its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the
55
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee, upon payment of
its charges, shall execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 607. Upon request
of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such Successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided that
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Debentures shall have been authenticated
but not delivered by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Debentures so authenticated with the same effect
as if such successor Trustee had itself authenticated such Debentures.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
(1) Subject to Subsection (2) of this Section, if the Trustee shall be or
shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within three months prior to a default, as defined in Subsection (3) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the
Debentures and the holders of other indenture securities, as defined in
Subsection (3) of this Section:
(a) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such three-month period and valid as against the
Company and its other creditors, except any such reduction resulting from the
receipt or disposition of any property described in paragraph (2) of this
Subsection, or from the exercise of any right of set off which the Trustee could
have exercised if a petition in bankruptcy had been filed by or against the
Company upon the date of such default; and
(b) all property received by the Trustee in respect of any claims as
such creditor, either as security therefor, or in satisfaction or composition
thereof or otherwise, after the beginning of such three-month period, or an
amount equal to the proceeds of any such
56
property if disposed of, subject, however, to the rights, if any, of the
Company and its other creditors in such property or such proceeds. Nothing
herein contained, however, shall affect the right of the Trustee:
(i) to retain for its own account (A) payments made on account
of any such claim by any Person (other than the Company) who is liable thereon,
(B) the proceeds of the bona fide sale of any such claim by the Trustee to a
third Person, and (C) distributions made in cash, securities or other property
in respect of claims filed against the Company in bankruptcy or receivership or
in proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law;
(ii) to realize for its own account upon any property held by
it as security for any such claim, if such property was so held prior to the
beginning of such three-month period;
(iii) to realize for its own account but only to the extent
of the claim hereinafter mentioned, upon any property held by it as security
for any such claim, if such claim was created after the beginning of such
three-month period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain the
burden of proving that at the time such property was so received the Trustee
had no reasonable cause to believe that a default, as defined in Subsection
(3) of this Section, would occur within three months; or
(iv) to receive payment on any claim referred to in paragraph
(ii) or (iii), against the release of any property held as security for such
claim as provided in paragraph (ii) or (iii), as the case may be, to the extent
of the fair value of such property.
For the purposes of paragraphs (ii), (iii) and (iv), property substituted
after the beginning of such three-month period for property held as security at
the time of such substitution, to the extent of the fair value of the property
released, shall have the same status as the property released and, to the extent
that any claim referred to in any of such paragraphs is created in renewal of or
in substitution for or for the purpose of repaying or refunding any preexisting
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.
If the Trustee shall be required to account, the funds and property held in
such special account and the proceeds thereof shall be apportioned among the
Trustee, the Debentureholders and the holders of other indenture securities in
such manner that the Trustee, the Debentureholders and the holders of other
indenture securities realize, as a result of payments from such special account
and payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Debentureholders and the holders of other indenture securities dividends on
claims filed against the Company in bankruptcy or receivership or in proceedings
57
for reorganization pursuant to the Federal Bankruptcy Act or applicable State
law, but after crediting thereon receipts on account of the indebtedness
represented by their respective claims from all sources other than from such
dividends and from the funds and property so held in such special account. As
used in this paragraph, with respect to any claim, the term "dividends" shall
include any distribution with respect to such claim, in bankruptcy or
receivership or proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, whether such distribution is made in
cash, securities or other property, but shall not include any such distribution
with respect to the secured portion, if any, of such claim. The court in which
such bankruptcy, receivership or proceedings for reorganization is pending shall
have jurisdiction (i) to apportion among the Trustee, the Debentureholders and
the holders of other indenture securities, in accordance with the provisions of
this paragraph, the funds and property held in such special account and proceeds
thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to
the provisions of this paragraph due consideration in determining the fairness
of the distributions to be made to the Trustee and the Debentureholders and the
holders of other indenture securities with respect to their respective claims,
in which event it shall not be necessary to liquidate or to appraise the value
of any securities or other property held in such special account or as security
for any such claim, or to make a specific allocation of such distributions as
between the secured and unsecured portions of such claims, or otherwise to apply
the provisions of this paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the beginning of such
three-month period shall be subject to the provisions of this Subsection as
though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such three-month period, it
shall be subject to the provisions of this Subsection if and only if the
following conditions exist: (i) the receipt of property or reduction of claim,
which would have given rise to the obligation to account, if such Trustee had
continued as Trustee, occurred after the beginning of such three-month period;
and (ii) such receipt of property or reduction of claim occurred within three
months after such resignation or removal.
(2) There shall be excluded from the operation of subsection (a) of this
Section a creditor relationship arising from:
(a) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or more
at the time of acquisition by the Trustee;
(b) advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by this Indenture for the purpose of preserving any
property which shall at any time be subject to the lien of this Indenture or of
discharging tax liens or other prior liens or encumbrances thereon, if notice of
such advances and of the circumstances surrounding the making thereof is given
to the Debentureholders at the time and in the manner provided in this
Indenture;
58
(c) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar, custodian,
paying agent, fiscal agent or depositary, or other similar capacity;
(d) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or securities
sold in a cash transaction, as defined in Subsection (3) of this Section;
(e) the ownership of stock or other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act, as
amended, which is directly or indirectly a creditor of the Company; and
(f) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of self-liquidating paper, as defined in Subsection (3) of this
Section.
(3) For the purposes of this Section only:
(a) the term "default" means any failure to make payment in full of
the principal of or interest on any of the Debentures or upon the other
indenture securities when and as such principal or interest become due and
payable;
(b) the term "other indenture securities" means securities upon which
the Company is an obligor outstanding under any other indenture (i) under which
the Trustee is also trustee, (ii) which contains provisions substantially
similar to the provisions of this Section, and (iii) under which a default
exists at the time of the apportionment of the funds and property held in such
special account;
(c) the term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after delivery of
the goods or securities in currency or in checks or other orders drawn upon
banks or bankers and payable upon demand;
(d) the term "self-liquidating paper" means any draft, xxxx of
exchange, acceptance or obligation which is made, drawn, negotiated or incurred
by the Company for the purpose of financing the purchase, processing,
manufacturing, shipment, storage or sale of goods, wares or merchandise and
which is secured by documents evidencing title to, possession of, or a lien
upon, the goods, wares or merchandise or the receivables or proceeds arising
from the sale of the goods, wares or merchandise previously constituting the
security, provided the security is received by the Trustee simultaneously with
the creation of the creditor relationship with the Company arising from the
making, drawing, negotiating or incurring of the draft, xxxx of exchange,
acceptance or obligation;
(e) the term "Company" means any obligor upon the Debentures; and
59
(f) the term "Federal Bankruptcy Act" means the Bankruptcy Act or
Title II of the United States Code.
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
At any time when any of the Debentures remain Outstanding, the Trustee may
appoint an Authenticating Agent or Agents which shall be authorized to act on
behalf of the Trustee to authenticate and deliver Debentures issued upon
original issuance, exchange, registration of transfer or partial redemption
thereof or pursuant to Section 307, and Debentures so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference
is made in this Indenture to the authentication and delivery of Debentures by
the Trustee or the Trustee's certificate of authentication, such reference shall
be deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $10,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of such supervising or examining authority, for
the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Debentureholders
as their names and addresses appear in the Debenture Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like
60
effect as if originally named as an Authenticating Agent herein. No
successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
If an appointment is made pursuant to this Section, the Debentures may have
endorsed thereon, in lieu of the form of certificate of authentication set forth
in Section 204, a certificate of authentication in the following form:
"This is one of the Debentures described in the within mentioned
Indenture."
----------------------------------------
As Trustee
By
-------------------------------------
As Authenticating Agent
By
-------------------------------------
Authorized Signature
END OF ARTICLE SIX.
61
ARTICLE SEVEN
DEBENTUREHOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
DEBENTUREHOLDERS.
