CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. as the Company CHINA SAFETECH HOLDINGS LIMITED CHINA SECURITY & SURVEILLANCE TECHNOLOGY (HK) LTD. CHAIN STAR INVESTMENTS LTD. as the Guarantors and THE BANK OF NEW YORK, a New York banking corporation as...
Exhibit
4.2
CHINA
SECURITY & SURVEILLANCE TECHNOLOGY, INC.
as
the
Company
CHINA
SAFETECH HOLDINGS LIMITED
CHINA
SECURITY & SURVEILLANCE TECHNOLOGY (HK) LTD.
CHAIN
STAR INVESTMENTS LTD.
as
the
Guarantors
and
THE
BANK
OF NEW YORK,
a
New
York banking corporation
as
the
Trustee
__________________________
Dated
April 24, 2007
__________________________
1.0%
Guaranteed Senior Unsecured Convertible Notes due 2012
TABLE
OF CONTENTS
DEFINITIONS
Section
1.01. Definitions
|
1
|
Section
1.02.
Other Definitions
|
30
|
Section
1.03.
Rules of Construction.
|
30
|
ARTICLE
2
ISSUE,
DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
Section
2.01.
Designation Amount and Issue of Notes
|
31
|
Section
2.02. Form of Notes
|
31
|
Section
2.03.
Date and Denomination of Notes; Payments of Interest
|
33
|
Section
2.04.
Execution of Notes
|
34
|
Section
2.05.
Exchange and Registration of Transfer of Notes; Restrictions on
Transfer
|
34
|
Section
2.06.
Mutilated, Destroyed, Lost or Stolen Notes
|
37
|
Section
2.07.
Temporary Notes
|
38
|
Section
2.08.
Cancellation of Notes
|
38
|
Section
2.09.
Defaulted Interest
|
38
|
Section
2.10. ISIN Numbers
|
39
|
ARTICLE
3
REDEMPTION
AND REPURCHASE OF NOTES
Section
3.01.
Redemption at Maturity
|
39
|
Section
3.02.
Offer to Purchase
|
39
|
ARTICLE
4
PARTICULAR
COVENANTS OF THE COMPANY
Section
4.01.
Payment of Principal and Interest
|
41
|
Section
4.02.
Maintenance of Office or Agency
|
42
|
Section
4.03.
Provisions as to Paying Agent
|
42
|
Section
4.04. Existence
|
43
|
Section
4.05.
Maintenance of Properties
|
44
|
Section
4.06.
Payment of Taxes and Other Claims
|
44
|
Section
4.07.
Stay, Extension and Usury Laws
|
44
|
Section
4.08.
Payments for Consent
|
44
|
i
Section
4.09.
Incurrence of Additional Debt; Financial Covenants
|
45
|
Section
4.10.
Restricted Payments
|
45
|
Section
4.11. Liens
|
47
|
Section
4.12.
Asset Sales
|
47
|
Section
4.13.
Restrictions on Distributions from Subsidiaries
|
49
|
Section
4.14.
Affiliate Transactions
|
50
|
Section
4.15.
Issuance or Sale of Capital Stock of Subsidiaries
|
51
|
Section
4.16.
Maintenance of Consolidated Tangible Net Worth
|
52
|
Section
4.17.
Repurchase at the Option of Holders Following a Change of
Control
|
52
|
Section
4.18.
Future Guarantors
|
52
|
Section
4.19.
Business Activities
|
52
|
Section
4.20.
Sale and Leaseback Transactions
|
53
|
Section
4.21.
Use of Proceeds
|
53
|
Section
4.22.
Maintenance of Insurance
|
53
|
Section
4.23.
Repurchase Upon Termination of Trading
|
53
|
Section
4.24.
Government Approvals and Licenses; Compliance with Law
|
53
|
Section
4.25. [RESERVED]
|
54
|
Section
4.26.
Notes to Rank Senior
|
54
|
Section
4.27.
Compliance Certificate
|
54
|
Section
4.28.
Calculation of Original Issue Discount
|
54
|
ARTICLE
5
SUCCESSORS
Section
5.01.
Merger, Consolidation and Sale of Assets
|
55
|
Section
5.02.
Successor Corporation Substituted
|
57
|
ARTICLE
6
REMEDIES
OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT
Section
6.01.
Events of Default
|
57
|
Section
6.02.
Payments of Notes on Default; Suit Therefor
|
60
|
Section
6.03.
Application of Monies Collected by Trustee
|
62
|
Section
6.04.
Proceedings by Noteholder
|
62
|
Section
6.05.
Proceedings by Trustee
|
63
|
Section
6.06.
Remedies Cumulative and Continuing
|
63
|
Section
6.07.
Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders
|
64
|
Section
6.08.
Notice of Default
|
64
|
Section
6.09.
Undertaking to Pay Costs
|
65
|
ii
ARTICLE
7
THE
TRUSTEE
Section
7.01.
Duties and Responsibilities of Trustee
|
65
|
Section
7.02.
Rights of Trustee
|
66
|
Section
7.03.
No
Responsibility for Recitals, Etc
|
69
|
Section
7.04.
Trustee, Paying Agents, Conversion Agents, Common Depositary or
Registrar
May Own Notes
|
69
|
Section
7.05.
Monies to Be Held in Trust
|
69
|
Section
7.06.
Compensation and Expenses of Trustee
|
69
|
Section
7.07.
Eligibility of Trustee
|
70
|
Section
7.08.
Resignation or Removal of Trustee
|
70
|
Section
7.09.
Acceptance by Successor Trustee
|
71
|
Section
7.10.
Succession by Merger
|
72
|
Section
7.11.
Trustee’s Application for Instructions from the Company
|
73
|
Section
7.12.
Reports by Trustee
|
73
|
Section
7.13.
Certain Provisions
|
73
|
ARTICLE
8
SUPPLEMENTAL
INDENTURES
Section
8.01.
Supplemental Indentures Without Consent of Noteholders
|
74
|
Section
8.02.
Supplemental Indenture with Consent of Noteholders
|
75
|
Section
8.03.
Effect of Supplemental Indenture
|
76
|
Section
8.04.
Notation on Notes
|
77
|
Section
8.05.
Evidence of Compliance of Supplemental Indenture to Be Furnished
to
Trustee
|
77
|
ARTICLE
9
GUARANTEES
Section
9.01. Guarantee
|
77
|
Section
9.02.
Limitation on Guarantor Liability
|
79
|
Section
9.03.
Execution and Delivery of Guarantee
|
79
|
Section
9.04.
Guarantors May Consolidate, etc., on Certain Terms
|
80
|
Section
9.05.
Releases Following Merger, Consolidation or Sale of Assets,
Etc
|
81
|
ARTICLE
10
[RESERVED]
ARTICLE
11
SATISFACTION
AND DISCHARGE OF INDENTURE
Section
11.01.
Discharge of Indenture
|
81
|
Section
11.02.
Deposited Monies to Be Held in Trust by Trustee
|
82
|
Section
11.03.
Paying Agent to Repay Monies Held
|
82
|
iii
Section
11.04.
Return of Unclaimed Monies
|
82
|
Section
11.05.
Reinstatement
|
83
|
ARTICLE
12
THE
NOTEHOLDERS
Section
12.01.
Action by Noteholders
|
83
|
Section
12.02.
Proof of Execution by Noteholders
|
83
|
Section
12.03.
Who Are Deemed Absolute Owners
|
84
|
Section
12.04.
Company-owned Notes Disregarded
|
84
|
Section
12.05.
Revocation of Consents; Future Holders Bound
|
84
|
ARTICLE
13
MEETINGS
OF NOTEHOLDERS
Section
13.01.
Purpose of Meetings
|
85
|
Section
13.02.
Call of Meetings by Company or Noteholders
|
85
|
Section
13.03.
Qualifications for Voting
|
85
|
Section
13.04. Regulations
|
86
|
Section
13.05. Voting
|
86
|
Section
13.06.
No
Delay of Rights by Meeting
|
87
|
ARTICLE
14
CONVERSION
OF NOTES
Section
14.01.
Right to Convert
|
87
|
Section
14.02.
Exercise of Conversion Right; Issuance of Common Stock on Conversion;
No
Adjustment for Interest or Dividends
|
87
|
Section
14.03.
Cash Payments in Lieu of Fractional Shares
|
89
|
Section
14.04.
Conversion Rate
|
89
|
Section
14.05.
Adjustment of Conversion Rate
|
89
|
Section
14.06.
Effect of Reclassification, Consolidation, Merger or Sale
|
98
|
Section
14.07.
Mandatory Conversion
|
99
|
Section
14.08.
Taxes on Shares Issued
|
100
|
Section
14.09.
Reservation of Shares; Shares to Be Fully Paid; Compliance with
Governmental Requirements; Listing of Common Stock
|
100
|
Section
14.10.
Responsibility of Trustee
|
101
|
Section
14.11.
Notice to Holders Prior to Certain Actions
|
101
|
Section
14.12.
Shareholder Rights Plans
|
102
|
ARTICLE
15
MISCELLANEOUS
PROVISIONS
Section
15.01.
Provisions Binding on Company’s Successors
|
102
|
iv
Section
15.02.
Official Acts by Successor Corporation
|
103
|
Section
15.03.
Addresses for Notices, Etc.
|
103
|
Section
15.04.
Governing Law
|
104
|
Section
15.05.
Evidence of Compliance with Conditions Precedent; Certificates
to
Trustee
|
104
|
Section
15.06.
Legal Holidays
|
104
|
Section
15.07.
Company Responsible for Making Calculations
|
104
|
Section
15.08.
Benefits of Indenture
|
105
|
Section
15.09.
Table of Contents, Headings, Etc.
|
105
|
Section
15.10.
Authenticating Agent
|
105
|
Section
15.11.
Indenture and Notes Solely Corporate Obligations
|
106
|
Section
15.12.
Execution in Counterparts
|
106
|
Section
15.13.
Severability
|
106
|
Exhibit
A
|
-
|
FORM
OF NOTE
|
Exhibit
B
|
-
|
FORM
OF NOTATION OF GUARANTEE
|
Exhibit
C
|
-
|
FORM
OF CERTIFICATE OF TRANSFER
|
Exhibit
D
|
-
|
FORM
OF RESTRICTIVE LEGEND FOR COMMON STOCK ISSUED UPON
CONVERSION
|
v
INDENTURE
INDENTURE
dated April 24, 2007, between CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC,
a Delaware corporation (hereinafter called the “Company”),
the
Guarantors listed on the signature pages hereto, and THE BANK OF NEW YORK,
a New
York banking corporation, as trustee hereunder (hereinafter called the
“Trustee”).
WITNESSETH:
WHEREAS,
for its lawful corporate purposes, the Company has duly authorized the issue
of
its 1.0% Guaranteed Senior Unsecured Convertible Notes due 2012 (hereinafter
called the “Notes”),
in an
aggregate principal amount not to exceed $50,000,000 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; and
WHEREAS,
for its lawful corporate purposes, each Guarantor has duly authorized the issue
of its Guarantee of the Notes and, to provide the terms and conditions upon
which the Guarantee is to be issued and delivered, each Guarantor has duly
authorized the execution and delivery of this Indenture; and
WHEREAS,
the Notes, the certificate of authentication to be borne by the Notes, a form
of
notation of Guarantee, a form of Assignment, a form of Purchase Notice and
a
form of Conversion Notice to be borne by the Notes are to be substantially
in
the forms hereinafter provided for; and
WHEREAS,
all acts and things necessary to make the Notes, when executed by the Company
and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as in this Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute this Indenture a valid
agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized,
NOW,
THEREFORE, THIS INDENTURE WITNESSETH:
That
in
order to declare the terms and conditions upon which the Notes are, and are
to
be, authenticated, issued and delivered, and in consideration of the premises
and of the purchase and acceptance of the Notes by the holders thereof, the
Company covenants and 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
1
DEFINITIONS
Section
1.01. Definitions.
The
terms
defined in this Section (except as herein otherwise expressly provided 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. All other terms used in this Indenture that are defined in the
Securities Act (except as herein otherwise expressly provided or unless the
context otherwise requires) shall have the meanings assigned to such terms
in
the Securities Act as in force at the date of the execution of this Indenture.
The words “herein”, “hereof”, “hereunder” and words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision. The terms defined in this Article include the plural as well as
the
singular.
“Additional
Assets”
means:
(a)
any
Property (other than cash, Cash Equivalent and securities) to be owned by the
Company or any of its Subsidiaries and used in a Related Business; or
(b)
Capital Stock of a Person that becomes a Subsidiary of the Company as a result
of the acquisition of such Capital Stock by the Company or another Subsidiary
of
the Company from any Person other than the Company or an Affiliate of the
Company; provided,
however,
that,
in the case of clause (b), such Subsidiary is primarily engaged in a Related
Business.
“Affiliate”
of
any
specified Person means:
(a)
any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person, or
(b)
any
other Person who is a director or officer of:
(1)
such
specified Person,
(2)
any
Subsidiary of such specified Person, or
(3)
any
Person described in clause (a) above.
For
the
purposes of this definition, “control,” when used with respect to any Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing. For purposes of Section 4.12 and Section 4.14
and
the definition of “Additional Assets” only, “Affiliate” shall also mean any
Beneficial Owner of shares representing 5% or more of the total voting power
of
the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such Voting Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such Beneficial Owner pursuant
to the first sentence hereof. Notwithstanding the foregoing, in no event shall
Citadel Equity Fund Ltd. or any of its Affiliates be considered an Affiliate
of
the Company.
“Amended
Investor Rights Agreement”
means
the investor rights agreement dated the Issue Date by and among the Company,
the
Guarantors, the Operating Subsidiaries, the Shareholders and Citadel Equity
Fund
Ltd.
“Applicable
Procedures”
means,
with respect to any transfer, repurchase or exchange of or for beneficial
interests in any Global Note, the rules and procedures of Euroclear and
Clearstream that apply to such transfer, repurchase or exchange.
2
“Asset
Sale”
means
any sale, lease, transfer, issuance or other disposition (or series of related
sales, leases, transfers, issuances or dispositions) by the Company or any
of
its Subsidiaries, including any disposition by means of a merger, consolidation
or similar transaction (each referred to for the purposes of this definition
as
a “disposition”), of
(a)
any
shares of Capital Stock of a Subsidiary of the Company (other than directors’
qualifying shares), or
(b)
any
other Property of the Company or any of its Subsidiaries outside of the ordinary
course of business of the Company or such Subsidiary,
other
than, in the case of clause (a) or (b) above,
(1)
any
disposition by a Subsidiary of the Company to the Company or by the Company
or
one of its Subsidiaries to a Wholly Owned Subsidiary,
(2)
any
disposition that constitutes a Permitted Investment or Restricted Payment
permitted by Section 4.10,
(3)
any
disposition effected in compliance with the first paragraph of Section 5.01,
(4)
any
disposition of inventory of the Company or any of its Subsidiaries in the
ordinary course of business, or inventory or other property that in the
reasonable judgment of the Company have become uneconomic, obsolete or worn
out,
(5)
the
sale or discount of accounts receivable in connection with the compromise or
collection thereof in the ordinary course of business, and
(6)
any
disposition in a single transaction or a series of related transactions of
assets for aggregate consideration of less than $2.5 million.
“Attributable
Debt”
in
respect of a Sale and Leaseback Transaction means, at any date of determination,
(a)
if
such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount
of
Debt represented thereby according to the definition of “Capital Lease
Obligations,” and
(b)
in
all other instances, the present value (discounted at the weighted average
interest rate borne by the Notes, compounded annually in the most recently
completed twelve months) of the total obligations of the lessee for rental
payments during the remaining term of the lease included in such Sale and
Leaseback Transaction (including any period for which such lease has been
extended).
“Average
Life”
means,
as of any date of determination, with respect to any Debt or Preferred Stock,
the quotient obtained by dividing:
(a)
the
sum of the product of the numbers of years (rounded to the nearest one-twelfth
of one year) from the date of determination to the dates of each successive
scheduled principal payment of such Debt or redemption or similar payment with
respect to such Preferred Stock multiplied by the amount of such payment by
3
(b)
the
sum of all such payments.
“Bankruptcy
Law”
means
Title 11, U.S. Code or any similar federal or state law for the relief of
debtors, or the law of any other jurisdiction relating to bankruptcy,
insolvency, winding up, liquidation, reorganization or relief of
debtors.
“Beneficial
Owner”
has
the
meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange
Act, except that in calculating the beneficial ownership of any particular
“person” (as such term is used in Section 13(d)(3) of the Exchange Act), such
“person” shall be deemed to have beneficial ownership of all securities that
such “person” has the right to acquire by conversion or exercise of other
securities, whether such right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition or passage of time. The terms
“Beneficially Owns” and “Beneficially Owned” have a corresponding
meaning.
“Board
of Directors”
means
(1) in respect of a corporation, the board of directors of the corporation,
or
(except if used in the definition of “Change of Control”) any duly authorized
committee thereof; and (2) in respect of any other Person, the board or
committee of that Person serving an equivalent function.
“Board
Resolution”
of
a
Person means a copy of a resolution (in form and substance satisfactory to
the
Trustee) certified by the secretary or an assistant secretary (or individual
performing comparable duties) of the applicable Person to have been duly adopted
by the Board of Directors of such Person and to be in full force and effect
on
the date of such certification, and delivered to the Trustee.
“Business
Day”
means
any day other than a Legal Holiday.
“Capital
Expenditures”
means
expenditures (whether paid in cash or other consideration or accrued as a
liability and including that portion of Capital Lease Obligations which is
capitalized on the consolidated balance sheet of the Company and its
Subsidiaries) by the Company and its Subsidiaries that, in conformity with
GAAP,
are included in “additions to property, plant and equipment” or as capitalized
internally developed software or comparable items reflected in the consolidated
balance sheet of the Company and its Subsidiaries.
“Capital
Lease Obligations”
means
any obligation under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP; and the amount of Debt represented
by such obligation shall be the capitalized amount of such obligations
determined in accordance with GAAP; and the Stated Maturity thereof shall be
the
date of the last payment of rent or any other amount due under such lease prior
to the first date upon which such lease may be terminated by the lessee without
payment of a penalty. For purposes of Section 4.11 a Capital Lease Obligation
shall be deemed secured by a Lien on the Property being leased.
“Capital
Stock”
means,
with respect to any Person, any shares or other equivalents (however designated)
of any class of corporate stock or partnership interests or any other
participations, rights, warrants, options or other interests in the nature
of an
equity interest in such Person, including Preferred Stock, but excluding any
debt security convertible or exchangeable into such equity
interest.
4
“Capital
Stock Sale Proceeds”
means
the aggregate cash proceeds received by the Company from the issuance or sale
(other than to a Subsidiary of the Company or an employee stock ownership plan
or trust established by the Company or any such Subsidiary for the benefit
of
their employees) by the Company of its Capital Stock (other than Disqualified
Stock) after the Issue Date, net of attorneys’ fees, accountants’ fees,
underwriters’ or placement agents’ fees, discounts or commissions and brokerage,
consultant and other fees actually incurred in connection with such issuance
or
sale and net of taxes paid or payable as a result thereof.
“Cash
Equivalents”
means
any of the following:
(a)
Investments in U.S. Government Securities maturing within 365 days of the date
of acquisition thereof;
(b)
Investments in time deposit accounts, certificates of deposit and money market
deposits maturing within 90 days of the date of acquisition thereof issued
by a
bank or trust company organized under the laws of the United States of America
or any state thereof having capital, surplus and undivided profits aggregating
in excess of $500 million and whose long-term debt is rated “A-3” or “A-” or
higher according to Xxxxx’x or S&P (or such similar equivalent rating by at
least one “nationally recognized statistical rating organization” (as defined in
Rule 436 under the Securities Act));
(c)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (a) entered into with:
(1)
a
bank meeting the qualifications described in clause (b) above, or
(2)
any
primary government securities dealer reporting to the Market Reports Division
of
the Federal Reserve Bank of New York;
(d)
Investments in commercial paper, maturing not more than 90 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America with
a
rating at the time as of which any Investment therein is made of “P-1” (or
higher) according to Xxxxx’x or “A-1” (or higher) according to S&P (or such
similar equivalent rating by at least one “nationally recognized statistical
rating organization” (as defined in Rule 436 under the Securities
Act));
(e)
direct obligations (or certificates representing an ownership interest in such
obligations) of any state of the United States of America (including any agency
or instrumentality thereof) for the payment of which the full faith and credit
of such state are pledged and which are not callable or redeemable at the
issuer’s option, provided
that:
(1)
the
long-term debt of such state is rated “A-3” or “A-” or higher according to
Xxxxx’x or S&P (or such similar equivalent rating by at least one
“nationally recognized statistical rating organization” (as defined in Rule 436
under the Securities Act)), and
5
(2)
such
obligations mature within 180 days of the date of acquisition thereof;
and
(f)
time
deposit accounts, certificates of deposit and money market deposits with (i)
Bank of China, Industrial and Commercial Bank of China, China Construction
Bank
and China Merchants Bank or (ii) any other bank or trust company organized
under
the laws of the PRC whose long-term debt is rated as high or higher than any
of
those banks.
“Chain
Star”
means
Chain Star Investments Ltd., a wholly-owned subsidiary of Safetech, incorporated
under the laws of Hong Kong.
“Change
of Control”
means
the occurrence of any of the following events:
(a)
the
Permitted Holders cease to be the “beneficial owners” (as defined in Rule 13d-3
under the Exchange Act, except that a Person will be deemed to have “beneficial
ownership” of all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of at least 20% of the total voting power of the Voting
Stock of the Company, whether as a result of the issuance of securities of
the
Company, any merger, consolidation, liquidation or dissolution of the Company,
any direct or indirect transfer of securities by the Permitted Holders or
otherwise (for purposes of this clause (a), the Permitted Holders will be deemed
to beneficially own any Voting Stock of a specified corporation held by a parent
corporation so long as the Permitted Holders beneficially own, directly or
indirectly, in the aggregate a majority of the total voting power of the Voting
Stock of such parent corporation); or
(b)
the
sale, transfer, assignment, lease, conveyance or other disposition, directly
or
indirectly, of all or substantially all the Property of the Company and its
Subsidiaries, considered as a whole (other than a disposition of such Property
as an entirety or virtually as an entirety to a Wholly Owned Subsidiary or
one
or more Permitted Holders), shall have occurred, or the Company merges,
consolidates or amalgamates with or into any other Person (other than one or
more Permitted Holders) or any other Person (other than one or more Permitted
Holders) merges, consolidates or amalgamates with or into the Company, in any
such event pursuant to a transaction in which the outstanding Voting Stock
of
the Company is reclassified into or exchanged for cash, securities or other
Property, other than any such transaction where:
(1)
the
outstanding Voting Stock of the Company is reclassified into or exchanged for
other Voting Stock of the Company or for Voting Stock of the Surviving Person,
and
(2)
the
holders of the Voting Stock of the Company immediately prior to such transaction
own, directly or indirectly, not less than a majority of the Voting Stock of
the
Company or the Surviving Person immediately after such transaction and in
substantially the same proportion as before the transaction; or
(c)
Continuing
Directors cease for any reason to constitute a majority of the Board of
Directors then in office; or
(d)
the
shareholders of the Company shall have approved any plan of liquidation or
dissolution of the Company.
