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INTERVEST BANCSHARES CORPORATION
AND
THE BANK OF NEW YORK
as Trustee
INDENTURE
Dated as of ___________, 1998
$6,000,000
Series __/__/98 Convertible Subordinated
Debentures Due July 1, 2008
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CROSS REFERENCE TABLE
TIA Section Indenture Section
310(a)(1) and (2)........................... 7.10
310(a)(3) and (4)........................... N.A.
310(b)...................................... 7.08, 7.10, 11.02
310(c)...................................... N.A.
311(a) and (b).............................. 7.11
311(c)...................................... N.A.
312(a)...................................... 2.05
312(b) and (c).............................. 2.06
313(a)...................................... 7.06
313(b)(1)................................... N.A.
313(b)(2)................................... 7.06
313(c)...................................... 7.06, 11.02
313(d)...................................... 7.06
314(a)...................................... 4.02, 11.02
314(b)...................................... N.A.
314(c)(1) and (c)(2)........................ 11.03
314(c)(3) and (d)........................... N.A.
314(e)...................................... 11.04
314(f)...................................... N.A.
315(a), (c) and (d)......................... 7.01
315(b)...................................... 7.05, 11.02
315(e)...................................... 6.11
316(a)(1)(A)................................ 6.05
316(a)(1)(B)................................ 6.04
316(a)(2)................................... 9.02
316(a) Last Paragraph....................... 2.10, 11.05
316(b)...................................... 6.07
317(a)...................................... 6.08, 6.09
317(b)...................................... 2.04
318(a)...................................... 11.01
N.A. means Not Applicable.
Note: This cross reference table shall not, for any purpose, be deemed to be
a part of the Indenture.
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
1.01. Definitions..................................................... 9
1.02. Other Definitions............................................... 11
1.03 Incorporation by Reference of Trust Indenture Act............... 11
1.04. Acts of Holders................................................. 12
1.05. Rules of Construction........................................... 13
ARTICLE TWO
THE DEBENTURES
--------------
2.01. Form and Dating................................................. 13
2.02. Execution and Authentication.................................... 14
2.03. Registrar and Paying Agent...................................... 14
2.04. Paying Agent to Hold Money in Trust............................. 15
2.05. Debentureholder Lists........................................... 15
2.06. Access of Information to Debentureholders. ..................... 15
2.07. Transfer and Exchange........................................... 16
2.08. Replacement Debentures.......................................... 17
2.09. Outstanding Debentures.......................................... 17
2.10. Treasury Debentures............................................. 17
2.11. Temporary Debentures............................................ 17
2.12. Cancellation.................................................... 17
2.13. Defaulted Interest.............................................. 18
2.14. CUSIP Numbers................................................... 18
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ARTICLE THREE
REDEMPTION
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3.01. Notices to Trustee......................................... 18
3.02. Selection of Debentures to be Redeemed..................... 19
3.03. Notice of Redemption....................................... 19
3.04. Effect of Notice of Redemption............................. 19
3.05. Deposit of Redemption Price................................ 19
3.06. Debentures Redeemed in Part................................ 19
ARTICLE FOUR
COVENANTS
---------
4.01. Payment of Debentures...................................... 20
4.02. SEC Reports................................................ 20
4.03. Compliance Certificate..................................... 20
4.04. Limitation on Dividends and Stock Purchases................ 20
4.05. Pari Passu Indebtedness.................................... 21
ARTICLE FIVE
SUCCESSOR CORPORATION
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5.01. When the Company May Merge, etc............................ 21
ARTICLE SIX
DEFAULTS AND REMEDIES
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6.01. Events of Default.......................................... 21
6.02. Acceleration............................................... 22
6.03. Other Remedies............................................. 22
6.04. Waiver of Past Defaults.................................... 23
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6.05. Control by Majority....................................... 23
6.06. Limitation of Suits....................................... 23
6.07. Rights of Holders to Receive Payment...................... 23
6.08. Collection Suit by Trustee................................ 24
6.09. Trustee May File Proof of Claim........................... 24
6.10. Priorities................................................ 24
6.11. Undertaking for Costs..................................... 24
ARTICLE SEVEN
TRUSTEE
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7.01. Duties of Trustee.......................................... 25
7.02. Rights of Trustee.......................................... 26
7.03. Individual Rights of Trustee............................... 26
7.04. Trustee's Disclaimer....................................... 26
7.05. Notice of Defaults......................................... 27
7.06. Reports by Trustees to Holders............................. 27
7.07. Compensation and Indemnity................................. 27
7.08. Replacement of Trustee..................................... 28
7.09. Successor Trustee by Merger, etc........................... 29
7.10. Eligibility; Disqualification.............................. 29
7.11. Preferential Collection of Claims Against the Company...... 29
7.12. Paying Agents.............................................. 29
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ARTICLE EIGHT
DISCHARGE OF INDENTURE
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8.01. Termination of the Company's Obligations....................... 29
8.02. Application of Trust Money..................................... 30
8.03. Repayment to the Company....................................... 31
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
-----------------------------------
9.01. Without Consent of Holders...................................... 31
9.02. With Consent of Holders......................................... 31
9.03. Execution of Supplemental Indentures............................ 32
9.04. Compliance with Trust Indenture Act............................. 32
9.05. Revocation and Effect of Consents............................... 32
9.06. Notation on or Exchange of Debentures........................... 33
9.07. Trustee to Sign Amendments, etc................................. 33
ARTICLE TEN
SUBORDINATION
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10.01. Agreement to Subordinate...................................... 33
10.02. Debentures Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution,
Liquidation or Reorganization of the Company................. 34
10.03. Debentureholders to be Subrogated to Rights of Holders
of Senior Indebtedness....................................... 35
10.04. Obligation of the Company Unconditional...................... 35
10.05. Knowledge of Trustee......................................... 36
10.06. Application by Trustee of Monies Deposited With It........... 36
10.07. Subordination Rights Not Impaired by Acts or
Omissions of the Company or Holders
of Senior Indebtedness....................................... 37
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10.08. Debentureholders Authorize Trustee to
Effectuate Subordination of Debentures....................... 37
10.09. Right of Trustee to Hold Senior Indebtedness................. 37
10.10. Article Ten Not to Prevent Events of Default................. 37
10.11. No Fiduciary Duty Created to Holders of Senior Indebtedness.. 37
10.12. Trustee's Compensation Not Prejudiced........................ 38
ARTICLE ELEVEN
CONVERSION OF SECURITIES
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11.01. Conversion Privilege and Conversion Price.................... 38
11.02. Exercise of Conversion Privilege............................. 38
11.03. Fractions of Shares.......................................... 39
11.04. Adjustment of Conversion Price............................... 39
11.05. Notice of Adjustments of Conversion Price.................... 43
11.06. Notice of Certain Corporate Actions.......................... 43
11.07. Company to Reserve Class A Common Stock..................... 44
11.08. Taxes on Conversions........................................ 44
11.09. Covenant as to Class A Common Stock......................... 44
11.10. Cancellation of Converted Debentures........................ 44
11.11 Provisions in Case of Consolidation,
Merger or Sale of Assets..................................... 44
ARTICLE TWELVE
MISCELLANEOUS
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12.01. Trust Indenture Act Controls................................ 45
12.02. Notices..................................................... 45
12.03. Certificate and Opinion as to Conditions Precedent.......... 46
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12.04. Statements Required in Certificate or Opinion............... 46
12.05. Rules by Trustee and Agents................................. 47
12.06. Legal Holidays.............................................. 47
12.07. Governing Law............................................... 47
12.08. No Recourse Against Others.................................. 47
12.09. Successors.................................................. 47
12.10. Duplicate Originals......................................... 47
12.11. Separability................................................ 47
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INDENTURE, dated as of ________ 1, 1998, between INTERVEST BANCSHARES
CORPORATION, a Delaware corporation (the "Company"), and THE BANK OF NEW YORK, a
New York banking corporation, as trustee (the "Trustee").
Intending to be legally bound hereby, each party agrees as follows for
the benefit of the other party and for the equal and ratable benefit of the
Holders of the Company's Series __/__/98 Convertible Subordinated Debentures.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
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SECTION 1.01. Definitions.
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
Subsidiary. For purposes of this definition, "control" when used with respect to
any 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.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Board of Directors" means the Board of Directors of the Company or any
committee of that Board duly authorized to act for it hereunder.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.
"Closing Price" means, with respect to the Class A Common Stock of the
Company, for any day, the reported last sales price or, in case no such reported
sale takes place on such day, the average of the reported closing bid and ask
prices, in either case (i) on the Nasdaq SmallCap Market or, if the Class A
Common Stock is not quoted on the Nasdaq SmallCap Market, on the principal
national security exchange on which the Class A Common Stock is listed or
admitted to trading or (ii) if not quoted on the Nasdaq SmallCap Market or
listed or admitted to trading on any national securities exchange, the average
of the closing bid and ask prices in the over-the-counter market as furnished by
any National Securities Exchange Member firm selected from time to time by the
Trustee for that purpose.
"Class A Common Stock" means the Class A Common Stock, par value $1.00
per share of the Company.
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"Common Stock" includes any stock of any class of the Company which has
no preference in respect of dividends or upon liquidation, include the Company's
Class A and Class B Common Stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the applicable provisions hereof and
thereafter means any such successor.
"Debentures" means: the Series __/__/98 Convertible Subordinated
Debentures, issued under this Indenture, and maturing on July 1, 2008; as
amended or supplemented from time to time pursuant to the terms of this
Indenture; "Debenture" means any one of such Debentures.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Holder" or "Debentureholder" means the person in whose name a
Debenture is registered on the Registrar's books.
"Indebtedness" means, with respect to any person: (i)(A) all
indebtedness of such person for borrowed money, (B) all indebtedness of such
person which is evidenced by a note, debenture, bond or other similar instrument
(including capitalized lease and purchase money obligations), and (C) all
indebtedness (including capitalized lease obligations) incurred, assumed or
given in the acquisition (whether by way of purchase, merger or otherwise) of
any business, real property or other assets (except assets acquired in the
ordinary course of the acquiror's business); (ii) any indebtedness of others
described in the preceding clause (i) which such person has guaranteed or for
which it is otherwise liable; and (iii) any amendment, renewal, extension or
refunding of any indebtedness referred to in clauses (i) and (ii) above.
"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.
"Maturity" means July 1, 2008.
"Officer" means the Chairman or co-Chairman of the Board, the Vice
Chairman of the Board, the President, any Vice President, the Treasurer or the
Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer or an Assistant Secretary of the
Company.
"Opinion of Counsel" means a written opinion from legal counsel who may
be counsel for the Company or other counsel who is acceptable to the Trustee.
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"person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof.
"principal" of a debt security means the principal of the security plus
the premium, if any, on the security.
"Responsible Officer", when used with respect to the Trustee, means any
officer of the Trustee assigned by the Trustee to administer its corporate trust
business.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" means a corporation, a majority of whose voting stock is
owned by the Company or a Subsidiary. Voting stock is Capital Stock having
voting power under ordinary circumstances to elect directors.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code xx.xx.
77aaa-77bbbb) as in effect on the date this Indenture was executed, except as
provided in Section 9.04.
"Trading Date" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which the Class A Common Stock is not traded on
the principal exchange or market on which the Class A Common Stock is traded or
quoted.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and thereafter means the successor.
"United States" means the United State of America.
SECTION 1.02. Other Definitions.
Term Defined in Section
"Bankruptcy Law" 6.01
"Custodian" 6.01
"Event of Default" 6.01
"Legal Holiday" 11.06
"Paying Agent" 2.03
"Registrar" 2.03
"Restricted Payments" 4.04
"Senior Indebtedness" 10.01
"U.S. Government Obligations" 8.01
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and
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made a part of this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Debentures.
"indenture security holder" means a Debentureholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Debentures.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rules have the
meanings assigned to them.
SECTION 1.04. Acts of Holders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of Holders
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 conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by 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 him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Debentures shall be proved by the registration of
the books of the Registrar.
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(d) 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.
(e) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the Company
shall have no obligation to do so. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
outstanding Debentures have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the outstanding Debentures shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.
SECTION 1.05. Rules of Construction. Unless the context otherwise
requires: (i) a term has the meaning assigned to it; (ii) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles; (iii) "or" is not exclusive; and (iv) words in
the singular include the plural, and words in the plural include the singular.
ARTICLE TWO
THE DEBENTURES
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SECTION 2.01. Form and Dating. The Debentures and the Trustee's
certificate of authentication shall be substantially in the form set forth in
Exhibits A and B which are incorporated in and form a part of this Indenture.
The Debentures may have notations, legends or endorsements required by law,
securities exchange rule or usage. The Company shall approve the form of the
Debentures and any notation, legend or endorsement on them and its execution
shall constitute conclusive evidence of its approval. Each Debenture shall be
dated the date of its authentication. The terms and provisions contained in the
forms of Debenture annexed hereto as Exhibits A and B shall constitute, and are
hereby expressly made, a part of this Indenture.
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SECTION 2.02. Execution and Authentication. Two Officers shall execute
the Debentures for the Company by manual or facsimile signature. The Company's
seal shall be affixed or reproduced on the Debentures.