The Company will furnish or cause to be furnished to the Trustee:
(1) quarterly, not later than first day of the month in which an Interest
Payment Date occurs, a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Debentureholders as of such Regular Record
Date, and
(2) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than fifteen (15) days prior to the time
such list is furnished;
provided, however, that such list need not be furnished so long as the Trustee
is the Debenture Registrar.
The Trustee shall furnish, and the Company shall cause the Trustee to
furnish, to Xxxxxx & Xxxxxxxxx Financial, Inc. or its successor ("Xxxxxx &
Xxxxxxxxx") at such times as Xxxxxx & Xxxxxxxxx may reasonably request in
writing, within 30 days of the receipt by the Trustee of such request, a list of
the names and addresses of the Debentureholders as of a date not more than 15
days prior to the time such list is furnished.
SECTION 702. PRESERVATION OF INFORMATION, COMMUNICATIONS TO DEBENTUREHOLDERS.
(1) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Debentureholders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Debentureholders received by the Trustee in its capacity as
Debenture Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
(2) If ten or more Debentureholders (herein referred to as "applicants")
apply in writing to the Trustee, and furnish to the Trustee reasonable proof
that each such applicant has owned a Debenture for a period of at least six
months preceding the date of such application, and such application states that
the applicants desire to communicate with other Debentureholders with respect to
their rights under this Indenture or under the Debentures and is accompanied by
a copy of the form of proxy or other communication which such applicants propose
to transmit, then the Trustee shall, within five business days after the receipt
of such application, at its election, either
(a) afford such applicants access to the information preserved at the
time by the Trustee in accordance with Section 702(1), or
62
(b) inform such applicants as to the approximate number of
Debentureholders whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 702(1) and as to the
approximate cost of mailing to such Debentureholders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appears in the information preserved
at the time by the Trustee in accordance with Section 702(1) a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interest of the
Debentureholders or would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If the Commission, after
opportunity for a hearing upon the objections specified in the written statement
so filed and, on notice to the Trustee, shall enter an order refusing to sustain
any of such objections or if, after the entry of an order sustaining one or more
of such objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Debentureholders with reasonable promptness after the entry of such order and
the renewal by such applicants of their applications.
(3) Every Holder of Debentures, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Debentureholders in accordance with Section 702(2), regardless of the source
from which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Section 702(2).
SECTION 703. REPORTS BY THE COMPANY.
The Company shall:
(1) File with the Trustee, within 15 days after the Company is required to
file the same with the Commission or to mail the same to its shareholders,
copies of the quarterly reports, annual reports and the information, documents
and other reports (or copies of such portions of the foregoing as the Commission
may from time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 12 or 13 or Section
15(d) of the Exchange Act or to mail to its shareholders pursuant to Section
14(a) thereof. The Company agrees to make all filings with the Commission
required by Section 15(d) of the Exchange Act without regard to the number of
Holders of record of the Debentures.
63
(2) File with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations.
(3) Within 15 days after the date on which the Company is required to file
reports with the Commission under the Exchange Act, or within 15 days after such
date would have occurred had the Company been required to file reports under the
Exchange Act, the Company shall transmit or cause to be transmitted copies of
such reports by mail (or such other means as permitted by the Commission for
delivery of a written proxy statement under the Exchange Act) to all
Debentureholders, as their names and addresses appear on the Debenture Register,
without cost to such Debentureholders.
(4) File with the Trustee within 45 days after the end of each of the
Company's fiscal quarters a certificate of the Chief Executive Officer and the
Controller of the Company stating that the Company is in compliance with Article
Ten, setting forth the calculations supporting such certification, where
applicable, and attaching the unaudited financial statements of the Company, and
file a supplemental certificate to the same effect attaching the audited
financial statements of the Company promptly after such statements become
available.
(5) File with the Trustee, within 90 days after the end of each fiscal
year of the Company ending after the date hereof, a certificate of the Chief
Executive Officer and Controller of the Company as to such person's knowledge of
the Company's compliance with all conditions and covenants under this Indenture,
such compliance to be determined without regard to any period of grace or
requirement of notice provided under this Indenture.
SECTION 704. REPORTS BY TRUSTEE.
(1) Within sixty (60) days of June __ each year commencing with the year
2000, the Trustee shall transmit by mail to all Debentureholders, as hereafter
provided for, a brief report with respect to the following, provided that no
report need be transmitted if no event requiring to be disclosed in the report
has occurred:
(a) any change to its eligibility under Section 609 and its
qualifications under Section 608, or in lieu thereof, if to the best of its
knowledge it has continued to be eligible and qualified under such Section, a
written statement to such effect;
(b) the creation of or any material change to a relationship
specified in paragraphs (e) through (f) of subsection (3) of Section 608;
(c) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made by
the Trustee (as such) which remain unpaid on the date of such report, and for
the reimbursement of which it claims or may claim a lien or charge, prior to
that of the Debentures, on the trust estate or any property or funds held or
collected by it as Trustee, except that the Trustee shall not be required (but
may elect) to
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report such advances if the unpaid aggregate of such advances does not exceed
1/2 of 1% of the principal amount of the Debentures Outstanding on the date
of such report;
(d) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or by any other obligor on the Debentures) to
the Trustee in its corporate capacity, on the date of such report, with a brief
description of any property held as collateral security therefor, except an
indebtedness based upon a creditor relationship arising in any manner described
in Section 613(2) (b), (c), (d) or (f);
(e) any change to the property and funds, if any, physically in the
possession of the Trustee as such on the date of such report;
(f) any additional issue of Debentures which the Trustee has not
previously reported; and
(g) any action taken by the Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Debentures, except action in respect of a default, notice
of which has been or is to be withheld by the Trustee in accordance with Section
602.
(2) The Trustee shall transmit by mail to all Debentureholders, as their
names and addresses appear in the Debenture Register, a brief report with
respect to the character and amount of any advances (and if the Trustee elects
so to state, the circumstances surrounding the making thereof) made by the
Trustee (as such) since the date of the last report transmitted pursuant to
Subsection (1) of this Section (or if no such report has yet been so
transmitted, since the date of execution of this instrument) for the
reimbursement of which it claims or may claim a lien or charge, prior to that of
the Debentures, on property or funds held or collected by it as Trustee and
which it has not previously reported pursuant to this subsection, except that
the Trustee shall not be required (but may elect) to report such advances if
such advances remaining unpaid at any time aggregate 10% or less of the
principal amount of the Debentures Outstanding at such time, such report to be
transmitted within 90 days after such time.
(3) Reports pursuant to this Section 704 shall be transmitted by mail to
all Debentureholders, as the names and addresses of such Debentureholders appear
upon the Debenture Register.
(4) A copy of each such report, at the time of such transmission to
Debentureholders, shall be filed by the Trustee with each stock exchange or
market upon which the Debentures are listed, with the Commission, if required,
and with the Company. The Company will notify the Trustee when the Debentures
are listed on any stock exchange.
END OF ARTICLE SEVEN.
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ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with
or merge into the Company or any Subsidiary or convey, transfer or lease its
properties and assets substantially as an entirety to the Company or any
Subsidiary, unless:
(1) in case the Company shall consolidate with or merge into another
corporation, trust or entity, the Person formed by such consolidation or into
which the Company is merged shall be a trust, corporation or other entity
organized and existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee and counsel to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Debentures and the
performance of every covenant of this Indenture on the part of the Company to be
performed or observed;
(2) immediately after giving effect to such transaction, and treating any
Indebtedness which becomes an obligation of the Company or a Subsidiary as a
result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, with the passage of time or the giving of notice, would become an Event
of Default, shall have occurred and be continuing;
(3) the Company, or the surviving entity, as the case may be, immediately
before and immediately after giving effect to such transaction or series of
transactions (including, without limitation, any Indebtedness incurred or
anticipated to be incurred in connection with or in respect of such transaction
or series of transactions) shall have a Consolidated Tangible Net Worth equal to
or greater than the amount required by Section 1010 hereof;
(4) immediately after giving effect to such transaction or series of
transactions, the Company or the surviving entity, as the case may be, could
incur $1.00 of Indebtedness pursuant to paragraph (3) of Section 1007 hereof;
and
(5) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such transaction
have been complied with.