6
“Clearstream” means
Clearstream Banking, société
anonyme,
and any
successor thereto.
“Closing
Sale Price”
of
the
shares of Common Stock on any date means (i) if Common Stock is primarily traded
on a securities exchange, the last sale price on such securities exchange on
the
applicable day, or if no sale occurred on such day, the mean between the closing
“bid” and “asked” prices on such day, (ii) if the principal market for Common
Stock is in the over-the-counter market, the closing sale price on the
applicable day as published by The NASDAQ Stock Market, Inc. or similar
organization, or if such price is not so published on such day, the mean between
the closing “bid” and “asked” prices, if available, on such day, which prices
may be obtained from any reputable pricing service, broker or dealer, and (iii)
if neither clause (i) nor clause (ii) is applicable, the Fair Market Value
as
determined in good faith by the Board of Directors of the Company or an
Independent Financial Advisor, as applicable. The Closing Sale Price shall
be
determined based on regular market hours without reference to extended after
hours trading or pre-market trading.
“Code”
means
the U.S. Internal Revenue Code of 1986, as amended.
“Commission”
means
the U.S. Securities and Exchange Commission.
“Commodity
Price Protection Agreement”
means,
in respect of a Person, any forward contract, commodity swap agreement,
commodity option agreement or other similar agreement or arrangement designed
to
protect such Person against fluctuations in commodity prices.
“Common
Depositary”
means,
with respect to the Notes issuable or issued in global form, The Bank of New
York Depository (Nominees) Limited, or registered assigns, as common depository
for Clearstream and/or Euroclear with respect to the Notes, and any and all
successors thereto appointed as depositary hereunder and having become such
pursuant to the applicable provisions of this Indenture.
“Common
Stock”
means
any stock of any class of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company and which is not subject
to redemption by the Company. Subject to the provisions of Section
14.06,
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
(namely, the Common Stock, par value $0.0001) or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which
have
no preference in respect of dividends or of amounts payable in the event of
any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which 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 on conversion shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
“Company”
means
the corporation named as the “Company” in the first paragraph of this Indenture,
and, subject to the provisions of Article
5
and
Section
14.06,
shall
include its successors and assigns.
7
“Consolidated
Interest Expense”
means,
for any period, the total interest expense of the Company and its consolidated
Subsidiaries, plus, to the extent not included in such total interest expense,
and to the extent Incurred by the Company or its Subsidiaries, without
duplication,
(a)
interest expense attributable to leases constituting part of a Sale and
Leaseback Transaction and to Capital Lease Obligations,
(b)
amortization of debt discount and debt issuance cost, including commitment
fees,
(c)
capitalized interest,
(d)
non-cash interest expense,
(e)
commissions, discounts and other fees and charges owed with respect to letters
of credit and banker’s acceptance financing,
(f)
net
costs associated with Hedging Obligations (including amortization of fees),
(g)
Disqualified Stock Dividends (other than dividends payable in Capital Stock
other than Disqualified Stock),
(h)
Preferred Stock Dividends (other than dividends payable in Capital Stock other
than Disqualified Stock) of Subsidiaries,
(i)
interest accruing on any Debt of any other Person to the extent such Debt is
guaranteed by the Company or any of its Subsidiaries, and
(j)
the
cash contributions to any employee stock ownership plan or similar trust, if
any
and to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Debt
Incurred by such plan or trust.
“Consolidated
Net Income”
means,
for any period, the net income (loss) of the Company and its consolidated
Subsidiaries; provided,
however,
that
there shall not be included in such Consolidated Net Income:
(a)
any
net income (loss) of any Person (other than the Company) if such Person is
not a
Subsidiary of the Company, except that:
(1)
subject to the exclusions contained in clauses (c), (d) and (e) below, equity
of
the Company and its consolidated Subsidiaries in the net income of any such
Person for such period shall be included in such Consolidated Net Income up
to
the aggregate amount of cash distributed by such Person during such period
to
the Company or any of its Subsidiaries as a dividend or other distribution
(subject, in the case of a dividend or other distribution to such Subsidiary,
to
the limitations contained in clause (b) below), and
(2)
the
equity of the Company and its consolidated Subsidiaries in a net loss of any
such Person for such period shall be included in determining such Consolidated
Net Income,
8
(b)
any
net income (loss) of any Subsidiary of the Company if such Subsidiary is subject
to restrictions, directly or indirectly, on the payment of dividends or the
making of distributions, directly or indirectly, to the Company, except
that:
(1)
subject to the exclusions contained in clauses (c), (d) and (e) below, the
equity of the Company and its consolidated Subsidiaries in the net income of
any
such Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash distributed by such Subsidiary during
such period to the Company or another of its Subsidiaries as a dividend or
other
distribution (subject, in the case of a dividend or other distribution to
another Subsidiary of the Company, to the limitation contained in this clause),
and
(2)
the
equity of the Company and its consolidated Subsidiaries in a net loss of any
such Subsidiary for such period shall be included in determining such
Consolidated Net Income,
(c)
any
gain (but not loss) realized upon the sale or other disposition of any Property
of the Company or any of its consolidated Subsidiaries (including pursuant
to
any Sale and Leaseback Transaction) that is not sold or otherwise disposed
of in
the ordinary course of business,
(d)
any
extraordinary gain or loss, and
(e)
the
cumulative effect of a change in accounting principles.
“Consolidated
Net Worth”
means
the total of the amounts shown on the consolidated balance sheet of the Company
and its Subsidiaries as of the end of the most recent Fiscal Quarter of the
Company ending prior to the taking of any action for the purpose of which the
determination is being made, as:
(a)
the
par or stated value of all outstanding Capital Stock of the Company, plus
(b)
paid-in capital or capital surplus relating to such Capital Stock, plus
(c)
any
retained earnings or earned surplus, less:
(1)
any
accumulated deficit, and
(2)
any
amounts attributable to Disqualified Stock or any equity security convertible
into or exchangeable for Debt, the cost of treasury stock and the principal
amount of any promissory notes receivable from the sale of Capital Stock of
the
Company or any of its Subsidiaries, each item to be determined in conformity
with GAAP.
“Consolidated
Tangible Net Worth”
means,
as of any date of determination, the Consolidated Net Worth less the Intangible
Assets.
“Continuing
Directors”
means,
as of any date of determination, any member of the Board of Directors who (a)
was a member of the Board of Directors on the date of this Indenture or (b)
was
nominated for election to the Board of Directors by, or whose election was
ratified with the approval of, a majority of the Continuing Directors who were
members of the Board of Directors at the time of such nomination or
election.
9
“Conversion
Price”
as
of
any day will equal $100,000 divided by the Conversion Rate as of such
date.
“Corporate
Trust Office”
shall
be the address of the Trustee specified in Section
15.03
hereof,
or such other address as to which the Trustee may give notice to the
Company.
“Credit
Facilities”
means,
with respect to the Operating Subsidiaries, one or more debt or commercial
paper
facilities with banks or other institutional lenders in the PRC providing for
revolving credit loans, term loans, receivables or inventory financing
(including through the sale of receivables or inventory to such lenders or
to
special purpose, bankruptcy remote entities formed to borrow from such lenders
against such receivables or inventory) or trade letters of credit, in each
case
together with any Refinancings thereof by any lender or syndicate of lenders.
“CSST
HK” means
China Security & Surveillance (HK) Ltd., a wholly-owned subsidiary of
Safetech, incorporated under the laws of Hong Kong.
“Currency
Exchange Protection Agreement”
means,
in respect of a Person, any foreign exchange contract, currency swap agreement,
currency option or other similar agreement or arrangement designed to protect
such Person against fluctuations in currency exchange rates.
“Custodian”
means,
with respect to the Notes issuable or issued in global form, the Person
specified in Section
2.02(e)
as
Custodian with respect to the Notes, and any and all successors thereto
appointed as custodian hereunder and having become such pursuant to the
applicable provisions of this Indenture.
“Debt”
means,
with respect to any Person on any date of determination (without
duplication):
(a)
the
principal of and premium (if any) in respect of:
(1)
debt
of such Person for money borrowed, and
(2)
debt
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such Person is responsible or liable;
(b)
all
Capital Lease Obligations of such Person and all Attributable Debt in respect
of
Sale and Leaseback Transactions entered into by such Person;
(c)
all
obligations of such Person representing the deferred purchase price of Property,
all conditional sale obligations of such Person and all obligations of such
Person under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business);
10
(d)
all
obligations of such Person for the reimbursement of any obligor on any letter
of
credit, banker’s acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in (a) through (c) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are
not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no
later than the third Business Day following receipt by such Person of a demand
for reimbursement following payment on the letter of credit);
(e)
the
amount of all obligations of such Person with respect to the Repayment of any
Disqualified Stock or, with respect to any Subsidiary of such Person, any
Preferred Stock (but excluding, in each case, any accrued dividends);
(f)
all
obligations of the type referred to in clauses (a) through (e) above of other
Persons and all dividends of other Persons for the payment of which, in either
case, such Person is responsible or liable, directly or indirectly, as obligor,
guarantor or otherwise, including by means of any guarantee;
(g)
all
obligations of the type referred to in clauses (a) through (f) above of other
Persons secured by any Lien on any Property of such Person (whether or not
such
obligation is assumed by such Person), the amount of such obligation being
deemed to be the lesser of the Fair Market Value of such Property and the amount
of the obligation so secured; and
(h)
to
the extent not otherwise included in this definition, Hedging Obligations of
such Person.
The
amount of Debt of any Person at any date shall be the outstanding balance,
or
the accreted value of such Debt in the case of Debt issued with original issue
discount, at such date of all unconditional obligations as described above
and
the maximum liability, upon the occurrence of the contingency giving rise to
the
obligation, of any contingent obligations at such date. The amount of Debt
represented by a Hedging Obligation shall be equal to the
notional amount of such Hedging Obligation.
“Default”
means
any event which is, or after notice or passage of time or both would be, an
Event of Default.
“Definitive
Note”
means
a
certificated Note registered in the name of the holder thereof and issued in
accordance with Section
2.05
or
2.07
hereof,
in substantially the form of Exhibit
A
hereto
except that such Note shall not bear the Global Note Legend and shall not have
the “Schedule of Exchanges of Interests in the Global Note” attached
thereto.
“Disqualified
Stock”
means
any Capital Stock of the Company or any of its Subsidiaries that by its terms
(or by the terms of any security into which it is convertible or for which
it is
exchangeable, in either case at the option of the holder thereof) or
otherwise:
(a)
matures or is mandatorily redeemable pursuant to a sinking fund obligation
or
otherwise,
(b)
is or
may become redeemable or repurchaseable at the option of the holder thereof
(except that any Capital Stock that would constitute Disqualified Stock solely
because the holders of such Capital Stock have the right to require the Company
to repurchase such Capital Stock upon the occurrence of a Change of Control
or
an Asset Sale shall not constitute Disqualified Stock if the terms of such
Capital Stock provide that the Company may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with Section
4.10
hereof),
in whole or in part, or
11
(c)
is
convertible or exchangeable at the option of the holder thereof for Debt or
Disqualified Stock,
on
or
prior to, in the case of clause (a), (b) or (c), the first anniversary of the
Stated Maturity of the Notes.
“Disqualified
Stock Dividends”
means
all dividends with respect to Disqualified Stock of the Company held by Persons
other than a Wholly Owned Subsidiary. The amount of any such dividend shall
be
equal to the quotient of such dividend divided by the difference between one
and
the maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the Company.
“Domestic
Subsidiary”
means
any Subsidiary of the Company other than (a) a Foreign Subsidiary or (b) a
Subsidiary of a Foreign Subsidiary.
“EBITDA”
means,
for any period, an amount equal to, for the Company and its consolidated
Subsidiaries:
(a)
the
sum of Consolidated Net Income for such period, plus the following to the extent
reducing Consolidated Net Income for such period:
(1)
the
provision for taxes based on income or profits or utilized in computing net
loss,
(2)
Consolidated Interest Expense,
(3)
depreciation,
(4)
amortization of intangibles, and
(5)
any
other non-cash items (other than any such non-cash item to the extent that
it
represents an accrual of, or reserve for, cash expenditures in any future period
or amortization of a prepaid cash expense paid in a period prior to the period
that is subject to calculation), minus
(b)
all
non-cash items increasing Consolidated Net Income for such period.
Notwithstanding
the foregoing clause (a), the provision for taxes and the depreciation,
amortization and non-cash items of a Subsidiary of the Company shall be added
to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted
at
the date of determination to be dividended to the Company by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms
of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Subsidiary
or
its shareholders.
12
“Euroclear”
means
Euroclear Bank, S.A./N.V., and any successor thereto.
“Exchange
Act”
means
the U.S. Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, as in effect from time to time.
“Ex-Dividend
Time”
means,
with respect to any distribution on shares of Common Stock, the first date
on
which the shares of Common Stock trade regular way on the principal securities
market on which the shares of Common Stock are then traded without the right
to
receive such distribution.
“Fair
Market Value”
means,
with respect to any Property at the time of determination, the price that could
be negotiated in an arm’s-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of whom is under undue pressure
or
compulsion to complete the transaction. Fair Market Value shall be determined,
except as otherwise provided,
(a)
if
such Property has a Fair Market Value equal to or less than $1.0 million, by
any
Officer of the Company,
(b)
if
such Property has a Fair Market Value in excess of $1.0 million, by a majority
of the Board of Directors and evidenced by a Board Resolution delivered to
the
Trustee, or
(c)
if
such Property has a Fair Market Value in excess of $5.0 million, by an
Independent Financial Advisor and evidenced by a written opinion from such
Independent Financial Advisor dated within 30 days of the relevant transaction
delivered to the Trustee.
“Fiscal
Quarter”
means
each of the three month periods ending on March 31, June 30, September 30 and
December 31.
“Foreign
Subsidiary”
means
any Subsidiary of the Company which is not organized under the laws of the
United States of America or any State thereof or the District of
Columbia.
“GAAP”
means
United States generally accepted accounting principles as in effect on the
Issue
Date, including those set forth in:
(a)
the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants,
(b)
the
statements and pronouncements of the Financial Accounting Standards Board,
(c)
such
other statements by such other entity as approved by a significant segment
of
the accounting profession, and
(d)
the
rules and regulations of the Commission governing the inclusion of financial
statements (including pro
forma financial
statements) in periodic reports required to be filed pursuant to Section 13
of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the
Commission.
13
All
ratios and computations based on GAAP contained in this Indenture will be
computed in conformity with GAAP.
“Global
Note Legend”
means
the legend set forth on all Global Notes issued under this
Indenture.
“Global
Notes”
means
the global Notes in the form of Exhibit
A
hereto
issued in accordance with Article
2
hereof.
“Governmental
Approval”
means
any authorization of or by, consent of, approval of, license from, ruling of,
permit from, tariff by, rate of, certification by, exemption from, filing with
(except any filing relating to the perfection of security interests), variance
from, claim of, order from, judgment from, decree of, publication to or by,
notice to, declaration of or with or registration by or with any Governmental
Authority, whether tacit or express.
“Governmental
Authority”
means
any federal, state, national, provincial, municipal, local, territorial or
other
government department, ministry (including local counterparts thereof),
commission, board, agency, regulatory authority, instrumentality, judicial
or
administrative body, domestic or foreign.
“guarantee”
means
any obligation, contingent or otherwise, of any Person directly or indirectly
guaranteeing any Debt of any other Person and any obligation, direct or
indirect, contingent or otherwise, of such Person:
(a)
to
purchase or pay (or advance or supply funds for the purchase or payment of)
such
Debt of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise), or
(b)
entered
into for the purpose of assuring in any other manner the obligee against loss
in
respect thereof (in whole or in part);
provided,
however,
that the
term “guarantee” shall not include:
(1)
endorsements for collection or deposit in the ordinary course of business,
or
(2)
a
contractual commitment by one Person to invest in another Person for so long
as
such Investment is reasonably expected to constitute a Permitted Investment
under clause (a), (b) or (c) of the definition of “Permitted Investment.”
The
term
“guarantee” used as
a verb
has a corresponding meaning. The term “guarantor” shall mean any Person
Guaranteeing
any
obligation.
14
“Guarantee”
means
the Guarantee of the Notes by each of the Guarantors pursuant to Article
9
and in
the form of the Guarantee attached as Exhibit
B
and any
additional Guarantee of the Notes to be executed by any Subsidiary of the
Company pursuant to Section
4.18.
“Guarantor”
means
any of Safetech, CSST HK, Chain Star and any other Subsidiary of the Company
that becomes a Guarantor pursuant to Section
4.18
or who
otherwise executes and delivers a supplemental indenture (in form satisfactory
to the Trustee) to the Trustee providing for a Guarantee; provided
that any
Person constituting a Guarantor as described above shall cease to constitute
a
Guarantor when its respective Guarantee is released in accordance with the
terms
of this Indenture.
“Hedging
Obligation”
of
any
Person means any obligation of such Person pursuant to any Interest Rate
Agreement, Currency Exchange Protection Agreement, Commodity Price Protection
Agreement or any other similar agreement or arrangement
“Incur”
means,
with respect to any Debt or other obligation of any Person, to create, issue,
incur (by merger, conversion, exchange or otherwise), extend, assume, Guarantee
or become liable in respect of such Debt or other obligation or the recording,
as required pursuant to GAAP or otherwise, of any such Debt or obligation on
the
balance sheet of such Person (and “Incurrence” and “Incurred” shall have
meanings correlative to the foregoing); provided,
however,
that a
change in GAAP that results in an obligation of such Person that exists at
such
time, and is not theretofore classified as Debt, becoming Debt shall not be
deemed an Incurrence of such Debt; and provided
further,
however,
that
any Debt or other obligations of a Person existing at the time such Person
becomes a Subsidiary (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to be Incurred by such Subsidiary at the time it
becomes a Subsidiary.
“Indenture”
means
this instrument as originally executed or, if amended or supplemented as herein
provided, as so amended or supplemented.
“Independent
Financial Advisor”
means
an investment banking firm of international standing or any third party
appraiser of international standing, provided
that
such firm or appraiser is not an Affiliate of the Company.
“Intangible
Assets” shall
mean as of the date of any determination thereof the total amount of all assets
of the Company and its Subsidiaries classified as goodwill, patents, trade
names, trademarks, copyrights, franchises, experimental expense, organization
expense, unamortized debt discount and expense, deferred assets other than
prepaid insurance and prepaid taxes, the excess of cost of shares acquired
over
book value of related assets and such other assets as are properly classified
as
“intangible
assets”
in
accordance with GAAP.
“Interest”
means,
when used with reference to the Notes, any interest payable under the terms
of
the Notes.
“Interest
Rate Agreement”
means,
for any Person, any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement or other similar agreement designed to protect
against fluctuations in interest rates.
15
“Investment”
by
any
Person means any direct or indirect loan (other than advances to customers
in
the ordinary course of business that are recorded as accounts receivable on
the
balance sheet of such Person), advance or other extension of credit or capital
contribution (by means of transfers of cash or other Property to others or
payments for Property or services for the account or use of others, or
otherwise) to, or Incurrence of a Guarantee of any obligation of, or purchase
or
acquisition of Capital Stock, bonds, notes, debentures or other securities
or
evidence of Debt issued by, any other Person.
In
determining the amount of any Investment made by transfer of any Property other
than cash, such Property shall be valued at its Fair Market Value at the time
of
such Investment.
“Issue
Date”
means
April 24, 2007.
“Legal
Holiday”
means
a
Saturday, a Sunday or a day on which banking institutions in the City of New
York, the PRC, London, England, the city in which the Corporate Trust Office
of
the Trustee is located or any other place of payment on the Notes are authorized
by law, regulation or executive order to remain closed.
“Leverage
Ratio”
means
the ratio of:
(a)
the
outstanding Debt of the Company and its Subsidiaries on a consolidated basis,
to
(b)
EBITDA for the most recently completed four Fiscal Quarters;
(1)
if:
(A)
since
the
beginning of such period the Company or any of its Subsidiaries has Incurred
any
Debt that remains outstanding or Repaid any Debt, or
(B) the
transaction giving rise to the need to calculate the Leverage Ratio is an
Incurrence or Repayment of Debt,
Consolidated
Interest Expense for such period shall be calculated after giving effect on
a
pro
forma basis
to
such Incurrence or Repayment as if such Debt was Incurred or Repaid on the
first
day of such period, provided
that,
in
the event of any such Repayment of Debt, EBITDA for such period shall be
calculated as if the Company or such Subsidiary had not earned any interest
income actually earned during such period in respect of the funds used to Repay
such Debt, and provided
further
that the
amount of Debt Incurred under revolving credit facilities shall be deemed to
be
the average daily balance of such Debt during such period (or any shorter period
in which such facilities are in effect) and
(2)
if
(A)
since
the beginning of such period, the Company or any of its Subsidiaries shall
have
made any Asset Sale or an Investment (by merger or otherwise) in any Subsidiary
of the Company (or any Person that becomes such a Subsidiary) or an acquisition
of Property,
16
(B)
the
transaction giving rise to the need to calculate the Leverage Ratio is such
an
Asset Sale, Investment or acquisition, or
(C)
since
the beginning of such period any Person (that subsequently became a Subsidiary
of the Company or was merged with or into the Company or any of its Subsidiaries
since the beginning of such period) shall have made such an Asset Sale,
Investment or acquisition,
EBITDA
for such period shall be calculated after giving pro
forma
effect
to such Asset Sale, Investment or acquisition as if such Asset Sale, Investment
or acquisition occurred on the first day of such period.