If an Officer whose signature is on a Debenture no longer holds that
office at the time the Registrar, as hereinafter defined, authenticates the
Debenture, the Debenture shall be valid nevertheless.
A Debenture shall not be valid until the Registrar manually signs the
certificate of authentication on the Debenture. The signature shall be
conclusive evidence that the Debenture has been authenticated under this
Indenture.
The Registrar shall authenticate Debentures for original issue in the
aggregate principal amount of up to $6,000,000 upon a written order of the
Company signed by two Officers or by an Officer and an Assistant Treasurer of
the Company. The order shall specify the amount and Maturity of Debentures to be
authenticated, and the date on which the original issue of Debentures is to be
authenticated. The aggregate principal amount of Debentures outstanding at any
time may not exceed the amount set forth above except as provided in Sections
2.08 and 2.09.
The Registrar may appoint an authenticating agent acceptable to the
Company to authenticate Debentures. Unless limited by the terms of said
appointment, an authenticating agent may authenticate Debentures whenever the
Registrar may do so. Each reference in this Indenture to authentication by the
Registrar includes authentication by such authenticating agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate.
The Debentures shall be issuable only in registered form without
coupons and only in denominations of $10,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an
office or agency where Debentures may be presented for registration of transfer
or for exchange and where Debentures may be surrendered for conversion
("Registrar") and an office or agency where Debentures may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of the Debentures
and of their transfer and exchange. The Company may have one or more
co-Registrars and one or more additional Paying Agents. The term "Paying Agent"
includes any additional paying agent. The Company or any of its Subsidiaries may
act as Paying Agent, Registrar or co-Registrar.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent and shall incorporate the
provisions of the TIA. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, upon notification and delivery of necessary records, the Trustee
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shall act as such and shall be entitled to appropriate compensation in
accordance with the provisions of Section 7.07.
The Company initially appoints THE BANK OF NEW YORK, a New York banking
corporation, as Registrar and Paying Agent.
SECTION 2.04. Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent to agree in writing to hold in trust for the benefit
of the Debentureholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Debentures, and the Company and
the Paying Agent shall each notify the Trustee of any default by the Company in
making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money and
hold it as a separate trust fund. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee. Upon such payment to the
Trustee the Paying Agent shall have no further liability for the money delivered
to the Trustee.
SECTION 2.05. Debentureholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Debentureholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee at least every six months
and at such other times as the Trustee may request in writing, a list, in such
form and as of such date as the Trustee may reasonably require, of the names and
addresses of Debentureholders.
SECTION 2.06. Access of Information to Debentureholders. Within five
business days after the receipt by the Trustee of a written application by any
three or more Debentureholders stating that the applicants desire to communicate
with other Debentureholders with respect to their rights under the Indenture or
under the Debentures, and accompanied by a form of proxy or other communication
which such applicants proposed to transmit, and by reasonable proof that each
such applicant has owned a Debenture for a period of at least six months
preceding the date of such application, the Trustee shall, at its election,
either:
(a) afford to such applicants access to all information in the
possession of the Trustee as to the names and addresses of the Debentureholders;
or
(b) inform such applicants as to the approximate number of
Debentureholders according to the most recent information so furnished or
received by the Trustee, 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 all the Debentureholders copies of the form of proxy or other
communication which is specified in the request, with reasonable promptness
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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 such mailing, unless
within five days after such tender, the Trustee shall mail to such applicants,
and file with the SEC together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interests of the Debentureholders or would
be in violation of applicable law. Such written statement shall specify the
basis of such opinion.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA ss.312.
SECTION 2.07. Transfer and Exchange. (a) Where a Debenture is presented
to the Registrar or a co-Registrar with a request to register a transfer, the
Registrar shall register the transfer as requested if its requirements for such
transaction are met. To permit transfers and exchanges, upon surrender of any
Debenture for registration of transfer at the office or agency maintained
pursuant to Section 2.03, the Company shall execute and the Registrar shall
authenticate Debentures to be issued upon transfer or exchange. If so requested
by the Registrar, all Debentures presented for exchange, registration of
transfer, redemption or payment shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar, duly executed by the registered
owner or by his attorney duly authorized in writing. Any exchange or transfer
shall be without charge to the Debentureholder, except that the Company may
require payment from the Debentureholder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto. The Registrar
shall not transfer or exchange any Debenture or portion of a Debenture selected
for redemption, or transfer or exchange any Debentures for a period of 15 days
before a selection of Debentures to be redeemed.
(b) Commencing July 1, 2003, Holders of Debentures in the Form of
Exhibit A shall have the right, during the period between April 1 and May 31 of
each year, to surrender such Debentures in exchange for Debentures in the form
of Exhibit B. The Registrar shall make the exchange as requested if the
Registrar's requirements for such transactions are met. To permit such an
exchange, the Debentureholder shall deliver the Debenture for surrender,
accompanied by a letter requesting the exchange, and such other written
instrument(s) as may be requested by the Registrar, all duly executed by the
registered owner or by his attorney duly authorized in writing. Upon delivery of
the Debentures for surrender, the letter requesting such exchange, and other
written instrument(s) that may be requested by the Registrar, the Company shall
execute and the Registrar shall authenticate Debentures to be issued upon the
effective date of such exchange. The exchange shall be effective on the first
day of July following delivery of the Debentures for surrender. On the effective
date of an exchange, the Company shall pay to the exchanging Debentureholder
cash in an amount equal to any accrued interest on the Debentures up to the
effective date of such exchange. Such exchange shall be without charge to the
Debentureholder, except that the Company may require payment from the
Debentureholder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto. The Registrar shall not exchange
any Debenture or portion of a Debenture selected for redemption, or exchange any
Debentures for a period of 15 days before selection of Debentures to be
redeemed.
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SECTION 2.08. Replacement Debentures. If a mutilated Debenture is
surrendered to the Registrar or if the Holder of a Debenture claims that the
Debenture has been lost, destroyed or wrongfully taken, the Company shall issue
and the Registrar shall authenticate a replacement Debenture if the requirements
of the Company or the Registrar for such transaction are met. The Registrar may
require an indemnity bond which shall be sufficient in the judgment of the
Registrar and the Company to protect the Company, the Trustee, the Registrar,
any Agent or any authenticating agent from any loss which any of them may suffer
if a Debenture is replaced, destroyed, lost or wrongfully taken. The Company may
charge such Holder for its expenses in replacing such Debenture. Every
replacement Debenture is an additional obligation of the Company.
SECTION 2.09. Outstanding Debentures. Debentures outstanding at any
time are all Debentures authenticated by the Registrar except for those canceled
by it, those delivered to it for cancellation, and those described in this
Section 2.09. A Debenture does not cease to be outstanding because the Company
or one of its Subsidiaries holds the Debenture.
If a Debenture is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee or the Registrar receives proof satisfactory to
it that the replaced Debenture is held by a bona fide purchaser.
If the Paying Agent (other than the Company or a Subsidiary) holds on a
redemption date or maturity date money sufficient to pay Debentures payable on
that date, then on and after that date such Debentures shall be deemed to be no
longer outstanding and interest on them shall cease to accrue.
SECTION 2.10. Treasury Debentures. In determining whether the Holders
of the required amount of Debentures have concurred in any direction, waiver or
consent, and for the purpose of calculating and making payments of interest and
selecting Debentures for redemption, Debentures owned by the Company or an
Affiliate shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in relying on any direction, waiver or
consent, only Debentures the Trustee actually knows are so owned shall be so
disregarded.
SECTION 2.11. Temporary Debentures. Until definitive Debentures are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Debentures. Temporary Debentures shall be substantially in the form of
definitive Debentures but may have variations that the Company considers
appropriate for temporary Debentures. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Debentures in
exchange for temporary Debentures. Until such exchange, temporary Debentures
shall be entitled to the same rights, benefits and privileges as definitive
Debentures.
SECTION 2.12. Cancellation. The Company at any time may deliver
Debentures to the Trustee or the Registrar for cancellation. The Registrar and
Paying Agent shall forward to the Trustee any Debentures surrendered to them for
17
transfer, exchange or payment. The Trustee or the Registrar and no one else
shall cancel and may destroy any Debentures surrendered for transfer, exchange,
payment or cancellation and deliver a certificate of any such destruction to the
Company unless the Company instructs the Trustee or the Registrar in writing to
deliver the Debentures to the Company. The Company may not issue new Debentures
to replace, or reissue or recall Debentures that it has (i) paid or redeemed or
(ii) purchased or otherwise acquired and delivered to the Trustee or the
Registrar for cancellation.
SECTION 2.13. Defaulted Interest. If the Company defaults in a payment
of interest on the Debentures, it shall pay the defaulted interest to the
persons who are Debentureholders on a subsequent special record date. The
Company shall fix the special payment date and special record date. The special
record date shall be at least 15 days prior to the special payment date. At
least 15 days before such special record date, the Company shall mail to each
Debentureholder a notice that states such special record date, the special
payment date and the amount of defaulted interest to be paid. The Company may
pay defaulted interest in any other lawful manner. Pursuant to Section 4.01, the
Company shall pay interest on overdue installments of interest, to the extent
lawful.
SECTION 2.14. CUSIP Numbers. The Company in issuing the Debentures may
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Debentures or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Debentures, and any such redemption shall
not be affected by any defect in or omission of such numbers.
ARTICLE THREE
REDEMPTION
----------
SECTION 3.01. Notices to Trustee. The Debentures may be redeemed at any
time in whole or in part, at the redemption price(s) set forth in section 5 of
the Debentures. The Registrar may select for redemption portions of the
principal amount of Debentures that have denominations larger than $10,000.
Debentures and portions of them it selects shall be in amounts of $10,000 or
integral multiples of $10,000. If the Company elects to redeem Debentures, it
shall notify the Registrar in writing of the redemption date, the Maturity or
Maturities to be redeemed, and the principal amount of each Maturity of
Debentures to be redeemed. In the case of any such redemption, the Company shall
deliver to the Trustee an Officers' Certificate stating that such redemption
will comply with the provisions for redemption contained herein and in the
Debentures.
The Company shall give each notice provided for in this Section 3.01 at
least 45 days before the redemption date (except that the Trustee may in its
sole discretion waive such notice period at any time).
18
SECTION 3.02. Selection of Debentures to be Redeemed. If less than all
the Debentures of any Maturity are to be redeemed, the Registrar shall select
the Debentures to be redeemed by such method as the Registrar shall deem fair
and appropriate or if the Debentures are listed on a national securities
exchange, in accordance with the rules of such exchange. The Registrar shall
make the selection from Debentures outstanding and not previously called for
redemption. Provisions of this Indenture that apply to Debentures called for
redemption also apply to portions of Debentures called for redemption.
SECTION 3.03. Notice of Redemption. At least 30 days but not more than
90 days before a redemption date, the Company shall mail a notice of redemption
by first-class mail to each Holder of Debentures to be redeemed. The notice
shall identify the Debentures to be redeemed and shall state: (i) the redemption
date; (ii) the redemption price and accrued interest, if any; (iii) the name and
address of the Paying Agent; (iv) that Debentures called for redemption must be
surrendered to the Paying Agent to collect the redemption price and accrued
interest, if any; (v) that, unless the Company defaults in making the redemption
payments, interest on Debentures called for redemption ceases to accrue on and
after the redemption date and the only remaining right of the Holders is to
receive payment of the redemption price upon surrender to the Paying Agent of
the Debentures; (vi) if any Debenture is being redeemed in part, the portion of
the principal amount of such Debenture to be redeemed and (vii) the CUSIP
number, if any. At the Company's request and expense, the Trustee shall give the
notice of redemption in the Company's name.
SECTION 3.04. Effect of Notice of Redemption. Once a notice of
redemption is mailed, Debentures called for redemption become due and payable on
the redemption date and at the redemption price. Upon surrender to the Paying
Agent, such Debentures shall be paid at the redemption price, plus accrued
interest to the redemption date, but interest installments for which the
interest payment date is on or prior to such redemption date will be payable to
the Holders of record at the close of business on the relevant record dates
referred to in the Debentures.
SECTION 3.05. Deposit of Redemption Price. At least one Business Day
prior to the redemption date, the Company shall deposit with the Paying Agent
(or if the Company is its own Paying Agent, shall segregate and hold in trust)
immediately available funds sufficient to pay the redemption price of, and
accrued interest on, all Debentures to be redeemed on that date.
SECTION 3.06. Debentures Redeemed in Part. Upon surrender of a
Debenture that is redeemed in part, the Registrar shall authenticate for the
Holder, at the expense of the Company, a new Debenture of the same Maturity
equal in principal amount to the unredeemed portion of the Debenture
surrendered.
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ARTICLE FOUR
COVENANTS
---------
SECTION 4.01. Payment of Debentures. The Company shall pay the
principal of and interest on the Debentures on the dates and in the manner
provided in the Debentures. An installment of principal or interest shall be
considered paid on the date due if the Paying Agent (other than the Company or a
Subsidiary) holds on that date money designated for and sufficient to pay the
installment. The Company shall deposit with the Paying Agent immediately
available funds sufficient to pay the principal of or interest on the Debentures
at least one Business Day prior to the dates provided in the Debentures.