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SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation or merger of the Company with or into any other
corporation, trust or other entity in accordance with Section 801, the successor
Person formed by such consolidation or into which the Company is merged shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter the predecessor
Person shall be relieved of all obligations and covenants under this Indenture
and the Debentures.
END OF ARTICLE EIGHT.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF DEBENTUREHOLDERS.
Without the consent of any Debentureholders, the Company, when authorized
by a Company Resolution, and the Trustee, at any time and from time to time may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee for any of the following purposes:
(1) to evidence the succession of another trust, corporation or other
entity to the Company and the assumption by any such successor of the covenants
of the Company herein and in the Debentures; or
(2) to add to the covenants of the Company for the benefit of the
Debentureholders, or to surrender any right or power herein conferred upon the
Company; or
(3) to evidence and provide for acceptance of appointment of a successor
Trustee; or
(4) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee; or
(5) to cure any ambiguity, to correct or supplement any provision herein
which may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Indenture
which shall not be inconsistent with the provisions of this Indenture, provided
that such action pursuant to this paragraph (5) shall not adversely affect the
interests of the Debentureholders.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF DEBENTUREHOLDERS.
With the consent of the Holders of not less than majority aggregate
principal amount of the Outstanding Debentures, by Act of such Debentureholders
delivered to the Company and the Trustee, the Company, when authorized by a
Company Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Debentureholders under this Indenture,
provided that without the consent of the Holder of each Outstanding Debenture
affected thereby, no such supplemental indenture shall,
(1) change the Stated Maturity of the principal of, or any installment of
interest on, any Debenture, or any premium payable on the redemption thereof, or
reduce the principal amount thereof or the rate of interest thereon, or change
the place of payment where, or the coin or currency in which, any Debenture or
the interest thereon is payable, or impair the right to
68
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), or
(2) reduce the percentage in principal amount of the Outstanding
Debentures, the consent of whose Debentureholders is required for any such
supplemental indenture, or the consent of whose Debentureholders is required for
any waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513, or Section
1011, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Debenture affected thereby, or
(4) modify any of the provisions of this Indenture relating to the
subordination of the Debentures in a manner adverse to the Debentureholders, or
(5) modify any of the provisions of Article Eleven, Article Twelve or
Article Thirteen.
It shall not be necessary for any Act of Debentureholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not
(except to the extent required in the case of a supplemental indenture entered
into under Section 901(4)) be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, such supplemental indenture
shall form a part of this Indenture for all purposes and every Holder of
Debentures theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
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SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental Indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect if this
Indenture shall then be qualified under the Trust Indenture Act.
SECTION 906. REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES.
Debentures authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Debentures so modified as to conform, in the opinion of the Trustee and the
Board of Directors of the Company, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Debentures.
SECTION 907. EFFECT ON SENIOR DEBT.
No supplemental indenture shall, directly or indirectly, adversely affect
the rights of any holder of Senior Debt under Article Fourteen without the
consent of such holder.
END OF ARTICLE NINE.
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ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company will duly and punctually pay the principal of, premium, if any,
and interest on the Debentures in accordance with the terms of the Debentures
and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain within the continental United States, an office
or agency where Debentures may be presented or surrendered for payment, where
Debentures may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Company in respect of the Debentures
and this Indenture may be served. The Company will give prompt written notice
to the Trustee of the location and any change in the location, of such office or
agency. Until otherwise designated by the Company in a written notice to the
Trustee, and 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 may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee its agent to receive such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other offices
or agencies where the Debentures may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations, provided that
no such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency within the continental United States,
for such purposes. The Company will give prompt written notice to the Trustee
of any such designation or rescission and of any change in the location of any
such other office or agency.
The Company hereby initially designates the Corporate Trust Office of the
Trustee set forth in the first paragraph of this instrument as an agency of the
Company.
SECTION 1003. MONEY FOR DEBENTURE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of (and premium, if any) or interest on
any of the Debentures, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action.
Whenever the Company shall have one or more Paying Agents, on or prior to
each due date of the principal of (and premium, if any) or interest on any
Debentures, it will deposit with a
71
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal (and premium, if any) or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Debentures in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Debentures) in the making of any payment of principal (and
premium, if any) or interest on the Debentures; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent. Upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Unless otherwise required by applicable law, any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of (and premium, if any) or interest on any Debenture
and remaining unclaimed for two years after such principal (and premium, if any)
or interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust.
The Holder of such Debenture shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease, provided that the Trustee or
such Paying Agent, before being required to make any such repayment, at the
expense of the Company, may cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in Minneapolis or Saint Xxxx, Minnesota, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than thirty (30) days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
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SECTION 1004. MAINTENANCE OF CORPORATE EXISTENCE, LICENSING AND RIGHTS.
Subject to Article Eight hereof, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect the corporate
existence of the Company and each Subsidiary, and all material rights,
certificates, authorities, licenses, permits and approvals of any of them, and
shall conduct its business in conformity with the requirements of such rights,
certificates, authorities, licenses, permits and approvals, provided that the
Company shall not be required to preserve any such right, certificate,
authority, license or permit if the Board of Directors of the Company shall
reasonably and in good faith determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company or of its
Subsidiaries and that the loss thereof is not disadvantageous in any material
respect to the Debentureholders.
SECTION 1005. PAYMENT OF TAXES AND ASSESSMENTS.
The Company and each of its Subsidiaries will cause to be paid and
discharged all lawful taxes, assessments and governmental charges or levies
imposed upon the Company or any Subsidiary or upon the income or profits of the
Company or any Subsidiary or upon property or any part thereof belonging to the
Company or any Subsidiary before the same shall be in default, as well as all
lawful claims for labor, materials and supplies which, if unpaid, might become a
lien or charge upon such property or any part thereof, provided that the Company
shall not be required to cause to be paid or discharged any such tax,
assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and for which
disputed amounts adequate reserves (in the good faith judgment of the Board of
Directors of the Company) have been established.
SECTION 1006. MAINTENANCE OF PROPERTIES; INSURANCE; BOOKS AND RECORDS;
COMPLIANCE WITH LAW.
(1) The Company and each of its Subsidiaries shall maintain insurance in
such amounts and covering such risks as are usually and customarily carried with
respect to similar facilities according to their respective locations.
(2) The Company and each of its Subsidiaries shall cause all its
properties (including leased properties) used or useful in the conduct of its
business to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this subsection (2) shall
prevent the Company or any Subsidiary from discontinuing the operation and
maintenance of any of its properties if such discontinuance is, in the good
faith judgment of the Board of Directors of the Company, desirable in the
conduct of its business and not disadvantageous in any material respect to the
Debentureholders.
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(3) The Company and each of its Subsidiaries shall 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
Subsidiary taken as a whole.
(4) The Company and each of its Subsidiaries shall comply with all
statutes, laws, ordinances, or government rules and regulations, including
rules, regulations and orders of governmental agencies, decrees, orders,
injunctions, writs to which it is subject, noncompliance with which would
materially adversely affect the business, prospects, earnings, properties,
assets or condition (financial or otherwise) of the Company and its Subsidiary
taken as a whole.