If
any
Debt bears a floating rate of interest and is being given pro
forma
effect,
the interest expense on such Debt shall be calculated as if the base interest
rate in effect for such floating rate of interest on the date of determination
had been the applicable base interest rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Debt if such Interest
Rate Agreement has a remaining term in excess of 12 months). In the event the
Capital Stock of any Subsidiary of the Company is sold during the period, the
Company shall be deemed, for purposes of clause (1) above, to have Repaid during
such period the Debt of such Subsidiary to the extent the Company and its
continuing Subsidiaries are no longer liable for such Debt after such
sale.
“Lien”
means,
with respect to any Property of any Person, any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, security interest,
lien,
charge, easement (other than any easement not materially impairing usefulness
or
marketability), encumbrance, preference, priority or other security agreement
or
preferential arrangement of any kind or nature whatsoever on or with respect
to
such Property (including any Capital Lease Obligation, conditional sale or
other
title retention agreement having substantially the same economic effect as
any
of the foregoing or any Sale and Leaseback Transaction).
“Material
Adverse Effect”
means
a
material adverse effect on (a) the property, business, operations, financial
condition, liabilities or capitalization of the Company or any of its
Subsidiaries, (b) the ability of any such Person to perform its payment
obligations or any of its material obligations under any of the Transaction
Documents to which such Person is a party, (c) the validity or enforceability
of
any of the Transaction Documents, (d) the material rights and remedies of the
Trustee, under any of the Transaction Documents or (e) the timely payment of
any
principal or premium of, or interest on, any of the Notes.
“Moody’s”
means
Xxxxx’x Investors Service, Inc. or any successor to the rating agency business
thereof.
“Net
Available Cash”
from
any Asset Sale means cash payments received therefrom (including any cash
payments received by way of deferred payment of principal pursuant to a note
or
installment receivable or otherwise, but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring Person of Debt or other obligations relating to the Property that
is
the subject of such Asset Sale or received in any other non-cash form), in
each
case net of:
17
(a)
all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all U.S. federal, state, national, provincial, foreign and local
taxes required to be accrued as a liability under GAAP, as a consequence of
such
Asset Sale,
(b)
all
payments made on or in respect of any Debt that is secured by any Property
subject to such Asset Sale, in accordance with the terms of any Lien upon such
Property, or which must by its terms, or in order to obtain a necessary consent
to such Asset Sale, or by applicable law, be repaid out of the proceeds from
such Asset Sale,
(c)
all
distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset Sale, and
(d)
the
deduction of appropriate amounts provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the Property
disposed of in such Asset Sale and retained by the Company or any of its
Subsidiaries after such Asset Sale.
“Note
Obligations”
means
the Notes, the Guarantees and all other obligations of any obligor under this
Indenture, the Notes and the Guarantees.
“Notes
Purchase Agreement”
means
the Notes purchase agreement dated April 24, 2007 by and among the Company,
the
Guarantors, the Operating Subsidiaries and Citadel Equity Fund Ltd.
“Notes”
is
defined in the preamble.
“Noteholder”
or
“holder”
as
applied to any Note, or other similar terms (but excluding the term “Beneficial
Holder”), means any Person in whose name at the time a particular Note is
registered on the Registrar’s books.
“Notice
Date”
means
the date of mailing of the notice pursuant to Section
3.02(b).
“Obligations”
means
all obligations for principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Debt.
“Officer”
means,
with respect to the Company, its Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer or any Vice President (whether or not
designated by a number or numbers or word or words added before or after the
title “Vice President”) and the Treasurer or any Assistant Treasurer, or the
Secretary or Assistant Secretary.
“Officers’
Certificate”
means
a
certificate, in form and substance satisfactory to the Trustee, signed by two
Officers of the Company, at least one of whom shall be the principal executive
officer or principal financial officer of the Company, and which certificate
meets the requirements of Section
15.05
hereof
and is delivered to the Trustee.
18
“Operating
Subsidiaries”
means
(i) Golden Group Corporation (Shenzhen) Limited, a limited liability company
organized and existing under the laws of the PRC and a wholly-owned Subsidiary
of Safetech, (ii) Shanghai Xxxxx Xxxx Digital Technology Co., Ltd., a limited
liability company organized and existing under the laws of the PRC and a
wholly-owned Subsidiary of CSST HK, (iii) China Security & Surveillance
Technology (PRC), Inc., a limited liability company organized and existing
under
the laws of the PRC and a wholly-owned Subsidiary of the Company, (iv) Shanghai
Xxxxx Xxxx Public Safety Prevention Technology Co., Ltd., a
limited
liability company organized and existing under the laws of the PRC and a seventy
percent (70%) owned subsidiary of Xxxxx Xxxx,
(v)
Shanghai Xxxxx Xxxx Digital Equipment Ltd., a
limited
liability company organized and existing under the laws of the PRC and a ninety
percent (90%) owned subsidiary of Xxxxx Xxxx, (vi)
Shenzhen
Hongtianzhi Electronics Co., Ltd., a
limited
liability company organized and existing under the laws of the PRC and a
wholly-owned subsidiary of Chain Star,
(vii)
Shenzhen Tongxing Shixun Technology Co., Ltd., a
limited
liability company organized and existing under the laws of the PRC and a seventy
percent (70%) owned subsidiary of Hongtianzhi,
and
(viii) Guangzhou Shixing Digital Technology Co., Ltd., a
limited
liability company organized and existing under the laws of the PRC and a seventy
percent (70%) owned subsidiary of Hongtianzhi.
“Opinion
of Counsel”
means
a
written opinion, in form and substance satisfactory to the Trustee, from legal
counsel who is acceptable to the Trustee and which meets the requirements of
Section
15.05
hereof.
“Outstanding”,
when
used with reference to Notes and subject to the provisions of Section
12.04,
means,
as of any particular time, 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, (i) for the redemption of which monies in the
necessary amount shall have been deposited in trust with the Trustee or with
any
paying agent (other than the Company) or (ii) which shall have been otherwise
discharged in accordance with Article
11;
(c)
Notes
in lieu of which, or in substitution for which, other Notes shall have been
authenticated and delivered pursuant to the terms of Section
2.06;
and
(d)
Notes
converted into Common Stock pursuant to Article
14
and
Notes deemed not outstanding pursuant to Article
3.
“Permitted
Holders”
means
Mr. Tu Xxx Xxxx, a resident
of Hangzhou in the PRC, and his estate, spouse, ancestors and lineal
descendants, the legal representatives of any of the foregoing and the
trustees
of
any bona fide trusts of which the foregoing are the sole beneficiaries or the
grantors, or any Person of which the foregoing “beneficially owns” (as defined
in Rule 13d-3 under the Exchange Act), individually or collectively with any
of
the foregoing, at least 50% of the total voting power of the Voting Stock of
such Person.
“Permitted
Investment”
means
any Investment by the Company or any of its Subsidiaries in:
(a) the
Company or any of its Subsidiaries engaged in a Related Business;
19
(b)
any
Person that will, upon the making of such Investment, become a Subsidiary of
the
Company, provided
that the
primary business of such Subsidiary is a Related Business;
(c)
any
Person if as a result of such Investment such Person is merged or consolidated
with or into, or transfers or conveys all or substantially all its Property
to,
the Company or a Subsidiary of the Company, provided
that
such Person’s primary business is a Related Business;
(d)
cash
and
Cash Equivalents;
(e)
receivables
owing to the Company or any of its Subsidiaries, if created or acquired in
the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided,
however,
that
such trade terms may include such concessionary trade terms as the Company
or
such Subsidiary deems reasonable under the circumstances;
(f)
payroll,
travel and similar advances to cover matters that are expected at the time
of
such advances ultimately to be treated as expenses under GAAP and that are
made
in the ordinary course of business;
(g)
stock,
obligations or other securities received in settlement of debts created in
the
ordinary course of business and owing to the Company or one of its Subsidiaries
or in satisfaction of judgments;
(h)
any
Person to the extent such Investment represents the non-cash portion of the
consideration received in connection with (A) an Asset Sale consummated in
compliance with Section
4.12
or (B)
any disposition of Property not constituting an Asset Sale;
(i)
Hedging
Obligations by the Company or any Guarantor that are otherwise permitted to
be
incurred under this Indenture, and which were entered into for financial
management of interest rates, foreign currency exchange rates or commodity
prices and are directly related to transactions entered into by such Person
in
the ordinary course of its business, and not for speculative purposes;
and
(j)
other
Investments made for Fair Market Value that do not exceed 10% of the aggregate
amount of Consolidated Net Income accrued during the period (treated as one
accounting period) from the beginning of the Fiscal Quarter after the Issue
Date
to the end of the most recent Fiscal Quarter ending prior to the date of such
Investment (or if the aggregate amount of Consolidated Net Income for such
period shall be a deficit, minus 100% of such deficit).
“Permitted
Liens”
means:
(a)
Liens
in
favor of the Company or the Guarantors;
(b)
Liens
securing, or created for the benefit of securing, the Notes and the
Guarantees;
(c)
Liens
securing Debt of a PRC Subsidiary under Credit Facilities, provided
that any
such Lien is limited to the Property of such PRC Subsidiary;
20
(d) leases,
licenses, subleases and sublicenses of assets (including, without limitation,
real property and intellectual property rights) which do not materially
interfere with the ordinary conduct of the business of the Company or any of
the
Subsidiaries;
(e) Liens
for
taxes, assessments or governmental charges or levies on the Property of the
Company or any of its Subsidiaries if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being contested
in
good faith and by appropriate proceedings promptly instituted and diligently
concluded, provided
that any
reserve or other appropriate provision that shall be required in conformity
with
GAAP shall have been made therefor;
(f)
Liens
imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and other
similar Liens, on the Property of the Company or any of its Subsidiaries arising
in the ordinary course of business and securing payment of obligations that
are
not more than 60 days past due or are being contested in good faith and by
appropriate proceedings;
(g)
Liens
on
the Property of the Company or any of its Subsidiaries Incurred in the ordinary
course of business to secure performance of obligations with respect to
statutory or regulatory requirements, performance or return-of-money bonds,
surety bonds or other obligations of a like nature and Incurred in a manner
consistent with industry practice, in each case which are not Incurred in
connection with the borrowing of money, the obtaining of advances or credit
or
the payment of the deferred purchase price of Property from vendors and others
and which do not in the aggregate impair in any material respect the use of
Property in the operation of the business of the Company and its Subsidiaries
taken as a whole;
(h)
Liens
on
Property at the time the Company or any of its Subsidiaries acquired such
Property, including any acquisition by means of a merger or consolidation with
or into the Company or any of its Subsidiaries; provided,
however,
that
any such Lien may not extend to any other Property of the Company or any of
its
Subsidiaries; provided
further, that
such
Liens shall not have been Incurred in anticipation of or in connection with
the
transaction or series of transactions pursuant to which such Property was
acquired by the Company or any of its Subsidiaries;
(i)
Liens
on
the Property of a Person at the time such Person becomes a Subsidiary of the
Company; provided,
however,
that
any such Lien may not extend to any other Property of the Company or any other
Subsidiary of the Company that is not a direct Subsidiary of such Person;
provided
further, that
any
such Lien was not Incurred in anticipation of or in connection with the
transaction or series of transactions pursuant to which such Person became
a
Subsidiary of the Company;
(j)
pledges
or deposits by the Company or any of its Subsidiaries under workers’
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for
the
payment of Debt) or leases to which the Company or any of its Subsidiaries
is
party, or deposits to secure public or statutory obligations of the Company,
or
deposits for the payment of rent, in each case Incurred in the ordinary course
of business;
21
(k)
utility
easements, building restrictions and such other encumbrances or charges against
real Property as are of a nature generally existing with respect to properties
of a similar character;
(l)
Liens
existing on the Issue Date not otherwise described in clauses (a) through (h)
above;
(m)
Liens
on
the Property of the Company or any of its Subsidiaries to secure any
Refinancing, in whole or in part, of any Debt secured by Liens referred to
in
clause (g), (h) or (k) above; provided,
however,
that
any such Lien shall be limited to all or part of the same Property that secured
the original Lien (together with improvements and accessions to such Property),
and the aggregate principal amount of Debt (and other obligations thereunder)
that is secured by such Lien shall not be increased to an amount greater than
the sum of:
(1)
the
outstanding principal amount, or, if greater, the committed amount, of the
Debt
(and other obligations thereunder) secured by Liens described under clause
(g),
(h) or (k) above, as the case may be, at the time the original Lien became
a
Permitted Lien under this Indenture, and
(2)
an
amount
necessary to pay any fees and expenses, including premiums and defeasance costs,
incurred by the Company or such Subsidiary in connection with such
Refinancing;
(n)
judgment
Liens not giving rise to en Event of Default so long as such Lien is adequately
bonded and any appropriate legal proceedings which may have been duly initiated
for the review of such judgment have not been finally terminated or the period
within which such proceedings may be initiated has not expired; and
(o) Liens
securing Debt in respect of the purchase and development of an industrial park
in Shenzhen, PRC, in
an
aggregate principal amount not to exceed RMB 200 million outstanding at any
one
time.
“Permitted
Refinancing Debt”
means
any Debt that Refinances any other Debt, including any successive Refinancings,
so long as:
(a)
such
Debt
is in an aggregate principal amount (or if Incurred with original issue
discount, an aggregate issue price) not in excess of the sum of:
(1)
the
aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value) then outstanding of the Debt being Refinanced,
and
(2)
an
amount necessary to pay any fees and expenses, including premiums and defeasance
costs, related to such Refinancing,
(b)
the
Average Life of such Debt is equal to or greater than the Average Life of the
Debt being Refinanced,
22
(c)
the
Stated Maturity of such Debt is no earlier than the Stated Maturity of the
Debt
being Refinanced,
(d)
the
new
Debt shall not be senior in right of payment to the Debt that is being
Refinanced, and
(e)
the
new
Debt, the proceeds of which are used to Refinance the Notes or any Debt that
is
pari
passu
with or
subordinate to the Notes or a Guarantee, shall only be permitted if (A) in
case
the Notes are refinanced in part or the Debt to be Refinanced is pari
passu
with the
Notes or a Guarantee, such new Debt, by its terms or by terms of any agreement
or instrument pursuant to which such new Debt is outstanding, is expressly
made
pari
passu
with, or
subordinate in right of payment to, the remaining Notes or such Guarantee,
or
(B) in case the Debt to be Refinanced is subordinated in right of payment to
the
Notes or a Guarantee, such new Debt, by its terms or by the terms of any
agreement or instrument to which such new Debt is issued or remains outstanding,
is expressly made subordinate in right of payment to the Notes or such Guarantee
at least to the extent that the Debt to be Refinanced is subordinated to the
Notes or the Guarantee;
provided,
however,
that
Permitted Refinancing Debt shall not include the Debt of any Subsidiary that
is
not a Guarantor, if such Debt is used to Refinance Debt of the Company or a
Subsidiary.
“Person”
means
a
corporation, an association, a partnership, a limited liability company, an
individual, a joint venture, a joint stock company, a trust, an unincorporated
organization or a government or an agency or a political subdivision
thereof.
“PRC”
means
the People’s Republic of China, exclusive of Taiwan, Macau and Hong
Kong.
“Predecessor
Note” of
any
particular Note means every previous Note evidencing all or a portion of the
same Debt as that evidenced by such particular Note; and any Note authenticated
and delivered under Section
2.06
in lieu
of a lost, destroyed or stolen Note shall be deemed to evidence the same Debt
as
the lost, destroyed or stolen Note.
“Preferred
Stock”
means
any Capital Stock of a Person, however designated, which entitles the holder
thereof to a preference with respect to the payment of dividends, or as to
the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of any other class of Capital Stock
issued by such Person.
“Preferred
Stock Dividends”
means
all dividends with respect to Preferred Stock of the Company’s Subsidiaries held
by Persons other than the Company or any of its Wholly Owned Subsidiaries.
The
amount of any such dividend shall be equal to the quotient of such dividend
divided by the difference between one and the maximum statutory federal income
rate (expressed as a decimal number between 1 and 0) then applicable to the
issuer of such Preferred Stock.
“pro
forma”
means,
with respect to any calculation made or required to be made pursuant to the
terms hereof, a calculation performed in accordance with Article 11 of
Regulation S-X promulgated under the Securities Act, as interpreted in good
faith by the Board of Directors after consultation with the independent
certified public accountants of the Company, or otherwise a calculation made
in
good faith by the Board of Directors after consultation with the independent
certified public accountants of the Company, as the case may be.
23
“Property”
means,
with respect to any Person, any interest of such Person in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible, including
intellectual property rights and Capital Stock in, and other securities of,
any
other Person. For purposes of any calculation required pursuant to this
Indenture, the value of any Property shall be its Fair Market
Value.
“Redemption
Price”
means
the amount calculated in accordance with the following formula, rounded (if
necessary) to two decimal places with 0.005 being rounded upwards:
Redemption
Price = I x (1 + r/4)d/90
|
||
Where:
|
||
I
|
=
|
Issue
price (100% of principal amount) of the Notes;
|
r
|
=
|
15.0%
expressed as a decimal; and
|
d
|
=
|
number
of days from and including the Issue Date to but excluding, the date
for
redemption or repurchase, calculated on the basis of a 360-day year
consisting of 12 months of 30 days each, and in the case of an incomplete
month, the actual number of days
elapsed.
|
For
the
avoidance of doubt, if the date fixed for redemption is one of the following
quarter-annual dates, the Redemption Price for each US$100,000 principal amount
shall be as set out in the table below in respect of such quarter-annual
date:
Quarter-annual
Date
|
Redemption
Price (US$)
|
|
July
24, 2007
|
US$103,750.00
|
|
October
24, 2007
|
$107,640.63
|
|
January
24, 2008
|
$111,677.15
|
|
April
24, 2008
|
$115,865.04
|
|
July
24, 2008
|
$120,209.98
|
|
October
24, 2008
|
$124,717.85
|
|
January
24, 2009
|
$129,394.77
|
|
April
24, 2009
|
$134,247.08
|
|
July
24, 2009
|
$139,281.34
|
|
October
24, 2009
|
$144,504.39
|
|
January
24, 2010
|
$149,923.31
|
|
April
24, 2010
|
$155,545.43
|
|
July
24, 2010
|
$161,378.39
|
|
October
24, 2010
|
$167,430.08
|
|
January
24, 2011
|
$173,708.70
|
|
April
24, 2011
|
$180,222.78
|
|
July
24, 2011
|
$186,981.13
|
|
October
24, 2011
|
$193,992.93
|
|
January
24, 2012
|
$201,267.66
|
|
April
24, 2012
|
$208,815.20
|
24
“Refinance”
means,
in respect of any Debt, to refinance, extend, renew, refund or Repay (in whole
or in part), or to issue other Debt, in exchange or replacement for (in whole
or
in part), such Debt. “Refinanced” and “Refinancing” shall have correlative
meanings.
“Related
Business”
means
the manufacturing, distributing, installing and maintaining security,
surveillance, fire and alarm products and systems, and other products or systems
in the similar nature.
“Repay”
means,
in respect of any Debt, to repay, prepay, repurchase, redeem, legally defease
or
otherwise retire such Debt. “Repayment” and “Repaid” shall have correlative
meanings. For purposes of Section
4.12
and the
definition of “Leverage Ratio,” Debt shall be considered to have been Repaid
only to the extent the related loan commitment, if any, shall have been
permanently reduced in connection therewith.
“Repurchase
Amount”
means,
with respect to any Note, the Redemption Price plus
any
accrued and unpaid Interest on such Note (including post-petition interest
in
any proceeding under any Bankruptcy Law) and interest accrued on overdue
principal (and, to the extent lawful, on overdue installments of interest)
and
premium, if any, at a rate that is 5% per annum in excess of the rate of
Interest then in effect.
“Responsible
Officer”
shall
mean, when used with respect to the Trustee, any officer within the corporate
trust department of the Trustee with direct responsibility for the
administration of this Indenture.
“Restricted
Payment”
means:
(a)
any
dividend or distribution (whether made in cash, securities or other Property)
declared or paid on or with respect to any shares of Capital Stock of the
Company or any of its Subsidiaries (including any payment in connection with
any
merger or consolidation with or into the Company or any of its Subsidiaries),
except for any dividend or distribution that is made solely to the Company
or
any of its Subsidiaries (and, if such Subsidiary is not a Wholly Owned
Subsidiary, to the other shareholders of such Subsidiary on a pro
rata basis
or
on a basis that results in the receipt by the Company or any of its Subsidiaries
of dividends or distributions of greater value than it would receive on a
pro
rata basis)
or
any dividend or distribution payable solely in shares of Capital Stock (other
than Disqualified Stock) of the Company;
(b)
the
purchase, repurchase, redemption, acquisition or retirement for value of any
Capital Stock of the Company or any of its Subsidiaries (other than from the
Company or any of its Subsidiaries) or any securities exchangeable for or
convertible into any such Capital Stock, including the exercise of any option
to
exchange any Capital Stock (other than for or into Capital Stock of the Company
that is not Disqualified Stock);
(c)
the
purchase, repurchase, redemption, acquisition or retirement for value, prior
to
the date for any scheduled maturity, sinking fund or amortization or other
installment payment, of any Subordinated Obligation (other than the purchase,
repurchase or other acquisition of any Subordinated Obligation purchased in
anticipation of satisfying a scheduled maturity, sinking fund or amortization
or
other installment obligation, in each case due within one year of the date
of
acquisition); or
25
(d)
any
Investment (other than Permitted Investments) in any Person.
“RMB”
means
the lawful currency of the PRC.
“S&P”
means
Standard & Poor’s Ratings Services, a division of McGraw Hill, Inc., or any
successor to the rating agency business thereof.
“Safetech” means
China Safetech Holdings Limited, a wholly-owned subsidiary of the Company,
incorporated under the laws of British Virgin Islands.
“Sale
and Leaseback Transaction”
means
any direct or indirect arrangement relating to Property now owned or hereafter
acquired whereby the Company or any of its Subsidiaries transfers such Property
to another Person and the Company or any of its Subsidiaries leases it from
such
Person.
“Securities
Act”
means
the U.S. Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, as in effect from time to time.