The Company shall pay interest on overdue principal and interest on
overdue installments of interest, to the extent lawful, at the rate per annum
borne by the Debentures.
SECTION 4.02. SEC Reports. Within 5 days after the Company files with
the SEC copies of its annual reports and other information, documents and
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which it is required to file with the SEC
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Company shall file the same with the Trustee. The Company also shall comply with
the other provisions of TIA ss. 314(a).
SECTION 4.03. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that a review of the activities of the Company has
been made under the supervision of the signing Officers with a view to
determining whether a Default or Event of Default has occurred and whether or
not the signers know of any Default by the Company in performing any of its
obligations under this Indenture. If they do know of such a Default, the
certificate shall describe all such Events of Default or Defaults, their status
and what action the Company is taking or proposes to take with respect thereto.
Upon becoming aware of any Default or Event of Default, the Company shall
deliver an Officers' Certificate to the Trustee specifying the Default or Event
of Default, its status and the action the Company proposes to take with respect
thereto.
SECTION 4.04. Limitation on Dividends and Stock Purchases. The Company
shall not declare or pay any dividend or make any distribution on its Capital
Stock or to its shareholders (other than dividends or distributions payable in
its Capital Stock) or purchase, redeem or otherwise acquire or retire for value,
or permit any Subsidiary to purchase or otherwise acquire for value, any Capital
Stock of the Company (collectively, "Restricted Payments") if, at the time of
such Restricted Payment, or after giving effect thereto, (i) an Event of Default
shall have occurred and be continuing, or (ii) a Default shall occur as a result
thereof; provided, however, that the provisions of this limitation on dividends
shall not prevent (A) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment complied
with the provisions of this limitation on dividends, or (B) the acquisition or
20
retirement of any shares of the Company's Capital Stock by exchange for, or out
of the proceeds of the sale of shares of, its Capital Stock.
SECTION 4.05. Pari Passu Indebtedness. There shall be no restriction on
the amount or type of Indebtedness of the Company which may be pari passu with
(i.e. having no priority of payment over and not subordinated in right of
payment to) or subordinate to the Debentures. At December 31, 1997, the Company
did not have outstanding any Debentures which rank pari passu with the
Debentures.
ARTICLE FIVE
SUCCESSOR CORPORATION
---------------------
SECTION 5.01. When the Company May Merge, etc. The Company shall not
consolidate with or merge with or into, or transfer all or substantially all of
its assets to, any other person unless (i) such other person is a corporation
organized or existing under the laws of the United States or a state thereof,
(ii) such surviving person (other than the Company) expressly assumes by
supplemental indenture all the obligations of the Company under the Debentures,
this Indenture and the other agreements related thereto, (iii) immediately after
such transaction no Default or Event of Default exists, and (iv) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or transfer and such supplemental
indenture comply with this Article and that all conditions precedent herein
provided for have been complied with. Thereafter all such obligations of the
predecessor corporation shall terminate.
ARTICLE SIX
DEFAULTS AND REMEDIES
---------------------
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any
Debenture when the same becomes due and payable and the default
continues for a period of 30 days, whether or not such payment shall be
prohibited by the provisions of Article Ten;
(2) the Company defaults in the payment of principal of any
Debenture when the same becomes due and payable at maturity, upon
redemption or otherwise, whether or not such payment shall be
prohibited by the provisions of Article Ten;
(3) the Company fails to comply with any of its other
agreements in the Debentures or this Indenture and the default
continues for the period and after the notice specified below;
21
(4) the Company pursuant to or within the meaning of any
Bankruptcy Law: (A) commences a voluntary case or proceeding, (B)
consents to the entry of an order for relief against it in an
involuntary case or proceeding, (C) consents to the appointment of a
Custodian (as defined herein) of it or for all or substantially all of
its property, or (D) makes a general assignment for the benefit of its
creditors;
(5) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (A) is for relief against the
Company in an involuntary case or proceeding, (B) appoints a Custodian
of the Company or for all or substantially all of its property, or (C)
orders the liquidation of the Company, and in each case the order or
decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A default under clause (3) is not an Event of Default until the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Debentures notify the Company of the default and the Company does not cure the
default within 60 days after receipt of the notice. The notice must specify the
default, demand that it be remedied and state that the notice is a "Notice of
Default". If the Holders of 25% in principal amount of the outstanding
Debentures request the Trustee to give such notice on their behalf, the Trustee
shall do so.
SECTION 6.02. Acceleration. If any Event of Default (other than an
Event of Default specified in Section 6.01(4) or (5)) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of at least 25% in
principal amount of the outstanding Debentures by notice to the Company and the
Trustee, may (but shall not be obligated to) declare the principal of and all
accrued interest on all the Debentures to be due and payable immediately. Upon
such declaration such principal and interest shall be due and payable
immediately. If an Event of Default specified in Section 6.01(4) or (5) occurs,
all unpaid principal and accrued interest on the Debentures then outstanding
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Debentureholder. The
Holders of a majority in principal amount of the outstanding Debentures by
notice to the Trustee may rescind an acceleration and its consequences if all
existing Events of Default have been cured or waived, except nonpayment of
principal or interest that has become due solely because of the acceleration,
and if the rescission would not conflict with any judgment or decree. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of or interest on the Debentures
or to enforce the performance of any provision of the Debentures or this
Indenture.
22
The Trustee may maintain a proceeding even if it does not possess any
of the Debentures or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Debentureholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. Subject to Sections 6.07 and
9.02, the Holders of a majority in principal amount of the outstanding
Debentures by notice to the Trustee may waive a past Default and its
consequences, except a Default under Section 6.01(1) or (2). When a Default is
so waived, it shall be deemed cured and ceases.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of outstanding Debentures may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee; provided, however: (i)
such direction shall not be in conflict with any rule of law or with this
Indenture; (ii) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the rights of any Holder not taking part in
such direction; (iii) the Trustee shall have the right to decline to follow any
such direction if the Trustee, being advised by counsel, determines that the
action so directed may not lawfully be taken or if the Trustee in good faith
shall determine that the proceedings so directed would involve it in personal
liability; or (iv) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction. In the event that the
Trustee takes any action or follows any direction pursuant to this Indenture,
the Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against all risk, loss or expense caused by taking such action or
following such direction.
SECTION 6.06. Limitation of Suits. A Debentureholder may not pursue any
remedy with respect to this Indenture or the Debentures unless: (i) the Holder
gives to the Trustee written notice of a continuing Event of Default; (ii) the
Holders of at least 25% in principal amount of the outstanding Debentures make a
written request to the Trustee to pursue the remedy; (iii) such Holder or
Holders offer and, if requested, provide to the Trustee indemnity and security
satisfactory to the Trustee against any loss, liability or expense; (iv) the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer and, if requested, provision of indemnity and security;
and (v) during such 60-day period the Holders of a majority in principal amount
of the Debentures do not give the Trustee a direction inconsistent with such
request.
A Debentureholder may not use this Indenture to prejudice the rights of
another Debentureholder or to obtain a preference or priority over another
Debentureholder.
SECTION 6.07. Rights of Holders to Receive Payment. Subject to Article
Ten and notwithstanding any other provisions of this Indenture, the right of any
Holder of a Debenture to receive payment of principal of and interest on the
Debenture, on or after the respective due dates expressed in the Debenture, or
23
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
Holder, except as to a postponement of an interest payment consented to as
provided in clause (ii) of Section 9.02.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
payment of interest or principal specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount of principal and
interest remaining unpaid, together with interest on overdue principal and, to
the extent that the payment of such interest is lawful, interest on overdue
installments of interest.
SECTION 6.09. Trustee May File Proof of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and any predecessor Trustee and the Debentureholders allowed in any
judicial proceedings relative to the Company, its creditors or its property.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Debentureholder 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 Debentureholder in any such proceedings.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant to
this Article Six, it shall pay out the money in the following order: (i) first,
to the Trustee and any predecessor Trustee for costs and expenses of collection
of such monies and for compensation payable to the Trustee or its agents and
counsel and all other expenses, liabilities, advances and other amounts
incurred, made or due under Section 7.07; (ii) second, to holders of Senior
Indebtedness of the Company to the extent required by Article Ten; (iii) third,
to Debentureholders for amounts due and unpaid on the Debentures for principal
and interest, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Debentures for principal and interest,
respectively; and (iv) fourth, to the Company. The Trustee may fix a record date
and payment date for any payment to Debentureholders pursuant to this Section.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard for the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the outstanding Debentures.
24
ARTICLE SEVEN
TRUSTEE
-------
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default; (i) the
Trustee need perform only those duties that are specifically set forth in this
Indenture and no others; and (ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture;
the Trustee, however, shall examine the certificates and opinions submitted in
accordance with Section 11.03 to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that: (i) this paragraph does not limit the effect of
paragraph (b) of this Section 7.01; (ii) the Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right or
power or risk its own funds or otherwise incur any financial liability unless it
receives indemnity satisfactory to it against any and all loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree with Company.
(g) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
25
SECTION 7.02. Rights of Trustee. Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, which shall conform with the
provisions of Section 11.04. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or opinion.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee may consult with counsel and the advice or opinion of
such counsel as to matters of law shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advise or opinion of such
counsel.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders of the Debentures, pursuant to the provisions of
this Indenture, unless such Holders shall have offered to the Trustee security
and indemnity, satisfactory to the Trustee in its sole discretion, against all
costs, expenses and liabilities which might be incurred by the Trustee therein
or thereby.
(g) The Trustee shall not be obligated to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or any other paper or document; provided, however, the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit. Nothing contained in this Indenture shall create any
liability to the Trustee in the event it elects to make or not to make a further
inquiry or investigation to which it is entitled as aforesaid.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Debentures
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not the Trustee. Any Agent may do the same with like
rights. The Trustee, however, must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
26
this Indenture or the Debentures; it shall not be accountable for the Company's
use of the proceeds from the Debentures; and, subject to any liabilities which
may be found to exist under the provisions of the Federal securities laws, shall
not be responsible for any statement of the Company in this Indenture or any
document issued in connection with the sale of the Debentures or any statement
in the Debentures other than its certificate of authentication or in any
prospectus used in connection with the sale of such Debentures, other than
statements provided in writing by the Trustee for use in such prospectus.
SECTION 7.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each
Debentureholder notice of the Default within 90 days after it occurs, or if it
becomes known to the Trustee after such 90 days, as soon as practicable after it
becomes known to the Trustee. Except in the case of a Default in payment of
principal of or interest on any Debenture or any amounts due on redemption, the
Trustee may withhold the notice if and so long as the board of directors of the
Trustee, the executive or any trust committee of such board and/or Responsible
Officers of the Trustee in good faith determine(s) that withholding the notice
is in the interest of Debentureholders.
SECTION 7.06. Reports by Trustees to Holders. Within 60 days after each
May 15, beginning with May 15, 1998, the Trustee shall mail to each
Debentureholder a brief report dated as of such May 15 that complies with TIA
ss. 313(a). The Trustee also shall comply with TIA ss. 313(b), (c) and (d).
A copy of each such report at the time of its mailing to
Debentureholders shall be filed by the Company with the SEC and each stock
exchange on which the Debentures are listed. The Trustee shall furnish the
Company with copies of such reports sufficiently in advance of its mailing to
Debentureholders to permit the Company to make such filings in a timely manner.
The Company shall notify the Trustee when the Debentures are listed on any stock
exchange.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee such compensation for its services as the Company and the Trustee shall
from time to time agree in writing. The Trustee's compensation hereunder shall
not be limited by any law on compensation relating to the trustee of an express
trust. The Company shall reimburse the Trustee upon request for reasonable
disbursements, advances and expenses incurred or made by it in connection with
its duties hereunder. The Company shall indemnify each of the Trustee and any
predecessor Trustee against any loss or liability incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder, including the reasonable expenses and attorneys' fees of defending
itself against any claim of liability arising hereunder. The Company shall
defend any claim against the Trustee of which the Company has notice. The
Trustee may have separate counsel, and if it does, the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not reimburse any
expenses or indemnify against any loss or liability incurred by the Trustee
through the Trustee's negligence or bad faith.
27
The obligations of the Company under this Section 7.07 to indemnify and
compensate the Trustee to pay or reimburse the Trustee for such expenses,
disbursements, and advances shall constitute Indebtedness. To secure the
Company's payment obligations in this Section, the Trustee shall have a lien
prior to the Debentures on all money or property held or collected by the
Trustee, except that held in trust to pay principal of or interest on particular
Debentures.
When the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in Section 6.01(4) or (5), the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
SECTION 7.08. Replacement of Trustee. A resignation or removal of the
Trustee and the appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as provided in this
Section. The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Debentures may remove the
Trustee by so notifying the Trustee and the Company, and may appoint a successor
Trustee with the Company's consent. The Company may remove the Trustee if: (i)
the Trustee fails to comply with Section 7.10; (ii) the Trustee is adjudged a
bankrupt or an insolvent; (iii) a receiver or other public officer takes charge
of the Trustee or its property; or (iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately thereafter,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee (subject to the lien provided for in Section 7.07), the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession to
each Debentureholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in principal amount of the outstanding Debentures may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Debentureholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee, provided, however, that if the
Trustee shall fail to comply with TIA ss. 310(b)(i), only a Debentureholder who
has been a bona fide holder of the Debentures for at least six months and has
requested the Trustee in writing to comply with such provision may so petition
such court.
