Exhibit 4.4
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NET.B@NK, INC.
Issuer
AND
SUNTRUST BANK, ATLANTA
Trustee
INDENTURE
Dated as of June __, 1999
_____% Convertible Subordinated Notes Due 2004
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CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
--------------------------- -----------------
310(a)(1)............................................ 7.10
(a)(2)............................................. 7.10
(a)(3)............................................. N.A.
(a)(4)............................................. N.A.
(a)(5)............................................. 7.10
(b)................................................ 7.9
(c)................................................ N.A.
311(a)............................................... 7.14
(b)................................................ 7.14
(c)................................................ N.A.
312(a)............................................... 2.5(a); 5.1
(b)................................................ 16.4
(c)................................................ 16.4
313(a)............................................... 7.2
(b)(1)............................................. N.A.
(b)(2)............................................. 7.2
(c)................................................ 7.2
(d)................................................ 7.2
314(a)............................................... 4.9(a); 4.7
(b)................................................ N.A.
(c)(1)............................................. 16.6
(c)(2)............................................. 16.6
(c)(3)............................................. N.A.
(d)................................................ N.A.
(e)................................................ 16.7
(f)................................................ N.A.
315(a)............................................... 7.1(b)
(b)................................................ 6.8
(c)................................................ 7.1(a)
(d)................................................ 7.1(c)
(e)................................................ 6.9
316(a)(last sentence)................................ 8.4
(a)(1)(A).......................................... 6.7
(a)(1)(B).......................................... 6.7
(a)(2)............................................. N.A.
(b)................................................ 6.4
(c)................................................ 9.2
317(a)............................................... 6.2
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(b)................................................ 4.4
318(a)............................................... 16.9; 16.10
N.A. means Not applicable.
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* This Cross-Reference Table is not part of the Indenture.
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions...................................................1
Section 1.2 Incorporation by Reference of Trust Indenture Act.............6
Section 1.3 Rules of Construction.........................................7
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION,
REGISTRATION AND EXCHANGE OF NOTES
Section 2.1 Designation, Amount and Issue of Notes........................7
Section 2.2 Form of Notes.................................................7
Section 2.3 Date and Denomination of Notes; Payments of Interest..........9
Section 2.4 Execution of Notes...........................................10
Section 2.5 Exchange and Registration of Transfer of Notes;
Depositary...................................................11
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes...................13
Section 2.7 Temporary Notes..............................................14
Section 2.8 Cancellation of Notes Paid, Etc..............................15
Section 2.9 CUSIP Numbers................................................15
ARTICLE III
REDEMPTION AND REPURCHASE OF NOTES
Section 3.1 Right of Redemption..........................................15
Section 3.2 Notice of Redemption; Selection of Notes.....................16
Section 3.3 Payment of Notes Called for Redemption.......................17
Section 3.4 Conversion Arrangement on Call for Redemption................18
Section 3.5 Repurchase of Notes Upon a Change of Control.................19
ARTICLE IV
PARTICULAR COVENANTS OF THE COMPANY
Section 4.1 Payment of Principal, Premium and Interest...................20
Section 4.2 Maintenance of Office or Agency..............................21
Section 4.3 Appointments to Fill Vacancies in Trustee's Office...........21
Section 4.4 Provisions as to Paying Agent................................21
Section 4.5 Corporate Existence..........................................22
Section 4.6 Maintenance of Status of Net.B@nk as Insured Depository
Institution..................................................23
Section 4.7 Commission and Other Reports.................................23
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Section 4.8 Stay, Extension and Usury Laws...............................23
Section 4.9 Compliance Statement; Notice of Defaults.....................24
Section 4.10 Taxes........................................................24
Section 4.11 Insurance....................................................24
ARTICLE V
NOTEHOLDERS' LISTS
Section 5.1 Noteholders' Lists...........................................24
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default............................................25
Section 6.2 Payments of Notes on Default; Suit Therefor..................26
Section 6.3 Application of Monies Collected by Trustee...................28
Section 6.4 Proceedings by Noteholder....................................29
Section 6.5 Proceedings by Trustee.......................................30
Section 6.6 Remedies Cumulative and Continuing...........................30
Section 6.7 Direction of Proceedings and Waiver of Defaults by
Majority of Noteholders......................................30
Section 6.8 Notice of Defaults...........................................31
Section 6.9 Undertaking to Pay Costs.....................................31
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.1 Duties and Responsibilities of Trustee.......................31
Section 7.2 Reports by Trustee to Holders................................32
Section 7.3 Reliance on Documents, Opinions, Etc.........................32
Section 7.4 No Responsibility for Recitals, Etc..........................34
Section 7.5 Trustee, Paying Agents, Conversion Agents or Registrar
May Own Notes................................................34
Section 7.6 Monies to Be Held in Trust...................................34
Section 7.7 Compensation and Expenses of Trustee.........................34
Section 7.8 Officers' Certificate as Evidence............................35
Section 7.9 Conflicting Interests of Trustee.............................35
Section 7.10 Eligibility of Trustee.......................................35
Section 7.11 Resignation or Removal of Trustee............................36
Section 7.12 Acceptance by Successor Trustee..............................37
Section 7.13 Successor, by Merger, Etc....................................37
Section 7.14 Limitation on Rights of Trustee as Creditor..................38
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ARTICLE VIII
CONCERNING THE NOTEHOLDERS
Section 8.1 Action by Noteholders........................................38
Section 8.2 Proof of Execution by Noteholders............................38
Section 8.3 Who Are Deemed Absolute Owners...............................38
Section 8.4 Company-Owned Notes Disregarded..............................39
Section 8.5 Revocation of Consents, Future Holders Bound.................39
ARTICLE IX
NOTEHOLDERS' MEETINGS
Section 9.1 Purposes for Which Meetings May be Called....................40
Section 9.2 Manner of Calling Meetings; Record Date......................40
Section 9.3 Call of Meeting by Company or Noteholders....................40
Section 9.4 Who May Attend and Vote at Meetings..........................41
Section 9.5 Manner of Voting at Meetings and Record To Be Kept...........41
Section 9.6 Exercise of Rights of Trustee and Noteholders Not To Be
Hindered or Delayed..........................................41
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1 Supplemental Indentures Without Consent of Noteholders.......42
Section 10.2 Supplemental Indentures With Consent of Noteholders..........43
Section 10.3 Effect of Supplemental Indentures............................44
Section 10.4 Notation on Notes............................................44
Section 10.5 Evidence of Compliance of Supplemental Indenture To Be
Furnished Trustee............................................44
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE,
TRANSFER AND LEASE
Section 11.1 Company May Consolidate, Etc. on Certain Terms...............44
Section 11.2 Successor Company To Be Substituted..........................45
Section 11.3 Opinion of Counsel To Be Given to Trustee....................45
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ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 12.1 Legal Defeasance and Covenant Defeasance of the Notes........45
Section 12.2 Termination of Obligations upon Cancellation of the Notes....47
Section 12.3 Survival of Certain Obligations..............................48
Section 12.4 Acknowledgment of Discharge by Trustee.......................48
Section 12.5 Application of Trust Assets..................................48
Section 12.6 Repayment to the Company; Unclaimed Money....................49
Section 12.7 Reinstatement................................................49
ARTICLE XIII
IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS AND DIRECTORS
Section 13.1 Indenture and Notes Solely Corporate Obligations.............49
ARTICLE XIV
CONVERSION OF NOTES
Section 14.1 Right to Convert.............................................50
Section 14.2 Exercise of Conversion Privilege; Issuance of Common
Stock on Conversion; No Adjustment for Interest or
Dividends....................................................50
Section 14.3 Cash Payments in Lieu of Fractional Shares...................52
Section 14.4 Conversion Price.............................................52
Section 14.5 Adjustment of Conversion Price...............................52
Section 14.6 Effect of Reclassification, Consolidation, Merger or Sale....60
Section 14.7 Taxes on Shares Issued.......................................61
Section 14.8 Reservation of Shares; Shares to Be Fully Paid; Listing
of Common Stock..............................................61
Section 14.9 Responsibility of Trustee....................................61
Section 14.10 Notice to Holders Prior to Certain Actions...................62
ARTICLE XV
SUBORDINATION
Section 15.1 Agreement to Subordinate.....................................63
Section 15.2 Certain Definitions..........................................63
Section 15.3 Liquidation; Dissolution; Bankruptcy.........................64
Section 15.4 Default on Senior Indebtedness...............................64
Section 15.5 When Distribution Must Be Paid Over..........................65
Section 15.6 Notice by Company............................................65
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Section 15.7 Subrogation..................................................65
Section 15.8 Relative Rights..............................................66
Section 15.9 Subordination May Not Be Impaired by Company.................66
Section 15.10 Distribution or Notice to Representative.....................66
Section 15.11 Rights of Trustee and Paying Agent...........................66
Section 15.12 Authorization to Effect Subordination........................67
Section 15.13 Conversions Not Deemed Payment...............................67
Section 15.14 Amendments...................................................68
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 Provisions Binding on Company's Successors...................68
Section 16.2 Official Acts by Successor Company...........................68
Section 16.3 Addresses for Notices, Etc...................................68
Section 16.4 Communications by Holders with Other Holders.................69
Section 16.5 Governing Law................................................69
Section 16.6 Evidence of Compliance with Conditions Precedent;
Certificates to Trustee......................................69
Section 16.7 Legal Holidays...............................................69
Section 16.8 No Security Interest Created.................................70
Section 16.9 Trust Indenture Act..........................................70
Section 16.10 Trust Indenture Act Controls.................................70
Section 16.11 Benefits of Indenture........................................70
Section 16.12 Table of Contents, Headings, Etc.............................70
Section 16.13 Authenticating Agent.........................................70
Section 16.14 Execution in Counterparts....................................71
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INDENTURE, dated as of June __, 1999, between NET.B@NK, INC., a Georgia
corporation (the "Company"), and SUNTRUST BANK, ATLANTA, a Georgia banking
corporation with trust powers (the "Trustee").
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issuance of its _____% Convertible Subordinated Notes Due 2004
(the "Notes"), in an aggregate principal amount not to exceed $100,000,000 (up
to $115,000,000 aggregate principal amount, assuming the full exercise of the
over-allotment option granted to the underwriters of the public offering of the
Notes), and, to provide the terms and conditions upon which the Notes are to be
authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture;
NOW, THEREFORE, in consideration of the terms and conditions hereof and of
the purchase and acceptance of the Notes by the holders thereof, the Company
agrees with the Trustee for the equal and proportionate benefit of the
respective holders from time to time of the Notes (except as otherwise provided
below) as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The terms defined in this Section 1.1 (except as
otherwise expressly provided herein or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto,
shall have the respective meanings specified in this Section 1.1. The words
"herein," "hereof," "hereunder" and words of similar import refer to this
Indenture as a whole and not to any particular Article or Section.
Acquisition Price shall mean the weighted average price paid by the person
or group in acquiring the Voting Stock.
Affiliate of any specified person shall mean any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purpose of this definition,
"control" when used with respect to any specified person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Board of Directors shall mean the Board of Directors of the Company or a
committee of such Board of Directors duly authorized to act for it hereunder.
Board Resolution shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
Business Day shall mean a day, other than a Saturday, a Sunday or a day on
which the banking institutions in the State and City of New York or in the State
of Georgia are authorized
or obligated by law or executive order to close or a day that is declared a
national, New York or Georgia state holiday.
Capital Stock of any person shall mean any and all shares, interests,
participations or other equivalents (however designated) of such person's
corporate stock or any and all equivalent ownership interests in a person (other
than a corporation) whether now outstanding or issued after the date hereof.
Change of Control shall have the meaning specified in Section 3.5(d).
Change of Control Notice shall have the meaning specified in Section
3.5(b).
Change of Control Offer shall have the meaning specified in Section
3.5(a).
Change of Control Purchase Date shall have the meaning specified in
Section 3.5(a).
Closing Price with respect to conversion of the Notes shall have the
meaning specified in Section 14.5(g).
Commission shall mean the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, the body performing
such duties at such time.
Common Stock shall mean any stock of any class of the Company that does
not have a preference in respect of dividends or of amounts payable in the event
of any voluntary or involuntary liquidation, dissolution or winding up of the
Company and that is not subject to redemption by the Company. Subject to the
provisions of Section 14.6, however, shares issuable on conversion of Notes
shall include only shares of the class designated as common stock of the Company
at the date of this Indenture or shares of any class or classes resulting from
any reclassification or reclassifications thereof and that do not have a
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and that are not subject to redemption by the Company; provided that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion that the total
number of shares of such class resulting from all such reclassification bears to
the total number of shares of all such classes resulting from all such
reclassifications.
Company shall mean Net.B@nk, Inc., a Georgia corporation and, subject to
the provisions of Article XI, shall include its successors and assigns.
Conversion Price shall have the meaning specified in Section 14.4.
Corporate Trust Office of the Trustee, or other similar term, shall mean
the office of the Trustee at which at any particular time its corporate trust
business shall be principally
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administered, which office is, at the date as of which this Indenture is dated,
located at 00 Xxxx Xxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxx 00000, Attention:
Corporate Trust Administration.
Current Market Price with respect to conversion of the Notes shall have
the meaning specified in Section 14.5(g).
Custodian shall mean the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
Default shall mean any event that is, or after notice or passage of time,
or both, would be, an Event of Default.
Defaulted Interest shall have the meaning specified in Section 2.3.
Definitive Notes or in definitive form shall have the meanings specified
in Section 2.2, any reference to Notes "in definitive form" shall mean
definitive Notes, and any reference to securities "in definitive form" shall
mean definitive Notes or Common Stock as the context requires.
Depositary shall mean, with respect to the Notes issuable or issued in
whole or in part in global form, the person specified in Section 2.5(b) as the
Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
Event of Default shall mean any event specified in Sections 6.1(a) through
(f).
Exchange Act shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
Fair market value with respect to conversion of the Notes shall have the
meaning specified in Section 14.5(g).
Fiscal Year means the annual period adopted by the Company as its fiscal
year for financial reporting and other purposes. The current fiscal year of the
Company is the annual period ending on December 31.
Global Note shall mean any and all Notes in global form.
Indenture shall mean this instrument as originally executed or, if amended
or supplemented as herein provided, as so amended or supplemented.
Make-Whole Payment shall have the meaning specified in Section 3.1(a).
Nonpayment Default shall have the meaning specified in Section 15.4(b).
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Note or Notes shall mean any Note or Notes, as the case may be,
authenticated and delivered under this Indenture.
Noteholder or holder as applied to any Note, or other similar terms (but
excluding the term "beneficial holder"), shall mean any person in whose name at
the time a particular Note is registered on the Note registrar's books.
Note register shall have the meaning specified in Section 2.5(a).
Notice Date shall have the meaning specified in Section 3.1(a).
Officers' Certificate when used with respect to the Company, shall mean a
certificate signed by the Chief Executive Officer, the President, the Chief
Operating Officer or the Chief Financial Officer and any Treasurer or Secretary
or any Assistant Treasurer or Assistant Secretary of the Company, that is
delivered to the Trustee. Each such certificate shall include the statements
provided for in Section 16.6 if and to the extent required by the provisions of
such Section.
Opinion of Counsel shall mean an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company or other counsel
acceptable to the Trustee, that is delivered to the Trustee. Each such opinion
shall include the statements provided for in Section 16.6 if and to the extent
required by the provisions of such Section.
Outstanding with reference to Notes as of any particular time shall mean,
subject to the provisions of Section 8.4, all Notes authenticated and delivered
by the Trustee under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, for which monies in the necessary
amount shall have been deposited in trust with the Trustee for payment or
redemption; provided that if such Notes are to be redeemed prior to the maturity
thereof, notice of such redemption shall have been given pursuant to Article III
or provisions satisfactory to the Trustee shall have been made for giving such
notice;
(c) Notes paid pursuant to Section 2.6 hereof or Notes in lieu of or
in substitution for which other Notes shall have been authenticated and
delivered pursuant to the terms of Section 2.6, unless proof satisfactory to the
Trustee is presented that any such Notes are held by bona fide holders in due
course; and
(d) Notes converted into Common Stock pursuant to Article XIV and
Notes not deemed outstanding pursuant to Section 3.2.
Payment Blockage Notice shall have the meaning specified in Section
15.4(b).
Payment Default shall have the meaning specified in Section 15.4(a).
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Person shall mean an individual, a corporation, a limited liability
company, an association, a partnership, a joint venture, a joint stock company,
a trust, an unincorporated organization or a government or an agency or a
political subdivision thereof.
Predecessor Note of any particular Note shall mean every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for purposes of this definition, any Note authenticated
and delivered under Section 2.6 in lieu of a lost, destroyed or stolen Note
shall be deemed to evidence the same debt as the lost, destroyed or stolen Note.
Provisional Redemption shall have the meaning specified in Section 3.1(a).
Provisional Redemption Date shall have the meaning specified in Section
3.1(a).
Record Date with respect to conversion of the Notes shall have the meaning
specified in Section 14.5(g).
Representative shall have the meaning specified in Section 15.2.