“Senior
Debt”
of
the
Company means:
(a)
all
obligations consisting of the principal, premium, if any, and accrued and unpaid
interest (including interest accruing on or after the filing of any petition
in
bankruptcy or for reorganization relating to the Company whether or not such
post-filing interest is allowed in such proceeding) in respect of:
(1)
Debt
of the Company for borrowed money, and
(2)
Debt
of the Company evidenced by notes, debentures, bonds or other similar
instruments permitted under this Indenture for the payment of which the Company
is responsible or liable;
(b)
all
Capital Lease Obligations of the Company and all Attributable Debt in respect
of
Sale and Leaseback Transactions entered into by the Company;
(c)
all
obligations of the Company
(1)
for
the reimbursement of any obligor on any letter of credit, banker’s acceptance or
similar credit transaction,
(2)
under
Hedging Obligations, or
(3)
issued or assumed as the deferred purchase price of Property and all conditional
sale obligations of the Company and all obligations under any title retention
agreement permitted under this Indenture; and
26
(d)
all
obligations of other Persons of the type referred to in clauses (a), (b) and
(c)
for the payment of which the Company is responsible or liable as
Guarantor;
provided,
however,
that
Senior Debt shall not include:
(A)
Debt
of
the Company that is by its terms subordinate in right of payment to the
Notes,
including any
Subordinated Obligations;
(B)
any
Debt
Incurred in violation of the provisions of this Indenture;
(C)
accounts
payable or any other obligations of the Company to trade creditors created
or
assumed by the Company in the ordinary course of business in connection with
the
obtaining of materials or services (including Guarantees thereof or instruments
evidencing such liabilities);
(D)
any
liability for U.S. federal, state, national, provincial, local or other taxes
owed or owing by the Company;
(E)
any
obligation of the Company to any of its Subsidiaries; or
(F)
any
obligations with respect to any Capital Stock of the Company.
To
the
extent that any payment of Senior Debt (whether by or on behalf of the Company
as proceeds of security or enforcement or any right of setoff or otherwise)
is
declared to be fraudulent or preferential, set aside or required to be paid
to a
trustee, receiver or other similar party under any bankruptcy, insolvency,
receivership or similar law, then if such payment is recovered by, or paid
over
to, such trustee, receiver or other similar party, the Senior Debt or part
thereof originally intended to be satisfied shall be deemed to be reinstated
and
outstanding as if such payment had not occurred.
“Senior
Debt” of any Guarantor has a correlative meaning.
“Shareholders”
means
Mr. Tu Xxx Xxxx, Ms. Xx Xxx Xxx, and Whitehorse Technology Limited, a British
Virgin Islands company wholly-owned by Mr. Tu Xxx Xxxx.
“Significant
Subsidiary”
means
any Subsidiary that would be a “significant subsidiary” of the Company within
the meaning of Rule 1-02 under Regulation S-X promulgated by the
Commission.
“Stated
Maturity”
means,
with respect to any installment of interest or principal on any series of Debt
(including, without limitation, a scheduled repayment or a scheduled sinking
fund payment), the date on which the payment of interest or principal was
scheduled to be paid in the original documentation governing such Debt, and
will
not include any contingent obligations to repay, redeem or repurchase any such
interest or principal prior to the date originally scheduled for the payment
hereof.
“Subordinated
Obligation”
means
any Debt of the Company or any Guarantor (whether outstanding on the Issue
Date
or thereafter Incurred) that is subordinate or junior in right of payment to
the
Notes or the applicable Guarantee pursuant to a written agreement to that
effect.
27
“Subsidiary,”
with
respect to any Person, means (i) any corporation of which the outstanding
Capital Stock having a majority of the votes entitled to be cast in the election
of directors under ordinary circumstances shall at the time be owned, directly
or indirectly, through one or more intermediaries, by such Person or (ii) any
other Person of which a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, through one or more
intermediaries, owned by such Person.
“Surviving
Person”
means
the surviving Person formed by a merger, consolidation or amalgamation and,
for
purposes of Section
5.01,
a
Person to whom all or substantially all of the Property of the Company or a
Guarantor is sold, transferred, assigned, leased, conveyed or otherwise
disposed.
“Tax
Original Issue Discount”
means
the amount of ordinary interest income on a Note that must be accrued as
original issue discount for United States federal income tax
purposes.
“Termination
of Trading”
will
be
deemed to have occurred if, (i) the Common Stock (or other common stock,
depositary receipts, ordinary shares or other certificates representing common
equity interests into which the Notes are then convertible) is neither listed
for trading on a United States national securities exchange, listed for trading
on a United States national or regional securities exchange nor approved for
trading on any of the Nasdaq’s Capital Market, Global Market, Global Select
Market or the OTC Bulletin Board, (ii) trading in the Common Stock on any such
exchange or market has been suspended for thirty or more consecutive Trading
Days, or (iii) a transaction or event (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) occurs in connection with which all or
substantially all of the Common Stock is exchanged for, converted into, or
acquired for, consideration which is not all or substantially all common stock,
depositary receipts, ordinary shares or other certificates representing common
equity interests that are (or, upon consummation of or immediately following
such transaction or event, will be) listed on a United States national
securities exchange or approved (or, upon consummation of or immediately
following such transaction or event, will be approved) for quotation on the
Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market, the
OTC Bulletin Board or any similar United States system of automated
dissemination of quotations of securities prices.
“Transaction
Document”
means
this Indenture, the Notes, the Guarantees, Notes Purchase Agreement, the Amended
Investor Rights Agreement, certain Non-Competition Covenant and Agreement dated
February 16, 2007 by and between Citadel Equity Fund Ltd. and Mr. Tu Xxx Xxxx,
or any of them as the context may so require.
“Trading
Day”
shall
mean (x) if the applicable security is quoted on the Nasdaq National Market,
a
day on which trades may be made thereon, (y) if the applicable security is
listed or admitted for trading on the American Stock Exchange, New York Stock
Exchange or another national securities exchange, a day on which the American
Stock Exchange, New York Stock Exchange or another national securities exchange
is open for business, or (z) 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.
28
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq Capital Market, the American
Stock Exchange, the New York Stock Exchange, the Nasdaq Global Market, the
Nasdaq Global Select Market or the OTC Bulletin Board.
“Trading
Reference VWAP”
means,
as of February 16 or August 16 of each year, the simple arithmetic average
of
the VWAPs as shown on Bloomberg for the forty-five Trading Days preceding such
February 16 or August 16, as the case may be, as proportionally adjusted for
any
subdivision, consolidation, reclassification or similar event of the Shares;
provided
that if
the actual Trading Reference VWAP be less than $9.00, the Trading Reference
VWAP
shall be deemed to be exactly $9.00.
“Trustee”
means
the Person named as the “Trustee” in the first paragraph of this instrument
until a successor Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter “Trustee” shall mean such successor
Trustee.
“U.S.
Government Securities”
means
direct obligations (or certificates representing an ownership interest in such
obligations) of the United States of America (including any agency or
instrumentality thereof) for the payment of which the full faith and credit
of
the United States of America are pledged and which are not callable or
redeemable at the issuer’s option.
“Voting
Stock”
of
any
Person means all classes of Capital Stock or other interests (including
partnership interests) of such Person then outstanding and normally entitled
(without regard to the occurrence of any contingency) to vote in the election
of
directors, managers or trustees thereof.
“VWAP”
means,
for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the daily volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the Trading Market on which the Common Stock
is
then listed or quoted for trading as reported by Bloomberg Financial L.P.
through its “Volume at Price” functions (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin
Board is not a Trading Market, the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC Bulletin Board;
or (c) if the Common Stock is not then quoted for trading on the OTC Bulletin
Board and if prices for the Common Stock are then reported in the “Pink Sheets”
published by Pink Sheets, LLC (or a similar organization or agency succeeding
to
its functions of reporting prices), the average of the highest closing bid
price
and lowest closing ask price of any of the market makers for such security
as
reported, and in each of the foregoing clauses ignoring any block trade (which
for purposes of this definition means any transfer of more than 100,000 shares).
If the VWAP cannot be calculated for such security on such date on any of the
foregoing bases, the VWAP
of such
security on such date shall be the fair market value as mutually determined
by
the Company and the Noteholders of at least a majority in aggregate principal
amount of the Notes then outstanding.
“Wholly
Owned Subsidiary”
means,
at any time, a Subsidiary all the Voting Stock of which (except directors’
qualifying shares) is at such time owned, directly or indirectly, by the Company
and its other Wholly Owned Subsidiaries.
29
Section
1.02. Other
Definitions.
Term
|
Defined
in
Section
|
“Adjustment
Event”
|
14.05(m)
|
“Affiliate
Transaction”
|
4.14
|
“Allocable
Excess Proceeds”
|
4.12
|
“Asset
Sale Offer”
|
4.12
|
“Authentication
Order”
|
2.04
|
“Benefited
Party”
|
9.01
|
“Change
of Control Offer”
|
4.17
|
“Conversion
Date”
|
14.02
|
“Conversion
Notice”
|
14.02
|
“Conversion
Rate”
|
14.04
|
“Current
Market Price”
|
14.05
|
“Determination
Date”
|
14.05(m)
|
“Event
of Default”
|
6.01
|
“Excess
Proceeds”
|
4.12
|
“Expiration
Time”
|
14.05(f)
|
“Future
Guarantor”
|
9.03
|
“Interest
Payment Date”
|
2.03
|
“Non-electing
share”
|
14.06
|
“Offer
Amount”
|
3.02(b)
|
“Offer
Period”
|
3.02(c)
|
“Offer
to Purchase”
|
3.02(a)
|
“Paying
Agent”
|
4.02
|
“Purchase
Date”
|
3.02(c)
|
“Purchase
Price”
|
3.02(b)
|
“Purchased
Shares”
|
14.05(f)
|
“Record
Date”
|
14.05(i)
|
“Registrar”
|
4.02
|
“Securities”
|
14.05(d)
|
“Security
Register”
|
4.02
|
“Termination
of Trading
Offer”
|
4.23
|
“Trading
Day”
|
14.05(i)
|
“Trigger
Event”
|
14.05(d)
|
“2010
Mandatory Conversion Trigger”
|
14.07
|
“2011
Mandatory Conversion Trigger”
|
14.07
|
“45-day
VWAP”
|
14.07
|
Section
1.03. Rules
of Construction.
(a) Unless
the context otherwise requires:
(i) a
term
has the meaning assigned to it;
30
(ii) an
accounting term not otherwise defined herein has the meaning assigned to it
in
accordance with GAAP;
(iii) “or”
is
not exclusive;
(iv) words
in
the singular include the plural, and in the plural include the
singular;
(v) all
references in this instrument to “Articles,” “Sections” and other subdivisions
are to the designated Articles, Sections and subdivisions of this instrument
as
originally executed;
(vi) the
words
“herein,” “hereof” and “hereunder” and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision.
(vii) “including”
means “including without limitation;”
(viii) provisions
apply to successive events and transactions;
(ix) “$”
means
the lawful currency of the United States of America; and
(x) references
to sections of or rules under the Securities Act or the Exchange Act shall
be
deemed to include substitute, replacement or successor sections or rules adopted
by the Commission from time to time thereunder.
ARTICLE
2
ISSUE,
DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
Section
2.01. Designation
Amount and Issue of Notes.
The
Notes
shall be designated as “1.0% Guaranteed Senior Unsecured Convertible Notes due
2012”. Notes not to exceed the aggregate principal amount of $50,000,000 (except
pursuant to Sections
2.05
and
2.06
hereof)
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 deliver said Notes to or upon the
written order of the Company, signed by its Chairman of the Board, Chief
Executive Officer, President or any Vice President (whether or not designated
by
a number or numbers or word or words added before or after the title “Vice
President”), the Treasurer or any Assistant Treasurer or the Secretary or
Assistant Secretary, without any further action by the Company hereunder.
Section
2.02. Form
of Notes.
(a) The
Notes
and the Trustee’s certificate of authentication to be borne by such Notes shall
be substantially in the form set forth in Exhibit
A.
The
terms and provisions contained in the form of Note attached as Exhibit
A
hereto
shall constitute, and are hereby expressly made, a part of this Indenture and,
to the extent applicable, the Company, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
31
(b) Any
of
the Notes may have such letters, numbers or other marks of identification and
such notations, legends, endorsements or changes as the 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 by the Custodian, the Common Depositary or as may be required to comply
with any applicable law or with any rule or regulation made pursuant thereto
or
with any rule or regulation of any securities exchange or automated quotation
system on which the Notes may be listed, or to conform to usage, or to indicate
any special limitations or restrictions to which any particular Notes are
subject.
(c) So
long
as the Notes are eligible for book-entry settlement with the Common Depositary,
or unless otherwise required by law, or otherwise contemplated by Section
2.05(a),
all of
the Notes will be represented by one or more Notes in global form registered
in
the name of the Common Depositary or the nominee of the Common Depositary.
The
transfer and exchange of beneficial interests in any such Global Note shall
be
effected through the Common Depositary in accordance with this Indenture and
the
applicable procedures of the Common Depositary. Except as provided in
Section
2.05(a),
beneficial owners of a Global Note shall not be entitled to have certificates
registered in their names, will not receive or be entitled to receive physical
delivery of certificates in definitive form and will not be considered holders
of such Global Note.
(d) 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 redemptions, repurchases, conversions, 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 instructions given by the
holder of such Notes in accordance with this Indenture. Payment of principal
of,
premium, if any, and Interest on any Global Note shall be made to the holder
of
such Note.
(e) This
Section
2.02(e)
shall
apply only to Global Notes deposited with the Trustee, as custodian for the
Common Depositary. Participants shall have no rights under this Indenture or
any
Global Note with respect to any Global Note held on their behalf by the Common
Depositary or by the Trustee as custodian for the Common Depositary, and the
Common Depositary shall be treated by the Company, the Trustee and any agent
of
the Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished
by
the Common Depositary or impair, as between the Common Depositary and its
Participants, the Applicable Procedures or the operation of customary practices
of the Common Depositary governing the exercise of the rights of a holder of
a
beneficial interest in any Global Note.
32
The
provisions of the “Terms and Conditions Governing Use of Euroclear” and the
“General Terms and Conditions of Clearstream” and “Customer Handbook” of
Clearstream shall be applicable to transfers of beneficial interests in Global
Notes that are held by Participants through Euroclear or
Clearstream.
The
Company shall exchange Global Notes for Definitive Notes if: (1) at any time
either Euroclear or Clearstream or any alternative clearing agency on behalf
of
which the Notes evidenced by the Global Note may be held is closed for business
for a continuous period of 14 days (other than reason of holidays, statutory
or
otherwise) or announces an intention permanently to cease business or does
in
fact do so, and, in either case, the Company shall not have appointed a
successor Common Depositary within 90 days after the Company receives such
notice or becomes aware of such ineligibility, or (2) upon written request
of a
holder or the Trustee if a Default or Event of Default shall have occurred
and
be continuing.
Upon
the
occurrence of any of the events set forth in clauses (1) or (2) of the
immediately preceding paragraph, the Company shall execute, and, upon receipt
of
an Authentication Order in accordance with Section
2.04
hereof,
the Trustee shall authenticate and deliver, Definitive Notes, in authorized
denominations, in an aggregate principal amount equal to the principal amount
of
the Global Notes in exchange for such Global Notes.
Upon
the
exchange of a Global Note for Definitive Notes, such Global Note shall be
cancelled by the Trustee or an agent of the Company or the Trustee. Definitive
Notes issued in exchange for a Global Note pursuant to this Section shall be
registered in such names and in such authorized denominations as the Common
Depositary, pursuant to instructions from its Participants or its Applicable
Procedures, shall instruct the Trustee or an agent of the Company or the Trustee
in writing. The Trustee or such agent shall deliver such Definitive Notes to
or
as directed by the Persons in whose names such Definitive Notes are so
registered or to the Common Depositary.
Section
2.03. Date
and Denomination of Notes; Payments of Interest.
The
Notes
shall be issuable in registered form without coupons in denominations of
$100,000 principal amount and integral multiples thereof. Each Note shall be
dated the date of its authentication and shall bear Interest from the date
specified on the face of the form of Note attached as Exhibit
A
hereto.
Interest on the Notes shall be computed on the basis of a 360-day year comprised
of twelve 30-day months.
The
Person in whose name any Note (or its Predecessor Note) is registered on the
Security Register at the close of business on any record date with respect
to
any interest payment date shall be entitled to receive the Interest payable
on
such interest payment date, except that the Interest payable upon redemption
or
repurchase will be payable to the Person to whom principal is payable pursuant
to such redemption or repurchase (unless the redemption date or the repurchase
date, as the case may be, falls after a record date and on or prior to the
corresponding interest payment date, in which case accrued and unpaid Interest
to, but excluding, such redemption date or repurchase date shall be payable
on
such interest payment date to the holders of such Notes registered as such
on
the applicable record date).
33
Notwithstanding
the foregoing, if any Note (or portion thereof) is converted into Common Stock
during the period after a record date for the payment of Interest to, but
excluding, the next succeeding interest payment date and such Note (or portion
thereof) has been called or tendered for redemption on a redemption date which
occurs during such period, the Company shall not be required to pay interest
on
such interest payment date in respect of any such Note (or portion thereof).
Interest shall be payable at the office of the Company maintained by the Company
for such purposes in the City of New York, which shall initially be an office
or
agency of the Trustee. The Company shall pay Interest (i) on any Notes in
certificated form by (x) check mailed to the address of the Person entitled
thereto as it appears in the Security Register (or upon written notice, by
wire
transfer in immediately available funds, if such Person is entitled to Interest
on aggregate principal in excess of $1 million) or (y) by transfer to an account
maintained by such person in the City of New York or
(ii)
on any Global Note by wire transfer of immediately available funds to the
account of the Common Depositary or its nominee. The term “record date” with
respect to any interest payment date shall mean the April 10 or October 10
preceding the applicable April 24 or October 24 interest payment date (each,
an
“Interest
Payment Date”),
respectively.
Section
2.04. Execution
of Notes.
The
Notes
shall be signed in the name and on behalf of the Company by the manual or
facsimile signature of its Chairman of the Board, Chief Executive Officer,
President or any Vice President (whether or not designated by a number or
numbers or word or words added before or after the title “Vice President”) and
attested by the manual or facsimile signature of its Secretary or any of its
Assistant Secretaries or its Treasurer or any of its Assistant Treasurers (which
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 form of Note attached
as Exhibit
A
hereto upon
a
written order of the Company signed by an Officer (an “Authentication
Order”),
manually executed by the Trustee (or an authenticating agent appointed by the
Trustee as provided by Section
15.10),
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.
Section
2.05. Exchange
and Registration of Transfer of Notes; Restrictions on Transfer.
(a) As
provided herein, interests in a Global Note will be exchanged, upon 45 days’
notice by a holder of an interest in such Global Note for Definitive Notes.
Each
Global Note shall be deposited with the Common Depositary, which shall hold
such
Global Note in safe custody for the account of Euroclear and/or Clearstream
and
instruct Euroclear or Clearstream or both of them, as the case may be, to credit
the principal amounts of the Notes represented by such Global Note to the
holder’s distribution account with Euroclear or Clearstream. Each relevant
Global Note shall be exchangeable in whole for an interest, equal to the
principal amount of such Global Note being exchanged, for Definitive Notes
in
the same principal amount, upon request of Euroclear or Clearstream to the
Registrar, but only upon delivery by Euroclear or Clearstream, acting on behalf
of the beneficial owners of such interests, to the Registrar at its principal
office in the City of New York, of certificates substantially in the form of
Exhibit
C
hereto.
The delivery to the Registrar of any certificate in the form referred to above
may be relied upon by the Company, the Trustee and the Registrar as conclusive
evidence that related certificates have been delivered to Euroclear or
Clearstream as contemplated by the terms of this Section.
34
(b) In
accordance with the terms of a Global Note and this Indenture, the Registrar
shall deliver at the cost of the Company, upon not less than 45 days’ notice to
the Registrar by Euroclear or Clearstream, the relevant Definitive Notes in
exchange for interests in such Global Note. For this purpose, the Registrar
is
authorized and it shall (A) authenticate each such Definitive Note and (B)
deliver each such Definitive Note to or to the order of Euroclear or
Clearstream, in exchange for interests in such Global Note. The Registrar shall
promptly notify the Company upon receipt of a request for issue of Definitive
Notes the aggregate principal amount of the relevant Global Note to be exchanged
in connection therewith. The Company undertakes to deliver to, or to the order
of, the Registrar sufficient numbers of duly executed Definitive Notes to enable
the Registrar to comply with its obligations under this Section
2.05(b).
Such
exchange shall be made free of charge to the holder and the beneficial owners
of
the relevant Global Note and to the holders of the Definitive Notes issued
in
exchange as provided above, except that a Person receiving Definitive Notes
must
bear the cost of insurance, postage, transportation and the like in the event
that such Person does not receive such Definitive Notes in person at the offices
of a Registrar. Notwithstanding the above, interests in a Global Note shall
be
exchangeable in whole (but not in part) at the cost of the Company for
Definitive Notes under the conditions described in Section
2.02(e).
(c) Upon
any
exchange of an interest in a Global Note for Definitive Notes, the relevant
Global Note shall be endorsed by the Trustee or the Registrar to reflect the
reduction of its principal amount by the aggregate principal amount so
exchanged. Until exchanged in full, the holder of any interest in any Global
Note shall in all respects be entitled to the same benefits under this Indenture
as Definitive Notes authenticated and delivered hereunder. Once exchanged in
full, a Global Note shall be canceled and disposed of by the Trustee in
accordance with its customary procedures and a certificate of disposition will
be sent to the Company.
(d) The
Trustee or the Registrar shall cause all Global Notes and Definitive Notes
delivered to it and held by it hereunder to be maintained in safe custody in
accordance with this Section.
(e) The
Security Register shall be in written form in the English language and shall
include a record of the certificate number of each Note that has been issued,
and shall show the amount of such Notes, the date of issue, all subsequent
transfers and changes in ownership in respect thereof and the names, tax
identifying numbers (if relevant to a specific holder), addresses of the holders
of the Notes and any payment instructions with respect thereto (if different
from a holder’s registered address).
35
(f) The
Registrar shall at all reasonable times during office hours make the Security
Register available to the Trustee, the Paying Agent, the Company and the holders
of such Notes or any person authorized by the Company in writing for inspection
and for taking of copies thereof or extracts therefrom, and at the expense
of
the Company, the Registrar shall deliver to such persons all lists of holders
of
such Notes, their addresses, amounts of such holdings and other details as
they
may request.