28
SECTION 7.09. Successor Trustee by Merger, etc. If the Trustee
consolidates with, merges or converts into or transfers all or substantially all
of its corporate trust business to, another corporation, the successor
corporation without any further act shall be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification. There shall at all times
be a trustee hereunder which shall be a corporation organized and doing business
under the laws of the United States or of any state thereof authorized under
such laws to exercise corporate trust powers, shall be subject to supervision or
examination by Federal or state authority and shall at all times have a combined
capital and surplus of at least $1,000,000. If such trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervisory or examining authority, then for the purposes of this Section 7.10,
the combined capital and surplus of such trustee shall be deemed to be its
combined capital and surplus as set forth in its most recent published annual
report of condition. This Indenture shall always have a trustee who satisfies
the requirements of TIA ss.310(a)(1) and (2) and the Trustee shall comply with
TIA ss.310(b).
SECTION 7.11. Preferential Collection of Claims Against the Company.
The Trustee shall be subject to TIA ss. 311(a), excluding any creditor
relationship arising as provided in TIA ss. 311(b). A Trustee who has resigned
or been removed shall be subject to TIA ss. 311(a) to the extent indicated.
SECTION 7.12. Paying Agents. The Company shall cause each Paying Agent
other than the Trustee to execute and deliver to it and the Trustee an
instrument in which such Agent shall agree with the Trustee, subject to the
provisions of this Section 7.12; (i) that it will hold sums held by it as Agent
for the payment of principal of or interest on the Debentures (whether such sums
have been paid to it by the Company or by any obligor on the Debentures) in
trust for the benefit of Holders of the Debentures; (ii) that it will at any
time during the continuance of any Event of Default, upon written request from
the Trustee, deliver to the Trustee all sums so held in trust by it; (iii) that
it will give the Trustee written notice within three Business Days of any
failure of the Company (or by any obligor on the Debentures) in the payment of
any installment of the principal of or interest on the Debentures when the same
shall be due and payable; and (iv) that it will comply with the provisions of
the TIA applicable to it.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
----------------------
SECTION 8.01. Termination of the Company's Obligations. The Company may
terminate all of its obligations under the Debentures and this Indenture if all
Debentures previously authenticated and delivered (other than destroyed, lost or
stolen Debentures which have been replaced or paid) have been delivered to the
Trustee for cancellation or if:
29
(1) the Debentures mature within one year or all of them are
to be called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption;
(2) the Company irrevocably deposits in trust with the Trustee
money or direct non-callable obligations of, or non-callable
obligations guaranteed by, the United States for the payment of which
guarantee or obligation the full faith and credit of the United States
is pledged ("U.S. Government Obligations"), sufficient to pay principal
of and interest on the outstanding Debentures to maturity or
redemption, as the case may be, and immediately after making the
deposit, the Company shall give notice of such event to the
Debentureholders; provided, however, that if such irrevocable deposit
in trust with the Trustee of cash or U.S. Government Obligations is
made, the Company shall have delivered to the Trustee either an Opinion
of Counsel with no material qualifications in form and substance
satisfactory to the Trustee to the effect that Holders of the
Debentures (i) will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit (and the defeasance
contemplated in connection therewith) and (ii) will be subject to
Federal income tax on the same amounts and in the same manner and at
the same times as would have been the case if such deposit and
defeasance had not occurred, or an applicable favorable ruling to that
effect is received from or published by the Internal Revenue Service;
(3) the Company has paid or caused to be paid all sums then
payable by the Company to the Trustee hereunder as of the date of such
deposit; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for herein relating to the satisfaction and
discharge of this Indenture have been complied with. The Company's
obligations in paragraph 9 of the Debentures and in Sections 2.03,
2.04, 2.05, 2.07, 2.08, 4.01, 7.07 and 8.03, however, shall survive
until the Debentures are no longer outstanding. Thereafter, the
Company's obligations in such paragraph 9 and in Sections 7.07 and 8.03
shall survive.
After such irrevocable deposit and delivery of an Officers' Certificate
and Opinion of Counsel pursuant to this Section 8.01, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Debentures and this Indenture except for those surviving obligations
specified above.
SECTION 8.02. Application of Trust Money. The Trustee shall hold in
trust money and U.S. Government Obligations deposited with it pursuant to
Section 8.01. It shall apply the deposited money through the Paying Agent and in
accordance with this Indenture to the payment of principal of and interest on
Debentures. Money and U.S. Government Obligations so held in trust shall not be
subject to Article Ten.
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SECTION 8.03. Repayment to the Company. Subject to Section 7.07, the
Trustee and the Paying Agent shall promptly pay to the Company upon request any
excess money or securities held by them at any time. The Trustee and the Paying
Agent shall pay to the Company upon request any money held by them for the
payment of principal or interest that remains unclaimed for two years, provided
such request is made by the Company within one year after the expiration of such
two year period that such money remains unclaimed. Thereafter, the Company shall
have no right to request repayment of unclaimed money, and such unclaimed money
shall be held and disposed of by the Trustee in accordance with applicable law.
The Trustee and the Paying Agent shall have no right to request or require that
the Company accept repayment of any unclaimed money.
The Trustee or the Paying Agent, before being required to make any
repayment to the Company of unclaimed money, may at the expense of the Company
mail to each Holder who has failed to claim a payment of interest or principal
which is due, notice that such money remains unclaimed and that, after a date
specified therein (which shall not be less than 30 days from the date of such
mailing), any unclaimed balance of such money then remaining will be repaid to
the Company. After payment to the Company, Debentureholders entitled to such
money must look to the Company for payment as general creditors unless
applicable abandoned property law designates another person, and all liability
of the Trustee or Paying Agent with respect to such money shall thereupon cease.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
-----------------------------------
SECTION 9.01. Without Consent of Holders. The Company, with the consent
of Trustee, may amend or supplement this Indenture or the Debentures without
notice to or consent of any Debentureholder: (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Section 5.01; or (iii) to
make any change that does not adversely affect the rights of any
Debentureholder. The Trustee shall not be obligated to enter into any
supplemental indenture which affects its own rights, duties or immunities under
this Indenture.
SECTION 9.02. With Consent of Holders. The Company, with the consent of
the Trustee, may amend or supplement this Indenture or the Debentures without
notice to any Debentureholder, but with the written consent of the Holders of at
least a majority in principal amount of the outstanding Debentures. The Holders
of a majority in principal amount of the outstanding Debentures may waive
compliance by the Company with any provision of this Indenture or the Debentures
without notice to any Debentureholder. Without the consent of each
Debentureholder affected, however, an amendment, supplement or waiver, including
a waiver pursuant to Section 6.04, may not: (i) reduce the amount of Debentures
whose Holders must consent to an amendment, supplement or waiver; (ii) reduce
the rate of or extend the time for payment of interest on any Debenture (except
that Holders of not less than 75% in principal amount of all outstanding
Debentures may consent, on behalf of the Holders of all of the outstanding
Debentures, to the postponement of any interest payment for a period not
31
exceeding three years from its due date); (iii) reduce the principal of or
extend the fixed maturity of any Debenture; (iv) waive a default in the payment
of the principal of or interest on, or other redemption payment with respect to,
any Debenture, (v) make any Debenture payable in money other than that stated in
the Debenture; (vi) make any change in Article Ten that adversely affects the
rights of any Debentureholder; or (vii) make any change in Section 6.04, 6.07 or
the third sentence of this Section 9.02.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment.
It shall not be necessary for the consent of the Holders under this
section to approve the particular form of any proposed amendment or supplement,
but it shall be sufficient if such consent approved the substance thereof.
Upon the request of the Company, accompanied by a resolution of the
Board of Directors or any duly authorized committee thereof, authorizing the
execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence satisfactory to the Trustee of the consent of the
Debentureholders as aforesaid, the Trustee shall join with the Company in
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
accepting the additional trust 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
7.01) 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 be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.04. Compliance with Trust Indenture Act. Every amendment to
or supplement of this Indenture or the Debentures shall comply with the TIA as
then in effect.
SECTION 9.05. Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to an amendment, supplement or
waiver by a Holder of a Debenture is a continuing consent by the Holder and
every subsequent Holder of that Debenture or portion of that Debenture that
evidences the same debt as the consenting Holder's Debenture, even if notation
of the consent is not made on any Debenture. Any such Holder or subsequent
Holder, however, may revoke the consent as to his Debenture or portion of a
Debenture. Such revocation shall be effective only if the Trustee receives the
notice of revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective on receipt
by the Trustee of written consents from the Holders of the requisite percentage
in principal amount of the outstanding Debentures.
32
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided, that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is six months after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
After an amendment, supplement or waiver becomes effective, it shall
bind every Debentureholder unless it makes a change described in any of clauses
(i) through (vii) of Section 9.02. In that case the amendment, supplement or
waiver shall bind each Holder of a Debenture who has consented to it and every
subsequent Holder of a Debenture or portion of a Debenture that evidences the
same debt as the consenting Holder's Debenture (except that an amendment,
supplement or wavier postponing any interest payment for a period not exceeding
three years from its due date shall, as provided in clause (ii) of Section 9.02,
bind all Debentureholders upon the consent of Holders of not less than 75% in
principal amount of all outstanding Debentures).
SECTION 9.06. Notation on or Exchange of Debentures. If an amendment,
supplement or waiver changes the terms of a Debenture, the Trustee may require
the Holder of the Debenture to deliver it to the Trustee. The Trustee may place
an appropriate notation on the Debenture about the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Debenture shall issue and the Trustee shall
authenticate a new Debenture that reflects the changed terms. Failure to make
the appropriate notation or issue a new Debenture shall not affect the validity
and effect of such amendment, supplement or waiver.
SECTION 9.07. Trustee to Sign Amendments, etc. The Trustee may but need
not sign any amendment, supplement or waiver authorized pursuant to this Article
if the amendment, supplement or waiver adversely affects the rights of the
Trustee. The Trustee shall be entitled to request and receive an indemnity
satisfactory to it before signing any amendment, supplement or waiver.
ARTICLE TEN
SUBORDINATION
-------------
SECTION 10.01. Agreement to Subordinate. The Company, for itself and
its successors, and each Holder, by his acceptance of Debentures, agrees that
the payment of the principal of, interest on or any other amounts due on the
Debentures is subordinated in right of payment, to the extent and in the manner
stated in this Article Ten, to the prior payment in full of all Senior
Indebtedness. Each Holder by his acceptance of the Debentures authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
33
appropriate to effectuate, as between the holders of Senior Indebtedness and
such Holder, the subordination provided in this Article Ten and appoints the
Trustee his attorney-in-fact for such purpose.
This Article Ten shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions of this Article Ten are made for the
benefit of the holders of Senior Indebtedness, and such holders are made
obligees under this Article Ten and they and/or each of them may enforce such
provisions of this Article Ten. The Trustee has no fiduciary duties or
obligations to holders of Senior Indebtedness.
"Senior Indebtedness" means Indebtedness of the Company outstanding at
any time, whether outstanding on the date hereof or hereafter created, which (i)
is secured, in whole or in part, by any asset or assets owned by the Company or
a Subsidiary, or (ii) arises from unsecured borrowings by the Company from a
commercial bank, a savings bank, a savings and loan association, an insurance
company, a company whose securities are traded in a national securities market,
or any majority-owned subsidiary of any of the foregoing, or (iii) arises from
unsecured borrowings by the Company from any pension plan (as defined in ss.
3(2) of the Employee Retirement Income Security Act of 1974, as amended), or
(iv) arises from borrowings by the Company which are evidenced by commercial
paper, or (v) other unsecured borrowings by the Company which are subordinate to
Indebtedness of a type described in clauses (i), (ii) or (iv) above if,
immediately after the issuance thereof, the total capital, surplus and retained
earnings of the Company exceed the aggregate of the outstanding principal amount
of such borrowings, or (vi) is a guarantee or other liability of the Company of
or with respect to Indebtedness of a Subsidiary of a type described in any of
clause (ii), (iii) or (iv) above.