Responsible Officer shall mean, with respect to the Trustee, an officer of
the Trustee assigned and duly authorized by the Trustee to administer its
corporate trust matters at the Corporate Trust Office of the Trustee.
Securities Act shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Senior Indebtedness shall have the meaning specified in Section 15.2.
Subsidiary of any specified person shall mean (i) a corporation a majority
of whose capital stock with voting power under ordinary circumstances to elect
directors is at the time directly or indirectly owned by such person or (ii) any
other person (other than a corporation) in which such person or such person and
a subsidiary or subsidiaries of such person or a subsidiary or subsidiaries of
such person directly or indirectly, at the date of determination thereof, has at
least majority ownership.
Successor Company shall have the meaning specified in Section 11.1.
Trading Day shall have the meaning specified in Section 14.5(g).
Trust Indenture Act shall mean the Trust Indenture Act of 1939, as
amended, as it was in force on the date of execution of this Indenture, except
as provided in Sections 10.3 and 14.6; provided that if the Trust Indenture Act
of 1939 is amended after the date hereof, the term "Trust Indenture Act" shall
mean, to the extent required by such amendment, the Trust Indenture Act of 1939
as so amended.
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Trustee shall mean SunTrust Bank, Atlanta, its successors and any
corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee at the time serving
as successor trustee hereunder.
U.S. Government Obligations shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a person controlled or
supervised by, and acting as an agency or instrumentality of, the United States
of America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or a specific
payment of principal or interest on any such U.S. Government Obligation held by
such custodian for the account of the holder of such depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by such custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or interest on the
U.S. Government Obligation evidenced by such depository receipt.
Voting Stock of any person shall mean stock of the class or classes
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of such person (irrespective of whether or not at the time
stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).
The definitions of certain other terms are as specified in Section 12.1.
Section 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act,
the provision is incorporated by reference in, and made a part of, this
Indenture.
The following Trust Indenture Act terms used in this Indenture have the
following meanings:
indenture securities means the Notes;
indenture security holder means a Holder of Notes;
indenture to be qualified means this Indenture;
indenture trustee or institutional trustee means the Trustee; and
obligor on the Notes means the Company and any successor obligor under the
Trust Indenture Act.
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All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by a Trust Indenture Act reference to another statute or
defined by Commission rule under the Trust Indenture Act have the meanings so
assigned to them.
Section 1.3 Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles;
(c) "or" is not exclusive;
(d) provisions apply to successive events and transactions; and
(e) words in the singular include the plural, and in the plural
include the singular.
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 Designation, Amount and Issue of Notes. The Notes shall be
designated as "____% Convertible Subordinated Notes Due 2004." The Notes are not
to exceed the aggregate principal amount of $100,000,000 (up to $115,000,000
aggregate principal amount assuming the full exercise of the over-allotment
option granted to the underwriters of the public offering of the Notes) upon the
execution of this Indenture, or from time to time thereafter, may be executed by
the Company and delivered to the Trustee for authentication, and the Trustee
shall thereupon authenticate and make available for delivery said Notes upon the
written order of the Company, signed by its (a) Chief Executive Officer,
President, Chief Operating Officer or Chief Financial Officer and (b) any
Treasurer or Secretary or any Assistant Secretary, without any further action by
the Company hereunder.
Section 2.2 Form of Notes. (a) The Notes, including the form of Trustee's
certificate of authentication, shall be in the form annexed hereto as Exhibit A,
and any Notes represented by a global Note shall be in the form annexed hereto
as Exhibit B.
(b) Any global Note shall represent such of the outstanding Notes as
shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be increased or reduced to reflect transfers or exchanges permitted
hereby. Any endorsement of a global Note to reflect the amount of any increase
or decrease in the amount of outstanding Notes represented thereby shall be made
by the Trustee or the Custodian, at the direction of the Trustee, in such manner
and upon written
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instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal of and interest and premium, if any, on any
global Note shall be made in accordance with the provisions of Section 2.3.
(c) Any of the Notes may have such letters, numbers or other marks
of identification and such notations, legends and endorsements as the Company
officers executing the same may approve (execution thereof to be conclusive
evidence of such approval) and as are not inconsistent with the provisions of
this Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Notes may be listed, or to conform to usage.
All Notes shall bear a legend in substantially the following form, in
capital letters and bold-face type:
THIS NOTE AND ANY SHARES OF COMMON STOCK OF NET.B@NK, INC. ISSUABLE UPON
CONVERSION OF THIS NOTE ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER OBLIGATIONS
OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT ISSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
Every global Note authenticated and delivered hereunder shall bear a
legend in substantially the following form, in capital letters and bold-face
type:
THIS DEBENTURE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS DEBENTURE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS DEBENTURE IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
If the Depositary is The Depository Trust Company, the global Note
authenticated and delivered hereunder shall also bear a legend in substantially
the following form, in capital letters and bold-face type:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED SIGNATORY OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. , HAS AN INTEREST HEREIN.
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The terms and provisions contained in the forms of Notes attached as
Exhibits A and B hereto shall constitute, and are hereby expressly made, a part
of this Indenture and to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Section 2.3 Date and Denomination of Notes; Payments of Interest. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication, shall bear interest from the date of
original issue and shall be payable semiannually on each June 1 and December 1,
beginning December 1, 1999, as specified on the faces of the forms of Notes
attached as Exhibits A and B.
The person in whose name any Note (or its Predecessor Note) is registered
at the close of business on any record date with respect to any interest payment
date (including any Note that is converted after the record date and on or
before the interest payment date) shall be entitled to receive the interest
payable on such interest payment date notwithstanding the cancellation of such
Note upon any transfer, exchange or conversion subsequent to the record date and
prior to such interest payment date. Unless other arrangements are made,
interest will be paid by check mailed to the address of such person as it
appears on the Note register; provided that, with respect to any global Note or
any holder of Notes with an aggregate principal amount equal to or in excess of
$5,000,000, at the request (such request to include appropriate wire
instructions) of such holder in writing to the Trustee on or before the record
date preceding any interest payment date, interest on the global Note and such
holder's Notes, as applicable, shall be paid by wire transfer in immediately
available funds to an account in the continental United States and any such
request shall be deemed a continuing request unless and until revoked in
writing. The term "record date" with respect to any interest payment date shall
mean the May 15 or November 15 preceding the applicable June 1 or December 1.
None of the Company, the Trustee or any paying agent shall have any
responsibility or liability for any aspect of the records relating to or payment
made on account of beneficial ownership interests in the global Notes or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
Any interest on any Note that is payable but is not punctually paid or
duly provided for on any applicable June 1 or December 1 (herein called
"Defaulted Interest") shall cease to be payable to the Noteholder on the
relevant record date by virtue of his having been such Noteholder; and such
Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Notes (or their respective Predecessor Notes)
are registered at the close of business on a special record date for the payment
of such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the
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amount of Defaulted Interest to be paid on each Note and the date of the payment
(which shall be not less than 25 days after the receipt by the Trustee of such
notice, unless the Trustee shall consent to an earlier date) and, at the same
time, the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as in this clause
provided. Thereupon, the Trustee shall fix a special record date for the payment
of such Defaulted Interest, which shall be not more than 15 days and not less
than 10 days prior to the date of the payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such special record date and, in the name
and at the expense of the Company, shall cause notice of the payment of such
Defaulted Interest and the special record date therefor to be mailed,
first-class postage prepaid, to each Noteholder at his address as it appears in
the Note register, not less than 10 days prior to such special record date.
Notice of the proposed payment of such Defaulted Interest and the special record
date therefor having been so mailed, such Defaulted Interest shall be paid to
the persons in whose names the Notes (or their respective Predecessor Notes)
were registered at the close of business on such special record date and shall
no longer be payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
Section 2.4 Execution of Notes. The Notes shall be signed in the name and
on behalf of the Company by its Chief Executive Officer, President, Chief
Operating Officer or Chief Financial Officer and attested by the signature of
its Treasurer, Secretary or any of its Assistant Secretaries or Assistant
Treasurers (any of which signatures may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise). Only such Notes as shall bear
thereon a certificate of authentication substantially in the form set forth on
the forms of Notes attached as Exhibits A and B hereto, manually executed by the
Trustee (or an authenticating agent appointed by the Trustee as provided by
Section 16.13), shall be entitled to the benefits of this Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee (or such an
authenticating agent) upon any Note executed by the Company shall be conclusive
evidence that the Note so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
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Section 2.5 Exchange and Registration of Transfer of Notes; Depositary.
(a) The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency of the Company designated pursuant to Section 4.2 being
herein sometimes collectively referred to as the "Note register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Notes and of transfers of Notes. Such Note
register shall be in written form or in any form capable of being converted into
written form within a reasonable period of time. The Trustee is hereby appointed
"Note registrar" for the purpose of registering Notes and transfers of Notes as
herein provided. The Company may appoint one or more co-registrars.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar and satisfaction of the requirements for such
transfer set forth in this Section 2.5, the Company shall execute, and the
Trustee shall authenticate and make available for delivery, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate principal amount.
Notes may be exchanged for other Notes of any authorized denominations and
of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency. Whenever any Notes are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
make available for delivery, the Notes that the Noteholder making the exchange
is entitled to receive bearing certificate numbers not contemporaneously
outstanding.
All Notes presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company, the Trustee, the Note registrar
or any co-registrar) be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Company, executed by the Noteholder
thereof or his attorney duly authorized in writing.
No service charge shall be charged to the Noteholder for any exchange or
registration of transfer of Notes, but the Company may require payment of a sum
sufficient to cover any tax, assessments or other governmental charges that may
be imposed in connection therewith.
None of the Company, the Trustee, the Note registrar or any co-registrar
shall be required to exchange or register a transfer of (i) any Notes for a
period of 15 days next preceding the mailing of a notice of redemption, (ii) any
Notes called for redemption or, if a portion of any Note is selected or called
for redemption, such portion thereof selected or called for redemption, (iii)
any Notes surrendered for conversion or, if a portion of any Note is surrendered
for conversion, such portion thereof surrendered for conversion or (iv) any
Notes surrendered for repurchase pursuant to Section 3.5 or, if a portion of any
Note is surrendered for repurchase pursuant to Section 3.5, such portion thereof
surrendered for repurchase pursuant to Section 3.5.
All Notes issued upon any transfer or exchange of Notes shall be the valid
obligations of the Company, evidencing the same debt and entitled to the same
benefits under this Indenture as the Notes surrendered upon such registration of
transfer or exchange.
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(b) Each global Note authenticated under this Indenture shall be
registered in the name of the Depositary designated for such global Note or a
nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such global Note shall constitute a single Note for
all purposes of this Indenture.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.5(b)), a global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the Exchange
Act.
The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the global Notes. Initially, the global Notes shall
be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Trustee as Custodian for Cede
& Co.
Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under this Indenture) shall have responsibility for the
performance by the Depositary or its participants or indirect participants of
their respective obligations under the rules and procedures governing their
operations.
If at any time the Depositary for the global Notes notifies the Company
that it is unwilling or unable to continue as Depositary for such Notes, the
Company may appoint a successor Depositary with respect to such Notes. If a
successor Depositary for the Notes is not appointed by the Company within 90
days after the Company receives such notice, the Company shall execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of Notes, shall authenticate and make available for delivery, Notes in
definitive form, in an aggregate principal amount equal to the principal amount
of the global Notes in exchange for such global Notes.
Definitive Notes issued in exchange for all or a part of a global Note
pursuant to this Section 2.5(b) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. Upon
execution and authentication, the Trustee shall make available for delivery such
definitive Notes to the persons in whose names such definitive Notes are so
registered.
At such time as all interests in global Notes have been redeemed,
converted, repurchased or canceled, such global Notes shall be, upon receipt
thereof, canceled by the Trustee in accordance with standing procedures and
instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in a global Note is exchanged for
definitive Notes, redeemed, repurchased, converted, canceled or transferred to a
transferee who receives definitive Notes therefor or any definitive Note is
exchanged or transferred for part of a global Note, the principal amount of such
global Note shall, in accordance with the standing procedures and instructions
existing between the Depositary and the Custodian, be reduced or
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increased, as the case may be, and an endorsement shall be made on such global
Note by the Trustee or the Custodian, at the direction of the Trustee, to
reflect such reduction or increase.
The Company and the Trustee may for all purposes, including the making of
payments due on the Notes, deal with the Depositary as the authorized
representative of the Noteholders for the purposes of exercising the rights of
Noteholders hereunder. The rights of the owner of any beneficial interest in a
global Note shall be limited to those established by law and agreements between
such owner and depository participants; provided that no such agreement shall
give any rights to any person against the Company or the Trustee without the
written consent of the parties so affected. Multiple requests and directions
from and votes of, the Depositary as holder of notes in book entry form with
respect to any particular matter shall not be deemed inconsistent to the extent
they do not represent an amount of notes in excess of those held in the name of
the Depositary or its nominee.
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes. In case any Note
shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its request, the Trustee or an authenticating
agent appointed by the Trustee shall authenticate and make available for
delivery a new Note bearing a number not contemporaneously outstanding in
exchange and substitution for the mutilated Note or in lieu of and in
substitution for the Note so destroyed, lost or stolen. The Company may charge
such applicant for the expenses of the Company in replacing a Note. In every
case the applicant for a substituted Note shall furnish to the Company, to the
Trustee and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless from any
loss, liability, cost or expense caused by or connected with such substitution,
and in every case of destruction, loss or theft, the applicant shall also
furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent evidence to their satisfaction of the destruction, loss or
theft of such Note and of the ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Note that has matured or is about to mature or has been
called for redemption or is about to be repurchased or converted into Common
Stock shall become mutilated or be destroyed, lost or stolen, the Company may,
instead of issuing a substitute Note, pay or authorize the payment of or convert
or authorize the conversion of the same (without surrender thereof, except in
the case of a mutilated Note), as the case may be, if the applicant for such
payment or conversion shall furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them harmless from any loss, liability, cost or
expense caused by or connected with such substitution, and in case of
destruction, loss or theft, evidence satisfactory to the Company, the Trustee
and, if applicable, any paying agent or conversion agent of the destruction,
loss or theft of such Note and of the ownership thereof.
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Every substitute Note issued pursuant to the provisions of this Section
2.6 in lieu of any Note that is destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be enforceable by anyone, and shall be entitled to all
the benefits of (but shall be subject to all the limitations set forth in) this
Indenture equally and proportionately with any and all other Notes duly issued
hereunder. To the extent permitted by law, all Notes shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment or conversion of mutilated, destroyed,
lost or stolen Notes and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.
Section 2.7 Temporary Notes. Pending the preparation of definitive Notes,
the Company may execute and the Trustee or an authenticating agent appointed by
the Trustee shall, upon written request of the Company, authenticate and make
available for delivery temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination and shall be
substantially in the form of the definitive Notes but with such omissions,
insertions and variations as may be appropriate for temporary Notes, all as may
be determined by the Company. Every such temporary Note shall be executed by the
Company and authenticated by the Trustee or such authenticating agent upon the
same conditions and in substantially the same manner, and with the same effect,
as the definitive Notes. Without unreasonable delay the Company shall execute
and deliver to the Trustee or such authenticating agent definitive Notes (other
than in the case of Notes in global form) and thereupon any or all temporary
Notes (other than any such global Note) may be surrendered in exchange therefor,
at each office or agency maintained by the Company pursuant to Section 4.2 and
the Trustee or such authenticating agent shall authenticate and make available
for delivery in exchange for such temporary Notes an equal aggregate principal
amount of definitive Notes. Such exchange shall be made by the Company at its
own expense and without any charge therefor. Until so exchanged, the temporary
Notes shall in all respects be entitled to the same benefits and subject to the
same limitations under this Indenture as definitive Notes authenticated and
delivered hereunder.
Section 2.8 Cancellation of Notes Paid, Etc. All Notes surrendered for the
purpose of payment, redemption, repurchase, conversion, exchange or registration
of transfer shall, if surrendered to the Company, any paying agent, any Note
registrar or any conversion agent, be surrendered to the Trustee and promptly
canceled by it or, if surrendered directly to the Trustee, shall be promptly
canceled by it and no Notes shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. If required by the
Company, the Trustee shall return canceled Notes to the Company. If the Company
shall acquire any of the Notes, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Notes unless
and until the same are delivered to the Trustee for cancellation.
Section 2.9 CUSIP Numbers. The Company in issuing the Notes 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 Notes or as
14
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such redemption
shall not be affected by any defect in or omission of such numbers. The Company
shall promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE III
REDEMPTION AND REPURCHASE OF NOTES
Section 3.1 Right of Redemption.