(5) The Company will take all appropriate steps to preserve, protect and
maintain the trademarks, trade names, copyrights, licenses and permits used in
the conduct of the business of the Company and its Subsidiaries; provided,
however, that nothing in this Subsection shall prevent the Company or a
Subsidiary from selling, abandoning, or otherwise disposing of any such
trademark, trade name, copyright, license or permit if such sale, abandonment or
disposition is, in the judgment of the Company, desirable in the conduct of its
business and not disadvantageous in any material respect to the
Debentureholders.
SECTION 1007. LIMITATION ON ADDITIONAL INDEBTEDNESS.
The Company shall not, and shall not permit any Subsidiary to, create,
incur, assume or issue, directly or indirectly, or guarantee or in any manner
become, directly or indirectly, liable for or with respect to the payment of any
Indebtedness, except for:
(1) Indebtedness under the Debentures and this Indenture;
(2) Indebtedness of the Company and any Subsidiary not otherwise referred
to in this Section 1007 outstanding on the Issue Date;
(3) Indebtedness (plus interest, premium, fees and other obligations
associated therewith) that, immediately after giving PRO FORMA effect to the
incurrence thereof, (i) does not cause the ratio of the sum of the Long Term
debt portion of the Capitalized Lease Obligations plus Long-Term Debt to
Consolidated Tangible Net Worth to exceed 2.75:1 and (ii) does not cause the
ratio of Total Liabilities to Consolidated Tangible Net Worth to exceed 5:1; or
(4) any deferrals, renewals, extensions, replacements, refinancings or
refundings of, or amendments, modifications or supplements to, Indebtedness
incurred under clauses (2) or (3) above, whether involving the same or any other
lender or creditor or group of lenders or creditors, provided that any such
deferrals, renewals, extensions, replacements, refinancings, refundings,
amendments, modifications or supplements (i) shall not provide for any mandatory
redemption, amortization or sinking fund requirement in an amount greater than
or at a time prior to the amounts and times specified in the Indebtedness being
deferred, renewed, extended, replaced, refinanced, refunded, amended, modified
or supplemented, (ii) shall not exceed the principal amount (plus accrued
interest and prepayment premium, if any) of the Indebtedness being renewed,
extended, replaced, refinanced or refunded and (iii) shall be subordinated to
the
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Debentures at least to the extent and in the manner, if at all, that the
Indebtedness being renewed, extended, replaced, refinanced or refunded is
subordinated to the Debenture.
SECTION 1008. TRANSACTIONS WITH AFFILIATES.
(a) The Company will cause any and all Indebtedness of the Company or any
Subsidiary created, incurred, assumed, guaranteed, renewed, extended or refunded
on or after the date of execution of this Indenture, to any Affiliate of the
Company, other than a Subsidiary, to be expressly subordinate and junior in
right of payment to the Debentures, according to the terms of the instrument (or
any supplemental instrument) creating or evidencing such Indebtedness or
pursuant to which such Indebtedness is outstanding, unless such Indebtedness is
borrowed from Yale X. Xxxxxxxx and approved by a majority of the Independent
members of the Board of Directors of the Company prior to the date such
Indebtedness is created, incurred, assumed, guaranteed, renewed, extended or
refunded. No payments of any principal or interest on any Indebtedness of the
Company or any Subsidiary to any Affiliate of the Company, other than a
Subsidiary or Yale X. Xxxxxxxx, shall be paid during any period which is, or
which would after the passage of time constitute, an Event of Default.
(b) The Company will not itself, and will not permit any Subsidiary to,
engage in any transaction of any kind or nature with any Affiliate of the
Company, other than a Wholly Owned Subsidiary, unless (1) a majority of the
Independent members of the Board of Directors of the Company has determined or
ratified by Resolution (a copy of which need not be delivered to the Trustee
unless and until ratified) that such transaction is or was, or, in the case of a
course of related or similar transactions or continuing transactions, such
course of transactions or continuing transactions are or were, upon terms which
are or were at the time entered into fair to the Company or such subsidiary, as
the case may be, (2) the transaction is or was at the time entered into
reasonably similar to, or more beneficial to the Company or such Subsidiary
than, the terms deemed likely to occur in similar transactions with unrelated
persons under the same circumstances; and (3) the transaction is or was at the
time entered into, certified (a copy of which certification need not be
delivered to the Trustee unless and until the Board Resolution described in
Subsection (b)(1) above is ratified) to the Board of Directors by a person
experienced in transactions of the nature of the subject transaction, other than
an Affiliate of the Company, as fair to the Company or such Subsidiary, as the
case may be, and as reasonably similar to, or more beneficial to the Company or
such Subsidiary than, the terms which would be likely to occur in similar
transactions with unrelated persons under the same circumstances.
SECTION 1009. RESTRICTIONS ON DIVIDENDS, REDEMPTIONS, ETC.
(a) The Company will not (1) declare or pay any dividend or make any other
distribution on any Capital Stock of the Company, except dividends or
distributions payable in Capital Stock of the Company.
(b) The Company and any Subsidiary will not purchase, redeem or otherwise
acquire or retire for value any Capital Stock of the Company, except Capital
Stock acquired upon conversion thereof into other Capital Stock of the Company,
if, upon giving effect to such
75
purchase, redemption, or other acquisition, the aggregate amount expended for
all such purposes subsequent to January 29, 1999 would exceed the sum of:
(A) 50% of the increment of Consolidated Net Income accumulated
subsequent to January 29, 1999;
(B) the aggregate of the net proceeds received by the Company or a
Subsidiary from the sale or issue after the date hereof (other than to a
Subsidiary or upon the conversion of Capital Stock or Indebtedness of the
Company or a Subsidiary) of Capital Stock of the Company, said net proceeds
being deemed for the purposes of this Section to equal the aggregate of
(i) the cash, if any, received by the Company or a Wholly Owned Subsidiary
from such sale or issue, plus (ii) the value of any consideration, other
than cash, received by the Company or a Wholly Owned Subsidiary from such
sale or issue, as determined by resolution of the Board of Directors; and
(C) the net proceeds (as above defined) received by the Company or a
Wholly Owned Subsidiary from the issuance or sale (other than to the
Company or a Subsidiary) of any convertible Indebtedness of the Company,
which Indebtedness has been converted into Equity Securities of the Company
after the date hereof.
SECTION 1010. NET WORTH.
The Company will at all times during the term of the Debentures keep and
maintain Consolidated Tangible Net Worth at an amount not less than Seven
Million Dollars ($7,000,000) plus 50% of positive Consolidated Net Income earned
after January 29, 1999.
SECTION 1011. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with the
covenants set forth in Section 1004 through 1010 and Section 1012 and 1013,
inclusive, if before the time for such compliance the Debentureholders of at
least a majority in aggregate principal amount of the Outstanding Debentures
shall, by Act of such Debentureholders, either waive such compliance or
condition in such instance or generally waive compliance with such covenants or
condition, but no such waiver shall extend to or affect such covenant except to
the extent so expressly waived, and, until such waiver shall become effective,
the obligations of the Company and the duties of the Trustee in respect of such
covenant shall remain in full force and effect.
SECTION 1012. STATEMENT AS TO COMPLIANCE.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year, a written statement signed by the Chairman of the Board,
President or a Vice President and by the Chief Financial Officer, an Assistant
Treasurer, the Controller or an Assistant Controller of the Company, stating, as
to each signer thereof, that:
(a) an analysis of the activities of the Company during such year and of
performance under this Indenture has been made under such person's supervision,
and
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(b) to the best of such person's knowledge, based on such analysis, the
Company has fulfilled all of its obligations under this Indenture throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such person and the nature and
status thereof, and if continuing the actions being taken by the company to cure
the same.
SECTION 1013. LIMITATION ON ISSUANCE OF CERTAIN SECURITIES.