SECTION 10.02. Debentures Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of the Company. Upon
any distribution of assets of the Company in any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or otherwise);
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full of all principal thereof, interest due thereon and other
amounts due thereon before the Holders of the Debentures are entitled to receive
any payment on account of the principal of or interest on the Debentures;
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders of the
Debentures or the Trustee on behalf of the Holders of the Debentures would be
entitled except for the provisions of this Article Ten, including any such
payment or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated or the
payment of the Debentures, shall be paid by the liquidating trustee or agent or
other person making such payment or distribution directly to the holders of the
Senior Indebtedness or their representative (pro rata as to each such holder or
34
representative on the basis of the respective amounts of unpaid Senior
Indebtedness held or represented by each), to the extent necessary to make
payment in full of all Senior Indebtedness remaining unpaid, after giving effect
to any concurrent payment or distribution or provision therefor to the holders
of such Senior Indebtedness, except that Holders of the Debentures shall be
entitled to receive securities that are subordinated to Senior Indebtedness to
at least the same extent as the Debentures; and
(c) in the event that notwithstanding the foregoing provisions of this
Section 10.02, any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, including any such
payment or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated to the
payment of the Debentures, shall be received by the Trustee or the Holders of
the Debentures on account of principal of or interest on the Debentures before
all Senior Indebtedness is paid in full, or effective provision made for its
payment, such payment or distribution (subject to the provisions of Sections
10.05 and 10.06) shall be received and held in trust for and shall be paid over
to the holders of the Senior Indebtedness remaining unpaid or unprovided for or
their representative (pro rata as provided in subsection (b) above), for
application to the payment of such Senior Indebtedness until all such Senior
Indebtedness shall have been paid in full, after giving effect to any concurrent
payment or distribution or provision therefor to the holders of such Senior
Indebtedness, except that Holders of the Debentures shall be entitled to receive
securities that are subordinated to Senior Indebtedness to at least the same
extent as the Debentures.
The Company shall give prompt written notice to the Trustee of any dissolution,
winding up, liquidation or reorganization of the Company and of any fact known
to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Debentures.
SECTION 10.03. Debentureholders to be Subrogated to Rights of Holders
of Senior Indebtedness. Subject to the payment in full of all Senior
Indebtedness pursuant to this Article Ten, the Holders of the Debentures shall
be subrogated equally and ratably to the right of the holders of the Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness until all amounts owing on the Debentures
shall be paid in full, and for the purpose of such subrogation no payments or
distributions to the holders of the Senior Indebtedness by or on behalf of the
Company or by or on behalf of the Holders of the Debentures by virtue of this
Article Ten which otherwise would have been made to the Holders of the
Debentures shall, as among the Company, its creditors other than holders of the
Senior Indebtedness and the Holders of the Debentures, be deemed to be payment
by the Company to or on account of the Senior Indebtedness, it being understood
that the provisions of this Article Ten 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 the Senior Indebtedness, on the other hand.
SECTION 10.04. Obligation of the Company Unconditional. Nothing
contained in this Article Ten or elsewhere in this Indenture or in any Debenture
is intended to or shall impair, as between the Company, its creditors other than
35
Holders of Senior Indebtedness 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 interest on the Debentures as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders of the Debentures and
creditors of the Company, other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee or the Holder of any
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article Ten of the holders of Senior Indebtedness in respect of cash, property
or securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets of the Company referred to in this Article Ten, the
Trustee, subject to the provisions of Sections 7.01 and 7.02, and the Holders of
the Debentures shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee or the Holders of the Debentures, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Ten.
Nothing contained in this Article Ten or elsewhere in this Indenture or
in any Debenture is intended to or shall affect the obligation of the Company to
make or prevent the Company from making, at any time except during the pendency
of any dissolution, winding-up, liquidation or reorganization proceeding,
payments at any time of the principal of or interest on the Debentures.
SECTION 10.05. Knowledge of Trustee. Notwithstanding any provisions of
this Indenture, the Trustee shall not be charged with actual knowledge of the
existence of any facts which would prohibit the making of any payment of monies
to or by the Trustee, or the taking or not taking of any other action by the
Trustee, until two Business Days after the Trustee through a Responsible Officer
shall have received written notice thereon from the Company, any Debentureholder
or any Paying Agent or the holder or representative of any class of Senior
Indebtedness.
SECTION 10.06. Application by Trustee of Monies Deposited With It. If
at least two Business Days prior to the date on which by the terms of this
Indenture any monies deposited with the Trustee or any Paying Agent may become
payable for any purpose (including, without limitation, the payment of either
the principal of or the interest on any Debenture) the Trustee shall not have
received with respect to such monies the notice provided for in Section 10.05,
then the Trustee shall have full power and authority to receive such monies and
to apply the same to the purpose for which they were received and shall not be
affected by any notice to the contrary which may be received by it on or after
such date. This Section shall be construed solely for the benefit of the Trustee
and Paying Agent and shall not otherwise affect the rights of holders of Senior
Indebtedness.
36
SECTION 10.07. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness. No right of any present or
future holders of any Senior Indebtedness to enforce subordination as provided
herein shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms of this Indenture, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of Senior Indebtedness
may extend, renew, modify or amend the terms of the Senior Indebtedness or any
security therefor and release, sell or exchange such security and otherwise deal
freely with the Company, all without affecting the liabilities and obligations
of the parties to the Indenture or the Holders. No provision in any supplemental
indenture which affects the superior position of the holders of any then
existing Senior Indebtedness shall be effective against the holders of the
Senior Indebtedness who have not consented thereto.
SECTION 10.08. Debentureholders Authorize Trustee to Effectuate
Subordination of Debentures. Each Holder of the Debentures by acceptance thereof
authorizes and expressly directs the Trustee on its, his or her behalf to take
such action as may be necessary or appropriate in the sole discretion of the
Trustee to effectuate the subordination provided in this Article Ten and
appoints the Trustee its, his or her attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise),
the immediate filing of a claim for the unpaid balance of its, his or her
Debentures in the form required in said proceedings and cause said claim to be
approved; provided, however, that the Trustee shall not be liable for any action
or failure to act in accordance with this Article Ten. If the Trustee does not
file a proper claim or proof of debt in the form required in such proceeding
prior to 30 days before the expiration of the time to file such claim or claims,
then the holders of Senior Indebtedness have the right to file and are hereby
authorized to file an appropriate claim for and on behalf of the Holders of said
Debentures.
SECTION 10.09. Right of Trustee to Hold Senior Indebtedness. The
Trustee shall be entitled to all of the rights set forth in this Article Ten in
respect of any Senior Indebtedness at any time held by it to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall be
construed to deprive the Trustee of any of its rights as such holder.
SECTION 10.10. Article Ten Not to Prevent Events of Default. The
failure to make a payment on account of principal shall not be construed as
preventing the occurrence of an Event of Default under Section 6.01.
SECTION 10.11. No Fiduciary Duty Created to Holders of Senior
Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
37
any fiduciary duty to the holders of Senior Indebtedness by virtue of the
provisions of this Article Ten.
SECTION 10.12. Trustee's Compensation Not Prejudiced. Nothing in this
Article Ten shall apply to amounts due to the Trustee pursuant to Section 7.07.
ARTICLE ELEVEN
CONVERSION OF SECURITIES
------------------------
SECTION 11.01. Conversion Privilege and Conversion Price. Subject to
and upon compliance with the provisions of this Article, at the option of the
Holder thereof, the principal amount of any Debenture or any portion thereof
which is $10,000 or an integral multiple of $10,000, together with all accrued
interest on the principal so converted, may be converted into fully paid and
non-assessable shares (calculated as to each conversion to the nearest 1/100 of
a share) of Class A Common Stock of the Company, 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 April 1, 2008. In case
a Debenture or portion thereof is called for redemption, such conversion right
in respect of the Debenture or portion so called shall expire at the close of
business on the date which is ten days prior to the Redemption Date unless the
Company defaults in making the payment due upon redemption.
The price at which shares of Class A Common Stock shall be delivered
upon conversion (herein called the "conversion price") shall be initially $_____
per share of Class A Common Stock. The conversion price shall be adjusted
periodically as set forth in the schedule set out in Section 8 of the Forms of
Debenture attached hereto as Exhibits A and B. In addition, the Company reserves
the right, from time to time in its discretion, to establish conversion prices
per share which are less than the conversion prices so specified, which lower
prices shall remain in effect for such periods as the Company may determine and
as shall be set forth in the written notice to holders of Debentures required by
Section 11.05. The conversion price shall also be adjusted in certain instances
as provided in this Article.
SECTION 11.02. Exercise of Conversion Privilege. In order to exercise
the conversion privilege, the Holder of any Debenture to be converted shall
surrender such Debenture, duly endorsed or assigned to the Company or in blank,
at any office or agency of the Company maintained for that purpose pursuant to
Section 2.03, accompanied by written notice to the Company (substantially in the
form set forth in the form of Debenture) that the Holder elects to convert such
Debenture or, if less than the entire principal amount thereof is to be
converted, the portion thereof to be converted.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Debentures for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Debentures as Holders shall cease, and the Person or Persons
38
entitled to receive the Class A Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such Class A Common
Stock at such time. As promptly as practicable on or after the conversion date,
the Company shall issue and shall deliver at such office or agency a certificate
or certificates for the number of full shares of Class A Common Stock issuable
upon conversion, together with payment in lieu of any fraction of a share, as
provided in Section 11.03.
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 the Holder thereof, at the expense of the Company, a new Debenture of
authorized denominations in aggregate principal amount equal to the unconverted
portion of the principal amount of such Debenture.
SECTION 11.03. Fractions of Shares. No fractional shares of Class A
Common Stock shall be issued upon conversion of Securities. If more than one
Security 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) so surrendered, together with accrued interest on the
principal so converted. Instead of any fractional share of Class A Common Stock
which would otherwise be issuable upon conversion of any Debenture (or specified
portions thereof), the Company shall pay a cash adjustment in respect of such
fraction in an amount equal to the portion of the principal and/or accrued
interest not so converted.
SECTION 11.04. Adjustment of Conversion Price. (a) In case the Company
shall pay or make a dividend or other distribution on any class of capital stock
of the Company in shares of Class A Common Stock, the conversion price in effect
at the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced to a conversion price determined by multiplying
such conversion price by a fraction of which the numerator shall be the number
of shares of Class A Common Stock outstanding at the close of business on the
date fixed for such determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
For the purposes of this paragraph (a), the number of shares of Class A Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company or which shall have been otherwise acquired by the Company but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Class A Common Stock. The Company will not pay any
dividend or make any distribution on shares of Class A Common Stock held in the
treasury of the Company.
(b) Subject to the last sentence of paragraph (e) of this Section, in
case the Company shall issue rights or warrants to all holders of its Class A
Common Stock entitling them to subscribe for or purchase shares of Class A
Common Stock at a price per share less than the current market price per share
(determined as provided in paragraph (f) of this Section) of the Class A Common
Stock on the date fixed for the determination of the shareholders entitled to
receive such rights or warrants, the conversion price in effect at the opening
39
of business on the day following the date fixed for such determination shall be
reduced to a conversion price determined by multiplying such conversion price by
a fraction of which the numerator shall be the number of shares of Class A
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Class A Common Stock which the
aggregate of the offering price of the total number of shares of Class A Common
Stock so offered for subscription or purchase would purchase at such current
market price and the denominator shall be the number of shares of Class A Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Class A Common Stock so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (b), the number of shares of
Class A Common Stock at any time outstanding shall not include shares held in
the treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Class A Common
Stock. The Company will not issue any rights or warrants in respect of shares of
Class A Common Stock held in the treasury of the Company.
(c) In case outstanding shares of Class A Common Stock shall be
subdivided into a greater number of shares of Class A Common Stock, the
conversion price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and, conversely, in case outstanding shares of Class A Common Stock
shall each be combined into a smaller number of shares of Class A Common Stock,
the conversion price in effect at the opening of business on the day following
the day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(d) Subject to the last sentence of this paragraph (d) and the last
sentence of paragraph (e) of this Section, in case the Company shall, by
dividend or otherwise, distribute to all holders of its Class A Common Stock
evidences of its indebtedness, shares of any class of capital stock, cash or
assets (including securities, but excluding those rights or warrants referred to
in paragraph (b) of this Section, any dividend or distribution paid exclusively
in cash and any dividend or distribution referred to in paragraph (a) of this
Section), the conversion price shall be adjusted so that the same shall equal
the price determined by multiplying the conversion price in effect immediately
prior to the close of business on the date fixed for the determination of
shareholders entitled to receive such distribution by a fraction of which the
numerator shall be the current market price per share (determined as provided in
paragraph (f) of this Section) of the Class A Common Stock on the date fixed or
such determination less the then fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Trustee) of the portion of the assets, securities or
evidences of indebtedness so distributed applicable to one share of Class A
Common Stock and the denominator shall be such current market price per share of
the Class A Common Stock, such adjustment to become effective immediately prior
to the opening of business on the day following the date fixed for the
40
determination of shareholders entitled to receive such distribution. If the
Board of Directors determines the fair market value of any distribution for
purposes of this paragraph (d) by reference to the actual or when issued trading
market for any securities comprising such distribution, it must in doing so
consider the prices in such market over the same period used in computing the
current market price per share pursuant to paragraph (f) of this Section.
Notwithstanding the foregoing, in the event that the Company shall distribute
rights or warrants (other than those referred to in paragraph (b) of this
Section) ("Rights") pro rata to holders of Class A Common Stock, the Company
shall make proper provision so that each Holder of a Debenture who converts such
Debenture (or any portion thereof) after the record date for such distribution
and prior to the expiration or redemption of the Rights shall be entitled to
receive upon such conversion, in addition to the shares of Class A Common Stock
issuable upon such conversion (the "Conversion Shares"), a number of Rights to
be determined as follows: (i) if such conversion occurs on or prior to the date
for the distribution to the holders of Rights of separate certificates
evidencing such Rights (the "Distribution Date"), the same number of Rights to
which a holder of a number of shares of Class A Common Stock equal to the number
of Conversion Shares is entitled at the time of such conversion in accordance
with the terms and provisions of and applicable to the Rights; and (ii) if such
conversion occurs after the Distribution Date, the same number of Rights to
which a holder of the number of shares of Class A Common Stock into which the
principal amount of the Debenture so converted was convertible immediately prior
to the Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the Rights.