(g) The
Registrar shall handle all requests for the registration of transfer, or
exchange, repurchase or conversion, of Notes and receive certificates for the
Notes deposited with the transfer agent for transfer, or exchange, repurchase
or
conversion, and in doing so, shall ensure that every Note presented or
surrendered for registration of transfer, or exchange, repurchase or conversion,
(if so required by the Company, the Trustee, the Paying Agent or the Registrar)
be duly endorsed by, or be accompanied by a written instrument or instruments
of
transfer (in form satisfactory to the Company and the Registrar) duly executed
by the holder thereof or by such holder’s attorney duly authorized in
writing.
(h) Neither
the Company nor the Trustee nor any Registrar shall be required to exchange
or
register a transfer of (a) any Notes or portions thereof surrendered for
conversion pursuant to Article
14
or (b)
any Notes or portions thereof tendered for purchase pursuant to Section
3.02
(and not
withdrawn).
(i) Until
the
expiration of the holding period applicable to sales thereof under Rule 144(k)
under the Securities Act (or any successor provision), any certificate
evidencing such Note (and all securities issued in exchange therefor or
substitution thereof, other than Common Stock, if any, issued upon conversion
thereof, which shall bear the legend set forth in Exhibit
D,
if
applicable) shall bear a legend set forth in Exhibit
A,
unless
such Note has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer) or pursuant to Rule 144 under the Securities
Act
or any similar provision then in force, or unless otherwise agreed by the
Company in writing, with written notice thereof to the Trustee.
(j) Any
stock
certificate representing Common Stock issued upon conversion of such Note shall
bear a legend substantially in the form of Exhibit
D.
(k) The
Trustee and the Registrar shall be entitled to treat a telephone, telex or
facsimile communication from a person purporting to be (and who the Trustee
or
the Registrar believe in good faith to be) the authorized representative of
the
Company, named in a list furnished to the Trustee and the Registrar from time
to
time, as sufficient instructions and authority of the Company for the Trustee
and the Registrar to act in accordance with this Section.
(l) Title
to
the Notes shall pass by delivery. However, title to Notes issued in the form
of
Global Notes held through Euroclear and Clearstream shall be transferable only
in accordance with the rules and procedures of Euroclear and Clearstream, as
appropriate.
36
Section
2.06. 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 written 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. 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 for 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.
Following
receipt by the Trustee or such authenticating agent, as the case may be, of
satisfactory security or indemnity and evidence, as described in the preceding
paragraph, the Trustee or such authenticating agent may authenticate any such
substituted Note and make available for delivery such Note. Upon the issuance
of
any substituted Note, the Company or the Trustee, as the case may be, may
require the payment by the holder of a sum sufficient to cover any tax,
assessment or other governmental charge that may be imposed in relation thereto
and any other expenses connected therewith. In case any Note which has matured
or is about to mature or has been called for redemption or has been tendered
for
repurchase upon a Termination of Trading (and not withdrawn) or is to be
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 for any
loss,
liability, cost or expense caused by or in connection with such substitution,
and, in every case of destruction, loss or theft, the applicant shall also
furnish to the Company, the Trustee and, if applicable, any paying agent or
conversion agent evidence to their satisfaction of the destruction, loss or
theft of such Note and of the ownership thereof.
Every
substitute Note issued pursuant to the provisions of this Section by virtue
of
the fact that any Note 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 found at any time, 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. If, after the delivery of such replacement Note, a protected
purchaser of the original Note in lieu of which such replacement Note was issued
presents for payment, registration or conversion of such original Note, the
Trustee shall be entitled to recover such replacement Note from the Person
to
whom it was delivered or any Person taking therefrom, except a protected
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred
by
the Company, the Trustee and any authenticating agent in connection
therewith.
37
Section
2.07. Temporary
Notes.
Pending
the preparation of Notes in certificated form, the Company may execute and
the
Trustee or an authenticating agent appointed by the Trustee shall, upon the
written request of the Company, authenticate and deliver temporary Notes
(printed or lithographed). Temporary Notes shall be issuable in any authorized
denomination, and substantially in the form of the Notes in certificated form,
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 Notes in certificated form. Without
unreasonable delay, the Company will execute and deliver to the Trustee or
such
authenticating agent Notes in certificated form and thereupon any or all
temporary Notes may be surrendered in exchange therefor, at each office or
agency maintained by the Company pursuant to Section
4.02
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 Notes in certificated form. 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 Notes in certificated
form authenticated and delivered hereunder.
Section
2.08. Cancellation
of Notes.
All
Notes
surrendered for the purpose of payment, redemption, repurchase, conversion,
exchange or registration of transfer shall, if surrendered to the Company or
any
paying agent or any Registrar or any conversion agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered 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. The Trustee
shall dispose of such canceled Notes in accordance with its customary
procedures. If the Company shall acquire any of the Notes, such acquisition
shall not operate as a redemption, repurchase or satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.
Section
2.09. Defaulted
Interest.
If
the
Company defaults in a payment of interest on the Notes, it shall pay the
defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section
4.01
hereof.
The Company shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment.
The Company shall fix or cause to be fixed each such special record date and
payment date; provided
that no
such special record date shall be less than 10 days prior to the related
Interest Payment Date for such defaulted interest. At least 15 days before
the
special record date, the Company (or, upon the written request of the Company,
the Trustee in the name and at the expense of the Company) shall mail or cause
to be mailed to holders a notice that states the special record date, the
related Interest Payment Date and the amount of such interest to be
paid.
38
Section
2.10. ISIN
Numbers.
The
Company in issuing the Notes may use ISIN numbers (if then generally in use),
and, if so, the Trustee shall use ISIN numbers in notices of redemption or
repurchases as a convenience to Noteholders; 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 contained in any notice of
a
redemption or a repurchase and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption or
repurchase shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee in writing of any change in the
ISIN numbers.
ARTICLE
3
REDEMPTION
AND REPURCHASE OF NOTES
Section
3.01. Redemption
at Maturity.
Unless
previously redeemed or converted or purchased and cancelled, the Company shall
redeem the Notes at the Repurchase Amount on April 24, 2012.
The
Notes
may not be redeemed at the election of the Company, in whole or in part at
any
time prior to April 24, 2012.
Section
3.02. Offer
to Purchase.
(a) In
the
event that, pursuant to Section
4.12,
Section
4.17
or
Section
4.23
hereof,
the Company shall be required to commence an Asset Sale Offer, a Change of
Control Offer or a Termination of Trading Offer (each of the foregoing, an
“Offer
to Purchase”),
respectively, it shall follow the procedures specified below.
(b) The
Company shall commence the Offer to Purchase by sending, by first-class mail,
with a copy to the Trustee, to each holder at such holder’s address appearing in
the Security Register, a notice the terms of which shall govern the Offer to
Purchase stating:
(i) that
the
Offer to Purchase is being made pursuant to this Section and Section
4.12,
Section
4.17
or
Section
4.23,
as the
case may be, and, in the case of a Change of Control Offer or Termination of
Trading Offer, that such event has occurred, the circumstances and relevant
facts regarding such event and that a Change of Control Offer or Termination
of
Trading Offer is being made pursuant to Section
4.17
or
Section
4.23,
respectively;
(ii) the
principal amount of Notes required to be purchased pursuant to Section
4.12,
Section
4.17
or
Section
4.23,
as the
case may be (the “Offer
Amount”),
the
purchase price set forth in Section
4.12,
Section
4.17
or
Section
4.23,
as
applicable (the “Purchase
Price”),
the
Offer Period and the Purchase Date (each as defined below);
(iii) except
as
provided in clause (ix), that all Notes timely tendered and not withdrawn shall
be accepted for payment;
39
(iv) that
any
Note not tendered or accepted for payment shall continue to accrue
interest;
(v) that,
unless the Company defaults in making such payment, any Note accepted for
payment pursuant to the Offer to Purchase shall cease to accrue interest after
the Purchase Date;
(vi) that
holders electing to have a Note purchased pursuant to an Offer to Purchase
may
elect to have Notes purchased in integral multiples of $100,000
only;
(vii) that
holders electing to have a Note purchased pursuant to any Offer to Purchase
shall be required to surrender the Note, with the form entitled “Purchase
Notice” on the reverse of the Note completed, or transfer by book-entry
transfer, to the Company, the Common Depositary, if appointed by the Company,
or
a Paying Agent at the address specified in the notice before the close of
business on the third Business Day before the Purchase Date;
(viii) that
holders shall be entitled to withdraw their election if the Company, the Common
Depositary or the Paying Agent, as the case may be, receives, not later than
the
expiration of the Offer Period, a telegram, facsimile transmission or letter
setting forth the name of the holder, the principal amount of the Note (or
portions thereof) the holder delivered for purchase and a statement that such
holder is withdrawing his election to have such Note purchased;
(ix) that,
in
the case of an Asset Sale Offer, if the aggregate principal amount of Notes
surrendered by holders exceeds the Offer Amount, the Company shall select the
Notes to be purchased on a pro
rata
basis
(with such adjustments as may be deemed appropriate by the Company so that
only
Notes in denominations of $100,000 or integral multiples thereof shall be
purchased);
(x) that
holders whose Notes were purchased in part shall be issued new Notes equal
in
principal amount to the unpurchased portion of the Notes surrendered (or
transferred by book-entry transfer); and
(xi) any
other
procedures the holders must follow in order to tender their Notes (or portions
thereof) for payment and the procedures that holders must follow in order to
withdraw an election to tender Notes (or portions thereof) for
payment.
(c) The
Offer
to Purchase shall remain open for a period of at least 30 days but no more
than
60 days following its commencement, except to the extent that a longer period
is
required by applicable law (the “Offer
Period”).
No
later than five (5) Business Days (and in any event no later than the 60th
day
following any Change of Control or Termination of Trading) after the termination
of the Offer Period (the “Purchase
Date”),
the
Company shall purchase the Offer Amount or, if less than the Offer Amount has
been tendered, all Notes tendered in response to the Offer to Purchase. Payment
for any Notes so purchased shall be made in the same manner as interest payments
are made. The Company shall publicly announce the results of the Offer to
Purchase on the Purchase Date.
40
(d) On
or
prior to the Purchase Date, the Company shall, to the extent
lawful:
(i) accept
for payment (on a pro
rata
basis to
the extent necessary in connection with an Asset Sale Offer) from each tendering
holder, the Offer Amount of Notes or portions of Notes properly tendered and
not
withdrawn pursuant to the Offer to Purchase, or if less than the Offer Amount
has been tendered, all Notes tendered; and
(ii) surrender
to the Trustee the Notes properly accepted to be cancelled by the Trustee in
accordance Section
2.08
hereof,
together with an Officers’ Certificate stating the aggregate principal amount of
Notes or portions of Notes being purchased by the Company and that such Notes
or
portions thereof were accepted for payment by the Company in accordance with
the
terms of this Section.
(e) Upon
receipt of the Notes in accordance with Section
3.02(d)(i),
the
Company shall promptly, and in any event within (1) Business Day after the
Purchase Date, deliver to each tendering holder the Purchase Price. In the
event
that any portion of the Notes surrendered is not purchased by the Company,
the
Company shall promptly execute and issue a new Note in a principal amount equal
to such unpurchased portion of the Note surrendered, and, upon receipt of an
Authentication Order in accordance with Section
2.04
hereof,
the Trustee shall authenticate and deliver (or cause to be transferred by
book-entry) such new Note to such holder, in a principal amount equal to any
unpurchased portion of the Note surrendered; provided,
however,
that
each such new Note shall be in a principal amount of $100,000 or an integral
multiple thereof. Any Note not so accepted shall be promptly mailed or delivered
by the Company to the holder thereof.
(f) If
the
Purchase Date is on or after a record date for the payment of interest and
on or
before the related Interest Payment Date, any accrued and unpaid Interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date for the payment of interest, and no further
Interest shall be payable to holders who tender Notes pursuant to the Offer
to
Purchase.
(g) The
Company shall comply, to the extent applicable, with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection
with the Offer to Purchase. To the extent that the provisions of any securities
laws or regulations conflict with Section
4.12,
Section
4.17
or
Section
4.23,
as
applicable, this Section or other provisions of this Indenture, the Company
shall comply with applicable securities laws and regulations and shall not
be
deemed to have breached its obligations under Section
4.12,
Section
4.17
or
Section
4.23,
as
applicable, this Section or such other provision by virtue of such
compliance.
ARTICLE
4
PARTICULAR
COVENANTS OF THE COMPANY
Section
4.01. Payment
of Principal and Interest.
The
Company covenants and agrees that it will duly and punctually pay or cause to
be
paid the principal of (including the purchase price upon an Offer to Purchase
or
the repurchase price upon repurchase, in each case pursuant to Article
3)
and
Interest, on each of the Notes at the places, at the respective times and in
the
manner provided herein and in the Notes.
41
The
Company shall pay, from time to time on demand, interest (including
post-petition interest in any proceeding under any Bankruptcy Law) accrued
on
overdue principal and premium, if any, at a rate that is 5% per annum in excess
of the rate then in effect from the due date and ending on the date immediately
preceding the related Interest Payment Date; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods),
from
time to time on demand at the same rate to the extent lawful.
Interest
shall be computed on the basis of a 360-day year of twelve 30-day
months.
Section
4.02. Maintenance
of Office or Agency.
The
Company will maintain an office or agency in the City of New York, where the
Notes may be surrendered for registration of transfer or exchange (“Registrar”)
or for
presentation for payment or for conversion, redemption or repurchase
(“Paying
Agent”)
and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Registrar shall keep a register (the
“Security
Register”)
of the
Notes and of their transfer and exchange. The Company will give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency not designated or appointed by the Trustee. If at any time
the
Company shall fail to maintain any such required office or agency or shall
fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust
Office.
The
Company may also from time to time designate co-registrars and one or more
offices or agencies where the Notes may be presented or surrendered for any
or
all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice of any such designation or rescission
and of any change in the location of any such other office or
agency.
The
Company hereby initially designates the Trustee as paying agent, Registrar,
Custodian and conversion agent and each of the Corporate Trust Office and the
office of agency of the Trustee in City of New York, shall be considered as
one
such office or agency of the Company for each of the aforesaid
purposes.
So
long
as the Trustee is the Registrar, the Trustee agrees to mail, or cause to be
mailed, the notices set forth in Section
7.08(a)
and the
third paragraph of Section
7.09.
If
co-registrars have been appointed in accordance with this Section, the Trustee
shall mail such notices only to the Company and the holders of Notes it can
identify from its records.
Section
4.03. 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 will 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:
42
(i) that
it
will hold all sums held by it as such agent for the payment of the principal
of
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
will 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 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 will forthwith pay to the Trustee all sums so held in
trust.
The
Company shall, on the Business Day prior to each due date of the principal
or
Interest on the Notes, deposit with the paying agent a sum (in funds which
are
immediately available on the due date for such payment) sufficient to pay such
principal or Interest, and (unless such paying agent is the Trustee) the Company
will promptly notify the Trustee in writing of any failure to take such action;
provided
that if
such deposit is made on the due date, such deposit shall be received by the
paying agent by 10:00 a.m. New York City time, on such date.
(b) If
the
Company shall act as its own paying agent, it will, on the Business Day prior
to
each due date of the principal of or Interest 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 or Interest so becoming due and will promptly notify
the
Trustee in writing 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 or Interest on the Notes when the same shall become due and
payable.
(c) Anything
in this Section 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,
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 to the contrary notwithstanding, the agreement to hold sums
in
trust as provided in this Section is subject to Sections
11.03
and
11.04.
The
Trustee shall not be responsible for the actions of any other paying agents
(including the Company if acting as its own paying agent) and shall have no
control of any funds held by such other paying agents.
Section
4.04. Existence.
Subject
to Article
5,
the
Company will do or cause to be done all things necessary to preserve and keep
in
full force and effect its existence and rights (charter and statutory);
provided
that the
Company shall not be required to preserve any such right if the Company shall
determine that the preservation thereof is no longer desirable in the conduct
of
the business of the Company and that the loss thereof is not disadvantageous
in
any material respect to the Noteholders.
43
Section
4.05. Maintenance
of Properties.
The
Company will cause all properties used or useful in the conduct of its business
or the business of any Significant Subsidiary to be maintained and kept in
good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company
may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided
that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is,
in
the judgment of the Company, desirable in the conduct of its business or the
business of any subsidiary and not disadvantageous in any material respect
to
the Noteholders.
Section
4.06. Payment
of Taxes and Other Claims.
The
Company will pay or discharge, or cause to be paid or discharged, before the
same may become delinquent, (i) all taxes, assessments and governmental charges
levied or imposed upon the Company or any Significant Subsidiary or upon the
income, profits or property of the Company or any Significant Subsidiary, (ii)
all claims for labor, materials and supplies which, if unpaid, might by law
become a lien or charge upon the property of the Company or any Significant
Subsidiary and (iii) all stamp taxes and other duties, if any, which may be
imposed by the United States or any political subdivision thereof or therein
in
connection with the issuance, transfer, exchange, conversion, redemption or
repurchase of any Notes or with respect to this Indenture; provided
that, in
the case of clauses (i) and (ii), the Company shall not be required to pay
or
discharge or cause to be paid or discharged any such tax, assessment, charge
or
claim (A) if the failure to do so will not, in the aggregate, have a material
adverse impact on the Company, or (B) if the amount, applicability or validity
is being contested in good faith by appropriate proceedings.
Section
4.07. Stay,
Extension and Usury Laws.
The
Company covenants (to the extent that it may lawfully do so) that it 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 which
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 which may affect the covenants or
the
performance of this Indenture and the Company (to the extent it may lawfully
do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
Section
4.08. Payments
for Consent.
The
Company shall not, and shall not permit any of its Subsidiaries to, directly
or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to or for the benefit of any holder for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
and is paid to all holders that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver
or agreement.
44
Section
4.09. Incurrence
of Additional Debt;
Financial Covenants.
(a) The
Company shall not, and shall not permit any of its Subsidiaries to, Incur,
directly or indirectly, any Debt unless, after giving effect to the application
of the proceeds thereof, no Default or Event of Default would occur as a
consequence of such Incurrence or be continuing following such
Incurrence.
(b) The
Company shall maintain:
(i) a
Leverage Ratio, as determined as of the last day of each Fiscal Quarter, for
the
four Fiscal Quarters ending on such day, not exceeding 3.50 to
1.00.
(c) Notwithstanding
anything to the contrary contained in this Section,
(i) the
Company shall not, and
shall
not permit any Guarantor to, Incur any Debt pursuant to this covenant if the
proceeds thereof are used, directly or indirectly, to Refinance any Subordinated
Obligations unless such Debt shall be subordinated to the Notes or the
applicable Guarantee, as the case may be, to at least the same extent as such
Subordinated Debt;
(ii) the
Company shall not permit any of its Subsidiaries that is not a Guarantor to
Incur any Debt pursuant to this covenant if the proceeds thereof are used,
directly or indirectly, to Refinance any Debt of the Company or any Guarantor;
and
(iii) accrual
of interest, accretion or amortization of original issue discount and the
payment of interest or dividends in the form of additional Debt, will be deemed
not to be an Incurrence of Debt for purposes of this Section.
Section
4.10. Restricted
Payments.
The
Company shall not make, and shall not permit any of its Subsidiaries to make,
directly or indirectly, any Restricted Payment if at the time of, and after
giving effect to, such proposed Restricted Payment,
(a) a
Default
or Event of Default shall have occurred and be continuing, or
(b) the
Company could not Incur at least $1.00 of additional Debt in compliance with
Section
4.09,
or
(c) the
aggregate amount of such Restricted Payment and all other Restricted Payments
declared or made since the Issue Date (the amount of any Restricted Payment,
if
made other than in cash, to be based upon Fair Market Value at the time of
such
Restricted Payment) would exceed an amount equal to the sum of:
45
(1) 10%
of
the aggregate amount of Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the Fiscal Quarter
after the Issue Date to the end of the most recent Fiscal Quarter ending prior
to the date of such Restricted Payment (or if the aggregate amount of
Consolidated Net Income for such period shall be a deficit, minus 100% of such
deficit), plus
(2) 100%
of
the Capital Stock Sale Proceeds, plus
(3) the
sum
of:
(A) the
aggregate net cash proceeds received by the Company or any Guarantor from the
issuance or sale after the Issue Date of convertible or exchangeable Debt that
has been converted into or exchanged for Capital Stock (other than Disqualified
Stock) of the Company, and
(B) the
aggregate amount by which Debt (other than Subordinated Obligations) of the
Company or any Guarantor is reduced on the Company’s consolidated balance sheet
on or after the Issue Date upon the conversion or exchange of any Debt issued
or
sold on or prior to the Issue Date that is convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company,
excluding,
in the case of clause (A) or (B):
(x)
any
such Debt issued or sold to the Company or a Subsidiary of the Company or an
employee stock
ownership plan or trust established by the Company or any such Subsidiary for
the benefit of their employees, and
(y)
the
aggregate amount
of any
cash or other Property distributed by the Company or any of its Subsidiaries
upon any such conversion or exchange, plus
(4) an
amount
equal to the net reduction in Investments in any Person other than the Company
or any of its Subsidiaries resulting from dividends, repayments of loans or
advances or other transfers of Property, in each case to the Company or any
of
its Subsidiaries from such Person.
Notwithstanding
the foregoing limitation, the Company may:
(a) pay
dividends on its Capital Stock within 60 days of the declaration thereof if,
on
the declaration date, such dividends could have been paid in compliance with
the
Indenture; provided,
however,
that at
the time of such payment of such dividend, no other Default or Event of Default
shall have occurred and be continuing (or result therefrom); provided
further,
however,
that
such dividend shall be included in the calculation of the amount of Restricted
Payments;
46
(b) purchase,
repurchase, redeem, legally defease,
acquire
or retire for value Capital Stock of the
Company
or Subordinated
Obligations in exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the Company
or an
employee stock ownership plan or trust established by the Company or any such
Subsidiary for the benefit of their employees); provided,
however,
that
(1) such
purchase, repurchase, redemption, legal defeasance, acquisition or retirement
shall be excluded in the calculation of the amount of Restricted Payments
and
(2) the
Capital Stock Sale Proceeds from such exchange or sale shall be excluded from
the calculation pursuant to clause (c)(2) above; and
(c) purchase,
repurchase, redeem, legally defease, acquire or retire for value any
Subordinated Obligations in exchange for, or out of the proceeds of the
substantially concurrent sale of, Permitted Refinancing Debt; provided,
however,
that
such purchase, repurchase, redemption, legal defeasance, acquisition or
retirement shall be excluded in the calculation of the amount of Restricted
Payments.