From and after the date of this Indenture as originally executed and for as
long as any of the Debentures are Outstanding, the Company will not publicly
offer for sale or sell any Redeemable Preferred Stock, if such Redeemable
Preferred Stock has a fixed redemption date, as the case may be (exclusive of
payments through the operation of a sinking fund), earlier than the last Stated
Maturity for payment of principal of the Debentures.
END OF ARTICLE TEN.
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ARTICLE ELEVEN
REDEMPTION OF DEBENTURES
SECTION 1101. OPTIONAL REDEMPTION.
The Company may, at its option, at any time on or after June ___ 2002,
redeem the Outstanding Debentures in whole but not in part at the following
redemption prices (expressed as a percentage of the principal amount of each
Debenture thereof) (the "Redemption Price") together with interest accrued and
unpaid thereon to the Redemption Date (which shall be an Interest Payment Date),
if redeemed during the twelve-month period beginning on June ___, of each of the
following years.
REDEMPTION PRICE: 2002 2003 2004
108% 104% 100%
The particular Debentures to be redeemed on a Redemption Date pursuant shall be
selected as provided in Section 1104.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Debentures at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, or any supplement
hereto shall be made in accordance with such provisions and this Article,
provided that no Redemption shall be made under this Article during any period
in which an Event of Default, or an event which, with notice or lapse of time or
both, would constitute an Event of Default, has occurred and is continuing.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Debentures pursuant to Section
1101 shall be evidenced by a Company Resolution. In case of any Redemption at
the election of the Company of all the Debentures, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), the Company shall notify the Trustee of such
Redemption Date and of the aggregate principal amount of Debentures to be
redeemed and shall deliver to the Trustee such documentation and records as
shall enable the Trustee to select the Debentures to be redeemed pursuant to
Section 1104.
SECTION 1104. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Debentures to be redeemed, at the address appearing in the
Debenture Register.
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All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date, the Redemption Price will become due and
payable upon each such Debenture to be redeemed and that interest thereon will
cease to accrue on and after said date, and
(4) the place or places where such Debentures are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Debentures to be redeemed at the election of the
Company shall be given by the Company or, upon Company request, by the Trustee
in the name and at the expense of the Company.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, the Company will segregate and hold in trust as provided in Section 1003)
in immediately available funds an amount of money sufficient to pay the
Redemption Price of all the Debentures which are to be redeemed on that date.
SECTION 1106. DEBENTURES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Debentures so to
be redeemed shall become, on the Redemption Date, due and payable at the
Redemption Price therein specified, and on and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Debentures shall cease to bear interest. Upon surrender of any
such Debenture for redemption in accordance with such notice, such Debenture
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date, exclusive of installments of interest whose
Stated Maturity is on or prior to the Redemption Date, which shall be payable to
the Debentureholders of such Debentures, or one or more Predecessor Debentures,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Debenture called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Debenture.
SECTION 1107. OPEN MARKET PURCHASES.
Except to the extent limited by Article 14, the Company is not prohibited
from acquiring Debentures on the open market.
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END OF ARTICLE ELEVEN.
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ARTICLE TWELVE
REPURCHASE OF SECURITIES AT THE OPTION
OF THE HOLDER UPON CHANGE IN CONTROL
SECTION 1201. RIGHT TO REQUIRE REPURCHASE.
In the event that, prior to June 15, 2005 there shall occur a Change of
Control (as hereinafter defined) of the Company, then each Holder shall have
the right, at the Holder's option, to require the Company to repurchase, and
upon the exercise of such right the Company shall repurchase, all of such
Holder's Debentures, or any portion of the principal amount thereof that is
an integral multiple of $1,000, on the date (the "Repurchase Date") that is
45 days after the date of the Company Notice (as defined in Section 1202(a))
at a purchase price, payable in cash, equal to 102% of the principal amount
of Debentures to be repurchased (a "Repurchase Price"), together with accrued
interest to the Repurchase Date. Such right to require the repurchase of the
Debentures shall not continue after a discharge of the Company from its
obligations with respect to the securities in accordance with Article 4,
unless a Change of Control shall have occurred prior to such discharge. The
Repurchase Price shall be paid in cash.
SECTION 1202. NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.
(a) Unless the Company shall have theretofore called for redemption all
the Outstanding Debentures pursuant to Article 11, on or before the 30th day
after the occurrence of a Change of Control, the Company or, at the request of
the Company, the Trustee, shall mail to all Holders in the manner provided in
Section 1104 a notice (the "Company Notice") of the occurrence of the Change of
Control and of the repurchase right set forth herein arising as a result
thereof. The Company shall also deliver a copy of such notice of a repurchase
right to the Trustee and cause a copy of such notice of a repurchase right to be
published in a newspaper of general circulation in Minneapolis and St. Xxxx,
Minnesota and San Diego, California.
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Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price, and
(4) a description of the procedure which a Holder must follow to
exercise a repurchase right.
No failure of the Company to give the foregoing notices or defect therein
shall limit any Holder's right to exercise a repurchase right or affect the
validity of the proceedings for the repurchase of Debentures.
(b) To exercise a repurchase right, a Holder shall deliver to the Trustee
on or before the 30th day after the date of the Company Notice (i) written
notice of the Holder's exercise of such right, which notice shall set forth the
name of the Holder, the principal amount of the Debentures to be repurchased, a
statement that an election to exercise the repurchase right is being made
thereby, and (ii) the Debentures with respect to which the repurchase right is
being exercised, duly endorsed for transfer to the Company. Such written notice
shall be irrevocable, except that the right of the holder to convert the
Debentures with respect to which the repurchase right is being exercised shall
continue until the close of business on the Repurchase Date.
(c) In the event a repurchase right shall be exercised in accordance with
the terms hereof, the Company shall pay or cause to be paid the Repurchase Price
in cash, as provided above, to the Holder on the Repurchase Date, together with
accrued and unpaid interest to the Repurchase Date payable with respect to the
Debentures as to which the repurchase right has been exercised; PROVIDED,
HOWEVER, that installments of interest whose Stated Maturity is on or prior to
the Repurchase Date shall be payable in cash to the Holders of such Debentures,
or one or more Predecessor Debentures, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 307.
(d) If any Debenture surrendered for repurchase shall not be so paid on
the Repurchase Date, the principal shall, until paid, bear interest to the
interest to the extent permitted by applicable law from the Repurchase Date at
the rate borne by the Debenture.
(e) Any Debenture which is to be repurchased only in part shall be
surrendered at any office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the holder of such Debenture without service
charge, a new Debenture or Debentures, of any authorized denomination as
requested by such Holder, in aggregate
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principal amount equal to and in exchange for the unrepurchased portion of
the principal of the Debenture so surrendered.
SECTION 1203. CERTAIN DEFINITIONS.
For purposes of this Article:
(a) the term "beneficial owner" shall be determined in accordance with
Rule 13d-3, as in effect on the date of the original execution of this
Indenture, promulgated by the Commission pursuant to the Exchange Act, as
amended, and for the purpose of this Article 12, "Person" shall include any
syndicate or group which would be deemed to be a "person" under Section 13(d)(3)
of such Exchange Act as in effect on the date of the original execution of this
Indenture; and
(b) a "Change of Control" of the Company shall be deemed to have occurred
at such time as any Person is or becomes the beneficial owner, directly or
indirectly, through a purchase, redemption, merger or other acquisition
transaction or series of transactions, of shares of capital stock of the Company
entitling such Person to exercise 50% or more of the total voting power of all
shares of capital stock of the Company entitled to vote in elections of
directors; PROVIDED, HOWEVER, that a Change of Control shall not be deemed to
have occurred if either (i) such Person is Yale X. Xxxxxxxx or is an Affiliate
thereof and such person is not entitled to exercise 66% or more of the total
voting power of all shares of capital stock of the Company entitled to vote in
elections of directors or (ii) the Closing Price on any five Trading Days during
the 10 Trading-Day period immediately preceding the date of the Change of
Control shall equal or exceed 125% of the conversion price in effect on such
Trading Day or (iii) all of the consideration (excluding cash payments for
fractional shares) to be paid for the Common Stock in the transaction or
transactions constituting the Change of Control consists of shares of common
stock traded on a national securities exchange or quoted on the Nasdaq National
Market and as a result of such transaction or transactions the Debentures become
convertible solely into such common stock.