(e) The reclassification of Class A Common Stock into securities other
than Class A Common Stock (other than any reclassification upon a consolidation
or merger to which Section 11.11 applies) shall be deemed to involve (i) a
distribution of such securities other than Class A Common Stock to all holders
of Class A Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of shareholders entitled
to receive such distribution" within the meaning of paragraph (d) of this
Section), and (ii) a subdivision or combination, as the case may be, of the
number of shares of Class A Common Stock outstanding immediately prior to such
reclassification into the number of shares of Class A Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective" or "the day
upon which such combination becomes effective", as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the meaning
of paragraph (c) of this Section). Rights or warrants issued by the Company to
all holders of its Class A Common Stock entitling the holders thereof to
subscribe for or purchase shares of Class A Common Stock, which rights or
warrants (i) are deemed to be transferred with such shares of Class A Common
Stock, (ii) are not exercisable and (iii) are also issued in respect of future
issuances of Class A Common Stock, in each case in clauses (i) through (iii)
until the occurrence of a specified event or events ("Trigger Event"), shall for
purposes of this Section 11.04 not be deemed issued until the occurrence of the
earliest Trigger Event.
(f) For the purpose of any calculation under paragraphs (b) and (d) of
this Section, the current market price per share of Class A Common Stock on any
41
date shall be deemed to be the average of the Closing Prices for the 20
consecutive Trading Days selected by the Company commencing not more than 20
Trading Days before, and ending not later than the day in question, provided,
however, that (i) if the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
conversion price pursuant to paragraph (a), (b), (c) or (d) above occurs on or
after the 20th Trading Day prior to the day in question and prior to the "ex"
date for the issuance or distribution requiring such computation, the Closing
Price for each Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by which the
conversion price is so required to be adjusted as a result of such other event,
(ii) if the "ex" date for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the conversion price
pursuant to paragraph (a), (b), (c) or (d) above occurs on or after the "ex"
date for the issuance or distribution requiring such computation and on or prior
to the day in question, the Closing Price for each Trading Day on and after the
"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the reciprocal of the fraction by which the conversion price is so
required to be adjusted as a result of such other event, and (iii) if the "ex"
date for the issuance or distribution requiring such computation is on or prior
to the day in question, after taking into account any adjustment required
pursuant to clause (ii) of this proviso, the Closing Price for each Trading Day
on or after such "ex" date shall be adjusted by adding thereto the amount of any
cash and the fair market value on the day in question (as determined by the
Board Directors in a manner consistent with any determination of such value for
purposes of paragraph (d) of this Section, whose determination shall be
conclusive and described in a Board Resolution) of the evidences of
indebtedness, shares of capital stock or assets being distributed applicable to
one share of Class A Common Stock as of the close of business on the day before
such "ex" date. For purposes of this paragraph, the term "ex" date, (i) when
used with respect to any issuance or distribution, means the first date on which
the Class A Common Stock trades regular way on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the right to
receive such issuance or distribution, (ii) when used with respect to any
subdivision or combination of shares of Class A Common Stock, means the first
date on which the Class A Common Stock trades regular way on such exchange or in
such market after the time at which such subdivision or combination becomes
effective, and (iii) when used with respect to any tender offer means the first
date on which the Class A Common Stock trades regular way on such exchange or in
such market after the Expiration Time of such tender offer.
(g) No adjustment in the conversion price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price,
provided, however, that any adjustment which by reason of this paragraph (g) is
not required to be made shall be carried forward and taken into account in any
subsequent adjustment in the same calendar year; and provided, further that all
calculations under this paragraph (g) shall be made to the nearest cent.
(h) In addition to the adjustments in conversion price required by
paragraphs (a), (b), (c) and (d), of this Section, the Company may from time to
42
time in its discretion make such decreases in the conversion price as it
considers to be advisable in order to avoid or diminish any federal income tax
to any holders of shares of Class A Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to purchase or subscribe
for stock or from any event treated as such for federal income tax purposes or
for any other reasons.
SECTION 11.05. Notice of Adjustments of Conversion Price. Whenever the
conversion price is adjusted as herein provided:
(a) if the adjustment is pursuant to Section 11.04, the Company shall
compute the adjusted conversion price in accordance with Section 11.04 and shall
prepare a certificate signed by the chief financial officer or the Treasurer of
the Company setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency maintained for the
purpose of conversion of Debentures pursuant to Section 2.03; and
(b) if the adjustment is pursuant to exercise of the Company's
discretion pursuant to Section 11.03, an Officer's Certificate setting forth the
reduced conversion price and the duration of the lower conversion price shall
forthwith be filed at each office or agency maintained for the purpose of
conversion of Debentures pursuant to Section 2.03; and
(c) a notice stating that the conversion price has been reduced or
adjusted and setting forth the reduced or adjusted conversion price (and the
duration, if applicable) shall forthwith be required, and as soon as practicable
after it is required, such notice shall be mailed by the Company to all Holders
at their last addresses as they shall appear in the register of Debentures.
SECTION 11.06. Notice of Certain Corporate Actions. In case:
(a) the Company shall declare a dividend (or any other distribution) on
its Class A Common Stock payable otherwise than in cash out of its retained
earnings; or
(b) the Company shall authorize the granting to the holders of its
Class A Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(c) of any reclassification of the Class A Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of Class A
Common Stock, or of any consolidation, merger or share exchange to which the
Company is a party and for which approval of any share holders of the Company is
required), or of the sale or transfer of all or substantially all of the assets
of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
43
up of the Company; then the Company shall cause to be filed with the Trustee,
and shall cause to be mailed to all Holders at their last addresses as they
shall appear in the register of Debentures, at least 20 days (or 10 days in any
case specified in clause (a) or (b) above) prior to the applicable record date
hereinafter specified, a notice stating (i) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or warrants, or, if
a record is not to be taken, the date as of which the holders of Class A Common
Stock of record to be entitled to such dividend, distribution, rights or
warrants are to be determined, or (ii) the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up is expected to become effective, and the date as of which it is
expected that holders of Class A Common Stock of record shall be entitled to
exchange their shares of Class A Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding up. If at any time
the Trustee shall not be the conversion agent, a copy of such notice shall also
forthwith be filed by the Company with the Trustee.
SECTION 11.07. Company to Reserve Class A Common Stock. The Company
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Class A Common Stock, for the purpose of
effecting the conversion of Debentures, the full number of shares of Class A
Common Stock then issuable upon the conversion of all outstanding Debentures.
SECTION 11.08. Taxes on Conversions. The Company will pay any and all
taxes that may be payable in respect of the issue or delivery of shares of Class
A Common Stock on conversion of Debentures pursuant hereto, excluding any income
taxes of the Holder. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Class A Common Stock in a name other than that of the
Holder of the Debenture to be converted, and no such issue or delivery shall be
made unless and until the person requesting such issue 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 11.09. Covenant as to Class A Common Stock. The Company
covenants that all shares of Class A Common Stock which may be issued upon
conversion of Debentures will upon issue be fully paid and nonassessable and,
except as provided in Section 11.08, the Company will pay all taxes, liens and
charges with respect to the issue thereof.
SECTION 11.10. Cancellation of Converted Debentures. All Debentures
delivered for conversion shall be delivered to the Trustee to be canceled by or
at the direction of the Trustee, which shall dispose of the same as provided in
Section 2.12.
SECTION 11.11 Provisions in Case of Consolidation, Merger or Sale of
Assets. In case of any consolidation of the Company with, or merger of the
Company into, any other Person, any merger or consolidation of another Person
into the Company (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Class A Common Stock of the Company), or any sale or transfer of all or
44
substantially all of the assets of the Company, the Person formed by such
consolidation or resulting from such merger or which acquires such assets or 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, during the period such Debenture
shall be convertible as specified in Section 11.01, to convert such Debenture
only into the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer by a holder of the number of
shares of Class A Common Stock of the Company into which such Debenture might
have been converted immediately prior to such consolidation, merger, sale or
transfer, assuming such holder of Class A Common Stock of the Company is not a
Person with which the Company consolidated or into which the Company merged or
which merged into the Company, or to which such sale or transfer was made, as
the case may be (a "Constituent Person"), or an Affiliate of a Constituent
Person, and failed to exercise his right of election, if any, as to the kind or
amount of securities, cash or other property receivable upon such consolidation,
merger, sale or transfer (provided that if the kind or amount of securities,
cash and other property receivable upon such consolidation, merger, sale or
transfer is not the same for each share of Class A Common Stock of the Company
in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, sale or transfer by each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing
shares). Such supplemental indenture shall provide for adjustments which, for
events subsequent to the effective date of such supplemental indenture, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article. The above provisions of this Section shall similarly apply to
successive consolidations, mergers, sales or transfers.
ARTICLE TWELVE
MISCELLANEOUS
-------------
SECTION 12.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 12.02. Notices. Any notice or communication shall be
sufficiently given if in writing and delivered or mailed as follows:
(a) Notices or communications to the Company or the Trustee shall be
given only by hand delivery or by certified or registered first class mail,
return receipt requested, or by facsimile transmission promptly followed by hand
delivery or certified or registered first class mail, return receipt requested,
as follows:
45
If to the Company, addressed to:
INTERVEST BANCSHARES CORPORATION
00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
If to the Trustee, addressed to:
THE BANK OF NEW YORK
000 Xxxxxxx Xxxxxx, 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
Any notice or communication to the Company or the Trustee shall be
deemed given on the day delivered and receipted for if delivered by hand, or on
the day the return receipt card is signed on behalf of the Company or the
Trustee if sent by certified or registered mail. The Company or the Trustee by
notice to the other and to Debentureholders may designate additional or
different addresses for subsequent notices or communications.
(b) Notices or communications to a Debentureholder shall be mailed by
first class mail to such Debentureholder at the address which appears on the
registration books of the Registrar and shall be sufficiently given to such
Debentureholder if so mailed within the time prescribed.
Failure to mail a notice or communication to a Debentureholder or any
defect in it shall not affect its sufficiency with respect to other
Debentureholders. If a notice or communication is mailed to a Debentureholder in
the manner provided in this paragraph (b), it is duly given, whether or not the
addressee receives it. If the Company mails a notice or communication to
Debentureholders it shall mail a copy of such notice to the Trustee and each
Agent at the same time.
SECTION 12.03. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee: (i) an Officers'
Certificate in form and substance satisfactory to the Trustee stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed actions have been complied with; and (ii) an Opinion of Counsel in form
and substance satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.04. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include: (i) a statement that the person
making such certificate or opinion has read such covenant or condition; (ii) 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
46
are based; (iii) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (iv) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 12.05. Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by, or at a meeting of, Debentureholders. The
Registrar or Paying Agent may make reasonable rules for its functions.
SECTION 12.06. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
City of New York, in the State of New York, or in the city in which the Trustee
administers its corporate trust business. If a payment date is a Legal Holiday
at a place of payment, payment may be made at such place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 12.07. Governing Law. The laws of the State of New York,
without regard to the principles of conflicts of law, shall govern this
Indenture and the Debentures.
SECTION 12.08. No Recourse Against Others. Liabilities of directors,
officers, employees and stockholders, as such, of the Company are waived and
released as provided in paragraph 14 of the Debentures.
SECTION 12.09. Successors. All agreements of the Company in this
Indenture and the Debentures shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 12.10. Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
SECTION 12.11. Separability. 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, and a Holder shall have no claim against any party
hereto.
47
SIGNATURES
Dated as of _________ 1, 1998 INTERVEST BANCSHARES CORPORATION
By: ___________________________
Name: Xxxxxx X. Xxxxxxx
Title: President
Attest:
--------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Secretary
THE BANK OF NEW YORK
as Trustee
By: _________________________________
Name: _________________________________
Title: _________________________________
Attest:
-------------------------------------
Name: _________________________
Title: _________________________
48
Exhibit A
---------
(FORM OF ACCRUAL DEBENTURE MATURING July 1, 2008)
Number RA(__________/99)- $
INTERVEST BANCSHARES CORPORATION
Series __/__/98 Convertible Subordinated
Debenture due July 1, 2008
INTERVEST BANCSHARES CORPORATION, a corporation duly organized
and existing under the laws of the State of Delaware (the "Company"), promises
to pay to ___________________ or registered assigns the principal sum of
______________________ Dollars on July 1, 2008, together with interest accruing
on principal at _______ percent (___%) per annum, plus interest accruing each
calendar quarter on the balance of interest accrued as of (and including) the
last day of the preceding calendar quarter at _________ percent (___%) per
annum, and with all accrued interest payable with the principal sum on July 1,
2008. The provisions on the back of this certificate are incorporated as if set
forth on the face of the certificate.