Section
4.11. Liens.
The
Company shall not, and shall not permit any of its Subsidiaries to, directly
or
indirectly, Incur or suffer to exist, any Lien (other than Permitted Liens)
upon
any of its Property (including Capital Stock of any of its Subsidiaries),
whether owned at the Issue Date or thereafter acquired, or any interest therein
or any income or profits therefrom, unless it has made or will make effective
provision whereby the Notes or the applicable Guarantee will be secured by
such
Lien equally and ratably with (or, if such other Debt constitutes Subordinated
Debt, prior to) all other Debt of the Company or any of its Subsidiaries secured
by such Lien for so long as such other Debt is secured by such
Lien.
Section
4.12. Asset
Sales.
The
Company shall not, and shall not permit any of its Subsidiaries to, directly
or
indirectly, consummate any Asset Sale unless:
(a) the
Company or such Subsidiary receives consideration at the time of such Asset
Sale
at least equal to the Fair Market Value of the Property subject to such Asset
Sale;
(b) at
least
75% of the consideration paid to the Company or such Subsidiary in connection
with such Asset Sale is in the form of cash or Cash Equivalents or the
assumption by the purchaser of liabilities of the Company or any of its
Subsidiaries (other than contingent liabilities or liabilities that are by
their
terms subordinated to the Notes or the applicable Guarantee) as a result of
which the Company and its Subsidiaries are no longer obligated with respect
to
such liabilities; and
47
(c) the
Company delivers an Officers’ Certificate to the Trustee certifying that such
Asset Sale complies with the foregoing clauses (a) and (b).
The
Net
Available Cash (or any portion thereof) from Asset Sales may be applied by
the
Company or any of its Subsidiaries, to the extent the Company or such Subsidiary
elects (or is required by the terms of any Debt) (i) to Repay Senior Debt of
the
Company or any Guarantor or Debt of any Subsidiary that is not a Guarantor
(excluding, in any such case, any Debt owed to the Company or an Affiliate
of
the Company), or (ii) to reinvest in Additional Assets (including by means
of an
Investment in Additional Assets by any Subsidiary of the Company with Net
Available Cash received by the Company or another Subsidiary of the
Company).
Any
Net
Available Cash from an Asset Sale not applied in accordance with the preceding
paragraph within 180 days from the date of the receipt of such Net Available
Cash shall constitute “Excess
Proceeds”.
When
the
aggregate amount of Excess Proceeds exceeds $5.0 million (taking into account
income earned on such Excess Proceeds, if any), the Company will be required
to
make an offer to repurchase (the “Asset
Sale Offer”)
the
Notes, which offer shall be in the amount of the Allocable Excess Proceeds
(rounded to the nearest $100,000), on a pro
rata
basis
according to principal amount, at the Repurchase Amount, in accordance with
the
procedures (including prorating in the event of oversubscription) set forth
in
Section
3.02.
To the
extent that any portion of the amount of Net Available Cash remains after
compliance with the preceding sentence and provided
that
all
holders of Notes have been given the opportunity to tender their Notes for
repurchase in accordance with Section
3.02,
the
Company or such Subsidiary may use such remaining amount first to Repay the
Credit Facilities or any other Senior Debt of the Company or any Guarantor
or
Debt of any Subsidiary of the Company that is not a Guarantor (excluding, in
any
such case, any Debt owed to the Company or an Affiliate of the Company), and
only thereafter, for any purpose permitted by this Indenture, and the amount
of
Excess Proceeds will be reset to zero.
The
term
“Allocable
Excess Proceeds”
shall
mean the product of:
(a) the
Excess Proceeds and
(b) a
fraction,
(1) the
numerator of which is the aggregate principal amount of the Notes outstanding
on
the date of the Asset Sale Offer, and
(2) the
denominator of which is the sum of the aggregate principal amount of the Notes
outstanding on the date of the Asset Sale Offer and the aggregate principal
amount (or accreted value, if applicable) of other Debt of the Company
outstanding on the date of the Asset Sale Offer that is pari
passu in
right
of payment with the Notes and subject to terms and conditions in respect of
Asset Sales similar in all material respects to this Section and requiring
the
Company to make an offer to repurchase such Debt at substantially the same
time
as the Asset Sale Offer.
48
Section
4.13. Restrictions
on Distributions from Subsidiaries.
The
Company shall not, and shall not permit any of its Subsidiaries to, directly
or
indirectly, create or otherwise cause or suffer to exist any consensual
restriction on the right of any of its Subsidiaries to:
(a) pay
dividends, in cash or otherwise, or make any other distributions on or in
respect of its Capital Stock owned by, or pay any Debt or other obligation
owed,
to, the Company or any other Subsidiary of the Company,
(b) make
any
loans or advances to the Company or any other Subsidiary of the Company, or
(c) transfer
any of its Property to the Company or any other Subsidiary of the Company.
The
foregoing limitations will not apply:
(1) with
respect to clauses (a), (b) and (c), to restrictions:
(A) in
effect
on the Issue Date (including, without limitation, restrictions pursuant to
the
Notes and this Indenture),
(B) relating
to Debt of any Subsidiary of the Company and existing at the time it became
a
Subsidiary of the Company if such restriction was not created in connection
with
or in anticipation of the transaction or series of transactions pursuant to
which such Subsidiary became a Subsidiary of the Company or was acquired by
the
Company, or
(C) that
result from the Refinancing of Debt Incurred pursuant to an agreement referred
to in clause (1)(A) or (B) above or in clause (2)(A) or (B) below, provided
such
restrictions are not less favorable to the holders of Notes than those under
the
agreement evidencing the Debt so Refinanced, and
(2) with
respect to clause (c) only, to restrictions:
(A) relating
to Debt that is permitted to be Incurred and secured without also securing
the
Notes or the applicable Guarantee in
compliance with Section
4.09
and
Section
4.11
that
limit the right of the debtor to dispose of the Property securing such
Debt,
(B) encumbering
Property at the time such Property was acquired by the Company or any of its
Subsidiaries, so long as such restrictions relate solely to the Property so
acquired and were not created in connection with or in anticipation of such
acquisition,
49
(C) resulting
from customary provisions restricting subletting or assignment of leases or
customary provisions in other agreements that restrict assignment of such
agreements or rights thereunder, or
(D) customary
restrictions contained in asset sale agreements limiting the transfer of such
Property pending the closing of such sale.
Section
4.14. Affiliate
Transactions.
The
Company shall not, and shall not permit any of its Subsidiaries to, directly
or
indirectly, conduct any business or enter into or suffer to exist any
transaction or series of transactions (including the purchase, sale, transfer,
assignment, lease, conveyance or exchange of any Property or the rendering
of
any service) with, or for the benefit of, any Affiliate of the Company (an
“Affiliate
Transaction”),
unless:
(a) the
terms
of such Affiliate Transaction are:
(1) set
forth
in writing,
(2) in
the
best interest of the Company or such Subsidiary, as the case may be, and
(3) no
less
favorable to the Company or such Subsidiary, as the case may be, than those
that
could be obtained in a comparable arm’s-length transaction with a Person that is
not an Affiliate of the Company,
(b) if
such
Affiliate Transaction involves aggregate payments or value in excess of $1.0
million, the Board of Directors (including a majority of the disinterested
members of the Board of Directors) approves such Affiliate Transaction and,
in
its good faith judgment, believes that such Affiliate Transaction complies
with
clauses (a)(2) and (3) of this paragraph as evidenced by a Board Resolution
promptly delivered to the Trustee, and
(c) if
such
Affiliate Transaction involves aggregate payments or value in excess of $5.0
million, the Company obtains a written opinion from an Independent Financial
Advisor to the effect that the consideration to be paid or received in
connection with such Affiliate Transaction is fair, from a financial point
of
view, to the Company and its Subsidiaries.
Notwithstanding
the foregoing limitation, the Company or any of its Subsidiaries may enter
into
or suffer to exist the following:
50
(a) any
transaction or series of transactions between the Company and one or more of
its
Subsidiaries or between two or more of its Subsidiaries in the ordinary course
of business, provided
that no
more than 5% of the total voting power of the Voting Stock (on a fully diluted
basis) of any such Subsidiary is owned by an Affiliate of the Company (other
than any Subsidiary of the Company);
(b) any
Restricted Payment permitted to be made pursuant to Section
4.10
or any
Permitted Investment;
(c) the
payment of compensation (including amounts paid pursuant to employee benefit
plans) for the personal services of officers, directors and employees of the
Company or any of its Subsidiaries, so long as the Board of Directors in good
faith shall have approved the terms thereof and deemed the services theretofore
or thereafter to be performed for such compensation to be fair consideration
therefor; and
(d) loans
and
advances to employees made in the ordinary course of business and consistent
with the past practices of the Company or such Subsidiary, as the case may
be,
provided
that
such
loans and advances do not exceed $300,000 in the aggregate at any one time
outstanding; provided,
however,
that
the Company and its Subsidiaries shall comply in all material respects with
all
provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated in connection therewith that would be applicable to an issuer with
debt securities registered under the Securities Act relating to such loans
and
advances.
Section
4.15. Issuance
or Sale of Capital Stock of Subsidiaries.
The
Company shall not:
(a) sell,
pledge, hypothecate or otherwise dispose of any shares of Capital Stock of
any
of its Subsidiaries, or
(b) permit
any Subsidiary of the Company to, directly or indirectly, issue or sell or
otherwise dispose of any shares of its Capital Stock,
other
than, in the case of either (a) or (b):
(1) directors’
qualifying shares,
(2) to
the
Company or a Wholly Owned Subsidiary, or
(3) a
disposition of 100% of the shares of Capital Stock of such Subsidiary;
provided,
however,
that, in
the case of this clause (3),
(A) such
disposition is effected in compliance with Section
4.12,
and
(B) upon
consummation of such disposition and execution and delivery of a supplemental
indenture in form satisfactory to the Trustee, such Subsidiary shall be released
from any Guarantee previously made by such Subsidiary.
51
Section
4.16. Maintenance
of Consolidated Tangible Net Worth.
The
Company shall not, on the Issue Date (after giving effect to the issuance of
the
Notes) or at the end of any Fiscal Quarter thereafter, permit its Consolidated
Tangible Net Worth to be less than the Consolidated Tangible Net Worth
Threshold. The “Consolidated Tangible Net Worth Threshold” shall be equal to
$50.0 million from the Issue Date until the first annual anniversary thereof,
and at each annual anniversary of the Issue Date shall increase by an amount
equal to $5.0 million.
Section
4.17. Repurchase
at the Option of Holders Following a Change of Control.
(a) Upon
the
occurrence of a Change of Control, the Company shall, within 7 days thereafter
notify the Trustee and the holders of such Change of Control, and within 30
days
of a Change of Control, make an offer (the “Change
of Control Offer”)
pursuant to the procedures set forth in Section
3.02.
Each
holder shall have the right to accept such offer and require the Company to
repurchase all or any portion (equal to $100,000 or an integral multiple
thereof) of such holder’s Notes pursuant to the Change of Control Offer at a
purchase price, in cash equal to the Repurchase Amount.
(b) The
Company shall not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth
in this Indenture applicable to a Change of Control Offer made by the Company
and purchases all Notes properly tendered and not withdrawn under such Change
of
Control Offer.
Section
4.18. Future
Guarantors.
(a) Each
of
the Operating Subsidiaries hereby agrees, and each of the Company, Safetech,
Chain Star and CSST HK, hereby agrees, jointly and severally, to cause each
Operating Subsidiary, to execute and deliver to the Trustee a Guarantee to
the
fullest extent permitted under applicable laws (including the laws of the PRC)
and subject to obtaining all necessary Governmental Approvals.
(b) The
Company shall cause each Person that becomes a Subsidiary following the Issue
Date to execute and deliver to the Trustee a Guarantee at the time such Person
becomes a Subsidiary, provided that, in the case of a Person that becomes a
Subsidiary incorporated in the PRC, the Company shall cause such Subsidiary
to
execute and deliver to the Trustee a Guarantee to the fullest extent permitted
by applicable laws (including the laws of the PRC) and subject to obtaining
all
necessary Governmental Approval.
Section
4.19. Business
Activities.
The
Company shall not, and the Company shall not permit any of its Subsidiaries
to,
directly or indirectly, engage in any business other than a Related
Business.
52
Section
4.20. Sale
and Leaseback Transactions.
The
Company shall not, and shall not permit any of its Subsidiaries to, enter into
any Sale and Leaseback Transaction with respect to any Property
unless:
(a) the
Company or such Subsidiary would be entitled to:
(1) Incur
Debt in an amount equal to the Attributable Debt with respect to such Sale
and
Leaseback Transaction in compliance with Section
4.09
and
(2) create
a
Lien on such Property securing such Attributable Debt without also securing
the
Notes or the applicable Guarantee pursuant
to Section
4.11
and
(b) such
Sale
and Leaseback Transaction is effected in compliance with Section
4.12.
Section
4.21. Use
of
Proceeds.
The
Company will not use the net proceeds from the sale of the Notes, in any amount,
for any purpose other than for Capital Expenditures, working capital, general
corporate purposes and acquisitions (if any), and pending the application of
all
of such net proceeds in such manner, to invest the portion of such net proceeds
not yet so applied in Cash Equivalents. Following the application of net
proceeds in such manner, any remaining net proceeds may be applied for general
corporate purposes not otherwise prohibited by the terms of this
Indenture.
Section
4.22. Maintenance
of Insurance.
The
Company shall, and shall cause its Subsidiaries to, maintain insurance policies
covering such risks, in such amounts and with such terms as are normally carried
by similar companies engaged in a similar business to the Related Business
in
the PRC.
Section
4.23. Repurchase
Upon Termination of Trading.
Upon
the
occurrence of a Termination of Trading, the Company shall, within 7 days
thereafter notify the Trustee and the holders of such Termination of Trading,
and within 30 days of a Termination of Trading, make an offer (the “Termination
of Trading Offer”)
pursuant to the procedures set forth in Section
3.02.
Each
holder shall have the right to accept such offer and require the Company to
repurchase all or any portion (equal to $100,000 or an integral multiple of
$100,000) of such holder’s Notes pursuant to the Termination of Trading Offer at
a purchase price, in cash equal to the Repurchase Amount.
Section
4.24. Government
Approvals and Licenses; Compliance with Law.
The
Company shall, and shall cause its Subsidiaries to, (a) obtain and maintain
in
full force and effect all Governmental Approvals, authorizations, consents,
permits, concessions and licenses as are necessary to engage in a Related
Business, (b) preserve and maintain good and valid title to its properties
and
assets (including land-use rights) free and clear of any Liens other than
Permitted Liens and (c) comply with all laws, regulations, orders, judgments
and
decrees of any governmental body, except to the extent that failure so to
obtain, maintain, preserve and comply would reasonably be expected to have
a
material adverse effect on (1) the business, results of operations or prospects
of the Company and its Subsidiaries taken as a whole or (2) the ability of
the
Company or any Guarantor to perform its obligations under the Notes, the
relevant Guarantee of the Notes or this Indenture.
53
Section
4.25. [RESERVED].
Section
4.26. Notes
to Rank Senior.
The
Notes
and all other obligations of the Company and the Guarantors under this Indenture
are and at all times shall remain direct and unsecured obligations of the
Company and each Guarantor ranking pari
passu
in right
and priority of payment, without any preference or priority among themselves
and
at least equally with all other present and future unsecured Indebtedness
(actual or contingent) of the Company and each Guarantor (except as otherwise
required by law).
Section
4.27. Compliance
Certificate.
The
Company shall deliver to the Trustee, within one hundred twenty (120) days
after
the end of each fiscal year of the Company, a certificate signed by either
the
principal executive officer, principal financial officer or principal accounting
officer of the Company, stating whether or not to the best knowledge of the
signer thereof the Company is in default in the performance and observance
of
any of the terms, provisions and conditions of this Indenture (without regard
to
any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
the
status thereof of which the signer may have knowledge.
The
Company will deliver to the Trustee, forthwith upon becoming aware of (i) any
default in the performance or observance of any covenant, agreement or condition
contained in this Indenture, or (ii) any Event of Default, an Officers’
Certificate specifying with particularity such Default or Event of Default
and
further stating what action the Company has taken, is taking or proposes to
take
with respect thereto.
Any
notice required to be given under this Section shall be delivered to a
Responsible Officer of the Trustee at its Corporate Trust Office.
Section
4.28. Calculation
of Original Issue Discount.
The
Company shall file with the Trustee, solely for purposes of making such
information available to the holders upon request, promptly at the end of each
calendar year (i) a written notice specifying the amount of Tax Original Issue
Discount (including daily rates and accrual periods) accrued on outstanding
Notes as of the end of such year and (ii) such other specific information
relating to such Tax Original Issue Discount as may then be required under
the
Code, or the Treasury regulations promulgated thereunder.
54
ARTICLE
5
SUCCESSORS
Section
5.01. Merger,
Consolidation and Sale of Assets.
(a) The
Company shall not merge, consolidate or amalgamate with or into any other Person
(other than a merger of a Wholly Owned Subsidiary into the Company) or sell,
transfer, assign, lease, convey or otherwise dispose of all or substantially
all
of its Property in any one transaction or series of transactions unless:
(i) the
Company shall be the Surviving Person in such merger, consolidation or
amalgamation, or the Surviving Person (if other than the Company) formed by
such
merger, consolidation or amalgamation or to which such sale, transfer,
assignment, lease, conveyance or disposition is made shall be a corporation
organized and existing under the laws of the United States of America, any
State
thereof or the District of Columbia;
(ii) the
Surviving Person (if other than the Company) expressly assumes, by supplemental
indenture in form satisfactory to the Trustee, executed and delivered to the
Trustee by such Surviving Person, the due and punctual payment of the principal
of, and premium, if any, and interest on, all the Notes, according to their
tenor, and the due and punctual performance and observance of all the covenants
and conditions of this Indenture to be performed by the Company;
(iii) in
the
case of a sale, transfer, assignment, lease, conveyance or other disposition
of
all or substantially all the Property of the Company, such Property shall have
been transferred as an entirety or virtually as an entirety to one Person or
a
group of related persons;
(iv) immediately
before and after giving effect to such transaction or series of transactions
on
a pro forma basis (and treating, for purposes of this clause (iv) and clauses
(v) and (vi) below, any Debt that becomes, or is anticipated to become, an
obligation of the Surviving Person or any Subsidiary of the Company as a result
of such transaction or series of transactions as having been Incurred by the
Surviving Person or such Subsidiary at the time of such transaction or series
of
transactions), no Default or Event of Default shall have occurred and be
continuing;
(v) immediately
after giving effect to such transaction or series of transactions on a pro
forma
basis, the Surviving Person shall have a Consolidated Net Worth in an amount
which is not less than the Consolidated Net Worth of the Company immediately
prior to such transaction or series of transactions;
(vi) the
Company shall deliver, or cause to be delivered, to the Trustee, an Officers’
Certificate and an Opinion of Counsel, each stating that such transaction or
series of transactions and the supplemental indenture, if any, in respect
thereto comply with this covenant and that all conditions precedent herein
provided for relating to such transaction or series of transactions have been
satisfied; and
55
(vii) the
Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that the holders will not recognize income, gain or loss for federal income
tax
purposes as a result of such transaction and will 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 transaction had not occurred.
The
foregoing provisions (other than clause (iv)) shall not apply to any transaction
or series of transactions which constitute an Asset Sale if the Company has
complied with Section
4.12.
(b) The
Company shall not permit any Guarantor to merge, consolidate or amalgamate
with
or into any other Person (other than a merger of a Wholly Owned Subsidiary
into
the Company or such Guarantor) or sell, transfer, assign, lease, convey or
otherwise dispose of all or substantially all its Property in any one
transaction or series of transactions unless:
(i) the
Surviving Person (if other than such Guarantor) expressly assumes, to the extent
permitted by applicable laws, by supplemental indenture in form satisfactory
to
the Trustee, executed and delivered to the Trustee by such Surviving Person,
the
due and punctual performance and observance of all the obligations of such
Guarantor under its Guarantee;
(ii) in
the
case of a sale, transfer, assignment, lease, conveyance or other disposition
of
all or substantially all the Property of such Guarantor, such Property shall
have been transferred as an entirety or virtually as an entirety to one Person;
(iii) immediately
before and after giving effect to such transaction or series of transactions
on
a pro forma basis (and treating, for purposes of this clause (iii) and clauses
(iv) and (v) below, any Debt that becomes, or is anticipated to become, an
obligation of the Surviving Person, the Company or any of its Subsidiaries
as a
result of such transaction or series of transactions as having been Incurred
by
the Surviving Person, the Company or such Subsidiary at the time of such
transaction or series of transactions), no Default or Event of Default shall
have occurred and be continuing;
(iv) immediately
after giving effect to such transaction or series of transactions on a pro
forma
basis, the Company shall have a Consolidated Net Worth in an amount which is
not
less than the Consolidated Net Worth of the Company immediately prior to such
transaction or series of transactions;
(v) the
Company shall deliver, or cause to be delivered, to the Trustee, an Officers’
Certificate and an Opinion of Counsel, each stating that such transaction or
series of transactions and the supplemental indenture, if any, in respect
thereto comply with this covenant and that all conditions precedent herein
provided for relating to such transaction or series of transactions have been
satisfied; and
(vi) the
Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that the holders will not recognize income, gain or loss for federal income
tax
purposes as a result of such transaction and will 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 transaction had not occurred.
56
The
foregoing provisions (other than clause (iii)) shall not apply to any
transaction or series of transactions which constitute an Asset Sale if the
Company has complied with Section
4.12.
Section
5.02. Successor
Corporation Substituted.
The
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of the Company or a Guarantor, as applicable, under this
Indenture; provided,
however,
that
the predecessor entity shall not be released from any of the obligations or
covenants under this Indenture, including with respect to the payment of the
Notes and obligations under the Guarantee, as the case may be, in the case
of:
(a) a
sale,
transfer, assignment, conveyance or other disposition (unless such sale,
transfer, assignment, conveyance or other disposition is of all or substantially
all of the assets of the Company, taken as a whole or, in the case of a
Guarantor, such sale, transfer, assignment, conveyance or other disposition
is
of all or substantially all of the assets of such Guarantor to a Person that
is
not (either before or after giving effect to such transaction) a Subsidiary
of
the Company, or such portion of the Capital Stock of such Guarantor ceases
to be
a Subsidiary of the Company), or
(b) a
lease.