(a) Provisional Redemption by the Company. The Notes may be redeemed
by the Company (a "Provisional Redemption"), in whole or in part, at any time
prior to June 5, 2002, upon notice as set forth in Section 3.2 of this
Indenture, at a redemption price equal to $1,000 per $1,000 principal amount of
Notes to be redeemed plus accrued and unpaid interest, if any, to the date of
redemption (the "Provisional Redemption Date") if the closing price of the
Common Stock shall have exceeded 150% of the Conversion Price then in effect for
at least 20 Trading Days within a period of 30 consecutive Trading Days ending
on the Trading Day prior to the date of mailing of the notice of redemption
pursuant to Section 3.2 (the "Notice Date"). Upon any such Provisional
Redemption, the Company shall make an additional payment in cash (the
"Make-Whole Payment") with respect to the Notes called for Provisional
Redemption to holders on the Notice Date in an amount equal to $____ per $1,000
principal amount of the Notes, less the amount of any interest actually paid on
such Notes prior to the Notice Date. The Company shall make the Make-Whole
Payment on all Notes called for Provisional Redemption, including any Notes
converted into Common Stock pursuant to the terms hereof after the Notice Date
and prior to the Provisional Redemption Date.
(b) Optional Redemption by the Company. At any time on or after June
5, 2002, the Notes may be redeemed at the Company's option, upon notice as set
forth in Section 3.2, in whole at any time or in part from time to time, at the
following optional redemption prices (expressed as percentages of the principal
amount), together with accrued and unpaid interest to the date fixed for
redemption, if redeemed on or after:
Date Redemption Price
---- ----------------
June 5, 2002 _____%
June 1, 2003 _____%
Section 3.2 Notice of Redemption; Selection of Notes. In case the Company
shall desire to exercise the right to redeem all or, as the case may be, any
part of the Notes pursuant to Section 3.1, it shall fix a date for redemption
and, in the case of any redemption pursuant to Section 3.1, it or, at its
request accompanied by the proposed form of notice of redemption (which must be
received by the Trustee at least ten days prior to the date the Trustee is
requested to give notice as described below, unless a shorter period is agreed
to by the Trustee), the Trustee in the name of and at the expense of the
Company, shall mail or cause to be mailed a notice of such redemption at least
30 and not more than 60 days prior to the date fixed for redemption to the
holders of Notes so to be redeemed as a whole or in part at their last addresses
as the same
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appear on the Note register; provided that if the Company shall give such
notice, it shall also give such notice, and notice of the Notes to be redeemed,
to the Trustee. Such mailing shall be by first class mail. The notice, if mailed
in the manner herein provided, shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the holder of any Note
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Note.
Each such notice of redemption shall specify (a) the Notes to be redeemed
(including CUSIP numbers), (b) the aggregate principal amount of Notes to be
redeemed, (c) the date fixed for redemption, (d) the redemption price at which
Notes are to be redeemed, (e) the place or places of payment, (f) that payment
shall be made upon presentation and surrender of such Notes, (g) that interest
accrued to the date fixed for redemption and any Make-Whole Payment shall be
paid as specified in said notice and (h) that on and after said date, interest
thereon or on the portion thereof to be redeemed shall cease to accrue. Such
notice shall also state the current Conversion Price and the date on which the
right to convert such Notes or portions thereof into Common Stock shall expire.
If fewer than all the Notes are to be redeemed, the notice of redemption shall
identify the Notes to be redeemed. In case any Note is to be redeemed in part
only, the notice of redemption shall state the portion of the principal amount
thereof to be redeemed and shall state that on and after the date fixed for
redemption, upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion thereof shall be issued. Any such notice of
redemption must contain a specific statement by the Trustee that no
representation or warranty is being made as to the correctness of the CUSIP
number either as printed on the Notes or as contained in the notice of
redemption and that reliance may be placed only on the other identification
numbers printed on the Notes.
On or prior to the Business Day prior to the redemption date specified in
the notice of redemption given as provided in this Section 3.2, the Company
shall deposit with the Trustee or with one or more paying agents (or, if the
Company is acting as its own paying agent, set aside, segregate and hold in
trust as provided in Section 4.4) an amount of money sufficient to redeem on the
redemption date all the Notes so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued and unpaid interest to the date fixed
for redemption and any Make-Whole Payment. If any Note called for redemption is
converted pursuant hereto, any money deposited with the Trustee or any paying
agent or so segregated and held in trust for the redemption of such Note shall
be paid to the Company upon its request or, if then held by the Company, shall
be discharged from such trust.
If fewer than all the Notes are to be redeemed, the Company shall give the
Trustee written notice in the form of an Officers' Certificate not fewer than 45
days (or such shorter period of time as may be acceptable to the Trustee) prior
to the redemption date as to the aggregate principal amount of Notes to be
redeemed.
If fewer than all the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed (in principal amounts of $1,000 or
integral multiples thereof), by lot. If any Note selected for partial redemption
is converted in part after such selection, the
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converted portion of such Note shall be deemed (so far as may be) to be the
portion to be selected for redemption. The Notes (or portions thereof) so
selected shall be deemed duly selected for redemption for all purposes hereof,
notwithstanding that any such Note is converted as a whole or in part before the
mailing of the notice of redemption.
Upon any redemption of less than all the Notes, the Company and the
Trustee may treat as outstanding any Notes surrendered for conversion during the
period of 15 days next preceding the mailing of a notice of redemption and need
not treat as outstanding any Note authenticated and delivered during such period
in exchange for the unconverted portion of any Note converted in part during
such period.
Section 3.3 Payment of Notes Called for Redemption. If notice of
redemption has been given as provided in Section 3.2, the Notes or portion of
Notes with respect to which such notice has been given shall, unless converted
into Common Stock pursuant to the terms hereof, become due and payable on the
date and at the place or places stated in such notice at the applicable
redemption price, together with interest thereon accrued to the date fixed for
redemption and any Make-Whole Payment, and on and after said date (unless the
Company shall default in the payment of such Notes at the redemption price,
together with interest thereon accrued to said date and any Make-Whole Payment),
interest on the Notes or portion of Notes so called for redemption shall cease
to accrue, and such Notes shall cease after the close of business on the
Business Day next preceding the date fixed for redemption to be convertible into
Common Stock and, except as provided in Sections 7.6 and 12.4, to be entitled to
any benefit or security under this Indenture, and the holders thereof shall have
no right in respect of such Notes except the right to receive the redemption
price thereof and unpaid interest thereon to the date fixed for redemption and
any Make-Whole Payment. On presentation and surrender of such Notes at the place
of payment specified in the notice, the said Notes or the specified portions
thereof shall be paid and redeemed by the Company at the applicable redemption
price, together with interest accrued thereon to the date fixed for redemption
and any Make-Whole Payment; provided that any semi-annual payment of interest
becoming due on the date fixed for redemption shall be payable to the holders of
such Notes registered as such on the relevant record date subject to the terms
and provisions of Section 2.3 hereof.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Notes so presented.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and premium, if any, shall, until paid or
duly provided for, bear interest from the date fixed for redemption at the rate
borne by the Note and such Note shall remain convertible into Common Stock until
the principal and premium, if any, shall have been paid or duly provided for.
Section 3.4 Conversion Arrangement on Call for Redemption. In connection
with any redemption of Notes, the Company may arrange for the purchase and
conversion of any Notes by an agreement with one or more investment bankers or
other purchasers to purchase such Notes
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by paying to the Trustee in trust for the Noteholders, on or prior to the
Business Day prior to the date fixed for redemption, an amount not less than the
applicable redemption price, together with interest accrued to the date fixed
for redemption and any Make-Whole Payment, of such Notes. Notwithstanding
anything to the contrary contained in this Article III, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to the date fixed for redemption and any Make-Whole Payment, shall be
deemed to be satisfied and discharged to the extent such amount is so paid by
such purchasers. If such an agreement is entered into, a copy of which shall be
filed with the Trustee prior to the date fixed for redemption, any Notes not
duly surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and (notwithstanding anything to the contrary
contained in Article XIV) surrendered by such purchasers for conversion, all as
of the time immediately prior to the close of business on the date fixed for
redemption (and the right to convert any such Notes shall be deemed to have been
extended through such time), subject to payment of the above amount as
aforesaid. At the direction of the Company, the Trustee shall hold and dispose
of any such amount paid to it in the same manner as it would monies deposited
with it by the Company for the redemption of Notes. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Notes shall increase or otherwise affect any of
the powers, duties, responsibilities or obligations of the Trustee as set forth
in this Indenture, and the Company agrees to indemnify the Trustee from, and
hold it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Notes between the Company and such purchasers including the costs and expenses
incurred by the Trustee in the defense of any claim or liability arising out of
or in connection with the exercise or performance of any of its powers, duties,
responsibilities or obligations under this Indenture.
Section 3.5 Repurchase of Notes Upon a Change of Control.
(a) If a Change of Control shall occur at any time, then each holder
of Notes shall have the right to require that the Company repurchase such
holder's Notes in whole or in part in integral multiples of $1,000 at a purchase
price (the "Change of Control Purchase Price") in cash equal to 100% of the
principal amount of such Notes, plus accrued and unpaid interest thereon, if
any, to the purchase date (the "Change of Control Purchase Date") pursuant to
the offer described in Section 3.5(b) (the "Change of Control Offer") and in
accordance with the other procedures set forth in this Indenture.
(b) Within 30 days following any Change of Control, the Company
shall, unless the Company shall have given each Noteholder notice of its
irrevocable intention to redeem all outstanding Notes as described in Section
3.1, notify the Trustee thereof and give written notice (the "Change of Control
Notice") of such Change of Control to each holder of Notes, by first-class mail,
postage prepaid, at the Noteholder's address appearing in the Note register,
stating, among other things, (i) that a Change of Control has occurred, (ii) the
Change of Control Purchase Price, (iii) the Change of Control Purchase Date
(which shall be a Business Day no earlier than 30 days nor later than 60 days
from the date such notice is mailed, or such later date as is necessary to
comply with requirements under the Exchange Act), (iv) that any Note not
tendered shall continue to accrue interest and to have all of the benefits of
this Indenture, (v) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Notes
18
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Purchase Date, (vi) that Noteholders
electing to have any Notes purchased pursuant to a Change of Control Offer shall
be required to surrender the Notes, with the form entitled "Option of Noteholder
to Elect Purchase" on the reverse of the Notes completed, to the Company at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Purchase Date, (vii) that
Noteholders shall be entitled to withdraw their election if the Company
receives, not later than the close of business on the second Business Day
preceding the Change of Control Purchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Noteholder, the principal
amount of Notes delivered for purchase, and a statement that such Noteholder is
withdrawing his election to have such Notes purchased, and (viii) that
Noteholders whose Notes are being purchased only in part shall be issued new
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof.
The Company shall comply with the requirements of Rule 13e-4 and 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes in connection with a Change of Control.
(c) On the Change of Control Purchase Date, the Company shall, to
the extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, and (ii) on or before the next Business
Day prior to the Change of Control Purchase Date, the Company shall deposit with
the Trustee an amount equal to the Change of Control Purchase Price in respect
of all Notes or portions thereof so tendered and deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the Notes or portions thereof tendered to the Company. The
Trustee shall promptly mail to each Noteholder of Notes so accepted payment in
an amount equal to the Change of Control Purchase Price of such Notes, and the
Trustee shall promptly authenticate and mail to each Noteholder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered, if any;
provided that each such new Note shall be in a principal amount of $1,000 or an
integral multiple thereof. The Company shall publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
(d) The term "Change of Control" shall mean an event or series of
events as a result of which (i) any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act) acquires "beneficial ownership"
(as determined in accordance with Rule 13d-3 under the Exchange Act), directly
or indirectly, of shares representing more than 50% of the combined voting power
of the then outstanding Voting Stock or (ii) the Company consolidates with or
merges into any other person, or conveys, transfers or leases all or
substantially all of its assets to any person, or any other person merges into
the Company, and, in the case of any such transaction, the outstanding Common
Stock of the Company is changed or exchanged as a result, unless the
shareholders of the Company immediately before such transaction own, directly or
indirectly, immediately following such transaction, at least 51% of the combined
voting power of the outstanding voting securities of the person resulting from
such transaction in substantially the same proportion as their ownership of the
Voting Stock immediately before such transaction; provided that a Change of
Control shall not be deemed to
19
have occurred if either (x) the closing price per share of the Common Stock for
any five Trading Days within the period of 10 consecutive Trading Days ending
immediately after the later of the Change of Control or the public announcement
of the Change of Control (in the case of a Change of Control under clause (i)
above) or ending immediately before the Change of Control (in the case of a
Change of Control under clause (ii) above) shall equal or exceed 105% of the
Conversion Price of the Notes in effect on each such Trading Day, or (y) at
least 90% of the consideration (determined as of the date on which the Change of
Control is triggered and excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change of Control consists of
shares of common stock traded on a national securities exchange or quoted on the
Nasdaq National Market and as a result of such transaction or transactions the
Notes become convertible solely into such common stock.
ARTICLE IV
PARTICULAR COVENANTS OF THE COMPANY
Section 4.1 Payment of Principal, Premium and Interest. The Company shall
duly and punctually pay or cause to be paid the principal of and premium, if
any, and interest on each of the Notes at the places, at the respective times
and in the manner provided herein and in the Notes. Each installment of interest
on the Notes due on any semi-annual interest payment date shall be payable (a)
in respect to Notes held of record by the Depositary or its nominee in same day
funds and (b) in respect of holders other than the Depositary or its nominee by
mailing checks for the interest payable to or upon the written order of the
holders of Notes entitled thereto as they shall appear on the Note register;
provided that, with respect to any holder of Notes with an aggregate principal
amount equal to or in excess of $5,000,000, at the request (such request to
include appropriate wire instructions) of such holder in writing to the Trustee,
interest on such holder's Notes shall be paid by wire transfer in immediately
available funds to an account in the continental United States of America and
any such request shall be deemed a continuing request unless and until revoked
in writing. An installment of principal or interest shall be considered paid on
the date due if the Trustee or paying agent (other than the Company, a
subsidiary of the Company or any Affiliate of any of them) holds on that date
money designated for and sufficient to pay the installment of principal or
interest and is not prohibited from paying such money to the holders of the
Notes pursuant to the terms of this Indenture.
Section 4.2 Maintenance of Office or Agency. The Company may from time to
time designate one or more offices or agencies where the Notes may be
surrendered for registration of transfer or exchange or for presentation for
payment or for conversion or redemption and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of any such office or agency. If at any time the Company
shall fail to maintain any such office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
20
The Company hereby initially designates the Trustee as paying agent, Note
registrar and conversion agent and the Corporate Trust Office of the Trustee as
the office or agency of the Company for the purposes set forth in the first
paragraph of this Section 4.2.
So long as the Trustee is the Note registrar, the Trustee agrees to mail,
or cause to be mailed, the notices set forth in Section 7.11(a) and the third
paragraph of Section 7.12.
Section 4.3 Appointments to Fill Vacancies in Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
shall appoint, in the manner provided in Section 7.11, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 4.4 Provisions as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, the Company or the
Trustee, as the case may be, shall cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section 4.4:
(i) that it shall hold all sums held by it as such agent for
the payment of the principal of, premium, if any, or interest on the Notes
(whether such sums have been paid to it by the Company or by any other
obligor on the Notes) in trust for the benefit of the holders of the
Notes;
(ii) that it shall give the Trustee notice of any failure by
the Company (or by any other obligor on the Notes) to make any payment of
the principal of, premium, if any, or interest on the Notes when the same
shall be due and payable; and
(iii) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it shall forthwith pay to the
Trustee all sums so held in trust.
The Company shall, before each due date of the principal of, premium, if
any, or interest on the Notes, deposit with the paying agent a sum sufficient to
pay such principal, premium, if any, or interest, and (unless such paying agent
is the Trustee) the Company shall promptly notify the Trustee of any failure to
take such action.
(b) If the Company shall act as its own paying agent, it shall, on
or before each due date of the principal of, premium, if any, or interest or any
Make-Whole Payment on the Notes, set aside, segregate and hold in trust for the
benefit of the holders of the Notes a sum sufficient to pay such principal,
premium, if any, or interest so becoming due and shall notify the Trustee of any
failure to take such action and of any failure by the Company (or any other
obligor under the Notes) to make any payment of the principal of, premium, if
any, or interest or any Make-Whole Payment on the Notes when the same shall
become due and payable.
21
(c) Anything in this Section 4.4 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any paying agent hereunder
as required by this Section 4.4, such sums to be held by the Trustee upon the
trusts herein contained and upon such payment by the Company or any paying agent
to the Trustee, the Company or such paying agent shall be released from all
further liability with respect to such sums.
(d) Anything in this Section 4.4 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 4.4 is subject
to Sections 12.3 and 12.4.
Section 4.5 Corporate Existence. Subject to Article XI, the Company shall
do or cause to be done all things necessary to preserve and keep in full force
and effect (a) its corporate existence, and the corporate or other existence of
any subsidiary of the Company, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such subsidiary and (b) the rights (charter and statutory), licenses and
franchises of the Company and its subsidiaries; provided that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate or other existence of any of its subsidiaries if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its subsidiaries, taken as a
whole, and that the loss thereof is not materially adverse to the Holders of the
Notes.