Record Dates:
The first day of the third month
of each calendar quarter
DATED:
Authenticated to be one of the Debentures described in the Indenture referred to
herein:
THE BANK OF NEW YORK, as INTERVEST BANCSHARES CORPORATION
Registrar
By: _______________________ (Seal) By: __________________________
Authorized Signatory President
By: __________________________
Secretary
A-1
(REVERSE OF DEBENTURE)
Series __/__/98 Convertible Subordinated
Debenture due July 1, 2008
1. Interest. The Company promises to pay interest on the
principal amount of this Debenture and interest on the balance of unpaid accrued
interest at the rate per annum shown above.
With respect to Debentures sold by the Company on the date $5,000,000
or more of Debentures are first approved for issuance (the "First Closing
Date"), interest will accrue on principal from the fifth day preceding the First
Closing Date. With respect to Debentures sold by the Company after the First
Closing Date, interest will accrue on principal commencing on the fifth day
preceding the date of the closing in which the Debenture is issued.
All interest will accrue quarterly but not be paid until maturity, at
which time all unpaid accrued interest will be payable together with the
principal amount. Interest on unpaid accrued interest will accrue each calendar
quarter based on the balance of unpaid accrued interest as of (and including)
the last day of the preceding calendar quarter. Interest will be credited on the
first day of the calendar quarter following the calendar quarter in which it
accrued. The first date on which interest will accrue on the balance of unpaid
accrued interest shall be the first day of the first calendar quarter after
interest on the principal balance commences accruing. Interest will be computed
on the basis of a 360-day year consisting of twelve 30-day months. For purposes
hereof, January 1, April 1, July 1 and October 1 shall be the first days of the
calendar quarters.
2. Method of Payment. Until maturity, the Company will accrue
interest on the Debentures in each calendar quarter and reflect such accrued
interest in its records for the account of the persons who are registered
holders of Debentures at the close of business on the first day of the third
month of the calendar quarter in which such interest is accruing. Holders must
surrender Debentures to a Paying Agent to collect accrued interest and principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. The Company may, however, pay principal and interest by its check
payable in such money. It may mail payments to a holder's registered address.
3. Paying Agent and Registrar. Initially, The Bank of New York
will act as Paying Agent. The Bank of New York, a New York banking corporation,
will also act as Registrar and will authenticate the Debentures. The Company may
change any Paying Agent, Registrar or co-Registrar without notice.
4. Indenture. This Debenture is one of a duly authorized
series of Debentures issued by the Company under an Indenture dated as of
_________ 1, 1998 (the "Indenture") between the Company and The Bank of New
York, as trustee (the "Trustee"). Capitalized terms herein are used as defined
in the Indenture unless otherwise indicated. Reference is hereby made to the
Indenture for a description of the rights, obligations, duties and immunities of
the Trustee and the Debentureholders and for the terms and conditions upon which
A-2
the Debentures are and are to be issued. The Debentures are general unsecured
obligations of the Company limited to the aggregate principal amount of
$6,000,000.
5. Optional Redemption. The Company may at its option redeem
the Debentures in whole or in part at any time. The redemption price will be
equal to (i) the face amount of the Debentures to be redeemed plus a 2% premium
if the date of redemption is prior to July 1, 1999; (ii) the face amount of the
Debentures to be redeemed plus a premium of 1% if the date of redemption is on
or after July 1, 1999 and before July 1, 2000; and (iii) the face amount of the
Debentures to be redeemed if the date of redemption is on or after July 2000.
6. Selection and Notice of Redemption. If less than all of the
Debentures of any Maturity are to be redeemed, the Registrar shall select the
Debentures to be redeemed by such method as the Registrar shall deem fair and
appropriate, or if the Debentures are listed on a national securities exchange,
in accordance with the rules of such exchange. The Registrar shall make the
selection from the Debentures outstanding and not previously called for
redemption. The Registrar may select for redemption portions (equal to $10,000
or any integral multiple thereof) of the principal amount of Debentures that
have denominations larger than $10,000. Provisions of the Indenture that apply
to Debentures called for redemption also apply to portions of Debentures called
for redemption. Notice of redemption will be mailed at least 30 days but not
more than 90 days before the redemption date to each holder of Debentures to be
redeemed at his registered address. On and after the redemption date, interest
ceases to accrue on Debentures or portions thereof called for redemption.
7. Denominations, Transfer, Exchange. The Debentures are
issuable in registered form without coupons in denominations of $10,000 and
integral multiples of $10,000. A holder may transfer or exchange Debentures in
accordance with the Indenture. Commencing July 1, 2003, holders shall have the
right, during the period between April 1 and May 31 of each year, to exchange
this Debenture, for a Debenture providing for the guarterly payment of interest.
The Registrar may require a holder, among other things, to furnish appropriate
endorsements and transfer documents, and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not transfer or exchange
any Debenture or portion of a Debenture selected for redemption, or transfer or
exchange any Debentures for a period of 15 days before a selection of Debentures
to be redeemed.
8. Conversion. Subject to and upon compliance with the
provisions of the Indenture, the holder of this Debenture is entitled, at the
holder's election, at any time on or before the close of business on April 1,
2008, or in case this Debenture or a portion hereof is called for redemption,
then in respect of this Debenture or such portion hereof until and including,
but (unless the Company defaults in making the payment due upon redemption) not
after, the close of business on the date which is ten days prior to the
Redemption Date, to convert this Debenture (or any portion of the principal
amount hereof which is $10,000 or an integral or multiple thereof), at the
principal amount hereof, and all accrued interest on the principal so converted,
into fully paid and non-assessable shares of Class A Common Stock of the Company
at a conversion price equal to the following dollar amounts of aggregate
principal amount and accrued interest for each share of Class A Common Stock (or
at the lesser conversion price determined by the Company or at the current
adjusted conversion price if a reduction or adjustment has been made as provided
in the Indenture):
A-3
Period of Conversion Price Per Share
-------------------- ---------------
Until December 31, 1998 $___________
From January 1, 1999 to June 30, 1999 $___________
From July 1, 1999 to June 30, 2000 $___________
From July 1, 2000 to June 30, 2001 $___________
From July 1, 2001 to June 30, 2002 $___________
From July 1, 2002 to June 30, 2003 $___________
From July 1, 2003 to June 30, 2004 $___________
From July 1, 2004 to June 30, 2005 $___________
From July 1, 2005 to June 30, 2006 $___________
From July 1, 2006 to June 30, 2007 $___________
From July 1, 2007 to April 1, 2008 $___________
Conversion will be by surrender of this Debenture, duly endorsed or assigned to
the Company or in blank, to the Company at its office or agency maintained for
that purpose, accompanied by written notice to the Company that the holder
hereof elects to convert this Debenture. No fractions of shares or script
representing fractions of shares will be issued on conversion, but instead of
any fractional interest the Company shall pay a cash adjustment equal to the
portion of the principal and/or interest not so converted into whole shares. The
conversion price is subject to reduction or adjustment as provided in the
Indenture. In addition, the Indenture provides that in the 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 convertible thereafter only into the kind and amount of
securities, cash and other property receivable upon the consolidation, merger or
transfer by a holder of the number of shares of Class A Common Stock into which
this Debenture might have been converted immediately prior to such
consolidation, merger or transfer.
9. Persons Deemed Owners. The registered holder of a Debenture
may be treated as the owner of it for all purposes.
10. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company, if the Company requests such repayment within one
year after such two year period that such money remains unclaimed. If such
unclaimed money is so paid back to the Company, thereafter, holders entitled to
the money must look to the Company for payment as general creditors, unless an
applicable abandoned property law designates another person. If such unclaimed
money is not so paid back to the Company, it may be disposed of by the Trustee
in accordance with applicable law.
11. Amendment, Supplement, Waiver. Subject to certain
exceptions, the Indenture or the Debentures may be amended or supplemented, and
any past default or compliance with any provision may be waived, with the
consent of the holders of a majority in principal amount of the outstanding
Debentures. Without the consent of any Debentureholder, the Company may amend or
supplement the Indenture or the Debentures to cure any ambiguity, omission,
defect or inconsistency, to comply with Article Five of the Indenture (providing
for the assumption of the obligations of the Company under the Indenture by a
successor corporation), or to make any change that does not adversely affect the
rights of any Debentureholder.
A-4
12. Defaults and Remedies. The Indenture provides that the
Trustee will give the Debentureholders notice of an uncured Default known to it,
within 90 days after the occurrence of an Event of Default (as defined in the
Indenture), or as soon as practicable after it learns of an Event of Default
which occurred more than 90 days beforehand; provided that, except in the case
of Default in the payment of principal of or interest on any of the Debentures
or any amount due on redemption, the Trustee may withhold such notice if it in
good faith determines that the withholding of such notice is in the interest of
the Debentureholders. In case an Event of Default occurs and is continuing, the
Trustee or the holders of not less than 25% of aggregate principal amount of the
Debentures then outstanding, by notice in writing to the Company (and to the
Trustee if given by the Debentureholders), may declare the principal of and all
accrued interest on all the Debentures to be due and payable immediately. Such
declaration may be rescinded by holders of a majority in principal amount of the
Debentures if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived and if the rescission would not conflict with any judgment or decree.
The Indenture requires the Company to file periodic reports with the Trustee as
to the absence of defaults.
13. Subordination. The indebtedness evidenced by all of the
Debentures is, to the extent provided in the Indenture, subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness, and
this Debenture is issued subject to such provisions of the Indenture, and each
holder of this Debenture by accepting same, agrees to and shall be bound by such
provisions. "Senior Indebtedness" means Indebtedness of the Company outstanding
at any time, whether outstanding on the date hereof or hereafter created, which
(i) is secured, in whole or in part, by any asset or assets owned by the Company
or a Subsidiary, or (ii) arises from unsecured borrowings by the Company from a
commercial bank, a savings bank, a savings and loan association, an insurance
company, a company whose securities are traded in a national securities market,
or any majority-owned subsidiary of any of the foregoing, or (iii) arises from
unsecured borrowings by the Company from any pension plan (as defined in ss.
3(2) of the Employee Retirement Income Security Act of 1974, as amended), or
(iv) arises from borrowings by the Company which are evidenced by commercial
paper, or (v) other unsecured borrowings by the Company which are subordinate to
Indebtedness of a type described in clauses (i), (ii) or (iv) above if,
immediately after the issuance thereof, the total capital, surplus and retained
earnings of the Company exceed the aggregate of the outstanding principal amount
of such borrowings, or (vi) is a guarantee or other liability of the Company of
or with respect to Indebtedness of a Subsidiary of a type described in any of
clauses (ii), (iii) or (iv) above.
14. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A director, officer, employee
or stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Debentures or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Debentureholder by accepting a Debenture waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Debentures.
A-5
16. Authentication. This Debenture shall not be valid until
the Registrar signs the certificate of authentication on the other side of this
Debenture.
17. Abbreviations. Customary abbreviations may be used in the
name of the Debentureholder or an assignee, such as: TEN COM (=tenants in
common), TEN ENT (=tenants by entirety), JT TEN (=joint tenants with right of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gifts to Minors Act).
The Company will furnish to any Debentureholder upon written
request and without charge a copy of the Indenture. Requests may be made to
Intervest Bancshares Corporation, 00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxx,
Xxx Xxxx 00000-0000.
A-6
ASSIGNMENT
If you want to assign this Debenture, fill in the form below and have your
signature guaranteed by a commercial bank or trust company or a member firm of
any national securities exchange registered under the Securities Exchange Act of
1934.
I or we assign and transfer this Debenture to
----------------------------------------------------------
(Please insert assignee's social security or tax identification number)
----------------------------------------------
----------------------------------------------
----------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
_________________________________________________________ agent to transfer this
Debenture on the books of the Company. The agent may substitute another to act
for him.
Date: ___________________ Your signature:______________________________
------------------------------
(Sign exactly as your name appears
on the other side of this Debenture)
Signatures must be guaranteed by an
Eligible Guarantor Institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange
Act of 1934 : ___________________________
A-7
{FORM OF CONVERSION NOTICE}
TO INTERVEST BANCSHARES CORPORATION
The undersigned Holder of this Debenture hereby irrevocably exercises
the option to convert this Debenture or portion hereof (which is $10,000
principal or an integral multiple thereof) below designated, together with
accrued interest on the principal portion converted, into shares of Class A
Common Stock of Intervest Bancshares Corporation in accordance with the terms of
the Indenture referred to in this Debenture, and directs that the shares
issuable and deliverable upon conversion, together with any check in payment for
fractional shares and any Debentures representing any unconverted principal
amount hereof, be issued and delivered to the registered Holder hereof unless a
different name has been indicated below. If shares of Class A Common Stock or
Debentures are to be issued in the name of a Person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Dated: ___________________________ ____________________________________
Fill in for registration of shares
of Class A Common Stock and _____________________________________
Securities if to be issued otherwise Signature(s)
than to the registered Holder.