ARTICLE
6
REMEDIES
OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT
Section
6.01. 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 any installment of Interest upon any of the Notes as and
when
the same shall become due and payable and continuance of such default for a
period of fifteen (15) days; or
(b) default
in the payment of the principal of, and premium, if any, on, any of the Notes
as
and when the same shall become due and payable either at maturity or in
connection with any redemption, repurchase or otherwise, in each case pursuant
to Article
3,
by
acceleration or otherwise; or
(c) default
in the Company’s obligation to provide an Offer to Purchase when required in
connection with an Asset Sale, a Change of Control or Termination of Trading
as
provided in Section
3.02;
or
(d) failure
to comply with Section
5.01;
57
(e) failure
on the part of the Company duly to observe or perform any other of the covenants
or agreements on the part of the Company in the Notes or in this Indenture
(other than a covenant or agreement a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with) continued for
a
period of thirty (30) 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 the Company and a Responsible Officer of the Trustee
by the holders of at least twenty-five percent (25%) in aggregate principal
amount of the Notes at the time outstanding determined in accordance with
Section
12.04;
or
(f) the
Company, any of its Significant Subsidiaries (or any group of Subsidiaries
that,
when taken together, would constitute a Significant Subsidiary) pursuant to
or
within the meaning of any Bankruptcy Law:
(i) commences
a voluntary case or gives notice of intention to make a proposal under any
Bankruptcy Law;
(ii) consents
to the entry of an order for relief against it in an involuntary case or
consents to its dissolution or winding up;
(iii) consents
to the appointment of a receiver, interim receiver, receiver and manager,
liquidator, trustee or custodian of it or for all or substantially all of its
property;
(iv) makes
a
general assignment for the benefit of its creditors; or
(v) admits
in
writing its inability to pay its debts as they become due or otherwise admits
its insolvency; or
(g) a
court
of competent
jurisdiction enters an order or decree under any Bankruptcy Law
that:
(i) is
for
relief against the Company, any of its Significant Subsidiaries (or any group
of
Subsidiaries that, when taken together, would constitute a Significant
Subsidiary) in an involuntary case; or
(ii) appoints
a receiver, interim receiver, receiver and manager, liquidator, trustee or
custodian of the Company, any of its Significant Subsidiaries (or any group
of
Subsidiaries that, when taken together, would constitute a Significant
Subsidiary) for all or substantially all of the property of the Company, any
of
its Significant Subsidiaries (or any group of Subsidiaries that, when taken
together, would constitute a Significant Subsidiary); or
(iii) orders
the liquidation of the Company, any of its Significant Subsidiaries (or any
group of Subsidiaries that, when taken together, would constitute a Significant
Subsidiary);
and
such
order or decree remains unstayed and in effect for 60 consecutive
days;
58
(h) a
default
under any Debt by the Company or any of its Subsidiaries that results in
acceleration of the maturity of such Debt, or failure to pay any such Debt
when
due, in an aggregate amount greater than $4.0 million or its foreign currency
equivalent at the time;
(i) any
legal
proceedings in respect of, or judgment or judgments for, the payment of money
in
an aggregate amount potentially in excess of $4.0 million (or its foreign
currency equivalent at the time) that shall be instituted or rendered against
the Company or any of its Subsidiaries;
(j) any
Guarantee ceases to be in full force and effect (other than in accordance with
the terms of such Guarantee) or any Guarantor or a group of Guarantors that,
taken as a whole, would constitute a Significant Subsidiary denies or disaffirms
its obligations under its Guarantee;
(k) the
Company or the Operating Subsidiaries amends or modifies their respective
constitutive documents in such a manner that would have a Material Adverse
Effect or engages any business other than a Related Business;
(l)
the
Indenture, the Notes, any Guarantee or any loan made directly or indirectly
from
the Company to the Operating Subsidiaries, shall be (A) declared by any
Governmental Authority to be illegal or unenforceable or (B) terminated prior
to
its scheduled termination date;
(m) (i)
the
confiscation, expropriation or nationalization by any Governmental Authority
of
any material Property of the Company or any of its Subsidiaries, provided
that for
the purposes of this paragraph (i), the determination of what is “material”
shall be determined by the holders of not less than 25% in aggregate principal
amount of the Notes then outstanding; or (ii) if such revocation or repudiation
could reasonably be expected to have a Material Adverse Effect, the revocation
or repudiation by any Governmental Authority of any previously granted
Governmental Approval to the Operating Subsidiaries that is material to the
operation of the Related Business; or (iii) the imposition or introduction
of
material and discriminatory taxes, tariffs, royalties, customs or excise duties
imposed on the Operating Subsidiaries, or the material and discriminatory
withdrawal or suspension of material privileges or specifically granted material
rights of a fiscal nature; or
(n) failure
by the Company or any Affiliate thereof (other than any Person who is an
Affiliate solely because such Person is a holder of Notes) to comply with any
of
the agreements in the Amended Investor Rights Agreement if such failure
continues for 30 days after written notice is given to the Company by the
Trustee or the holders of not less than 25% in aggregate principal amount of
the
Notes then outstanding specifying the default, demanding that it be remedied
and
stating that such notice is a “Notice of Default;”
then,
and
in each and every such case (other than an Event of Default specified in
Section
6.01(f)
or
6.01(g)),
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 twenty-five percent (25%)
in
aggregate principal amount of the Notes then outstanding hereunder determined
in
accordance with Section
12.04,
by
notice in writing to the Company (and to the Trustee if given by Noteholders),
may declare the principal of all the Notes, 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
6.01(f)
or
6.01(g)
occurs,
the principal of all the Notes and the Interest accrued thereon shall be
immediately and automatically due and payable without necessity of further
action.
59
This
provision, however, 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, (i) 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 any and all Notes which 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 at the rate borne by the Notes, to the
date of such payment or deposit) and amounts due to the Trustee pursuant to
Section
7.06,
(ii) if
any and all defaults under this Indenture, other than the nonpayment of
principal of and accrued Interest on Notes which shall have become due by
acceleration, shall have been cured or waived pursuant to Section
6.07,
then
and in every such case the holders of a majority in aggregate principal amount
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 thereon. The Company shall notify in writing
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
6.02. 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 thirty
(30) days, or (b) in case default shall be made in the payment of the principal
of 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 or
repurchase, by or under this Indenture by declaration or otherwise, then, upon
demand of the Trustee, the Company will 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 or Interest, as the case may be, with
interest upon the overdue principal 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, plus 1% and, in addition thereto,
such
further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to the Trustee, its agents, attorneys and
counsel, and all other amounts due the Trustee under Section
7.06.
Until
such demand by the Trustee, the Company may pay the principal of and Interest
on
the Notes to the registered holders, whether or not the Notes are
overdue.
60
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
case
there shall be pending proceedings for the bankruptcy or for the reorganization
of the Company or any other obligor on the Notes under any Bankruptcy 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 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, 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
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
7.06,
and to
take any other action with respect to such claims, including participating
as a
member of any official committee of creditors, as it reasonably deems necessary
or advisable, and, unless prohibited by law or applicable regulations, 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 compensation, expenses, advances and
disbursements, including counsel fees and expenses incurred by it up to the
date
of such distribution. To the extent that such payment of 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 which 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.
61
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 at 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 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
6.03. Application
of Monies Collected by Trustee.
Any
monies or property collected by the Trustee pursuant to this Article shall
be
applied in the order following, at the date or dates fixed by the Trustee for
the distribution of such monies or property, upon presentation of the several
Notes and either (i) stamping thereon the payment, if only partially paid,
or
(ii) upon surrender thereof, if fully paid.
FIRST:
To
the payment of all amounts due the Trustee under Section
7.06
in
connection with the Trustee’s performance of its duties under this Indenture or
the Notes;
SECOND:
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 specified in the Notes, such payments to be made ratably
to the Persons entitled thereto;
THIRD:
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
owing and unpaid upon the Notes for principal and Interest, with Interest on
the
overdue principal and (to the extent that such Interest has been collected
by
the Trustee) upon overdue installments of Interest at the rate specified in
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
and Interest without preference or priority of principal over Interest, or
of
Interest over principal, 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 accrued and unpaid Interest; and
FOURTH:
To the payment of the remainder, if any, to the Company or the Guarantors or
to
whomever may be lawfully entitled thereto.
62
Section
6.04. Proceedings
by Noteholder.
No
holder
of any Note shall have any right by virtue of or by reference to 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 (a) such holder previously shall have given
to
the Trustee written notice of an Event of Default and of the continuance
thereof, as hereinbefore provided, (b) the holders of not less than twenty-five
percent (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 security or indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee for sixty
(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
6.07;
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
no
one or more holders of Notes shall have any right in any manner whatever by
virtue of or by reference to any provision of this Indenture to affect, disturb
or prejudice the rights of any other holder of Notes, or 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 enforcement of this Section 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 (including
the
purchase price upon an Offer to Purchase or the repurchase price, in each case
pursuant to Article
3)
and
accrued Interest on such Note, on or after the respective due dates expressed
in
such Note or in the event of an Offer to Purchase or a repurchase, as the case
may be, 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.
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 its own behalf and for its own benefit, may enforce, and may institute
and maintain any proceeding suitable to enforce, its rights of conversion as
provided herein.
Section
6.05. 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 are necessary 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
6.06. Remedies
Cumulative and Continuing.
Except
as
provided in Section
2.06,
all
powers and remedies given by this Article to the Trustee or to the Noteholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of
any thereof 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
6.04,
every
power and remedy given by this Article 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.
63
Section
6.07. 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
12.04
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 which is not inconsistent
with such direction, (c) the Trustee may decline to take any action that would
benefit some Noteholder to the detriment of other Noteholders and (d) the
Trustee may decline to take any action that would involve the Trustee in
personal liability. Subject to Section
6.01,
the
holders of a majority in aggregate principal amount of the Notes at the time
outstanding determined in accordance with Section
12.04
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
Interest on, or the principal of, the Notes, (ii) a failure by the Company
to
convert any Notes into Common Stock, (iii) a default in the payment of the
purchase price pursuant to Section
3.02
or (iv)
a default in respect of a covenant or provisions hereof which under Article
8
cannot
be modified or amended without the consent of the holders of each or all of
the
Notes then outstanding or affected thereby. Upon any such waiver, 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. Whenever any Default or Event of Default hereunder shall have been
waived as permitted by this Section, 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; but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon.
Section
6.08. Notice
of Default.
If
the
Trustee receives notice of any Default or Event of Default from the Company,
the
Trustee shall mail to all Noteholders, as the names and addresses of such
holders appear upon the Security Register, Notice of the Default or Event of
Default within 90 days after it occurs, unless the Default or Event of Default
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 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 determines that the withholding of such notice is in
the
interests of the Noteholders.
64
Section
6.09. 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 (to the extent permitted by law) 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 ten percent in
principal amount of the Notes at the time outstanding determined in accordance
with Section
12.04,
or to
any suit instituted by any Noteholder for the enforcement of the payment of
the
principal of 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
14.
ARTICLE
7
THE
TRUSTEE
Section
7.01. Duties
and Responsibilities of Trustee.
The
Trustee, prior to the occurrence of an Event of Default and after the curing
of
all Events of Default which may have occurred, undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture. In case
an
Event of Default has occurred (which has not been cured or waived), the Trustee
shall exercise such of the rights and powers vested in it by this Indenture,
and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person’s
own affairs.
No
provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or
its
own willful misconduct, except that:
(a) prior
to
the occurrence of an Event of Default and after the curing or waiving of all
Events of Default which may have occurred:
(i) the
duties and obligations of the Trustee shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable except for
the
performance of such duties and obligations as are specifically set forth in
this
Indenture and no implied covenants, duties or obligations shall be read into
this Indenture against the Trustee; and
(ii) in
the
absence of bad faith and willful misconduct on the part of the Trustee, the
Trustee may conclusively rely as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture;
but, in the case of any such certificates or opinions which by any provisions
hereof are specifically required to be furnished to the Trustee under this
Indenture, 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;
65
(b) the
Trustee shall not be liable for any error of judgment made in good faith by
a
Responsible Officer or Officers of the Trustee, unless the Trustee was negligent
in ascertaining the pertinent facts;
(c) the
Trustee shall not be liable with respect to any action taken or omitted to
be
taken by it in good faith in accordance with the written direction of the
holders of not less than a majority in principal amount of the Notes at the
time
outstanding determined as provided in Section
12.04
relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee under this Indenture;
(d) whether
or not therein provided, every provision of this Indenture relating to the
conduct or affecting the liability of, or affording protection to, the Trustee
shall be subject to the provisions of this Section;
(e) the
Trustee shall not be liable in respect of any payment (as to the correctness
of
amount, entitlement to receive or any other matters relating to payment) or
notice effected by the Company or any paying agent or any records maintained
by
any co-registrar with respect to the Notes;
(f) if
any
party fails to deliver a notice relating to an event the fact of which, pursuant
to this Indenture, requires notice to be sent to the Trustee, the Trustee may
conclusively rely on its failure to receive such notice as reason to act as
if
no such event occurred; and
(g) the
Trustee shall not be deemed to have knowledge of any Default or Event of Default
hereunder unless a Responsible Officer of the Trustee at the Corporate Trust
Office shall have been notified in writing of such Default or Event of Default
by the Company or the holders of at least 25% in aggregate principal amount
of
the Notes.
None
of
the provisions contained in this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers, if there is reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
Section
7.02. Rights
of Trustee.
(a) The
Trustee may conclusively rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, coupon or other paper or
document (whether in its original or facsimile form) believed by it in good
faith to be genuine and to have been signed or presented by the proper party
or
parties.
66
(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); 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; the Trustee shall
be
entitled to accept such certificate as sufficient and conclusive evidence of
the
fulfillment of the applicable conditions precedent, in which event it shall
be
conclusive and binding on the Noteholders.
(c) The
Trustee may consult with counsel of its own 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; the Trustee shall be entitled to accept
such
opinion as sufficient and conclusive evidence of the fulfillment of the
applicable conditions precedent, in which event it shall be conclusive and
binding on the Noteholders.
(d) The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request, order or direction of any of
the
Noteholders pursuant to the provisions of this Indenture, unless such
Noteholders shall have offered to the Trustee security or indemnity satisfactory
to it against the costs, expenses and liabilities which may be incurred therein
or thereby.
(e) The
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture or other paper
or
document, but the Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine
to
make such further inquiry or investigation, it shall be entitled to examine
the
books, records and premises of the Company, personally or by agent or attorney
at the expense of the Company, and shall incur no liability of any kind by
reason of such inquiry or investigation.
(f) 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.
(g) The
Trustee shall not be liable for any action taken, suffered or omitted to be
taken by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
(h) The
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and
shall be enforceable by, the Trustee in each of its capacities hereunder, and
each agent, custodian and other Person employed to act hereunder.
(i) The
Trustee may request that the Company deliver an Officers’ Certificate setting
forth the names of individuals and/or titles of officers authorized at such
time
to take specified actions pursuant to this Indenture, which Officers’
Certificate may be signed by any person authorized to sign an Officers’
Certificate, including any person specified as so authorized in any such
certificate previously delivered and not superseded.
67
(j) Any
permissive right or authority granted to the Trustee shall not be construed
as a
mandatory duty.
(k) The
Trustee shall not be required to give any bond or surety in respect of the
performance of its powers and duties hereunder.
(l) The
Trustee shall have no duty to inquire as to the performance of the Company’s
covenants herein.
(m) Neither
the Trustee nor any clearing system through which the Notes are traded shall
have any obligation or duty to monitor, determine or inquire as to compliance,
and shall not be responsible or liable for compliance, with restrictions on
transfer, exchange, redemption, purchase or repurchase, as applicable, of
minimum denominations imposed hereunder or under applicable law or regulation
with respect of any transfer, exchange, redemption, purchase or repurchase,
as
applicable, of interest in any Note.
(n) In
the
event the Trustee receives inconsistent or conflicting requests and indemnity
from two or more groups of Noteholders, each representing less than a majority
in aggregate principal amount of the Notes then outstanding, pursuant to the
provisions of this Indenture, the Trustee, in its sole discretion, may determine
what action, if any, will be taken.
(o) The
Trustee is entitled to enter into business transactions with the Company, its
Affiliates or any entity related thereto without accounting for any
profit.
(p) In
connection with the exercise of its functions (including but not limited to
those in relation to any proposed modification, authorization, waiver or
substitution), the Trustee will have regard to the interests of the Noteholders
as a class, and will not have regard to the consequences of such exercise for
individual Noteholders. The Trustee will not be entitled to require, nor will
any Noteholder be entitled to claim, from the Company or any Guarantor, any
indemnification or payment in respect of any tax consequences of any such
exercise upon individual Noteholders.
(q) The
Trustee may refrain from taking any action in any jurisdiction if the taking
of
such action in that jurisdiction would, in its opinion based upon legal advice
in the relevant jurisdiction, be contrary to any law of that jurisdiction or,
to
the extent applicable, of the State of New York. Furthermore, the Trustee may
also refrain from taking such action if it would otherwise render it liable
to
any person in that jurisdiction or the State of New York or if, in its opinion
based upon such legal advice, it would not have the power to do the relevant
thing in that jurisdiction by virtue of any applicable law in that jurisdiction
or in the State of New York or if it is determined by any court or other
competent authority in that jurisdiction or in the State of New York that it
does not have such power.
68
Notwithstanding
any provision herein to the contrary, the Trustee shall not be obligated to
take
any action with respect to an Event of Default pursuant to Sections 6.01(k)
and
6.01(m),
unless
it has been first notified to do so in writing by the Holders of at least 25%
in
aggregate principal amount of the outstanding Notes.
Section
7.03. 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
7.04. Trustee,
Paying Agents, Conversion Agents, Common Depositary or Registrar May Own
Notes.
The
Trustee, any paying agent, any conversion agent, Common Depositary or 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, Common Depositary or Registrar.
Section
7.05. Monies
to Be Held in Trust.
Subject
to the provisions of Section
11.04,
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 in writing from
time to time by the Company and the Trustee.
Section
7.06. Compensation
and Expenses of Trustee.
The
Company and each Guarantor, jointly and severally, covenants and agrees to
pay
to the Trustee from time to time, and the Trustee shall be entitled to, such
compensation 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) as mutually agreed to from time to time in writing
between the Company and the Trustee, and the Company and each Guarantor, jointly
and severally, will pay or reimburse the Trustee upon its request for all
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
compensation and the expenses and disbursements of its counsel and of all
Persons not regularly in its employ), except any such expense, disbursement
or
advance as shall be determined to have been caused by its own gross negligence
or willful misconduct. The Company and each Guarantor, jointly and severally,
also covenants to indemnify the Trustee and any predecessor Trustee (or any
officer, director or employee of the Trustee) in any capacity under this
Indenture (which, for the avoidance of doubt, includes its duties as paying
agent, conversion agent, Common Depositary or Registrar) and its agents and
any
authenticating agent 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) incurred without gross negligence, bad faith or
willful misconduct on the part of the Trustee or such officers, directors,
employees and agents or authenticating agent, 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 (whether asserted by the Company, any holder or
any
other Person) of liability in the premises. The obligations of the Company
under
this Section 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 pursuant to Article
11
hereof,
the termination of this Indenture, the resignation or removal of the Trustee
or
payment in full of the Notes through the expiration of the applicable statute
of
limitations.
69
To
secure
the Company’s payment obligations in this Section, the Trustee shall have a Lien
prior to the Notes on all money or property held or collected by the Trustee,
except that held in trust to pay principal, premium, if any, and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of
this
Indenture pursuant to Article
11
hereof,
the termination of this Indenture, the resignation or removal of the Trustee
or
payment in full of the Notes through the expiration of the applicable statute
of
limitations.
When
the
Trustee and its agents and any authenticating agent incur expenses or render
services after an Event of Default specified in Section
6.01(f)
or
(g)
with
respect to the Company occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under any
bankruptcy, insolvency or similar laws.
Section
7.07. Eligibility
of Trustee.
There
shall at all times be a Trustee hereunder which shall be a Person that has
a
combined capital and surplus of at least $50,000,000 (or, if such Person is
a
member of a bank holding company system, its bank holding company shall have
a
combined capital and surplus of at least $50,000,000). If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of any supervising or examining authority, 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
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately
in
the manner and with the effect hereinafter specified in this
Article.
Section
7.08. Resignation
or Removal of Trustee.
(a) The
Trustee may at any time resign by giving written notice of such resignation
to
the Company and to the holders of Notes. 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. If no successor trustee shall have been so appointed
and
have accepted appointment sixty (60) days after the mailing of such notice
of
resignation to the Noteholders, the resigning Trustee may, upon ten (10)
Business Days’ notice to the Company and the Noteholders, petition, at the
expense of the Company, any court of competent jurisdiction for the appointment
of a successor trustee, or, any Noteholder who has been a bona fide holder
of a
Note or Notes for at least six (6) months may, subject to the provisions of
Section
6.09,
on
behalf of himself and all others similarly situated, petition any such court
for
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
70
(b) In
case
at any time any of the following shall occur:
(i) the
Trustee shall cease to be eligible in accordance with the provisions of
Section
7.09
and
shall fail to resign after written request therefor by the Company or by any
such Noteholder; or
(ii) 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, subject to the provisions
of
Section
6.09,
any
Noteholder who has been a bona fide holder of a Note or Notes for at least
six
(6) 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; provided
that if
no successor Trustee shall have been appointed and have accepted appointment
sixty (60) days after either the Company or such Noteholder has removed the
Trustee, or the Trustee resigns, the Trustee so removed may petition, at the
expense of the Company, any court of competent jurisdiction for an 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 (10)
days after notice to the Company of such nomination, the Company objects
thereto, in which case the Trustee so removed or any Noteholder, or, if such
Trustee so removed or any Noteholder fails to act, the Company, upon the terms
and conditions and otherwise as in Section
7.08(a)
provided, may petition any court of competent jurisdiction for an appointment
of
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 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section
7.09.