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ARTICLE THIRTEEN
CONVERSION OF DEBENTURES
SECTION 1301. RIGHT OF HOLDER TO CONVERT DEBENTURES INTO COMMON STOCK;
CONVERSION RATE.
(a) Subject to and upon compliance with the provisions of this Article
Thirteen, at the option of the Holder thereof, any Debenture or any portion of
the principal amount thereof which is $1,000 or an integral multiple of $1,000
may be converted at the principal amount thereof, or of such portion thereof,
into fully paid and non-assessable shares (calculated as to each conversion to
the nearest 1/100 of a share) of Common Stock, at the Conversion Price,
determined as hereinafter provided, in effect at the time of conversion. Such
conversion right shall expire at the close of business on June 15, 2005. In
case a Debenture is called for redemption or is repurchased, such conversion
right in respect to the Debenture shall expire at the close of business on the
Redemption Date or Repurchase Date, unless the Company defaults in making the
payment due on upon redemption or repurchase.
(b) The initial Conversion Price ("CONVERSION PRICE") at which shares of
Common Stock shall be delivered upon conversion shall be $________ principal
amount of Debentures for each share of Common Stock but such Conversion Price
and any adjusted conversion price shall be subject to adjustment from time to
time as provided in Section 1304.
SECTION 1302. ISSUANCE OF SHARES OF COMMON STOCK ON CONVERSION; NO ADJUSTMENT
FOR INTEREST OR DIVIDENDS.
(a) In order to exercise the conversion privilege, the Holder of any
Debenture to be converted shall surrender such Debenture to the Company at any
office or agency to be maintained by the Company for that purpose pursuant to
Section 1002, and shall give written notice to the Company at said office or
agency that the Holder elects to convert such Debenture or a specified portion
thereof. Such notice shall also state the name or names (with addresses) in
which the certificate or certificates for shares of Common Stock which shall be
issuable on such conversion shall be issued. Debentures surrendered for
conversion shall (if so required by the Company or the Trustee) be accompanied
by proper assignments thereof to the Company or in blank for transfer. As
promptly as practicable after the receipt of such notice and the surrender of
such Debenture as aforesaid, the Company shall issue and shall deliver at said
office or agency to such Holder, or on his or her written order, a certificate
or certificates for the number of full shares of Common Stock issuable upon the
conversion of such Debenture (or a specified portion thereof) in accordance with
the provisions of this Article Thirteen and cash, as provided in Section 1303,
in respect of any fraction of a share of Common Stock issuable upon such
conversion. Such conversion shall be deemed to have been effected at the close
of business on the date on which such notice, duly completed and executed, shall
have been received at said office or agency, and such Debenture shall have been
surrendered as aforesaid, and at such time the rights of the Holder of such
Debenture as such Holder shall cease and the person or persons in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of
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the shares represented thereby; provided, however, that no such surrender on
any date when the stock transfer books of the Company shall be closed shall
be effective to cnstitute the person or persons entitled to receive the
shares of Common Stock upon such conversion as the record holder or holders
of such shares of Common Stock on such date, but such surrender shall be
effective to constitute the person or persons entitled to receive such shares
of Common Stock as the record holder or holders thereof for all purposes at
the opening of business on the next succeeding day on which such stock
transfer books are open and such conversion shall be at the conversion price
in effect at the opening of business on such next succeeding day. Subject to
the provisions of Section 307, no payment or adjustment shall be made upon
any conversion on account of any interest accrued on the Debentures
surrendered for conversion or on account of any dividends on the Common Stock
issued upon such conversion.
(b) In the case of any Debenture which is converted in part only, upon
such conversion the Company shall execute and the Trustee shall authenticate and
deliver to or on the order of the Holder of such Debenture without service
charge, a new Debenture or Debentures, of any authorized denomination or
denominations as requested by such Holder, in aggregate principal amount equal
to the unconverted portion of the principal of the Debenture so surrendered.
(c) In the case of any Debenture which is converted after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date, the
interest falling due on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such Conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name the Debenture (or any Predecessor Debenture or Debentures)
is registered at the close of business on such Regular Record Date.
SECTION 1303. CASH TO BE PAID IN LIEU OF FRACTIONAL SHARES.
No fractional shares of Common Stock shall be issued upon conversion of
Debentures. If more than one Debenture shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures (or specified portions thereof to the extent
permitted hereby) so surrendered. Instead of any fractional share of Common
Stock which would otherwise be issuable upon conversion of any Debenture or
Debentures or specified portions thereof, the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the same fraction
of the conversion price per share of Common Stock.
SECTION 1304. ADJUSTMENT OF CONVERSION PRICE.
The Conversion Price in effect at any time shall be subject to adjustment
as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its Common Stock in shares of its or any of its Subsidiaries'
capital stock, (ii) subdivide its outstanding shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (iv) issue by reclassification of its shares of Common Stock (including any
such reclassification in connection with a consolidation or merger in which the
85
Company is the continuing corporation) any shares, the conversion price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the Holder of any Debenture surrendered for
conversion after such time shall be entitled to receive the number and kind
of shares which he would have owned or have been entitled to receive had such
Debenture been converted immediately prior to such time. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) In case the Company shall fix a record date for the making of a
distribution to all holders of its Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of its indebtedness or assets or
subscription rights or warrants (excluding any cash dividends paid from retained
earnings and dividends payable in stock for which adjustment is made pursuant to
paragraph (a) above and subscription rights or warrants issued in any "rights
offering" for which notice has been given to the Holders of the Debentures
pursuant to Section 1305), the number of shares of Common Stock into which each
$1,000 principal amount of Debentures shall be convertible after such record
date shall be determined by multiplying the number of shares of Common Stock
into which such principal amount of Debentures was convertible immediately prior
to such record date by a fraction, of which the numerator shall be the current
market price per share of Common Stock (as defined in paragraph (c) below) on
such record date, and of which the denominator shall be such current market
price per share of Common Stock, less the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive, and described
in a statement filed with the Trustee and each conversion agent) of the portion
of the assets or evidences of indebtedness so distributed or of such
subscription rights or warrants applicable to one share of Common Stock. Such
adjustment shall be made successively whenever such a Record Date is fixed; and
in the event that such distribution is not made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such Record Date had not been fixed. For purposes of this subsection (b),
"rights of offering" means the issuance of rights or warrants to all holders of
Common Stock entitling them (for a period expiring within 90 days after the
Record Date therefor) to subscribe for or purchase Common Stock (or securities
convertible into shares of Common Stock) at a price per share (or having a
Conversion Price per share) less than the current market price per share of
Common Stock (as defined in paragraph (c) below) on the record date therefor.
(c) For the purpose of any computation under subsection (b) above, the
current market price per share of Common Stock on any date shall be deemed to be
the average of the daily closing prices, for 30 consecutive Business Days
commencing 45 Business Days before the date in question. The closing price for
each day shall be: (i) if the Common Stock is listed on a national securities
exchange or on the Nasdaq National Market, the last reported sale price of
Common Stock on that day, as reported on a composite basis with other exchanges
upon which the Common stock is listed or over-the-counter transactions, or, if
not so reported on a composite basis, then on the principal securities exchange
on which the Common Stock is listed, as designated by the Board of Directors for
the purposes hereof, or if there was no reported sale on that day, on the basis
of the average of the bid and asked quotations on such composite report or such
exchange on that day, or (ii) if the stock was not then listed on a securities
exchange, on the basis of the highest bid quotation in the over-the-counter
market at the close of business on that
86
day, as reported on Nasdaq or its successor quotation system, or, if not so
reported, then as quoted by the principal market maker for the Common Stock,
as designated by the Board of Directors for the purposes hereof.