_________________________________ Signature(s) must be guaranteed by an
Name Eligible Guarantor Institution with
_________________________________ membership in an approved signature
Address guarantee program pursuant to Rule 17Ad-15
_________________________________ under the Securities Exchange Act of 1934.
Please print name and address
(including zip code)
SOCIAL SECURITY OR TAXPAYER
IDENTIFICATION NUMBER
---------------------------------
Portion of Debenture to be Converted (in
an integral multiple of $10,000, if less
than all):
------------------------------------
A-8
Exhibit B
(FORM OF QUARTERLY PAYMENT DEBENTURE MATURING JULY 1, 2008)
Number R(__________/2005)- $
INTERVEST BANCSHARES CORPORATION
Series __/__/98 Convertible Subordinated
Debenture due July 1, 2008
INTERVEST BANCSHARES CORPORATION , a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
promises to pay to ______________________ or registered assigns the principal
sum of ______________________ Dollars on July 1, 2008, together with interest at
_____ percent (___%) per annum. The provisions on the back of this certificate
are incorporated as if set forth on the face of the certificate.
Interest Payment Dates:
The first day of each calendar quarter
Record Dates:
The first day of the third month
of the calendar quarter
DATED:
Authenticated to be one of the Debentures described in the Indenture referred to
herein:
THE BANK OF NEW YORK, as INTERVEST BANCSHARES CORPORATION
Registrar
By: _____________________________ By:________________________________
Authorized Signatory President
By:________________________________
Secretary
B-1
(REVERSE OF DEBENTURE)
Series __/__/98 Convertible Subordinated
Debenture due July 1, 2008
1. Interest. The Company promises to pay interest on the
principal amount of this Debenture at the rate per annum shown above. The
Company will pay interest quarterly on January 1, April 1, July 1 and October 1
of each year. Interest will accrue from the 1st day of July in the year in which
the Debenture is issued in exchange for a Debenture providing for accrual of
interst. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on the
Debentures (except defaulted interest) to the persons who are registered holders
of Debentures at the close of business on the first day of the third month of
the calendar quarter. Holders must surrender Debentures to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. The Company may, however, pay principal and interest
by its check payable in such money. It may mail payments to a holder's
registered address.
3. Paying Agent and Registrar. Initially, The Bank of New York
will act as Paying Agent. The Bank of New York, a New York banking corporation,
will also act as Registrar and will authenticate the Debentures. The Company may
change any Paying Agent, Registrar or co-Registrar without notice.
4. Indenture. This Debenture is one of a duly authorized
series of Debentures issued by the Company under an Indenture dated as of
________1, 1998 (the "Indenture") between the Company and The Bank of New York,
as trustee (the "Trustee"). Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. Reference is hereby made to the Indenture
for a description of the rights, obligations, duties and immunities of the
Trustee and the Debentureholders and for the terms and conditions upon which the
Debentures are and are to be issued. The Debentures are general unsecured
obligations of the Company limited to the aggregate principal amount of
$6,000,000.
5. Optional Redemption. The Company may at its option redeem
the Debentures in whole or in part at any time. The redemption price will be
equal to (i) the face amount of the Debentures to be redeemed plus a 2% premium
if the date of redemption is prior to July 1, 1999; (ii) the face amount of the
Debentures to be redeemed plus a premium of 1% if the date of redemption is on
or after July 1, 1999 and before July 1, 2000; and (iii) the face amount of the
Debentures to be redeemed if the date of redemption is on or after July 2000.
B-2
6. Selection and Notice of Redemption. If less than all of the
Debentures of any Maturity are to be redeemed, the Registrar shall select the
Debentures to be redeemed by such method as the Registrar shall deem fair and
appropriate, or if the Debentures are listed on a national securities exchange,
in accordance with the rules of such exchange. The Registrar shall make the
selection from the Debentures outstanding and not previously called for
redemption. The Registrar may select for redemption portions (equal to $10,000
or any integral multiple thereof) of the principal amount of Debentures that
have denominations larger than $10,000. Provisions of the Indenture that apply
to Debentures called for redemption also apply to portions of Debentures called
for redemption. Notice of redemption will be mailed at least 30 days but not
more than 90 days before the redemption date to each holder of Debentures to be
redeemed at his registered address. On and after the redemption date, interest
ceases to accrue on Debentures or portions thereof called for redemption.
7. Denominations, Transfer, Exchange. The Debentures are
issuable in registered form without coupons in denominations of $10,000 and
integral multiples of $10,000. A holder may transfer or exchange Debentures in
accordance with the Indenture. A Debenture containing a particular CUSIP Number
may not be exchanged for a Debenture containing another CUSIP Number. The
Registrar may require a holder, among other things, to furnish appropriate
endorsements and transfer documents, and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not transfer or exchange
any Debenture or portion of a Debenture selected for redemption, or transfer or
exchange any Debentures for a period of 15 days before a selection of Debentures
to be redeemed.
8. Conversion. Subject to and upon compliance with the
provisions of the Indenture, the holder of this Debenture is entitled, at the
holder's election, at any time on or before the close of business on April 1,
2008, or in case this Debenture or a portion hereof is called for redemption,
then in respect of this Debenture or such portion hereof until and including,
but (unless the Company defaults in making the payment due upon redemption) not
after, the close of business on the date which is ten days prior to the
Redemption Date, to convert this Debenture (or any portion of the principal
amount hereof which is $10,000 or an integral or multiple thereof), at the
principal amount hereof, and all accrued interest on the principal so converted,
into fully paid and non-assessable shares of Class A Common Stock of the Company
at a conversion price equal to the following dollar amounts of aggregate
principal amount and accrued interest for each share of Class A Common Stock (or
at the lesser conversion price determined by the Company or at the current
adjusted conversion price if a reduction or adjustment has been made as provided
in the Indenture):
Period of Conversion Price Per Share
-------------------- ---------------
Until December 31, 1998 $___________
From January 1, 1999 to June 30, 1999 $___________
From July 1, 1999 to June 30, 2000 $___________
From July 1, 2000 to June 30, 2001 $___________
From July 1, 2001 to June 30, 2002 $___________
From July 1, 2002 to June 30, 2003 $___________
From July 1, 2003 to June 30, 2004 $___________
From July 1, 2004 to June 30, 2005 $___________
From July 1, 2005 to June 30, 2006 $___________
From July 1, 2006 to June 30, 2007 $___________
From July 1, 2007 to April 1, 2008 $___________
B-3
Conversion will be by surrender of this Debenture, duly
endorsed or assigned to the Company or in blank, to the Company at its office or
agency maintained for that purpose, accompanied by written notice to the Company
that the holder hereof elects to convert this Debenture. No fractions of shares
or script representing fractions of shares will be issued on conversion, but
instead of any fractional interest the Company shall pay a cash adjustment equal
to the portion of the principal and/or interest not so converted into whole
shares. The conversion price is subject to adjustment as provided in the
Indenture. In addition, the Indenture provides that in the 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 convertible thereafter only into the kind and amount of
securities, cash and other property receivable upon the consolidation, merger or
transfer by a holder of the number of shares of Class A Common Stock into which
this Debenture might have been converted immediately prior to such
consolidation, merger or transfer.
9. Persons Deemed Owners. The registered holder of a Debenture
may be treated as the owner of it for all purposes.
10. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company, if the Company requests such repayment within one
year after such two year period that such money remains unclaimed. If such
unclaimed money is so paid back to the Company, thereafter, holders entitled to
the money must look to the Company for payment as general creditors, unless an
applicable abandoned property law designates another person. If such unclaimed
money is not so paid back to the Company, it may be disposed of by the Trustee
in accordance with applicable law.
11. Amendment, Supplement, Waiver. Subject to certain
exceptions, the Indenture or the Debentures may be amended or supplemented, and
any past default or compliance with any provision may be waived, with the
consent of the holders of a majority in principal amount of the outstanding
Debentures. Without the consent of any Debentureholder, the Company may amend or
supplement the Indenture or the Debentures to cure any ambiguity, omission,
defect or inconsistency, to comply with Article Five of the Indenture (providing
for the assumption of the obligations of the Company under the Indenture by a
successor corporation), or to make any change that does not adversely affect the
rights of any Debentureholder.
12. Defaults and Remedies. The Indenture provides that the
Trustee will give the Debentureholders notice of an uncured Default known to it,
within 90 days after the occurrence of an Event of Default (as defined in the
Indenture), or as soon as practicable after it learns of an Event of Default
which occurred more than 90 days beforehand; provided that, except in the case
of Default in the payment of principal of or interest on any of the Debentures
or any amount due on redemption, the Trustee may withhold such notice if it in
good faith determines that the withholding of such notice is in the interest of
the Debentureholders. In case an Event of Default occurs and is continuing, the
Trustee or the holders of not less than 25% of aggregate principal amount of the
B-4
Debentures then outstanding, by notice in writing to the Company (and to the
Trustee if given by the Debentureholders), may declare the principal of and all
accrued interest on all the Debentures to be due and payable immediately. Such
declaration may be rescinded by holders of a majority in principal amount of the
Debentures if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived and if the rescission would not conflict with any judgment or decree.
The Indenture requires the Company to file periodic reports with the Trustee as
to the absence of defaults.
13. Subordination. The indebtedness evidenced by all of the
Debentures is, to the extent provided in the Indenture, subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness, and
this Debenture is issued subject to such provisions of the Indenture, and each
holder of this Debenture by accepting same, agrees to and shall be bound by such
provisions. "Senior Indebtedness" means Indebtedness of the Company outstanding
at any time, whether outstanding on the date hereof or hereafter created, which
(i) is secured, in whole or in part, by any asset or assets owned by the Company
or a Subsidiary, or (ii) arises from unsecured borrowings by the Company from a
commercial bank, a savings bank, a savings and loan association, an insurance
company, a company whose securities are traded in a national securities market,
or any majority-owned subsidiary of any of the foregoing, or (iii) arises from
unsecured borrowings by the Company from any pension plan (as defined in ss.
3(2) of the Employee Retirement Income Security Act of 1974, as amended), or
(iv) arises from borrowings by the Company which are evidenced by commercial
paper, or (v) other unsecured borrowings by the Company which are subordinate to
Indebtedness of a type described in clauses (i), (ii) or (iv) above if,
immediately after the issuance thereof, the total capital, surplus and retained
earnings of the Company exceed the aggregate of the outstanding principal amount
of such borrowings, or (vi) is a guarantee or other liability of the Company of
or with respect to Indebtedness of a Subsidiary of a type described in any of
clauses (ii), (iii) or (iv) above.
14. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A director, officer, employee
or stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Debentures or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Debentureholder by accepting a Debenture waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Debentures.
16. Authentication. This Debenture shall not be valid until
the Registrar signs the certificate of authentication on the other side of this
Debenture.
17. Abbreviations. Customary abbreviations may be used in the
name of the Debentureholder or an assignee, such as: TEN COM (=tenants in
common), TEN ENT (=tenants by entirety), JT TEN (=joint tenants with right of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gifts to Minors Act).
B-5
The Company will furnish to any Debentureholder upon written
request and without charge a copy of the Indenture. Requests may be made to
Intervest Bancshares Corporation, 00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxx,
Xxx Xxxx 00000-0000.
B-6
ASSIGNMENT
If you want to assign this Debenture, fill in the form below and have your
signature guaranteed by a commercial bank or trust company or a member firm of
any national securities exchange registered under the Securities Exchange Act of
1934.
I or we assign and transfer this Debenture to
-----------------------------------------------------------
(Please insert assignee's social security or tax identification number)
----------------------------------------------
----------------------------------------------
----------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint __________________________________________ agent to
transfer this Debenture on the books of the Company. The agent may substitute
another to act for him.
Date: ____________________ Your signature: ___________________________
---------------------------------------------
(Sign exactly as your name appears on the other
side of this Debenture)
Signature(s) must be guaranteed by an
Eligible Guarantor Institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange
Act of 1934 :___________________________
B-7
{FORM OF CONVERSION NOTICE}
TO INTERVEST BANCSHARES CORPORATION
The undersigned Holder of this Debenture hereby irrevocably exercises
the option to convert this Debenture or portion hereof (which is $10,000 or an
integral multiple thereof) below designated, together with accrued interest on
the principal portion converted, into shares of Class A Common Stock of
Intervest Bancshares Corporation in accordance with the terms of the Indenture
referred to in this Debenture, and directs that the shares issuable and
deliverable upon conversion, together with any check in payment for fractional
shares and any Debentures representing any unconverted principal amount hereof,
be issued and delivered to the registered Holder hereof unless a different name
has been indicated below. If shares of Class A Common Stock or Debentures are to
be issued in the name of a Person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto.
Dated: ___________________________ ____________________________________
Fill in for registration of shares
of Class A Common Stock and _____________________________________
Securities if to be issued otherwise Signature(s)
than to the registered Holder.
_________________________________ Signature(s) must be guaranteed by an
Name Eligible Guarantor Institution with
_________________________________ membership in an approved signature
Address guarantee program pursuant to Rule 17Ad-15
_________________________________ under the Securities Exchange Act of 1934.
Please print name and address
(including zip code)
SOCIAL SECURITY OR TAXPAYER
IDENTIFICATION NUMBER
---------------------------------
Portion of Debenture to be Converted (in
an integral multiple of $10,000, if less
than all):
------------------------------------
B-8