Section 4.6 Maintenance of Status of Net.B@nk as Insured Depository
Institution. The Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect the status of Net.B@nk, its banking
subsidiary, as an insured depository institution and do or cause to be done all
things necessary to ensure that depository accounts of Net.B@nk are insured by
the Federal Deposit Insurance Corporation or any successor organization up to
the maximum amount permitted by 12 U.S.C. Section 1811 et seq. and the
regulations thereunder or any succeeding federal law, except as to individual
accounts or interests in employee benefit plans that are not entitled to
pass-through insurance under 12 U.S.C. Section 1821 (a)(1)(D).
Section 4.7 Commission and Other Reports. The Company shall deliver to the
Trustee and each Holder, within 10 days after it files the same with the
Commission, copies of all reports and information (or copies of such portions of
any of the foregoing as the Commission may by rules and regulations prescribe),
if any, that the Company is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act; provided that in the case of annual
reports, information may be incorporated by reference and furnished to Holders
at the time and in the manner in which such information is required to be
furnished to the Company's common shareholders. The Company agrees to continue
to comply with the filing and reporting requirements of the Commission as long
as any of the Notes are outstanding; provided, that if the Company is not
subject to the filing and reporting requirements of the Commission at any time,
(a) the Company shall provide the Trustee and each Holder with the reports and
information (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that are specified in Section
13 or 15(d) of the Exchange Act as if the Company were subject to such filing
and reporting requirements, and (b) the Company shall provide copies of such
reports and information to any prospective holder of the Notes promptly upon
written request and payment of reasonable costs of duplication and delivery. The
record date to identify
22
the Holders to whom such reports shall be furnished shall be no longer than 60
days prior to the date on which such reports are first mailed to the Holders on
the Notes. The Company shall also comply with the other provisions of the Trust
Indenture Act Section 314(a).
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.8 Stay, Extension and Usury Laws. The Company (to the extent
that it may lawfully do so) shall not at any time insist upon, plead or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law or other law that would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Indenture; and the Company (to
the extent it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
Section 4.9 Compliance Statement; Notice of Defaults.
(a) The Company shall deliver to the Trustee within 120 days after
the end of each Fiscal Year of the Company an Officers' Certificate stating
whether or not to the best knowledge of the signers thereof the Company is in
compliance (without regard to periods of grace or notice requirements) with all
conditions and covenants under this Indenture, and if the Company shall not be
in compliance, specifying such non-compliance and the nature and status thereof
of which such signer may have knowledge. The Company agrees to promptly notify
the Trustee of any change in the Fiscal Year.
(b) The Company shall file with the Trustee written notice of the
occurrence of any default or Event of Default within ten days of its becoming
aware of any such default or Event of Default.
Section 4.10 Taxes. The Company shall pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (a) all taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Company
or its subsidiaries or upon the income, profits or property of the Company or
any such subsidiary and (b) all lawful claims for labor, materials and supplies
that, if unpaid, might by law become a lien upon the property of the Company or
any such subsidiary; provided that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which disputed amounts adequate reserves have
been made.
23
Section 4.11 Insurance. The Company shall provide, or cause to be
provided, for itself and its subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties, including, but
not limited to, products liability insurance and public liability insurance,
with reputable insurers or with the government of the United States of America
or an agency or instrumentality thereof, in such amounts with such deductibles
and by such methods as shall be determined in good faith by the Board of
Directors to be appropriate.
ARTICLE V
NOTEHOLDERS' LISTS
Section 5.1 Noteholders' 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 holders of Notes and shall otherwise comply with Trust
Indenture Act Section 312(a). If the Trustee is not the Notes registrar, the
Company shall furnish or cause to be furnished to the Trustee on or before at
least seven Business Days preceding each interest payment date, redemption date,
purchase date and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee reasonably may require of
the names and addresses of holders of Notes; and the Company shall otherwise
comply with Trust Indenture Act Section 312(a); provided however to the extent
there has been established a record date or special record date with respect to
such payment, any such list of holders shall be as of such record date or
special record date.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default. In case one or more of the following Events
of Default (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall have occurred and be continuing:
(a) default in the payment of the principal of or premium, if any,
on the Notes when due at maturity, upon redemption or otherwise, including
failure by the Company to purchase the Notes when required under Section 3.5
(whether or not such payment shall be prohibited by Article XV of this
Indenture); or
(b) default in the payment of any installment of interest on the
Notes as and when the same shall become due and payable (whether or not such
payment shall be prohibited by Article XV of this Indenture), and continuance of
such default for a period of 30 days; or
(c) failure to provide a Change of Control Notice (whether or not
such Notice or payment pursuant to Section 3.5 shall be prohibited by Article XV
of this Indenture); or
24
(d) failure on the part of the Company to duly observe or perform
any other covenant on the part of the Company in this Indenture (other than a
default in the performance or breach of a covenant that is specifically dealt
with elsewhere in this Section 6.1) that continues for a period of 90 days after
the date on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the Trustee, or to the
Company and a Responsible Officer of the Trustee by the holders of at least 25%
in aggregate principal amount of the Notes at the time outstanding (determined
in accordance with Section 8.4); or
(e) the Company shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect, or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it or shall make a general assignment for the benefit of
creditors or shall fail generally to pay its debts as they become due; or
(f) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 6.1(e) or (f)), unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the holders of not less
than 25% in aggregate principal amount of the Notes then outstanding (determined
in accordance with Section 8.4), by notice in writing to the Company (and to the
Trustee if given by Noteholders), may declare the principal of and premium, if
any, on the Notes and the interest accrued thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the Notes
contained to the contrary notwithstanding. If an Event of Default specified in
Section 6.1(e) or (f) occurs and is continuing, the principal of all the Notes
and the interest accrued thereon shall be immediately due and payable. The
foregoing provision is subject to the conditions that if, at any time after the
principal of the Notes shall have been so declared due and payable, and before
any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all Notes and the principal of and premium, if any, on any and all
Notes that shall have become due otherwise than by acceleration (with interest
on overdue installments of interest (to the extent that payment of such interest
is enforceable under applicable law) and on such principal and premium, if any,
at the rate borne by the Notes, to the date of such payment or deposit) and
amounts due to the Trustee pursuant to Section 7.7, and if any and all defaults
under this Indenture, other than the nonpayment of principal of, premium, if
any, and accrued interest on Notes that shall have become due by acceleration,
shall have been cured or waived pursuant to Section 6.7, then and in every such
case the holders of a majority in aggregate principal amount
25
of the Notes then outstanding, by written notice to the Company and to the
Trustee, may waive all defaults or Events of Default and rescind and annul such
declaration and its consequences; but no such waiver or rescission and annulment
shall extend to or shall affect any subsequent default or Event of Default, or
shall impair any right consequent thereto. The Company shall notify a
Responsible Officer of the Trustee, promptly upon becoming aware thereof, of any
Event of Default.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Notes and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes and the Trustee shall continue as
though no such proceeding had been taken.
Section 6.2 Payments of Notes on Default; Suit Therefor. The Company
covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Notes as and when the same shall become
due and payable, and such default shall have continued for a period of 30 days,
or (b) in case default shall be made in the payment of the principal of or
premium, if any, on any of the Notes as and when the same shall have become due
and payable, whether at maturity of the Notes or in connection with any
redemption, by declaration or otherwise, then, upon demand of the Trustee, the
Company shall pay to the Trustee, for the benefit of the holders of the Notes,
the whole amount that then shall have become due and payable on all such Notes
for principal of, premium, if any, or interest, or both, as the case may be,
with interest upon the overdue principal of, premium, if any, and (to the extent
that payment of such interest is enforceable under applicable law) upon the
overdue installments of interest at the rate borne by the Notes; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including reasonable compensation to the Trustee,
its agents, attorneys and counsel, and any expenses or liabilities incurred by
the Trustee hereunder other than through its negligence or bad faith. Until such
demand by the Trustee, the Company may pay the principal of and premium, if any,
and interest on the Notes to the registered holders, whether or not the Notes
are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In the case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Notes under Title
11 of the United States Code or any other applicable law, or in case a receiver,
assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Company or such other obligor, the property of the Company or such
26
other obligor, or in the case of any other judicial proceedings relative to the
Company or such other obligor upon the Notes, or to the creditors or property of
the Company or such other obligor, the Trustee, irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand pursuant to the provisions of this Section 6.2, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal, premium, if any, and interest
owing and unpaid in respect of the Notes and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee and of the
Noteholders allowed in such judicial proceedings relative to the Company or any
other obligor on the Notes, its or their creditors, or its or their property and
to collect and receive any monies or other property payable or deliverable on
any such claims and to distribute the same after the deduction of any amounts
due the Trustee under Section 7.7; and any receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, custodian or similar official is
hereby authorized by each of the Noteholders to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Noteholders, to pay to the Trustee any amount due it
for reasonable compensation, expenses, advances and disbursements, including
counsel fees incurred by it up to the date of such distribution. To the extent
that such payment of reasonable compensation, expenses, advances and
disbursements out of the estate in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a lien on, and shall be paid out
of, any and all distributions, dividends, monies, securities and other property
that the holders of the Notes may be entitled to receive in such proceedings,
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or adopt on behalf of any Noteholder any plan of
reorganization or arrangement affecting the Notes or the rights of any
Noteholder, or to authorize the Trustee to vote in respect of the claim of any
Noteholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes or the production thereof on any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
holders of the Notes, and it shall not be necessary to make any holders of the
Notes parties to any such proceedings.
Section 6.3 Application of Monies Collected by Trustee. Any monies
collected by the Trustee pursuant to this Article VI shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes
27
and stamping thereon the payment, if only partially paid, and upon surrender
thereof, if fully paid:
First: To the payment of all amounts due the Trustee under this
Indenture, including, without limitation Section 7.7;
Second: Subject to the provisions of Article XV, in case the
principal of the outstanding Notes shall not have become due and be
unpaid, to the payment of interest on the Notes in default in the order of
the maturity of the installments of such interest, with interest (to the
extent that such interest has been collected by the Trustee) upon the
overdue installments of interest at the rate borne by the Notes, such
payments to be made ratably to the persons entitled thereto; and
Third: Subject to the provisions of Article XV, in case the
principal of the outstanding Notes shall have become due, by declaration
or otherwise, and be unpaid, to the payment of the whole amount then due
and unpaid upon the Notes for principal, premium, if any, and interest,
with interest on the overdue principal and premium, if any, and (to the
extent that such interest has been collected by the Trustee) upon overdue
installments of interest at the rate borne by the Notes; and in case such
monies shall be insufficient to pay in full the whole amounts so due and
unpaid upon the Notes, then to the payment of such principal of, premium,
if any, and interest without preference or priority of principal and
premium, if any, over interest, or of interest over principal and premium,
if any, or of any installment of interest over any other installment of
interest, or of any Note over any other Note, ratably to the aggregate of
such principal and premium, if any, and accrued and unpaid interest.
Section 6.4 Proceedings by Noteholder. No holder of any Note shall have
any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding, and no direction inconsistent
with such written request shall have been given to the Trustee pursuant to
Section 6.7; it being understood and intended, and being expressly covenanted by
the taker and holder of every Note with every other taker and holder and the
Trustee, that not one or more holders of Notes shall have any right in any
manner whatever by virtue of or by availing of any provision of this Indenture
to affect, disturb or prejudice the rights of any other holder of Notes, to
obtain or seek to obtain priority over or preference to any other such holder or
to enforce any right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all holders of Notes (except as
otherwise provided herein). For the protection and
28
enforcement of this Section 6.4, each and every Noteholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any holder of any Note to receive payment of the
principal of, premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder
except as otherwise set forth herein.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in his own behalf and for his own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, his rights of
conversion as provided herein.
Section 6.5 Proceedings by Trustee. In case of an Event of Default, the
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
Section 6.6 Remedies Cumulative and Continuing. Except as provided in
Section 2.6, all powers and remedies given by this Article VI to the Trustee or
to the Noteholders shall, to the extent permitted by law, be deemed cumulative
and not exclusive of such powers and remedies or of any other powers and
remedies available to the Trustee or the holders of the Notes, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any holder of any of the Notes to exercise any right or
power accruing upon any default or Event of Default occurring and continuing as
aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such default or any acquiescence therein; and, subject to the
provisions of Section 6.4, every power and remedy given by this Article VI or by
law to the Trustee or to the Noteholders may be exercised from time to time, and
as often as shall be deemed expedient, by the Trustee or by the Noteholders.
Section 6.7 Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding (determined in accordance with Section 8.4) shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee; provided that (a) such direction shall not be in
conflict with any rule of law or with this Indenture, (b) the Trustee may take
any other action deemed proper by the Trustee that is not inconsistent with such
direction and (c) such direction shall not in the estimation of the Trustee
involve it in personal liability. The holders of a majority in aggregate
principal amount of the Notes at the time outstanding (determined in accordance
with Section 8.4) may on behalf of the holders of all of the Notes waive any
past default or Event of Default hereunder and its consequences except (i) a
default in the payment of
29
interest or premium, if any, on, or the principal of, the Notes, (ii) a failure
by the Company to convert any Notes into Common Stock or (iii) a default in
respect of a covenant or provisions hereof that under Article X cannot be
modified or amended without the consent of the holders of all Notes then
outstanding. Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section 6.7, said default or Event of Default shall
for all purposes of the Notes and this Indenture be deemed to have been cured
and to be not continuing and the Company, the Trustee and the holders of the
Notes shall be restored to their former positions and rights hereunder; but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon.
Section 6.8 Notice of Defaults. The Trustee shall, within 90 days after
the occurrence of a default, mail to all Noteholders, as the names and addresses
of such holders appear upon the Note register, notice of all defaults known to a
Responsible Officer, unless such defaults shall have been cured or waived before
the giving of such notice; provided that, except in the case of default in the
payment of the principal of, premium, if any, or interest on any of the Notes,
the Trustee shall be protected in withholding such notice if and so long as a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the
Noteholders.
Section 6.9 Undertaking to Pay Costs. All parties to this Indenture agree,
and each holder of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided that the provisions of this Section 6.9
shall not apply to any suit instituted by the Trustee, to any suit instituted by
any Noteholder or group of Noteholders holding in the aggregate more than 10% in
principal amount of the Notes at the time outstanding (determined in accordance
with Section 8.4) or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of, premium, if any, or interest on
any Note on or after the due date expressed in such Note or to any suit for the
enforcement of the right to convert any Note in accordance with the provisions
of Article XIV.
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.1 Duties and Responsibilities of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
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(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;
provided that in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).
(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 (c) does not limit the effect of paragraph
(b) of this Section 7.1;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by an officer or officers of the Trustee 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 6.7.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1.
(e) The Trustee may refuse to perform any duty or exercise any right
or power or expend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.
Section 7.2 Reports by Trustee to Holders. Within 60 days after each May
15 commencing with the May 15 following the date of this Indenture, the Trustee
shall, but only if required by the Trust Indenture Act, mail to each Noteholder
a brief report dated as of such May 15 that complies with Trust Indenture Act
Section 313(a). The Trustee also shall comply with Trust Indenture Act Sections
313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the Notes
become listed or delisted on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Noteholders shall be
mailed to the Company and, to the extent required by Section 4.7 hereof and of
the Trust Indenture Act Section 313(d), filed with the Commission and each stock
exchange, if any, on which the Notes are listed.
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Section 7.3 Reliance on Documents, Opinions, Etc. Except as otherwise
provided in Section 7.1:
(a) The Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, coupon or other paper or document
believed by it in good faith to be genuine and to have been signed or presented
by the proper party or parties;
(b) Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed or required by the
Trust Indenture Act); and any resolution of the Board of Directors may be
evidenced to the Trustee by a copy thereof certified by the Secretary or an
Assistant Secretary of the Company;
(c) The Trustee may consult with counsel of its selection and any
advice or opinion of counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in accordance with such advice or opinion of counsel;
(d) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder; no Depositary, Custodian or paying agent who is not the Trustee shall
be deemed an agent of the Trustee, and the Trustee (in its capacity as Trustee)
shall not be responsible for any act or omission by any such Depositary,
Custodian or paying agent;
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by the Indenture at the request or direction of
any of the holders pursuant to this Indenture unless such holders have offered
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities that would be incurred by it in compliance with such request or
direction.
(f) Subject to the provisions of Section 7.1(c), the Trustee shall
not be liable for any action it takes or omits to take in good faith that it
believes to be authorized or within its rights or powers;
(g) In connection with any request to transfer or exchange any Note,
the Trustee may request a direction (in the form of an Officers' Certificate)
from the Company and an Opinion of Counsel with respect to compliance with any
restrictions on transfer or exchange imposed by this Indenture, the Securities
Act, other applicable law or the rules and regulations of any exchange on which
the Notes or the capital stock may be traded, and the Trustee may rely and shall
be protected in acting upon such direction and in accordance with such Officers'
Certificate and Opinion of Counsel;
(h) The Trustee may rely and shall be fully protected in acting upon
the determination and notice by the Company of the Conversion Price; and
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(i) The Trustee shall not be deemed to have knowledge of any Event
of Default or other fact or event upon the occurrence of which it may be
required to take action hereunder unless one of its Responsible Officers has
actual knowledge thereof.