(d) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least $.01 per share in
such price; provided, however, that any adjustments which by reason of this
paragraph (d) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment, and provided further, that
adjustments shall be required and made in accordance with the provisions of this
Article Thirteen (other than this paragraph (d)) not later than such time as may
be required in order to preserve the tax-free nature of a distribution for
United States income tax purposes to the holders of Debentures of Common Stock.
All calculations under this Article Thirteen shall be made to the nearest cent
or to the nearest one-thousandth of a share, as the case may be.
(e) Whenever the Conversion Price is adjusted, as herein provided, the
Company shall promptly file with the Trustee and with the office or agency
maintained by the Company for the conversion of Debentures pursuant to Section
1002, a certificate of a firm of independent public accountants selected by the
Board of Directors (who may be the regular accountants employed by the Company)
setting forth the conversion price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment and a computation
thereof. Such certificate shall be conclusive evidence of the correctness of
such adjustment, and subject to the provisions of Article Six, neither the
Trustee nor any conversion agent shall be under any duty or responsibility with
respect to any such certificate or any facts or computations set forth therein,
except to exhibit said certificate from time to time to any Debentureholder
desiring to inspect the same. The Company shall promptly cause a notice setting
forth the adjusted Conversion Price to be mailed to the holders of Debentures as
their names and addresses appear upon the Debenture Register.
(f) In the event that any time, as a result of an adjustment made pursuant
to paragraph (a) above, the holder of any Debenture thereafter surrendered for
conversion shall become entitled to receive any shares of the Company other than
shares of Common Stock, thereafter the number of such other shares so receivable
upon conversion of any Debenture shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in paragraphs (a) to (e),
inclusive, above and the provisions of this Article Thirteen with respect to the
Common Stock shall apply on like items to any such other shares.
(g) In addition to the foregoing adjustments in subsections (a), (b), (c),
(d), (e) and (f) above, the Company, from time to time and to the extent
permitted by law, may reduce the Conversion Price by any amount for at least 20
Business Days, if the Board of Directors has made a determination, which
determination shall be conclusive, that such reduction would be in the best
interests of the Company. The Company shall give notice to the Trustee and
cause notice of such reduction to be mailed to each Holder of Debentures at such
Holder's address as the same appears on the registry books of the Registrar, at
least 15 days prior to the date on which such reduction commences.
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SECTION 1305. NOTICE OF CERTAIN CORPORATION ACTION.
In case:
(a) the Company shall declare a dividend (or any other distribution) on
its Common Stock payable otherwise than in cash out of its retained earnings or
dividends payable in its Common Stock; or
(b) the Company shall authorize the granting to the holders of its Common
Stock of warrants or rights to subscribe for or purchase any shares of stock of
any class or of any other rights; or
(c) of any reclassification, change, consolidation, merger, sale, transfer
or statutory exchange of securities necessitating the execution of a
supplemental indenture pursuant to Section 1309; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company;
then the Company shall cause to be filed with the Trustee and at the
office or agency maintained for the purpose of conversion of Debentures
pursuant to Section 1002, and shall cause to be mailed to the Holders of
Debentures, at their last address as they shall appear upon the Debenture
Register, at least 15 days prior to such record date hereinafter specified, a
notice stating (i) the date on which a record is to be taken for the purpose
of such dividend or distribution of rights, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend or distribution of rights are to be determined, or
(ii) the date on which such reclassification, change, consolidation, merger,
sale, transfer, statutory exchange, dissolution, liquidation or winding-up is
expected to become effective and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
reclassification, change, consolidation, merger, sale, transfer, statutory
exchange, dissolution, liquidation or winding-up.
SECTION 1306. COMPANY TO RESERVE SHARES OF COMMON STOCK.
(a) The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized and unissued Common Stock, for the
purpose of effecting the conversion of Debentures, the full number of shares of
Common Stock then issuable upon the conversion of all Outstanding Debentures.
(b) The Company covenants that if any shares of Common Stock required to
be reserved for purposes of conversion of Debentures hereunder require
registration with or approval of any governmental authority under any Federal or
State law, or listing upon any national securities exchange, before such shares
may be issued upon conversion, the Company will in good faith and as
expeditiously as possible endeavor to cause such shares to be duly registered,
approved or listed, as the case may be.
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SECTION 1307. TAXES ON ISSUANCE OF COMMON STOCK UPON CONVERSION.
The issue and delivery of stock certificates on conversion of Debentures
shall be made without charge to the converting Holders of any documentary
stamp tax or other similar tax in respect of the issue or delivery thereof
(except any such taxes which may be in the nature of exchange or currency
control measures or which, for any other reason, are payable by reason of the
status of any person surrendering Debentures for conversion or receiving
Common Stock, securities or other property upon conversion). The Company
shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of shares of
Common Stock in a name other than that of the Holder of the Debenture or
Debentures to be converted, and no such issuance or delivery shall be made
unless and until the person requesting such issuance has paid to the Company
the amount of any such tax, or has established, to the satisfaction of the
Company, that such tax has been paid.
SECTION 1308. COVENANT AS TO COMMON STOCK.
The Company covenants and agrees that, subject to the effectiveness of any
registration and the obtaining of any approval referred to in Section 1306(b),
all shares of Common Stock which may be issued upon conversion of Debentures
will upon issuance be duly and validly issued and fully paid and non-assessable.
SECTION 1309. PROVISION IN CASE OF RECLASSIFICATION OF COMMON STOCK OR
CONSOLIDATION, MERGER, SALE, OR TRANSFER OF ASSETS OF
THE COMPANY.
In case of any reclassification or change of outstanding shares of
the Common Stock issuable upon conversion of the Debentures (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), or in case of
any consolidation or merger of the Company with or into any other corporation
(other than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or change,
other than as aforesaid, of the shares of Common Stock issuable upon
conversion of the Debentures), the Company or the corporation formed by such
consolidation or the corporation into which the Company shall have been
merged or the corporation which shall have acquired such assets or securities
of the Company, as the case may be, shall execute and deliver to the Trustee
a supplemental indenture providing that the Holder of each Debenture then
Outstanding shall have the right thereafter (until the expiration of the
conversion right of such Debenture) to convert such Debenture into the kind
and amount of shares of stock and other securities and property, including
cash, receivable upon such reclassification, change, consolidation, merger,
sale or transfer by a holder of the number of shares of Common stock of the
Company into which such Debenture might have been converted immediately prior
to such reclassification, change, consolidation, merger, sale or transfer.
Such supplemental indenture shall conform to the requirements of the Trust
Indenture Act as then in effect and shall provide for adjustments provided
for in this Article Thirteen. The provisions of this Section 1309 shall
similarly apply to successive reclassifications, changes, consolidations,
mergers, sales or transfers.
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SECTION 1310. DISCLAIMER OF RESPONSIBILITY FOR CERTAIN MATTERS.
Neither the Trustee nor any agent (other than the Company) shall at any
time be under any duty or responsibility to any Holder of Debentures to
determine whether any facts exist which may require any adjustment of the
Conversion Price, or with respect to the nature or extent 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.
Neither the Trustee nor any agent (other than the Company) shall 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 Debenture; and
neither the Trustee nor any agent (other than the Company) makes any
representation with respect thereto. Neither the Trustee nor any conversion
agent (other than the Company) 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 upon the surrender of any
Debenture for the purpose of conversion or, subject to the provisions of
Article Six, to comply with any of the covenants of the Indenture contained
in this Article Thirteen.