(j) The Trustee's privileges, protections and immunities from
liability and its rights to compensation and indemnification in connection with
the performance of its duties under this Indenture shall extend to the Trustee
when serving in the roles of paying agent, authenticating agent, conversion
agent and Note registrar, as well as to the Trustee's officers, directors,
employees and agents. Such privileges, protections, immunities and rights to
indemnification, together with the Trustee's right to compensation, shall
survive the Trustee's resignation or removal in any or all of the capacities it
may be serving hereunder and final payment of the Notes.
(k) No recourse under or upon any obligation, covenant or agreement
of the Trustee in this Indenture or in any supplemental indenture shall be had
against any officer, director, employee or agent, as such, past, present or
future, of the Trustee or of any successor entity, either directly or through
the Trustee or any successor entity, whether by virtue of any constitution,
statute or rule of law, by the enforcement of any assessment or penalty or
otherwise, it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as consideration for, the
execution of this Indenture.
Section 7.4 No Responsibility for Recitals, Etc. The recitals contained
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
Section 7.5 Trustee, Paying Agents, Conversion Agents or Registrar May Own
Notes. The Trustee, any paying agent, any conversion agent or any Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.
Section 7.6 Monies to Be Held in Trust. Subject to the provisions of
Section 12.4, all monies received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.
Money held by the Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as may be
agreed to in writing from time to time by the Company and the Trustee.
Section 7.7 Compensation and Expenses of Trustee. The Company shall pay to
the Trustee from time to time, and the Trustee shall be entitled to, such
compensation as the Company and the Trustee shall from time to time agree in
writing, for all services rendered by it hereunder in any capacity (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), and the Company shall pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or
33
made by the Trustee in accordance with any of the provisions of this Indenture
(including the reasonable fees and expenses of its counsel and of all persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Company also shall indemnify
each of the Trustee or any predecessor Trustee in any capacity under this
Indenture and its respective agents and any authenticating agent and their
respective officers, directors, employees and agents for, and to hold them
harmless against, any and all loss, liability, damage, claim or expense,
including taxes (other than taxes based on the income of the Trustee) and
reasonable counsel fees and expenses incurred without negligence or bad faith on
the part of the Trustee or any such other indemnified parties, as the case may
be, and arising out of or in connection with the acceptance or administration of
this trust or in any other capacity hereunder, including the costs and expenses
of defending themselves against any claim of liability in the premises. The
obligations of the Company under this Section 7.7 to compensate or indemnify the
Trustee and to pay or reimburse the Trustee for expenses, disbursements and
advances shall be secured by a lien prior to that of the Notes upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the holders of particular Notes. The obligation of the
Company under this Section shall survive the satisfaction and discharge of this
Indenture.
Section 7.8 Officers' Certificate as Evidence. Except as otherwise
provided in Section 7.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee, and such Officers' Certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.
Section 7.9 Conflicting Interests of Trustee. In the event that the Trust
Indenture Act is applicable hereto, and if the Trustee has or shall acquire a
conflicting interest within the meaning of Trust Indenture Act Section 310(b)
and there exists an Event of Default hereunder (exclusive of any period of grace
or requirement of notice), the Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.
Section 7.10 Eligibility of Trustee. There shall at all times be a Trustee
hereunder that shall be a person that satisfied the requirements of Trust
Indenture Act Section 310(a)(1) and Section 310(a)(5) and that has a combined
capital and surplus of at least $50,000,000. If such person makes available to
the public reports of condition or audited financial statements at least
annually, then for the purposes of this Section, the combined capital and
surplus of such person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition or audited financial
statements. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article VII.
Section 7.11 Resignation or Removal of Trustee.
34
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company; and the Company shall mail, or cause to be
mailed, notice thereof to the holders of Notes at their addresses as they shall
appear on the Note register. Upon receiving such notice of resignation, the
Company shall promptly appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with Section 7.9 after
written request therefor by the Company or by any Noteholder who has been
a bona fide holder of a Note or Notes for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 7.10 and shall fail to resign after written
request therefor by the Company or by any such Noteholder; or
(iii) the Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee or any Noteholder who
has been a bona fide holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and nominate a
successor trustee, which shall be deemed appointed as successor trustee unless
within ten days after notice to the Company of such nomination the Company
objects thereto, in which case the Trustee so removed or any Noteholder, upon
the terms and conditions and otherwise as provided in the next paragraph, may
petition any court of competent jurisdiction for an appointment of a successor
trustee.
If no successor trustee shall have been so appointed and have accepted
appointment within 60 days after removal or the mailing of such notice of
resignation to the Noteholders, the Trustee resigning or being removed may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or, in the case of either resignation or removal, any Noteholder who
has been a bona fide holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of
35
a successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 7.11 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 7.12.
Section 7.12 Acceptance by Successor Trustee. Any successor trustee
appointed as provided in Section 7.11 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon, the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but on the written request of the Company
or of the successor trustee, the Trustee ceasing to act shall, upon payment of
any amounts then due it pursuant to the provisions of Section 7.7, execute and
deliver an instrument transferring to such successor trustee all the rights and
powers of the Trustee so ceasing to act. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a lien
upon all property and funds held or collected by such trustee as such, except
for funds held in trust for the benefit of holders of particular Notes, to
secure any amounts then due it pursuant to the provisions of Section 7.7.
No successor trustee shall accept appointment as provided in this Section
7.12 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 7.9 and eligible under the provisions
of Section 7.10.
Upon acceptance of appointment by a successor trustee as provided in this
Section 7.12, the Company shall mail or cause to be mailed notice of the
succession of such Trustee hereunder to the holders of Notes at their addresses
as they shall appear on the Note register. If the Company fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Company.
Section 7.13 Successor, by Merger, Etc. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor to
the Trustee hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided such corporation
shall be qualified under the provisions of Section 7.9 and eligible under the
provisions of Section 7.10.
Section 7.14 Limitation on Rights of Trustee as Creditor. If and when the
Trustee shall be or become a creditor of the Company (or any other obligor upon
the Notes) and the Trust Indenture Act is applicable hereto, the Trustee shall
be subject to the provisions of Trust Indenture Act Section 311(a) or, if
applicable, Trust Indenture Act Section 311(b) regarding the collection of the
claims against the Company (or any such other obligor).
36
ARTICLE VIII
CONCERNING THE NOTEHOLDERS
Section 8.1 Action by Noteholders. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article IX or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than 15 days
prior to the date of commencement of solicitation of such action.
Section 8.2 Proof of Execution by Noteholders. Subject to the provisions
of Sections 7.1, 7.2 and 9.5, proof of the execution of any instrument by a
Noteholder or by agent or proxy shall be sufficient if made in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
such manner as shall be satisfactory to the Trustee. The holding of Notes shall
be proved by the Note register or by a certificate of the Note registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 9.5.
Section 8.3 Who Are Deemed Absolute Owners. The Company, the Trustee, any
paying agent, any conversion agent and any Note registrar may deem the person in
whose name such Note shall be registered upon the books of the Company to be,
and may treat such person as, the absolute owner of such Note (whether or not
such Note shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment of or on account of
the principal of, premium, if any, and interest on such Note, for conversion of
such Note and for all other purposes; and neither the Company nor the Trustee
nor any paying agent nor any conversion agent nor any Note registrar shall be
affected by any notice to the contrary. All such payments so made to any holder
for the time being, or upon order of such holder, shall be valid and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for monies payable upon any such Note.
The Depositary shall be deemed to be the owner of any global Note for all
purposes, including receipt of notices to Noteholders and payment of principal
of, premium, if any, and interest on the Notes. None of the Company, the Trustee
(in its capacity as Trustee), any paying agent or the Note registrar (or
co-registrar) shall have any responsibility for any aspect of the records
relating to or payments made on account of beneficial interests of a global Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests; provided that the foregoing shall not apply to
the Trustee or any other person acting in its capacity as Custodian.
37
Section 8.4 Company-Owned Notes Disregarded. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes that
are owned by the Company or any other obligor on the Notes or by any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any other obligor on the Notes shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; provided that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, consent, waiver or other
action, only Notes that a Responsible Officer actually knows are so owned shall
be so disregarded. Notes so owned that have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 8.4 if the pledgee
shall establish to the satisfaction of the Trustee the xxxxxxx'x right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or a person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any such other obligor. In
the case of a dispute as to such right, any decision by the Trustee taken upon
the advice of counsel shall be full protection to the Trustee. Upon request of
the Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Notes, if any, known by the Company to
be owned or held by or for the account of any of the above described persons;
and subject to Section 7.1, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth and
of the fact that all Notes not listed therein are outstanding for the purpose of
any such determination.
Section 8.5 Revocation of Consents, Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
8.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note that is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 8.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.
ARTICLE IX
NOTEHOLDERS' MEETINGS
Section 9.1 Purposes for Which Meetings May be Called. A meeting of
Noteholders may be called at any time and from time to time pursuant to the
provisions of this Article IX for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to be
taken by Noteholders pursuant to any of the provisions of Article VI;
38
(b) to remove the Trustee and appoint a successor trustee pursuant
to the provisions of Article VII;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 10.2; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of the Notes under
any other provisions of this Indenture or under applicable law.
Section 9.2 Manner of Calling Meetings; Record Date. The Trustee may at
any time call a meeting of Noteholders to take any action specified in Section
9.1, to be held at such time and at such place in the City of New York, State of
New York, as the Trustee shall determine. Notice of every meeting of the
Noteholders, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be mailed not less
than 30 nor more than 60 days prior to the date fixed for the meeting to such
Noteholders at their addresses as such addresses appear in the Note register.
For the purpose of determining Noteholders entitled to notice of any meeting of
Noteholders, the Trustee shall fix in advance a date as the record date for such
determination, such date to be a Business Day not more than ten days prior to
the date of the mailing of such notice as hereinabove provided. Only persons in
whose name any Note shall be registered in the Note register at the close of
business on a record date fixed by the Trustee as aforesaid, or by the Company
or the Noteholders as provided in Section 9.3, shall be entitled to notice of
the meeting of Noteholders with respect to which such record date was so fixed.
Section 9.3 Call of Meeting by Company or Noteholders. In case at any time
the Company, pursuant to a resolution of its Board of Directors or the holders
of at least 10% in aggregate principal amount of the Notes then outstanding
shall have requested the Trustee to call a meeting of Noteholders to take any
action authorized in Section 9.1 by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall not
have mailed notice of such meeting within 20 days after receipt of such request,
then the Company or the holders of Notes in the amount above specified, as the
case may be, may fix the record date with respect to, and determine the time and
the place for, such meeting and may call such meeting to take any action
authorized in Section 9.1, by mailing notice thereof as provided in Section 9.2.
The record date fixed as provided in the preceding sentence shall be set forth
in a written notice to the Trustee and shall be a Business Day not less than 15
nor more than 20 days after the date on which the original request is sent to
the Trustee.
Section 9.4 Who May Attend and Vote at Meetings. Only persons entitled to
receive notice of a meeting of Noteholders and their respective proxies duly
appointed by an instrument in writing shall be entitled to vote at such meeting.
The only persons who shall be entitled to be present or to speak at any meeting
of Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel. When a determination of
Noteholders entitled to vote at any meeting of Noteholders has been made as
provided in this Section, such determination shall apply to any adjournments
thereof.
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Section 9.5 Manner of Voting at Meetings and Record To Be Kept. The vote
upon any resolution submitted to any meeting of Noteholders shall be by written
ballots on each of which shall be subscribed the signature of the Noteholder or
proxy casting such ballot and the identifying number or numbers of the Notes
held or represented in respect of which such ballot is cast. The chairman of the
meeting shall appoint two inspectors of votes who shall count all votes cast at
the meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Noteholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was mailed as provided in Section 9.2. The record
shall show the identifying numbers of the Notes voting in favor of or against
any resolution. Each counterpart of such record shall be signed and verified by
the affidavits of the chairman and secretary of the meeting and one of the
counterparts shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee.
Any counterpart record so signed and verified shall be conclusive evidence
of the matters therein stated and shall be the record referred to in clause (b)
of Section 8.1.
Section 9.6 Exercise of Rights of Trustee and Noteholders Not To Be
Hindered or Delayed. Nothing in this Article IX contained shall be deemed or
construed to authorize or permit, by reason of any call of a meeting of
Noteholders or any rights expressly or impliedly conferred hereunder to make
such call, any hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the Noteholders under any of the
provisions of this Indenture or of the Notes.
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1 Supplemental Indentures Without Consent of Noteholders. The
Company, when authorized by a Board Resolution, and the Trustee may from time to
time and at any time enter into an indenture or indentures supplemental hereto
for one or more of the following purposes:
(a) to make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 14.6;
(b) subject to Article XV, to convey, transfer, assign, mortgage or
pledge to the Trustee, as security for the Notes, any property or assets;
(c) to evidence the succession of another person to the Company, or
successive successions, and the assumption by the Successor Company of the
covenants, agreements and obligations of the Company pursuant to Article XI;
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(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture; provided that in respect of any such additional
covenant, restriction or condition, such supplemental indenture may provide for
a particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such default or may limit the remedies available to
the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to provide
for exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;
(f) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture that may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture that shall not adversely affect the interests of
the holders of the Notes;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this Indenture
to such extent necessary to effect the qualification of this Indenture under the
Trust Indenture Act (if applicable), or under any similar federal statute
hereafter enacted (if applicable).
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations that may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
that affects the Trustee's own rights, duties, protections, privileges,
liabilities or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
10.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 10.2.
Section 10.2 Supplemental Indentures With Consent of Noteholders. With the
consent (evidenced as provided in Article VIII) of the holders of not less than
a majority in aggregate principal amount of the Notes at the time outstanding,
the Company, when authorized by a Board Resolution and the Trustee may from time
to time and at any time enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or any supplemental
indenture or of modifying in any manner the rights of the holders of the Notes;
provided that, without the
41
consent of the holders of all Notes then outstanding, no such supplemental
indenture shall (a) extend the fixed maturity of any Note, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or premium, if any, thereon or reduce any amount payable on redemption
thereof, alter the obligation of the Company to redeem the Notes at the option
of the holder upon the occurrence of a Change of Control or impair or affect the
right of any Noteholder to institute suit for the payment thereof or make the
principal thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes, modify the subordination
provisions in a manner adverse to the holders of the Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth herein
without the consent of the holder of each Note so affected or (b) reduce the
aforesaid percentage of Notes, the holders of which are required to consent to
any such supplemental indenture.
Upon the request of the Company, accompanied by a copy of a Board
Resolution certified by its Secretary or Assistant Secretary authorizing the
execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of Noteholders as aforesaid, the Trustee
shall join with the Company in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties,
protections, privileges, liability or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Noteholders under this
Section 10.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 10.3 Effect of Supplemental Indentures. Any supplemental indenture
executed pursuant to the provisions of this Article X shall comply with the
Trust Indenture Act, as then in effect, if such supplemental indenture is then
required to so comply. Upon the execution of any supplemental indenture pursuant
to the provisions of this Article X, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitation of rights, obligations, duties and immunities under this Indenture of
the Trustee, the Company and the holders of Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 10.4 Notation on Notes. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article X may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture, but they need not do so. If the
Company or the Trustee shall determine to add such a notation, new Notes so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may, at the Company's expense, be prepared and executed
by the Company, authenticated by the Trustee (or an authenticating agent duly
appointed by the Trustee pursuant to Section 16.13) and delivered in exchange
for the Notes then outstanding, upon surrender of such Notes then outstanding.
42
Section 10.5 Evidence of Compliance of Supplemental Indenture To Be
Furnished Trustee. The Trustee shall be furnished with and, subject to the
provisions of Sections 7.1 and 7.2, may rely upon an Officers' Certificate and
an Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant hereto complies with the requirements of this Article X.
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE,
TRANSFER AND LEASE
Section 11.1 Company May Consolidate, Etc. on Certain Terms. The Company
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substantially all of its assets (determined on a consolidated basis),
whether in a single transaction or a series of related transactions, to any
person unless: (a) either the Company is the resulting, surviving or transferee
person (the "Successor Company") or the Successor Company is a person organized
and existing under the laws of the United States or any State thereof or the
District of Columbia, and the Successor Company (if not the Company) expressly
assumes by a supplemental indenture, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under this
Indenture and the Notes, including the rights pursuant to Article XIV hereof,
(b) immediately after giving effect to such transaction, no Event of Default has
happened and is continuing and (c) the Company delivers to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
Section 11.2 Successor Company To Be Substituted. In case of any such
consolidation, merger, sale, conveyance, transfer or lease and upon the
assumption by the Successor Company, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of, premium, if any, and interest on all of
the Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such Successor
Company shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party hereto. When a Surviving
Person duly assumes all the obligations of the Company pursuant to their
Indenture and the Notes, the predecessor shall be released from all such
obligations.
Section 11.3 Opinion of Counsel To Be Given to Trustee. The Trustee,
subject to Sections 7.1 and 7.2, shall receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance, transfer or lease and any such assumption complies with the
provisions of this Article XI.
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONIES
Section 12.1 Legal Defeasance and Covenant Defeasance of the Notes.
43
(a) The Company may, at its option by Board Resolution, at any time,
with respect to the Notes, elect to have either paragraph (b) or paragraph (c)
below be applied to the outstanding Notes upon compliance with the conditions
set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"legal defeasance"). For this purpose, such legal defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of the Sections of and matters under this
Indenture referred to in clauses (i) and (ii) below and to have satisfied all
its other obligations under such Notes and this Indenture insofar as such Notes
are concerned, except for the following, which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of holders of outstanding
Notes to receive solely from the trust fund described in paragraph (d) below and
as more fully set forth in such paragraph, payments in respect of the principal
of, premium, if any, and interest on such Notes when such payments are due and
(ii) obligations listed in Section 12.3.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Sections 3.5 and 4.6 and
Article XI with respect to the outstanding Notes on and after the date the
conditions set forth in paragraph (d) are satisfied (hereinafter, "covenant
defeasance"), and the Notes shall thereafter be deemed to be not "outstanding"
for the purpose of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes hereunder.
For this purpose, such covenant defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document, and such omission to
comply shall not constitute a default or an Event of Default under Section 6.1,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Notes:
(i) The Company shall have irrevocably deposited in trust with
the Trustee, pursuant to an irrevocable trust and security agreement in
form and substance satisfactory to the Trustee, cash or U.S. Government
Obligations maturing as to principal and interest at such times, or a
combination thereof, in such amounts as are sufficient, without
consideration of the reinvestment of such interest and after payment of
all federal, state and local taxes or other charges or assessments in
respect thereof payable by the Trustee, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof (in form and substance reasonably satisfactory to
the Trustee) delivered to the Trustee, to pay the principal of, premium,
if any, and
44
interest on the outstanding Notes on the dates on which any such payments
are due and payable in accordance with the terms of this Indenture and of
the Notes;
(ii) (A) No Event of Default shall have occurred or be
continuing on the date of such deposit, and (B) no default or Event of
Default under Section 6.1(e) or 6.1(f) shall occur on or before the 123rd
day after the date of such deposit;
(iii) Such deposit shall not result in a default under this
Indenture or a breach or violation of, or constitute a default under, any
other instrument or agreement to which the Company is a party or by which
it or its property is bound;
(iv) In the case of a legal defeasance under paragraph (b)
above, the Company has delivered to the Trustee an Opinion of Counsel
stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date
of this Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion shall confirm that, the holders of the Notes shall not recognize
income, gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and shall 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, defeasance and discharge had not
occurred; and, in the case of a covenant defeasance under paragraph (c)
above, the Company shall deliver to the Trustee an Officers' Certificate
and an Opinion of Counsel, in form and substance reasonably satisfactory
to the Trustee, to the effect that holders of the Notes shall not
recognize income, gain or loss for federal income tax purposes as a result
of such deposit and defeasance and shall be subject to federal income tax
on the same amounts, in the same manner and at the same times as would
have been the case if such deposit and defeasance had not occurred;
(v) The holders shall have a perfected security interest under
applicable law in the cash or U.S. Government Obligations deposited
pursuant to Section 12.1(d)(i) above;
(vi) The Company shall have delivered to the Trustee an
Opinion of Counsel, in form and substance reasonably satisfactory to the
Trustee, to the effect that, after the passage of 123 days following the
deposit, the trust funds shall not be subject to any applicable
bankruptcy, insolvency, reorganization or similar law affecting creditors'
rights generally;
(vii) Such defeasance shall not cause the Trustee to have a
conflicting interest with respect to any securities of the Company; and
(viii) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent
45
specified herein relating to the defeasance contemplated by this Section
12.1 have been complied with;
provided that no deposit under clause (i) shall be effective to terminate the
obligations of the Company under the Notes or this Indenture prior to the
passage of 123 days following such deposit.
Section 12.2 Termination of Obligations upon Cancellation of the Notes. In
addition to the Company's rights under Section 12.1, the Company may terminate
all of its obligations under this Indenture (subject to Section 12.3) when:
(a) (i) all Notes theretofore authenticated and delivered (other
than Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.6) have been delivered to the Trustee for
cancellation, and (ii) the Company has paid or caused to be paid all other sums
payable hereunder and under the Notes by the Company; or
(b) (i) the Notes not previously delivered to the Trustee for
cancellation shall have become due and payable or are by their terms to become
due and payable within one year or are to be called for redemption under
arrangements satisfactory to the Trustee upon delivery of notice, (ii) the
Company shall have irrevocably deposited with the Trustee, as trust funds, cash,
in an amount sufficient to pay principal of and interest on the outstanding
Notes, to maturity or redemption, as the case may be, (iii) such deposit shall
not result in a breach or violation of, or constitute a default under, any
agreement or instrument pursuant to which the Company is a party or by which it
or its property is bound and (iv) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions related to such defeasance have been complied with.
Section 12.3 Survival of Certain Obligations. Notwithstanding the
satisfaction and discharge of this Indenture and of the Notes referred to in
Section 12.1 or 12.2, the respective obligations of the Company and the Trustee
under Sections 2.3, 2.4, 2.5, 2.6, 3.1, 4.2, 5.1, 6.4, 6.9, 7.6, 7.7, 7.11,
12.5, 12.6, 12.7 and Article XIV shall survive until the Notes are no longer
Outstanding, and thereafter, the obligations of the Company and the Trustee
under Sections 6.9, 7.6, 7.7, 12.5, 12.6 and 12.7 shall survive. Nothing
contained in this Article XII shall abrogate any of the rights, obligations or
duties of the Trustee under this Indenture.
Section 12.4 Acknowledgment of Discharge by Trustee. Subject to Section
12.7, after (i) the conditions of Section 12.1 or 12.2 have been satisfied, (ii)
the Company has paid or caused to be paid all other sums payable hereunder by
the Company and (iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon written
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified in Section
12.3.
Section 12.5 Application of Trust Assets. The Trustee shall hold any cash
or U.S. Government Obligations deposited with it in the irrevocable trust
established pursuant to Section 12.1 or 12.2, as the case may be. The Trustee
shall apply the deposited cash or the U.S.
46
Government Obligations, together with earnings thereon in accordance with this
Indenture and the terms of the irrevocable trust agreement established pursuant
to Section 12.1 or 12.2, as the case may be, to the payment of principal of,
premium, if any, and interest on the Notes. The cash or U.S. Government
Obligations so held in trust and deposited with the Trustee in compliance with
Section 12.1 or 12.2, as the case may be, shall not be part of the trust estate
under this Indenture, but shall constitute a separate trust fund for the benefit
of all holders entitled thereto. Except as specifically provided herein, the
Trustee shall not be requested to invest any amounts held by it for the benefit
of the holders or pay interest on uninvested amounts to any holder.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 12.1 hereof or Section 12.2 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the holders of outstanding
Notes.
Section 12.6 Repayment to the Company; Unclaimed Money. Subject to
applicable laws governing escheat of such property, and upon termination of the
trust established pursuant to Section 12.1 hereof or 12.2 hereof, as the case
may be, the Trustee shall promptly pay to the Company upon written request any
excess cash or U.S. Government Obligations held by it. Additionally, if amounts
for the payment of principal, premium, if any, or interest remains unclaimed for
two years, the Trustee shall pay such amounts back to the Company forthwith.
Thereafter, all liability of the Trustee with respect to such amounts shall
cease. After payment to the Company, holders entitled to such payment must look
to the Company for such payment as general creditors unless an applicable
abandoned property law designates another person.
Section 12.7 Reinstatement. If the Trustee is unable to apply any cash or
U.S. Government Obligations in accordance with Section 12.1 or 12.2 by reason of
any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
12.1 or 12.2 until such time as the Trustee is permitted to apply all such cash
or U.S. Government Obligations in accordance with Section 12.1 or 12.2, as the
case may be; provided that if the Company makes any payment of principal of,
premium, if any, or interest on any Notes following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the holders of
such Notes to receive such payment from the amounts held by the Trustee.
ARTICLE XIII
IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS AND DIRECTORS
Section 13.1 Indenture and Notes Solely Corporate Obligations. No recourse
for the payment of the principal of, or premium, if any, or interest on any
Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
47
incorporator, shareholder, officer or director, as such, past, present or
future, of the Company or of any successor entity, either directly or through
the Company or any successor entity, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issuance of the Notes.
ARTICLE XIV
CONVERSION OF NOTES
Section 14.1 Right to Convert. Subject to and upon compliance with the
provisions of this Indenture, the holder of any Note shall have the right, at
the option of such holder, at any time through the close of business on the
Business Day immediately preceding the maturity date (except that, with respect
to any Note or portion of a Note that shall be called for redemption or
delivered for repurchase, such right shall terminate immediately prior to the
close of business on the last Business Day before the date fixed for redemption
of such Note or portion of a Note unless the Company shall default in payment
due upon redemption thereof) to convert the principal amount of any such Note,
or any portion of such principal amount that is $1,000 or an integral multiple
thereof, into that number of fully paid and nonassessable shares of Common Stock
(as such shares shall then be constituted) obtained by dividing the aggregate
principal amount of the Notes or portion thereof surrendered for conversion by
the Conversion Price in effect at such time rounded to the nearest 1/100,000th
of a share (with .0000005 being rolled upward), by surrender of the Note so to
be converted in whole or in part in the manner provided in Section 14.2. A
holder of Notes is not entitled to any rights of a holder of Common Stock until
such holder has converted such holder's Notes to Common Stock and only to the
extent such Notes are deemed to have been converted to Common Stock under this
Article XIV.
Section 14.2 Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion; No Adjustment for Interest or Dividends. In order to exercise the
conversion privilege with respect to any Note in definitive form, the holder of
any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 4.2, accompanied by the funds, if any, required by the penultimate
paragraph of this Section 14.2, and shall give written notice of conversion in
the form provided on the form of Note (or such other notice that is acceptable
to the Company) to the office or agency that the holder elects to convert such
Note or the portion thereof specified in said notice. Such notice shall also
state the name or names (with address) in which the certificate or certificates
for shares of Common Stock that shall be issuable on such conversion shall be
issued and shall be accompanied by transfer taxes, if required pursuant to
Section 14.7. Each such Note surrendered for conversion shall, unless the shares
issuable on conversion are to be issued in the name of the holder of such Note
as it appears on the Note register, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any interest
in a global Note, the beneficial holder must complete the appropriate
instruction form for conversion pursuant to
48
the Depositary's book-entry conversion program and follow the other procedures
set forth in such program.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such holder at the office or agency maintained by the Company for such purpose
pursuant to Section 4.2, a certificate or certificates for the number of full
shares issuable upon the conversion of such Note (or portion thereof) in
accordance with the provisions of this Article XIV and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 14.3. In case any Note of a
denomination greater than $1,000 shall be surrendered for partial conversion,
and subject to Section 2.3, the Company shall execute and the Trustee shall
authenticate and make available for delivery to the holder of the Note so
surrendered, without charge to him, a new Note or Notes in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such Note
(or portion thereof) on the date on which the requirements set forth above in
this Section 14.2 have been satisfied as to such Note (or portion thereof), and
the person in whose name any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become on
said date the holder of record of the shares represented thereby; provided that
any such surrender on any date when the stock transfer books of the Company
shall be closed shall constitute the person in whose name the certificates are
to be issued as the record holder thereof for all purposes on the next
succeeding day on which such stock transfer books are open, but such conversion
shall be at the Conversion Price in effect on the date upon which such Note
shall have been surrendered.
Any Note or portion thereof surrendered for conversion during the period
from the close of business on the record date for any interest payment date
through the opening of business on the next succeeding interest payment date
shall (unless such Note or portion thereof being converted shall have been
called for redemption on a date during the period from the close of business on
or after any record date to the close of business on the Business Day following
the corresponding payment date) be accompanied by payment, in funds acceptable
to the Company, of an amount equal to the interest otherwise payable on such
interest payment date on the principal amount being converted; provided that no
such payment need be made if there shall exist at the time of conversion an
Event of Default under subsection (a) or (b) of Section 6.1 hereof. An amount
equal to such payment shall be paid by the Company on such interest payment date
to the holder of such Note at the close of business on such record date;
provided that if the Company shall default in the payment of interest on such
interest payment date, such amount shall be paid to the person who made such
required payment. The interest payment with respect to a Note called for
redemption on a date during the period from the close of business on or after
any record date to the close of business on the business Day following the
corresponding payment date shall be payable on the corresponding interest
payment date to the registered Holder at the close of business on that record
date (notwithstanding the conversion of such Note
49
before the corresponding interest payment date) and a Holder who elects to
convert need not include funds equal to the interest paid. Except as provided
above in this Section 14.2, no adjustment shall be made for interest accrued on
any Note converted or for dividends on any shares issued upon the conversion of
such Note as provided in this Article XIV.
Upon the conversion of an interest in a global Note, the Trustee, or the
Custodian at the direction of the Trustee, shall make a notation on such global
Note as to the reduction in the principal amount represented thereby.
Section 14.3 Cash Payments in Lieu of Fractional Shares. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of fully paid and
non-assessable shares of Common Stock issuable upon conversion of a Note shall
be determined by dividing the aggregate principal amount of the Note or portion
thereof surrendered for conversion by the Conversion Price in effect at such
time. The aggregate number of shares of Common Stock issuable upon conversion
shall be rounded to the nearest 1/100,000th of a share (with .0000005 being
rolled upward). If any fractional share of stock would be issuable upon the
conversion of any Note or Notes, the Company shall make an adjustment therefor
in cash at the current market value thereof. The current market value of a share
of Common Stock shall be determined by multiplying the fractional share by the
Closing Price on the Trading Day immediately preceding the date on which the
Notes (or specified portions thereof) are deemed to have been converted.
Section 14.4 Conversion Price. The Conversion Price shall be as specified
in the forms of Notes (herein called the "Conversion Price") attached as
Exhibits A and B hereto, subject to adjustment as provided in this Article XIV.
Section 14.5 Adjustment of Conversion Price. The Conversion Price shall be
adjusted from time to time by the Company as follows:
(a) In case the Company shall (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
or split its outstanding Common Stock into a greater number of shares, (iii)
combine its outstanding Common Stock into a smaller number of shares or (iv)
issue any shares of capital stock by reclassification of its Common Stock, the
Conversion Price in effect immediately prior thereto shall be adjusted so that
the Holder of any Notes thereafter surrendered for conversion shall be entitled
to receive the number of shares of Common Stock or other shares of capital stock
of the Company that such Holder would have owned or have been entitled to
receive after the occurrence of any of the events described above had such Notes
been surrendered for conversion immediately prior to the occurrence of such
event or the Record Date therefor, whichever is earlier. An adjustment made
pursuant to this subsection (a) shall become effective immediately after the
close of business on the Record Date for determination of shareholders entitled
to receive such dividend or distribution in the case of a dividend or
distribution (except as provided in Section 14.5(k)) and shall become effective
immediately after the close of business on the effective date in the case of a
subdivision, split, combination or reclassification. Any shares of Common Stock
issuable in payment of a dividend shall be deemed to have been issued
immediately prior to the close of
50
business on the Record Date for such dividend for purposes of calculating the
number of outstanding shares of Common Stock under Sections 14.5(b) and (c).
(b) In case the Company shall issue rights, options or warrants to
all holders of its outstanding shares of Common Stock entitling them (for a
period expiring within 45 days after the date fixed for determination of
shareholders entitled to receive such rights, options or warrants) to subscribe
for or purchase shares of Common Stock at a price per share less than the
Current Market Price on the Record Date fixed for determination of shareholders
entitled to receive such rights, options or warrants, the Conversion Price shall
be adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect at the opening of business on the day after the
Record Date by a fraction the numerator of which shall be the number of shares
of Common Stock outstanding at the close of business on the Record Date plus the
number of shares that the aggregate offering price of the total number of shares
so offered would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Common Stock outstanding on the close of
business on the Record Date plus the total number of additional shares of Common
Stock so offered for subscription or purchase. Such adjustment shall become
effective immediately after the opening of business on the day following the
Record Date fixed for determination of shareholders entitled to receive such
rights, options or warrants. To the extent that shares of Common Stock are not
delivered after the expiration or termination of such rights, options or
warrants, the Conversion Price shall be readjusted to the Conversion Price that
would then be in effect had the adjustments made upon the issuance of such
rights, options or warrants been made on the basis of delivery of only the
number of shares of Common Stock actually delivered. In the event that such
rights, options or warrants are not so issued, the Conversion Price shall again
be adjusted to be the Conversion Price that would then be in effect if such date
fixed for the determination of shareholders entitled to receive such rights,
options or warrants had not been fixed. In determining whether any rights,
options or warrants entitle the holders to subscribe for or purchase shares of
Common Stock at less than such Current Market Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account all consideration received for such rights, options or warrants,
the value of such consideration, if other than cash, to be determined by the
Board of Directors.