END OF ARTICLE THIRTEEN
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ARTICLE FOURTEEN
SUBORDINATION OF DEBENTURES
SECTION 1401. AGREEMENT TO SUBORDINATE.
The Company covenants and agrees, and each Holder of Debentures by such
Holder's acceptance thereof (whether upon original issue or upon transfer or
assignment) likewise covenants and agrees, that the indebtedness represented by
the Debentures and the payment of the principal of (and premium, if any) and
interest on each and all of the Debentures is hereby expressly subordinated, and
junior to the extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of all Senior Debt.
SECTION 1402. DISTRIBUTION OF ASSETS, ETC.
Upon any distribution of assets of the Company upon any dissolution,
winding-up, liquidation or reorganization of the Company, whether in bankruptcy,
insolvency, reorganization or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or upon any acceleration or maturity of the Debentures or
otherwise:
(1) the holders of all Senior Debt shall first be entitled to receive
payment in full of the principal thereof (and premium, if any) and interest
due thereon, or adequate provisions shall be made for such payment, before
the Debentureholders of the Debentures are entitled to receive any payment
on account of the principal of (or premium, if any) or interest on the
Indebtedness evidenced by the Debentures; and
(2) any payment by, or distribution of assets of, the Company of any
kind or character, whether in cash, property or securities, to which the
Debentureholders of the Debentures or the Trustee would be entitled except
for the provisions of this Article Twelve shall be paid or delivered by the
person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Senior Debt which may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Debt held or
represented by each, to the extent necessary to make payment in full of all
Senior Debt remaining unpaid after giving effect to any concurrent payment
or distribution (or provision therefor) to the holders of such Senior Debt.
SECTION 1403. NO PAYMENT TO DEBENTUREHOLDERS IF SENIOR DEBT IS IN DEFAULT.
(a) Upon the maturity of any Senior Debt by lapse of time, acceleration or
otherwise, all principal thereof (and premium, if any) and interest due thereon
shall first be paid in full, or such payment duly provided for in cash or in a
manner satisfactory to the holder or holders of such Senior Debt before any
payment is made on account of the principal of (or premium, if any) or interest
on the Debentures or to acquire any of the Debentures.
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(b) Upon the happening of an event of default with respect to any Senior
Debt, as such event of default is defined therein or in the instrument under
which it is outstanding, permitting the holders to accelerate the maturity
thereof, and, if the default is other than default in payment of the principal
of (or premium, if any) or interest on such Senior Debt, upon written notice
thereof given to the Company and the Trustee by the holder or holders of such
Senior Debt or their representative or representatives, then, unless and until
such event of default shall have been cured or waived or shall have ceased to
exist, no payment shall be made by the Company with respect to the principal (or
premium, if any) or interest on the Debentures or to acquire any of the
Debentures.
SECTION 1404. SUBROGATION.
Subject to the payment in full of all Senior Debt, the Holders of the
Debentures shall be subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of cash, property or securities of the Company
applicable to the Senior Debt until all amounts owing on the Debentures shall be
paid in full, and, as between the Company, its creditors other than holders of
Senior Debt, and the Debentureholders of the Debentures, no such payment or
distribution made to the holders of Senior Debt by virtue of this Article Twelve
which otherwise would have been made to the Holders of the Debentures shall be
deemed to be a payment by the Company on account of the Senior Debt, it being
understood that the provisions of this Article Twelve are and are intended
solely for the purpose of defining the relative rights of the Holders of the
Debentures, on the one hand, and the holders of Senior Debt, on the other hand.
SECTION 1405. OBLIGATION OF COMPANY UNCONDITIONAL.
Nothing contained in this Article Twelve or elsewhere in this Indenture or
in the Debentures is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Debt, and the Holders of the
Debentures, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Debentures the principal of (and premium, if any)
and interest on the Debentures as and when the same shall become due and payable
in accordance with their terms, or affect the relative rights of the Holders of
the Debentures and creditors of the Company other than the holders of Senior
Debt, nor shall anything herein or exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights, if
any, under this Article Twelve of the holders of Senior Debt in respect of cash,
property or securities of the Company received upon the exercises of any such
remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article Twelve, the Trustee and the Debentureholders of the Debentures
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any such dissolution, winding-up, liquidation
or reorganization proceeding affecting the affairs of the Company is pending
or upon a certificate of the liquidating trustee or agent or other person
making any payment or distribution to the Trustee or to the Debentureholders
of the Debentures for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the
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holders of the Senior Debt and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount paid or distributed thereon and all
other facts pertinent thereto or to this Article Twelve.
SECTION 1406. PAYMENTS ON DEBENTURES PERMITTED.
Nothing contained in this Article Fourteen or elsewhere in this Indenture,
or in any of the Debentures, shall (a) affect the obligation of the Company to
make, or prevent the Company from making, at any time except during the pendency
of any dissolution, winding-up, liquidation of reorganization proceeding, and
except during the continuance of any event of default specified in Section 1403
(not cured or waived), payments at the Stated Maturity of principal of (or
premium, if any) or interest on the Debentures, or (b) prevent the application
by the Trustee or any Paying Agent of any moneys held by the Trustee or such
Paying Agent, in trust for the benefit of the Debentureholders of Debentures as
to which notice of redemption shall have been mailed or published at least once
prior to the happening of an Event of Default specified in Section 1403, to the
payment of or on account of the principal of (and premium, if any) and interest
on such Debentures, or (c) prevent the application by the Trustee or any Paying
Agent of any moneys deposited prior to the happening of any Event of Default
specified in Section 1403 with the Trustee or such Paying Agent in trust for the
purpose of paying a specified installment or installments of interest on the
Debentures, to the payment of such installments of interest on the Debentures.
SECTION 1407. EFFECTUATION OF SUBORDINATION BY TRUSTEE.
Each Holder of Debentures, by such Holder's acceptance thereof, authorizes
and directs the Trustee in such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Fourteen and appoints the Trustee such Holder's attorney-in-fact for any
and all such purposes.
SECTION 1408. KNOWLEDGE OF TRUSTEE.
Notwithstanding the provisions of this Article Twelve or any other
provisions of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment of
moneys to or by the Trustee, or the taking of any other action by the Trustee,
unless and until the Trustee shall have received written notice thereof, at
least one business day prior to the relevant payment date, from the Company, any
Holder, any Paying Agent or the holder or representative or any class of Senior
Debt.
SECTION 1409. RIGHTS OF HOLDERS OF SENIOR DEBT NOT IMPAIRED.
No right of any present or future holder of any Senior Debt to enforce the
subordination herein shall at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of the Company with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
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SECTION 1410. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt and shall not be liable to any such holders if it shall in good
faith pay over or distribute to the Debentureholders of the Debentures, to the
Company or to any other Person cash, property or securities to which any holders
of Senior Debt shall be entitled by virtue of this Article or otherwise.
SECTION 1411. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Debt which may at any time
be held by it, to the same extent as any other holder of Senior Debt, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
SECTION 1412. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully for all intents and purposes as if such Paying Agent were named
in this Article in addition to or in place of the Trustee.
SECTION 1413. RIGHTS AND OBLIGATIONS SUBJECT TO POWER OF COURT.
The rights of the holders of Senior Debt and the obligations of the Trustee
and the Debentureholders set forth in this Article Twelve are subject to the
power of a court of competent jurisdiction to make other equitable provision
reflecting the rights conferred in this Indenture upon the Senior Debt and the
holders thereof with respect to the Debentures and the Debentureholders thereof
by a plan or reorganization under applicable bankruptcy law.
END OF ARTICLE FOURTEEN.
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This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective seals to be hereunto affixed and attested,
all as of the day and year first above written.
PAPER WAREHOUSE, INC.
By
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-----------------------,
Chief Executive Officer
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as Trustee
By
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Its
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