(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of 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 Common Stock shall be combined into a smaller
number of shares of 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) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 14.5(a)
applies) or evidences of its indebtedness or assets (including securities, but
excluding any rights, options or warrants referred to in Section 14.5(b), and
excluding any dividend or distribution (i) in connection with the liquidation,
51
dissolution or winding-up of the Company, whether voluntary or involuntary, (ii)
exclusively in cash or (iii) referred to in Section 14.5(a) (any of the
foregoing hereinafter in this Section 14.5(d) called the "Securities")), then,
in each such case, the Conversion Price shall be reduced so that the same shall
be equal to the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the Record Date with respect to
such distribution by a fraction of which the numerator shall be the Current
Market Price on such date less the fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution) on such date of the portion of the Securities so distributed
applicable to one share of Common Stock and the denominator shall be such
Current Market Price, such reduction to become effective immediately prior to
the opening of business on the day following the Record Date; provided that in
the event the then fair market value (as so determined) of the portion of the
Securities so distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Noteholder
shall have the right to receive upon conversion the amount of Securities such
holder would have received had such holder converted each Note on such date. In
the event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price that would
then be in effect if such dividend or distribution had not been declared. If the
Board of Directors determines the fair market value of any distribution for
purposes of this Section 14.5(d) by reference to the actual or when issued
trading market for any securities comprising all or part of such distribution,
it must in doing so consider the prices in such market over the same period used
in computing the Current Market Price pursuant to Section 14.5(g) to the extent
possible.
Notwithstanding the foregoing provisions of this Section 14.5(d), no
adjustment shall be made hereunder for any distribution of Securities if the
Company makes proper provision so that each Noteholder who converts a Note (or
any portion thereof) after the Record Date for determination of shareholders
entitled to receive such distribution shall be entitled to receive upon such
conversion, in addition to the shares of Common Stock issuable upon such
conversion, the amount and kind of Securities that such holder would have been
entitled to receive if such holder had, immediately prior to such Record Date,
converted such Note into Common Stock; provided that, with respect to any
Securities that are convertible, exchangeable or exercisable, the foregoing
provision shall only apply to the extent (and so long as) the Securities
receivable upon conversion of such Note would be convertible, exchangeable or
exercisable, as applicable, without any loss of rights or privileges for a
period of at least 60 days following conversion of such Note.
Rights, options or warrants distributed by the Company to all holders of
Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company's capital stock (either initially or under specified
circumstances), which rights, options or warrants, until the occurrence of a
specified event or events (the "Trigger Event") (i) are deemed to be transferred
with such shares of Common Stock, (ii) are not exercisable and (iii) are also
issued in respect of future issuances of Common Stock, shall not be deemed
distributed for purposes of this Section 14.5(d) (and no adjustment to the
Conversion Price under Section 14.5(d) shall be required) until the occurrence
of the earliest Trigger Event. In addition, in the event of any distribution of
rights, options or warrants, or any Trigger Event with respect thereto, that
shall have resulted in an adjustment to the Conversion Price under this Section
14.5(d), (1) in the case of any such rights, options or warrants that shall all
have been redeemed or repurchased without exercise by
52
any holders thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger Event,
as the case may be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder of Common Stock with
respect to such rights, options or warrants (assuming such holder had retained
such rights, options or warrants), made to all holders of Common Stock as of the
date of such redemption or repurchase, and (2) in the case of such rights,
options or warrants all of which shall have expired or been terminated without
exercise by any holder thereof, the Conversion Price shall be readjusted as if
such issuance had not occurred.
For purposes of this Section 14.5(d) and Sections 14.5(a) and (b), any
dividend or distribution to which this Section 14.5(d) is applicable that also
includes shares of Common Stock, or rights, options or warrants to subscribe for
or purchase shares of Common Stock (or both), shall be deemed instead to be (i)
a dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights, options or
warrants (and any Conversion Price reduction required by this Section 14.5(d)
with respect to such dividend or distribution shall then be made) immediately
followed by (ii) a dividend or distribution of such shares of Common Stock or
such rights, options or warrants (and any further Conversion Price reduction
required by Sections 14.5(a) and (b) with respect to such dividend or
distribution shall then be made) except (1) the Record Date of such dividend or
distribution shall be substituted as "the date fixed for the determination of
shareholders entitled to receive such dividend or distribution" and "the date
fixed for such determination" within the meaning of Sections 14.5(a) and (b) and
(2) any shares of Common Stock included in such dividend or distribution shall
not be deemed "outstanding at the close of business on the date fixed for such
determination" within the meaning of Section 14.5(a).
(e) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding any cash that is distributed
upon a merger or consolidation to which Section 14.6 applies or as part of a
distribution referred to in Section 14.5(d) for which an adjustment to the
Conversion Price is provided therein) in an aggregate amount that, together with
(i) the aggregate amount of any other such distributions to all holders of its
Common Stock made exclusively in cash within the 12 months preceding the date of
payment of such distribution, and in respect of which no adjustment pursuant to
this Section 14.5(e) has been made, and (ii) the aggregate of any cash plus the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) of consideration
payable in respect of any tender offer, by the Company or any of its
subsidiaries for all or any portion of the Common Stock concluded within the 12
months preceding the date of payment of such distribution, and in respect of
which no adjustment pursuant to Section 14.5(f) has been made, exceeds 20.0% of
the product of the Current Market Price (determined as provided in Section
14.5(g)) on the Record Date with respect to such distribution times the number
of shares of Common Stock outstanding on such date, then, and in each such case,
immediately after the close of business on such date, unless the Company elects
to reserve such cash for distribution to the holders of the Notes upon the
conversion of the Notes so that any such holder converting Notes shall receive
upon such conversion, in addition to the shares of Common Stock to which such
holder is entitled, the amount of cash that such holder would have received if
such holder had, immediately prior to the Record Date for such distribution of
cash, converted its Notes into Common Stock, the Conversion Price shall be
reduced so that the same
53
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on such date by a fraction (1) the
numerator of which shall be equal to the Current Market Price on the Record Date
less an amount equal to the quotient of (x) the excess of such combined amount
over such 20.0% and (y) the number of shares of Common Stock outstanding on the
Record Date and (2) the denominator of which shall be equal to the Current
Market Price on such date; provided that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Noteholder
shall have the right to receive upon conversion the amount of cash such holder
would have received had such holder converted each Note on the Record Date. In
the event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price that would
then be in effect if such dividend or distribution had not been declared.
(f) In case a tender offer made by the Company or any of its subsidiaries
for all or any portion of the Common Stock shall expire and such tender offer
(as amended upon the expiration thereof) shall require the payment to
shareholders (based on the acceptance (up to any maximum specified in the terms
of the tender offer) of Purchased Shares (as defined below)) of an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) that combined together with (1) the aggregate of the cash plus the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution), as of the expiration
of such tender offer, of consideration payable in respect of any other tender
offer, by the Company or any of its subsidiaries for all or any portion of the
Common Stock expiring within the 12 months preceding the expiration of such
tender offer, and in respect of which no adjustment pursuant to this Section
14.5(f) has been made, and (ii) the aggregate amount of any distributions to all
holders of the Company's Common Stock made exclusively in cash within 12 months
preceding the expiration of such tender offer, and in respect of which no
adjustment pursuant to Section 14.5(e) has been made, exceeds 20.0% of the
product of the Current Market Price as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender offer (as it may be
amended) times the number of shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time, then, and in each such case,
immediately prior to the opening of business on the day after the date of the
Expiration Time, 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 of the Expiration Time by
a fraction of which the numerator shall be the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time multiplied by
the Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the sum of (1) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in the terms
of the tender offer) of all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (2) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) on the Expiration
Time and the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction to become effective immediately
prior to the opening of business on the day following the Expiration Time. In
the event that the Company is obligated to purchase shares
54
pursuant to any such tender offer, but the Company is permanently prevented by
applicable law from effecting any such purchases or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price that would then be in effect if such tender offer had not been made.
(g) For purposes of this Section 14.5, the following terms shall
have the meaning indicated:
(i) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case no
such sale takes place on such day, the average of the reported closing bid
and asked prices, regular way, in each case on the New York Stock
Exchange, or, if such security is not listed or admitted to trading on
such Exchange, on the principal national security exchange or quotation
system on which such security is quoted or listed or admitted to trading,
or, if not quoted or listed or admitted to trading on any national
securities exchange or quotation system, the average of the closing bid
and asked prices of such security on the over-the-counter market on the
day in question as reported by the National Quotation Bureau Incorporated,
or a similar generally accepted reporting service, or if not so available,
in such manner as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors for that purpose, or
a price determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution.
(ii) "Current Market Price" shall mean the average of the
daily Closing Prices per share of Common Stock for the ten consecutive
Trading Days immediately prior to the date in question; provided that (1)
if the "ex" date (as hereinafter defined) for any event (other than the
issuance or distribution or other event requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section
14.5(a), (b), (c), (d), (e) or (f) occurs during such ten consecutive
Trading Days, 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, (2) if the "ex" date for any
event (other than the issuance, distribution or other event requiring such
computation) that requires an adjustment to the Conversion Price pursuant
to Section 14.5(a), (b), (c), (d), (e) or (f) occurs on or after the "ex"
date for the issuance or distribution requiring such computation and 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 (3) if the "ex" date for the issuance, distribution or other
event requiring such computation is prior to the day in question, after
taking into account any adjustment required pursuant to clause (1) or (2)
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 (as determined by the Board of Directors in a manner
consistent with any determination of such value
55
for purposes of Section 14.5(d) or (f), 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 Common Stock as of the close of business on the
day before such "ex" date. For purposes of any computation under Section
14.5(f), the Current Market Price of the Common Stock on any date shall be
deemed to be the average of the daily Closing Prices per share of Common
Stock for such day and the next two succeeding Trading Days; provided that
if the "ex" date for any event (other than the tender or exchange offer
requiring such computation) that requires an adjustment to the Conversion
Price pursuant to Section 14.5(a), (b), (c), (d), (e) or (f) occurs on or
after the Expiration Time for the tender or exchange offer requiring such
computation and 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. For purposes of this paragraph, the term "ex"
date, (x) when used with respect to any issuance or distribution, means
the first date on which the 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,
(y) when used with respect to any subdivision or combination of shares of
Common Stock, means the first date on which the Common Stock trades
regular way on such exchange or in such market after the time at which
such subdivision or combination becomes effective and (z) when used with
respect to any tender or exchange offer means the first date on which the
Common Stock trades regular way on such exchange or in such market after
the expiration of such offer. Notwithstanding the foregoing, whenever
successive adjustments to the Conversion Price are called for pursuant to
this Section 14.5, such adjustments shall be made to the Current Market
Price as may be necessary or appropriate to effectuate the intent of this
Section 14.5 and to avoid unjust or inequitable results as determined in
good faith by the Board of Directors.
(iii) "Fair market value" shall mean the amount that a willing
buyer would pay a willing seller in an arm's-length transaction.
(iv) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common
Stock have the right to receive any cash, securities or other property or
in which the Common Stock (or other applicable security) is exchanged for
or converted into any combination of cash, securities or other property,
the date fixed for determination of shareholders entitled to receive such
cash, securities or other property (whether such date is fixed by the
Board of Directors or by statute, contract or otherwise).
(v) "Trading Day" shall mean (1) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or another
national security exchange, a day on which the New York Stock Exchange or
such other national security exchange is open for business or (2) if the
applicable
56
security is quoted on the Nasdaq National Market, a day on which trades
may be made thereon or (3) if the applicable security is not so listed,
admitted for trading or quoted, any day other than a Saturday or Sunday or
a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(h) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 14.5(a), (b), (c), (d), (e) and (f), as
the Board of Directors considers to be advisable to avoid or diminish any income
tax to holders of Common Stock or rights to purchase Common Stock resulting from
any dividend or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes. To the extent permitted by
applicable law, the Company from time to time may reduce the Conversion Price by
any amount for any period of time if the period is at least 20 Business Days,
the reduction is irrevocable during the period and the Board of Directors shall
have made a determination that such reduction would be in the best interests of
the Company, which determination shall be conclusive and described in a Board
Resolution. Whenever the Conversion Price is reduced pursuant to the preceding
sentence, the Company shall mail to the Trustee and all holders of record of the
Notes a notice of the reduction at least 15 days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it shall be in effect.
(i) 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 that any adjustments that by reason of this Section 14.5(i) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article XIV shall be made by
the Company and shall be made to the nearest 1/100,000 (with 0.0000005 being
rolled upward).
No adjustment need be made for a change in the par value, or to or from no
par value, of the Common Stock.
To the extent the Notes become convertible into cash, assets, property or
securities (other than Common Stock of the Company), no adjustment need be made
thereafter as to the cash, assets, property or such securities (except as such
securities may otherwise by their terms provide), and interest shall not accrue
on such cash.
(j) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly file with the Trustee and any conversion agent other
than the Trustee an Officers' Certificate setting forth the Conversion Price
both before and after such adjustment and setting forth in reasonable detail the
facts upon which such adjustment is based. Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date on
which each adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to the holder of each Note at his last
address appearing on the Note register provided for in Section 2.5, within 20
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of any such adjustment.
57
(k) In any case in which this Section 14.5 provides that an
adjustment shall become effective immediately after a Record Date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
holder of any Note converted after such Record Date and before the occurrence of
such event the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above the Common
Stock issuable upon such conversion before giving effect to such adjustment and
(ii) paying to such holder any amount in cash in lieu of any fraction pursuant
to Section 14.3.
Section 14.6 Effect of Reclassification, Consolidation, Merger or Sale. If
any of the following events occur, namely (a) any reclassification or change of
outstanding shares of Common Stock (other than a change in par value, or to or
from no par value, as a result of a subdivision or combination), (b) any
consolidation, merger or combination of the Company with another person as a
result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock or (c) any sale or conveyance of the properties
and assets of the Company as, or substantially as, an entirety (determined on a
consolidated basis) to any other person as a result of which holders of Common
Stock shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, then the
Company or the successor or purchasing person, as the case may be, shall execute
with the Trustee a supplemental indenture (which shall comply with the Trust
Indenture Act as in force at the date of execution of such supplemental
indenture if such supplemental indenture is then required to so comply)
providing that the Notes shall be convertible into the kind and amount of shares
of stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance by a holder of a number of shares of Common Stock issuable upon
conversion of such Notes (assuming, for such purposes, a sufficient number of
authorized shares of Common Stock available to convert all such Notes)
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance, assuming such holder of Common Stock did not
exercise his rights of election, if any, as to the kind or amount of securities,
cash or other property receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance (provided that, if the
kind or amount of securities, cash or other property receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
is not the same for each share of Common Stock in respect of which such rights
of election shall not have been exercised ("non-electing share"), then for the
purposes of this Section 14.6 the kind and amount of securities, cash or other
property receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance for 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
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article XIV.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on the
Note register provided for in Section 2.5, within 20 days after execution
thereof. Failure to deliver such notice shall not affect the legality or
validity of such supplemental indenture.
The above provisions of this Section 14.6 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
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Section 14.7 Taxes on Shares Issued. The issuance of stock certificates on
conversions of Notes shall be made without charge to the converting Noteholder
for any transfer or similar tax in respect of the issue thereof. The Company
shall not, however, be required to pay any tax that may be payable in respect of
any transfer involved in the issue and delivery of stock in any name other than
that of the holder of any Note converted, and the Company shall not be required
to issue or deliver any such stock certificate unless and until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
Section 14.8 Reservation of Shares; Shares to Be Fully Paid; Listing of
Common Stock. The Company shall provide, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares to
provide for the conversion of the Notes from time to time as such Notes are
presented for conversion.
Before taking any action that would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company shall take all corporate
action that may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock that may be issued
upon conversion of Notes shall, upon issuance, be fully paid and nonassessable
by the Company and free from all taxes, liens and charges with respect to the
issuance thereof.
The Company further covenants that it shall, if permitted by the rules of
the Nasdaq National Market and each securities exchange upon which the Common
Stock is listed or quoted, list and keep listed or have and keep quoted, so long
as the Common Stock shall be so listed or quoted on such market and exchange or
exchanges, all Common Stock issuable upon conversion of the Notes.
Section 14.9 Responsibility of Trustee. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist that may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, that may at any time
be issued or delivered upon the conversion of any Note; and the Trustee and any
other conversion agent make no representations with respect thereto. Subject to
the provisions of Section 7.1, neither the Trustee nor any conversion agent
shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article XIV. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to
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determine whether a supplemental indenture under Section 14.6 needs to be
entered into or the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 14.6 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 14.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 7.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
Section 14.10 Notice to Holders Prior to Certain Actions. If:
(a) the Company makes any distribution or dividend that would
require an adjustment in the Conversion Price pursuant to Section 14.5; or
(b) the Company takes any action that would require a supplemental
indenture pursuant to Section 14.6; or
(c) there shall occur the voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register, as promptly as
possible but in any event at least 15 days prior to the applicable 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, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights,
options or warrants are to be determined or (ii) the date on which such
reclassification, change, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur
and the date as of which it is expected that holders of record of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, change, consolidation, merger,
sale, conveyance, transfer, dissolution, liquidation or winding-up. Neither the
failure to give such notice nor any defect therein shall affect the legality or
validity of the proceedings referenced in clauses (a) through (c) of this
Section 14.10.
ARTICLE XV
SUBORDINATION
Section 15.1 Agreement to Subordinate. The Company agrees, and each
Noteholder by accepting a Note agrees, that the indebtedness evidenced by the
Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article XV, to the prior payment in full of all Senior
Indebtedness and that the subordination is for the benefit of the holders of
Senior Indebtedness.
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Section 15.2 Certain Definitions. For purposes of this Article XV, the
following terms shall have the meaning indicated:
(a) "Representative" shall mean the indenture trustee or other
trustee, agent or representative for any Senior Indebtedness.
(b) "Senior Indebtedness" with respect to the Notes means the
principal of, premium, if any, and interest on, and any fees, costs, expenses
and any other amounts (including indemnity payments) related to the following,
whether outstanding on the date hereof or hereafter incurred or created: (i)
indebtedness, matured or unmatured, whether or not contingent, of the Company
for money borrowed evidenced by notes or other written obligations, (ii) any
interest rate contract, interest rate swap agreement or other similar agreement
or arrangement designed to protect the Company or any of its subsidiaries
against fluctuations in interest rates, (iii) indebtedness, matured or
unmatured, whether or not contingent, of the Company evidenced by notes,
debentures, bonds or similar instruments or letters of credit (or reimbursement
agreements in respect thereof), (iv) obligations of the Company as lessee under
capitalized leases and under leases of property made as part of any sale and
leaseback transactions, (v) indebtedness of others of any of the kinds described
in the preceding clauses (i) through (iv) assumed or guaranteed by the Company
and (vi) renewals, extensions, modifications, amendments, and refundings of, and
indebtedness and obligations of a successor person issued in exchange for or in
replacement of, indebtedness or obligations of the kinds described in the
preceding clauses (i) through (v), unless the agreement pursuant to which any
such indebtedness described in clauses (i) through (v) is created, issued,
assumed or guaranteed expressly provides that such indebtedness is not senior or
superior in right of payment to the Notes; provided that the following shall not
constitute Senior Indebtedness: (1) any indebtedness or obligation of the
Company in respect of the Notes, (2) any indebtedness of the Company to any of
its subsidiaries or other Affiliates; (3) any indebtedness that is subordinated
or junior in any respect to any other indebtedness of the Company; and (4) any
indebtedness incurred for the purchase of goods or materials in the ordinary
course of business.
For the purposes of this Indenture, Senior Indebtedness shall not be
deemed to have been paid in full until the holders of the Senior Indebtedness
shall have indefeasibly received payment in full in cash of all Senior
Indebtedness; provided that if any holder of Senior Indebtedness agrees to
accept payment in full of such Senior Indebtedness for consideration other than
cash, such holder shall be deemed to have indefeasibly received payment in full
of such Senior Indebtedness. The provisions of this Article XV shall continue to
be effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Indebtedness is rescinded or must otherwise be returned by any
holder of Senior Indebtedness upon the insolvency, bankruptcy or organization of
the Company or otherwise, all as though such payment had not been made.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
Section 15.3 Liquidation; Dissolution; Bankruptcy. Upon any distribution
to creditors of the Company in a liquidation or dissolution of the Company or in
a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property, in an assignment for the benefit of
creditors or any marshalling of the Company's
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assets and liabilities, (a) holders of Senior Indebtedness shall be entitled to
receive payment in full of all amounts due or to become due thereon before
Noteholders shall be entitled to receive any payment with respect to the
principal of, premium, if any, or interest on the Notes (except that Noteholders
may receive securities that are subordinated to at least the same extent as the
Notes to Senior Indebtedness and any securities issued in exchange for Senior
Indebtedness) and (b) until all Senior Indebtedness (as provided in clause (a)
above) is paid in full, any distribution to which Noteholders would be entitled
but for this Article shall be made to holders of Senior Indebtedness (except
that Noteholders may receive securities that are subordinated to at least the
same extent as the Notes to Senior Indebtedness and any securities issued in
exchange for Senior Indebtedness), as their interests may appear.
Section 15.4 Default on Senior Indebtedness. The Company may not make any
payment upon or in respect of the Notes (except in such subordinated securities)
and may not acquire from the Trustee or any Noteholder any Note for cash or
property (other than securities that are subordinated to at least the same
extent as the Note to Senior Indebtedness and any securities issued in exchange
for Senior Indebtedness) until all Senior Indebtedness has been paid in full if:
(a) a default in the payment of the principal of, premium, if any,
or interest on Senior Indebtedness occurs and is continuing beyond any
applicable period of grace (a "Payment Default"); or
(b) a default, other than a Payment Default, on Senior Indebtedness
occurs and is continuing that permits holders of the Senior Indebtedness as to
which such default relates to accelerate its maturity (a "Nonpayment Default")
and the Trustee receives a notice of the default (a "Payment Blockage Notice")
from the Representative or Representatives of holders of at least a majority in
principal amount of Senior Indebtedness then outstanding. No Nonpayment Default
that existed or was continuing on the date of delivery of any such Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice. No new period of payment blockage may be commenced
within 360 days after the receipt by the Trustee of any prior Payment Blockage
Notice.
The Company may and shall resume payments on and distributions in respect
of the Notes and may acquire them upon the earlier of:
(i) in the case of a Payment Default, upon the date on which
the default is cured or waived, or
(ii) in the case of a Nonpayment Default, 179 days after the
date on which the applicable Payment Blockage Notice is received, unless
the maturity of such Senior Indebtedness has been accelerated,
if this Article XV otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 15.5 When Distribution Must Be Paid Over. Subject to the
provisions of Section 15.11, if the Trustee (or paying agent if other than the
Trustee) or any Noteholder
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receives any payment of principal of, premium, if any, or interest with respect
to the Notes at a time when such payment is prohibited by Section 15.3 or 15.4
hereof, such payment shall be held by the Trustee (or paying agent if other than
the Trustee) or such Noteholder, in trust for the benefit of, and immediately
shall be paid over and delivered, upon written request, to the holders of Senior
Indebtedness as their interests may appear or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Indebtedness may
have been issued, as their respective interests may appear, for application to
the payment of all Senior Indebtedness remaining unpaid to the extent necessary
to pay all Senior Indebtedness in full in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article XV, 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 any fiduciary duty
to the holders of Senior Indebtedness. The Trustee shall not be liable to any
such holders of Senior Indebtedness if the Trustee shall pay over or distribute
to or on behalf of Noteholders or the Company or any other person money or
assets to which any holders of Senior Indebtedness shall be entitled by virtue
of this Article XV, except if such payment is made as a result of the willful
misconduct or gross negligence of the Trustee.
Section 15.6 Notice by Company. The Company shall promptly notify the
Trustee and the paying agent of any facts known to the Company that would cause
a payment of any principal or interest with respect to the Notes to violate this
Article XV, but failure to give such notice shall not affect the subordination
of the Notes to the Senior Indebtedness as provided in this Article XV.
Section 15.7 Subrogation. After all Senior Indebtedness is paid in full
and until the Notes are paid in full, Noteholders shall be subrogated (equally
and ratably with all other Indebtedness pari passu with the Notes) to the rights
of holders of Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the
Noteholders have been applied to the payment of Senior Indebtedness. A
distribution made under this Article XV to holders of Senior Indebtedness that
otherwise would have been made to Noteholders is not, as between the Company and
Noteholders, a payment by the Company on the Notes.
Section 15.8 Relative Rights. This Article XV defines the relative rights
of Noteholders and holders of Senior Indebtedness. Nothing in this Indenture
shall:
(a) impair, as between the Company and the Noteholders, the
obligation of the Company, which is absolute and unconditional, to pay principal
of, premium, if any, and interest on the Notes in accordance with their terms;
(b) affect the relative rights of Noteholders and creditors of the
Company other than their rights in relation to holders of Senior Indebtedness;
or
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(c) prevent the Trustee or any Noteholder from exercising its
available remedies upon a default or Event of Default, subject to the rights of
holders and owners of Senior Indebtedness to receive distributions and payments
otherwise payable to Noteholders.
If the Company fails because of this Article XV to pay principal of,
premium, if any, or interest on a Note on the due date, the failure is still a
default or Event of Default.
Section 15.9 Subordination May Not Be Impaired by Company. No right of any
holder of Senior Indebtedness to enforce the subordination of the indebtedness
evidenced by the Notes shall be impaired by any act or failure to act by the
Company or any holder of Notes or by the failure of the Company or any holder of
Notes to comply with this Indenture.
Section 15.10 Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article XV, the Trustee and the Noteholders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other person making any distribution to the Trustee or to the Noteholders 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
XV.
Section 15.11 Rights of Trustee and Paying Agent. Notwithstanding the
provisions of this Article XV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment or distribution by the Trustee, and the
Trustee and the paying agent may continue to make payments on the Notes, unless
a Responsible Officer shall have received at the Corporate Trust Office at least
three Business Days prior to the date of such payment written notice of facts
that would cause the payment of any principal, premium, if any, and interest
with respect to the Notes to violate this Article XV. Only the Company or a
Representative may give the notice. Nothing in this Article XV shall impair the
claims of, or payments to, the Trustee under or pursuant to this Indenture,
including, without limitation, Section 7.7 hereof.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a person representing such person to be a holder of Senior
Indebtedness (or a trustee or agent on behalf of such holder) to establish that
such notice has been given by a holder of Senior Indebtedness (or a trustee or
agent on behalf of any such holder). In the event that the Trustee determines in
good faith that further evidence is required with respect to the right of any
person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XV, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such person, the extent to which such person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such person under this Article XV, and if such
evidence is not furnished, the Trustee may defer any payment which it may be
required to make for the benefit of such person pursuant to the
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terms of this Indenture pending judicial determination as to the rights of such
person to receive such payment.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
paying agent, any authenticating agent, any conversion agent, any Note registrar
and their successors may do the same with like rights.
Section 15.12 Authorization to Effect Subordination. Each holder of a Note
by the holder's acceptance thereof authorizes and directs the Trustee on the
holder's behalf to take such action as may be necessary or appropriate to effect
subordination as provided in this Article XV and appoints the Trustee to act as
the holder's attorney-in-fact for any and all such purposes. Without limiting
the foregoing, each Representative is hereby irrevocably authorized and
empowered (in its own name or in the name of the Noteholders or the Trustee or
otherwise), but shall have no obligation, to demand, xxx for, collect and
receive every payment or distribution referred to in Section 15.3 above and give
acquittance therefor and to file claims and proofs of claim and take such other
action as it may deem necessary or advisable for the exercise or enforcement of
any of the rights or interests of the holders or owners of the Senior
Indebtedness hereunder; provided that for purposes of this Section 15.12 holders
or owners of Senior Indebtedness may act only through such Representative.
Section 15.13 Conversions Not Deemed Payment. For the purposes of this
Article XV only, the issuance and delivery of Common Stock upon conversion of
the Notes in accordance with Article XIV shall not be deemed to constitute a
payment or distribution on account of the principal of or interest on the Notes
or on account of the purchase or other acquisition of Notes. Nothing contained
in this Article or elsewhere in this Indenture or in the Notes is intended to or
shall impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the holders, the right, which is absolute and unconditional, of
the holder of any Note to convert such Note in accordance with Article XIV.
Section 15.14 Amendments. The provisions of this Article XV shall not be
amended or modified without the written consent of the holders of Senior
Indebtedness.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements in this Indenture made by the
Company shall bind its successors and assigns whether so expressed or not.
Section 16.2 Official Acts by Successor Company. Any act or proceeding by
any provision of this Indenture authorized or required to be done or performed
by any board (including the Board of Directors), committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the time be
the lawful sole successor of the Company.
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Section 16.3 Addresses for Notices, Etc. Any notice or demand that by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by the holders of Notes on the Company shall be deemed to have
been sufficiently given or made, for all purposes if given or served by being
sent by prepaid overnight delivery or being deposited postage prepaid by
registered or certified mail in a post office letter box addressed (until
another address is filed by the Company with the Trustee) to Net.B@nk, Inc., 000
Xxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, Attention: Chief Executive
Officer with a copy to Powell, Goldstein, Xxxxxx & Xxxxxx LLP, 000 Xxxxxxxxx
Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxx XX, Esq. Any
notice, direction, request or demand hereunder to or upon the Trustee shall be
deemed to have been sufficiently given or made, for all purposes, if given or
served by being sent by prepaid overnight delivery or being deposited postage
prepaid by registered or certified mail in a post office letter box addressed to
the Corporate Trust Office of the Trustee, which office is, at the date as of
which this Indenture is dated, located at 00 Xxxx Xxxxx, 00xx Xxxxx, Xxxxxxx,
Xxxxxxx 00000, Attention: Corporate Trust Administration.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to him
by first class mail, postage prepaid, at the address of such Noteholder as it
appears on the Note register and shall be sufficiently given to such Noteholder
if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any defect in
it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 16.4 Communications by Holders with Other Holders. Noteholders may
communicate pursuant to Trust Indenture Act Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Note registrar and any other person shall have the
protection of Trust Indenture Act Section 312(c).
Section 16.5 Governing Law. This Indenture and each Note shall be deemed
to be a contract made under the substantive laws of New York and for all
purposes shall be construed in accordance with the substantive laws of New York
without regard to conflicts of laws principles thereof.
Section 16.6 Evidence of Compliance with Conditions Precedent;
Certificates to Trustee. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture,
including those actions set forth in Trust Indenture Act Section 314(c), the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the Opinion of such Counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall
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include: (a) a statement that the person making such certificate or opinion has
read such covenant or condition, (b) a brief statement as to the nature and
scope of the examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based, (c) 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 (d) a statement as to whether
or not, in the opinion of such person, such condition or covenant has been
complied with.
Section 16.7 Legal Holidays. In any case where any interest payment date,
date fixed for redemption, stated maturity or Change of Control Purchase Date of
any Note or the last date on which a Holder has the right to convert his Notes
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of interest or principal (and premium, if
any) or conversion of the Notes need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the interest payment date, date fixed for redemption, Change of Control Purchase
Date, or at the stated maturity, or on such last day for conversion; provided
that no interest shall accrue for the period from and after such interest
payment date, date fixed for redemption, Change of Control Purchase Date or
stated maturity, as the case may be.
Section 16.8 No Security Interest Created. Nothing in this Indenture or in
the Notes, expressed or implied (other than the lien granted to the Trustee
pursuant to Section 7.7), shall be construed to constitute a security interest
under the Uniform Commercial Code or similar legislation, as now or hereafter
enacted and in effect, in any jurisdiction where property of the Company or its
subsidiaries is located.
Section 16.9 Trust Indenture Act. This Indenture is hereby made subject
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act.
Section 16.10 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or conflicts with the duties imposed by operation
of the Trust Indenture Act, the imposed duties, upon qualification of this
Indenture under the Trust Indenture Act, shall control.
Section 16.11 Benefits of Indenture. Nothing in this Indenture or in the
Notes, expressed or implied, shall give to any person, other than the parties
hereto, any paying agent, any authenticating agent, any conversion agent, any
Note registrar and their successors hereunder and the holders of Notes, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 16.12 Table of Contents, Headings, Etc. The table of contents and
the titles and headings of the articles and sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 16.13 Authenticating Agent. The Trustee may appoint an
authenticating agent that shall be authorized to act on its behalf and subject
to its direction in the authentication and
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delivery of Notes in connection with the original issuance thereof and transfers
and exchanges of Notes hereunder, including under Sections 2.4, 2.5, 2.6, 2.7
and 3.3, as fully to all intents and purposes as though the authenticating agent
had been expressly authorized by this Indenture and those Sections to
authenticate and deliver Notes. For all purposes of this Indenture, the
authentication and delivery of Notes by the authenticating agent shall be deemed
to be authentication and delivery of such Notes "by the Trustee" and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent shall be deemed to satisfy any requirement hereunder or in
the Notes for the Trustee's certificate of authentication. Such authenticating
agent shall at all times be a person eligible to serve as Trustee hereunder
pursuant to Section 7.10.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor company is otherwise eligible under this Section,
without the execution or filing of any paper or any further act on the part of
the parties hereto or the authenticating agent or such successor company.
Any authenticating agent may at any time resign by giving written notice
of resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any authenticating agent by giving written notice of
termination to such authenticating agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time any
authenticating agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor authenticating agent (which may be the
Trustee), shall give written notice of such appointment to the Company and shall
mail notice of such appointment to all holders of Notes as the names and
addresses of such holders appear on the Note register.
The Company agrees to pay to the authenticating agent from time to time
reasonable compensation for its services.
The provisions of Sections 7.3, 7.4, 7.5, 8.3 and this Section 16.13 shall
be applicable to any authenticating agent.
Section 16.14 Execution in Counterparts. This Indenture may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
SunTrust Bank, Atlanta hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly signed and attested, all as of the date first written above.
NET.B@NK, INC.
By:______________________________
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Name:
Title:
Attest:
______________________________
69
SUNTRUST BANK, ATLANTA, as Trustee
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
70