(e) Notwithstanding
the replacement of the Trustee pursuant to this Section, the Company’s
obligations under Section
7.06
shall
continue for the benefit of the retiring Trustee.
71
Section
7.09. Acceptance
by Successor Trustee.
Any
successor trustee appointed as provided in Section
7.08
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, nevertheless, on the written request of the Company or of the
successor trustee, the trustee ceasing to act shall, upon payment of any amount
then due it pursuant to the provisions of Section
7.06,
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
7.06.
No
successor trustee shall accept appointment as provided in this Section unless,
at the time of such acceptance, such successor trustee shall be eligible under
the provisions of Section
7.07.
Upon
acceptance of appointment by a successor trustee as provided in this Section,
the Company (or the former trustee, at the written direction of 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
Security Register. If the Company fails to mail such notice within ten (10)
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
7.10. Succession
by Merger.
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 (including any trust created by this Indenture), 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
that in
the case of any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, such corporation shall be eligible
under the provisions of Section
7.09.
The
Trustee shall provide the Company with a written notice within thirty (30)
days
after the closing of such merger, conversion or consolidation.
In
any
case where at the time such successor to the Trustee shall succeed to the trusts
created by this Indenture, any of the Notes shall have been authenticated but
not delivered, any such successor to the Trustee may adopt the certificate
of
authentication of any predecessor trustee or authenticating agent appointed
by
such predecessor trustee, and deliver such Notes so authenticated; and in case
at that time any of the Notes shall not have been authenticated, any successor
to the Trustee or any authenticating agent appointed by such successor trustee
may authenticate such Notes in the name of the successor trustee; and in all
such cases such certificates shall have the full force that is provided in
the
Notes or in this Indenture; provided
that the
right to adopt the certificate of authentication of any predecessor Trustee
or
to authenticate Notes in the name of any predecessor Trustee shall apply only
to
its successor or successors by merger, conversion or consolidation.
72
Section
7.11. Trustee’s
Application for Instructions from the Company.
Any
application by the Trustee for written instructions from the Company (other
than
with regard to any action proposed to be taken or omitted to be taken by the
Trustee that affects the rights of the holders of the Notes under this
Indenture) may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the
date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application
on or
after the date specified in such application (which date shall not be less
than
three (3) Business Days after the date any Officer of the Company actually
receives such application, unless any such Officer shall have consented in
writing to any earlier date) unless prior to taking any such action (or the
effective date in the case of an omission), the Trustee shall have received
written instructions in response to such application specifying the action
to be
taken or omitted.
Section
7.12. Reports
by Trustee.
(a) Within
60
days after each May 15 beginning with the May 15 following the date of this
Indenture, and for so long as Notes remain outstanding, the Trustee shall mail
to the holders a brief report dated as of such reporting date with respect
to
any of the following events which may have occurred within the previous 12
months (but if no such event has occurred such date, no report need be
transmitted).
(i) the
character and amount of any disbursements made by it, as the Trustee under
this
Indenture, which remain unpaid on the date of such report, and for the
reimbursement of which it claims or may claim a lien or charge, prior to that
of
Notes, on property or funds held or collected by it as the Trustee under this
Indenture, if such disbursements so remaining unpaid aggregate more than
one-half of 1 per centum of the principal amount of the Notes outstanding on
such date; and
(ii) any
action taken by it in the performance of its duties under this Indenture which
it has not previously reported and which in its opinion materially affects
the
Notes, except action in respect of a default, notice of which has been or is
to
be withheld by it in accordance with this Indenture.
(b) A
copy of
each report at the time of its mailing to the holders shall be mailed to the
Company. The Company shall promptly notify the Trustee when the Notes are listed
on any stock exchange and any delisting thereof.
Section
7.13. Certain
Provisions.
Each
Noteholder by accepting a Note authorizes and directs on his or her behalf
the
Trustee to enter into and to take such actions and to make such acknowledgements
as are set forth in this Indenture or other documents entered into in connection
therewith.
73
ARTICLE
8
SUPPLEMENTAL
INDENTURES
Section
8.01. Supplemental
Indentures Without Consent of Noteholders.
The
Company, when authorized by the resolutions of the Board of Directors, 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) make
provision with respect to the conversion rights of the holders of Notes pursuant
to the requirements of Section
14.05
and the
purchase obligations of the Company pursuant to the requirements of Section
3.02;
(b) 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 Person of the covenants,
agreements and obligations of the Company pursuant to Article
11;
(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 as herein set forth;
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 materially 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;
(h) add
additional Guarantees or additional obligors with respect to the Notes or
release Guarantors from guarantees as permitted by the terms of this Indenture;
or
74
(i) to
increase, from time to time, the per annum interest rate on the Notes for any
period.
Upon
the
written request of the Company, accompanied by a copy of the resolutions of
the
Board of Directors certified by its Secretary or Assistant Secretary authorizing
the execution of any supplemental indenture (in form satisfactory to the
Trustee), 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; provided
that 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 or
immunities under this Indenture or otherwise.
Any
supplemental indenture authorized by the provisions of this Section 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
8.02.
Section
8.02. Supplemental
Indenture with Consent of Noteholders.
With
the
consent (evidenced as provided in Article
12)
of the
holders of a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, 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 no
such supplemental indenture shall:
(a) extend
the fixed maturity of any Note;
(b) reduce
the rate or extend the time of payment of Interest thereon;
(c) reduce
the principal amount thereof or reduce any amount payable on redemption or
repurchase thereof;
(d) change
the obligation of the Company to repurchase any Note upon the happening of
a
Termination of Trading in a manner adverse to the holders of Notes;
(e) impair
the right of any Noteholder to institute suit for the payment thereof;
(f) make
the
principal thereof or Interest thereon payable in any coin or currency other
than
that provided in the Notes;
(g) impair
the right to convert the Notes into Common Stock or reduce the number of shares
of Common Stock or any other property receivable by a Noteholder upon conversion
subject to the terms set forth herein, including Section
14.05,
in each
case, without the consent of the holder of each Note so affected;
75
(h) modify
any of the provisions of this Section or Section
6.07,
except
to increase any such percentage or to provide that certain other provisions
of
this Indenture cannot be modified or waived without the consent of the holder
of
each Note so affected;
(i) change
any obligation of the Company to maintain an office or agency in the places
and
for the purposes set forth in Section
4.02;
(j) reduce
the quorum or voting requirements set forth in Article
13;
(k) subordinate
the Notes or any Guarantee to any other obligation of the Company or the
applicable Guarantor;
(l) release
any security interest that may have been granted in favor of the holders of
the
Notes other than pursuant to the terms of such security interest;
(m) at
any
time after a Change of Control has occurred, change the time at which the Change
of Control Offer relating thereto must be made or at which the Notes must be
repurchased pursuant to such Change of Control Offer;
(n) at
any
time after the Company is obligated to make an Asset Sale Offer with the Excess
Proceeds from Asset Sales, change the time at which such Asset Sale Offer must
be made or at which the Notes must be repurchased pursuant thereto;
(o) make
any
change in any Guarantee that would adversely affect the holders; or
(p) reduce
the aforesaid percentage of Notes, the holders of which are required to consent
to any such supplemental indenture, without the consent of the holders of all
Notes then outstanding.
Upon
the
written request of the Company, accompanied by a copy of the resolutions of
the
Board of Directors certified by its Secretary or Assistant Secretary authorizing
the execution of any such supplemental indenture (in form satisfactory to the
Trustee), 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 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 to
approve the particular form of any proposed supplemental indenture, but it
shall
be sufficient if such consent shall approve the substance thereof.
Section
8.03. Effect
of Supplemental Indenture.
Upon
the
execution of any supplemental indenture pursuant to the provisions of this
Article, this Indenture shall be and shall 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
shall be deemed to be part of the terms and conditions of this Indenture for
any
and all purposes.
76
Section
8.04. Notation
on Notes.
Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to the provisions of this Article may bear a notation in form approved
by the Trustee as to any matter provided for in such supplemental indenture.
If
the Company or the Trustee shall so determine, 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
15.10)
and
delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.
Section
8.05. Evidence
of Compliance of Supplemental Indenture to Be Furnished to
Trustee.
Prior
to
entering into any supplemental indenture, the Trustee shall be provided with
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 and is otherwise authorized or permitted by this
Indenture.
ARTICLE
9
GUARANTEES
Section
9.01. Guarantee.
Subject
to this Article
9,
each
Guarantor hereby unconditionally guarantees to each holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns: (a) the due and punctual payment of the principal of, premium,
if
any, and interest on the Notes, subject to any applicable grace period, whether
at Stated Maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on the overdue principal of and premium, if any,
and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the holders or the
Trustee under this Indenture or any other agreement with or for the benefit
of
the holders or the Trustee, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Notes
or
any of such other obligations, that same shall be promptly paid in full when
due
or performed in accordance with the terms of the extension or renewal, whether
at Stated Maturity, by acceleration pursuant to Section
6.01,
redemption or otherwise. Failing payment when due of any amount so guaranteed
or
any performance so guaranteed for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately. Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of
collection.
77
Each
Guarantor hereby agrees that its obligations with regard to its Guarantee shall
be joint and several, unconditional, irrespective of the validity or
enforceability of the Notes or the obligations of the Company under this
Indenture, the absence of any action to enforce the same, the recovery of any
judgment against the Company or any other obligor with respect to this
Indenture, the Notes or the Obligations of the Company under this Indenture
or
the Notes, any action to enforce the same or any other circumstances (other
than
complete performance) which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor further, to the extent
permitted by law, waives and relinquishes all claims, rights and remedies
accorded by applicable law to guarantors and agrees not to assert or take
advantage of any such claims, rights or remedies, including but not limited
to:
(a) any right to require any of the Trustee, the holders or the Company (each
a
“Benefited
Party”),
as a
condition of payment or performance by such Guarantor, to (1) proceed against
the Company, any other guarantor (including any other Guarantor) of the
Obligations under the Guarantees or any other Person, (2) proceed against or
exhaust any security held from the Company, any such other guarantor or any
other Person, (3) proceed against or have resort to any balance of any deposit
account or credit on the books of any Benefited Party in favor of the Company
or
any other Person, or (4) pursue any other remedy in the power of any Benefited
Party whatsoever; (b) any defense arising by reason of the incapacity, lack
of
authority or any disability or other defense of the Company including any
defense based on or arising out of the lack of validity or the unenforceability
of the Obligations under the Guarantees or any agreement or instrument relating
thereto or by reason of the cessation of the liability of the Company from
any
cause other than payment in full of the Obligations under the Guarantees; (c)
any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (d) any defense based upon any
Benefited Party’s errors or omissions in the administration of the Obligations
under the Guarantees, except behavior which amounts to bad faith; (e)(1) any
principles or provisions of law, statutory or otherwise, which are or might
be
in conflict with the terms of the Guarantees and any legal or equitable
discharge of such Guarantor’s obligations hereunder, (2) the benefit of any
statute of limitations affecting such Guarantor’s liability hereunder or the
enforcement hereof, (3) any rights to set-offs, recoupments and counterclaims
and (4) promptness, diligence and any requirement that any Benefited Party
protect, secure, perfect or insure any security interest or lien or any property
subject thereto; (f) notices, demands, presentations, protests, notices of
protest, notices of dishonor and notices of any action or inaction, including
acceptance of the Guarantees, notices of Default under the Notes or any
agreement or instrument related thereto, notices of any renewal, extension
or
modification of the Obligations under the Guarantees or any agreement related
thereto, and notices of any extension of credit to the Company and any right
to
consent to any thereof; (g) to the extent permitted under applicable law, the
benefits of any “One Action” rule and (h) any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of the Guarantees.
Except to the extent expressly provided herein, including Section
9.05,
each
Guarantor hereby covenants that its Guarantee shall not be discharged except
by
complete performance of the obligations contained in its Guarantee and this
Indenture.
If
any
holder or the Trustee is required by any court or otherwise to return to the
Company, the Guarantors or any custodian, trustee, liquidator or other similar
official acting in relation to either the Company or the Guarantors, any amount
paid by either to the Trustee or such holder, the Guarantee of such Guarantor,
to the extent theretofore discharged, shall be reinstated in full force and
effect.
78
Each
Guarantor agrees that it shall not be entitled to any right of subrogation
in
relation to the holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby. Each Guarantor further
agrees that, as between the Guarantors, on the one hand, and the holders and
the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Section
6.01
hereof
for the purposes of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby and (y) in the event of any declaration of acceleration of
such obligations as provided in Section
6.01
hereof,
such obligations (whether or not due and payable) shall forthwith become due
and
payable by the Guarantors for the purpose of this Guarantee. The Guarantors
shall have the right to seek contribution from any non-paying Guarantor so
long
as the exercise of such right does not impair the rights of the holders under
the Guarantee.
Section
9.02. Limitation
on Guarantor Liability.
(a) Each
Guarantor, and by its acceptance of Notes, each holder, hereby confirms that
it
is the intention of all such parties that the Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or
any similar federal or state law to the extent applicable to any guarantee.
To
effectuate the foregoing intention, the Trustee, the holders and the Guarantors
hereby irrevocably agree that each Guarantor’s liability shall be that amount
from time to time equal to the aggregate liability of such Guarantor under
the
guarantee, but shall be limited to the lesser of (a) the aggregate amount of
the
Company’s obligations under the Notes and this Indenture or (b) the amount, if
any, which would not have (1) rendered the Guarantor “insolvent” (as such term
is defined in Bankruptcy Law and in the Debtor and Creditor Law of the State
of
New York) or (2) left it with unreasonably small capital at the time its
guarantee with respect to the Notes was entered into, after giving effect to
the
incurrence of existing Debt immediately before such time; provided,
however,
it
shall be a presumption in any lawsuit or proceeding in which a Guarantor is
a
party that the amount guaranteed pursuant to the guarantee with respect to
the
Notes is the amount described in clause (a) above unless any creditor, or
representative of creditors of the Guarantor, or debtor in possession or trustee
in bankruptcy of the Guarantor, otherwise proves in a lawsuit that the aggregate
liability of the Guarantor is limited to the amount described in clause (b).
(b) In
making
any determination as to the solvency or sufficiency of capital of a Guarantor
in
accordance with the proviso of Section
9.02(a),
the
right of each Guarantor to contribution from other Guarantors and any other
rights such Guarantor may have, contractual or otherwise, shall be taken into
account.
Section
9.03. Execution
and Delivery of Guarantee.
To
evidence its Guarantee set forth in Section
9.01,
each
Guarantor hereby agrees that a notation of such Guarantee in substantially
the
form included in Exhibit
B
attached
hereto shall be endorsed by an Officer of such Guarantor on each Note
authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Guarantor by its President or one of its Vice
Presidents.
79
Each
Guarantor hereby agrees that its Guarantee set forth in Section
9.01
shall
remain in full force and effect notwithstanding any failure to endorse on each
Note a notation of such Guarantee.
If
an
Officer whose signature is on this Indenture or on the Guarantee no longer
holds
that office at the time the Trustee authenticates the Note on which a Guarantee
is endorsed, the Guarantee shall be valid nevertheless.
The
delivery of any Note by the Trustee, after the authentication thereof hereunder,
shall constitute due delivery of the Guarantee set forth in this Indenture
on
behalf of the Guarantors.
The
Company hereby agrees that it shall cause each Person that becomes obligated
to
provide a Guarantee pursuant to Section
4.18
(each, a
“Future
Guarantor”)
to
execute a supplemental indenture in form and substance satisfactory to the
Trustee, pursuant to which such Person provides the guarantee set forth in
this
Article
9
and
otherwise assumes the obligations and accepts the rights of a Guarantor under
this Indenture, in each case with the same effect and to the same extent as
if
such Person had been named herein as a Guarantor. The Company also hereby agrees
to cause each such new Guarantor to evidence its guarantee by endorsing a
notation of such guarantee on each Note as provided in this
Section.
Section
9.04. Guarantors
May Consolidate, etc., on Certain Terms.
Except
as
otherwise provided in Section
9.05,
no
Guarantor may consolidate with or merge with or into (whether or not such
Guarantor is the Surviving Person) another Person whether or not affiliated
with
such Guarantor unless:
(a) subject
to Section
9.05,
the
Person formed by or surviving any such consolidation or merger (if other than
a
Guarantor or the Company) unconditionally assumes all the obligations of such
Guarantor, pursuant to a supplemental indenture in form and substance
satisfactory to the Trustee, under this Indenture, the Guarantee on the terms
set forth herein or therein; and
(b) the
Guarantor complies with the requirements of Article
5
hereof.
In
case
of any such consolidation, merger, sale or conveyance and upon the assumption
by
the successor Person, by supplemental indenture, executed and delivered to
the
Trustee and satisfactory in form and substance to the Trustee, of the Guarantee
endorsed upon the Notes and the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor
with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Guarantees
so issued shall in all respects have the same legal rank and benefit under
this
Indenture as the Guarantees theretofore and thereafter issued in accordance
with
the terms of this Indenture as though all of such Guarantees had been issued
at
the date of the execution hereof.
80
Except
as
set forth in Articles
4
and
5,
and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as
an
entirety to the Company or another Guarantor.
Section
9.05. Releases
Following Merger, Consolidation or Sale of Assets, Etc.
In
the
event of a sale or other disposition of all or substantially all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all of the Capital Stock of any Guarantor, in each case
to
a Person that is not (either before or after giving effect to such transactions)
a Subsidiary of the Company, then such Guarantor (in the event of a sale or
other disposition, by way of merger, consolidation or otherwise, of all of
the
Capital Stock of such Guarantor) or the corporation acquiring the property
(in
the event of a sale or other disposition of all or substantially all of the
assets of such Guarantor) shall be released and relieved of any obligations
under its Guarantee; provided
that the
net proceeds of such sale or other disposition shall be applied in accordance
with the applicable provisions of this Indenture, including without limitation
Section
4.12.
Upon
delivery by the Company to the Trustee of an Officers’ Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made
by
the Company in accordance with the provisions of this Indenture, including
without limitation Section
4.12,
the
Trustee shall execute any documents reasonably required in order to evidence
the
release of any Guarantor from its obligations under its Guarantee.
Any
Guarantor not released from its obligations under its Guarantee shall remain
liable for the full amount of principal of and interest on the Notes and for
the
other obligations of any Guarantor under this Indenture as provided in this
Article
9.
ARTICLE
10
[RESERVED]
ARTICLE
11
SATISFACTION
AND DISCHARGE OF INDENTURE
Section
11.01. Discharge
of Indenture.
When
(a)
the Company shall deliver to the Trustee for cancellation all Notes theretofore
authenticated (other than any Notes that have been mutilated, destroyed, lost
or
stolen and in lieu of or in substitution for which other Notes shall have been
authenticated and delivered) and not theretofore canceled, or (b) all the Notes
not theretofore canceled or delivered to the Trustee for cancellation shall
have
become due and payable, or are by their terms to become due and payable within
three years or are to be called for redemption within three years under
arrangements satisfactory to the Trustee for the giving of notice of redemption,
and the Company shall deposit with the Trustee, in trust, funds sufficient
to
pay at maturity or upon redemption of all of the Notes (other than any Notes
that shall have been mutilated, destroyed, lost or stolen and in lieu of or
in
substitution for which other Notes shall have been authenticated and delivered)
not theretofore canceled or delivered to the Trustee for cancellation, including
principal and Interest due or to become due to such date of maturity or
redemption date, as the case may be, accompanied by a verification report,
as to
the sufficiency of the deposited amount, from an independent certified
accountant or other financial professional satisfactory to the Trustee, and
if
the Company shall also pay or cause to be paid all other sums payable hereunder
by the Company, and in the case of either clause (a) or (b), no Default or
Event
of Default with respect to this Indenture or the Notes shall have occurred
and
be continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit shall not result in 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 is bound, then this Indenture shall cease
to
be of further effect (except as to (i) remaining rights of registration of
transfer, substitution and exchange and conversion of Notes, (ii) rights
hereunder of Noteholders to receive payments of principal of and Interest on
the
Notes and the other rights, duties and obligations of Noteholders, as
beneficiaries hereof with respect to the amounts, if any, so deposited with
the
Trustee and (iii) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, on written demand of the Company accompanied by
an
Officers’ Certificate and an Opinion of Counsel as required by Section
15.05
and at
the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Company,
however, hereby agrees to reimburse the Trustee for any costs or expenses
thereafter incurred by the Trustee and to compensate the Trustee for any
services thereafter rendered by the Trustee in connection with this Indenture
or
the Notes. The Trustee shall hold in trust money deposited with it pursuant
to
this Article. It shall apply the deposited money through the Paying Agent and
in
accordance with this Indenture to the payment of principal of and Interest
on
the Notes.
81
Section
11.02. Deposited
Monies to Be Held in Trust by Trustee.
Subject
to Section
11.04,
all
monies deposited with the Trustee pursuant to Section
11.01
shall be
held in trust for the sole benefit of the Noteholders, and such monies shall
be
applied by the Trustee to the payment, either directly or through any paying
agent (including the Company if acting as its own paying agent), to the holders
of the particular Notes for the payment or redemption of which such monies
have
been deposited with the Trustee of all sums due and to become due thereon for
principal, premium, if any, and Interest.
Section
11.03. Paying
Agent to Repay Monies Held.
Upon
the
satisfaction and discharge of this Indenture, all monies then held by any paying
agent of the Notes (other than the Trustee) shall, upon written request of
the
Company, be repaid to it or paid to the Trustee, and thereupon such paying
agent
shall be released from all further liability with respect to such
monies.
Section
11.04. Return
of Unclaimed Monies.
Subject
to the requirements of applicable law, any monies deposited with or paid to
the
Trustee for payment of the principal or Interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years (or such shorter
period of time under applicable escheat law) after the date upon which the
principal of or Interest on such Notes, as the case may be, shall have become
due and payable, shall be repaid to the Company by the Trustee on demand and
all
liability of the Trustee shall thereupon cease with respect to such monies;
and
the holder of any of the Notes shall thereafter look only to the Company for
any
payment that such holder may be entitled to collect unless an applicable
abandoned property law designates another Person.
82
Section
11.05. Reinstatement.
If
the
Trustee or the paying agent is unable to apply any money in accordance with
Section
11.02
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
11.01
until
such time as the Trustee or the paying agent is permitted to apply all such
money in accordance with Section
11.02;
provided
that, if
the Company makes any payment of Interest on or principal of any Note 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 money
held
by the Trustee or paying agent.
ARTICLE
12
THE
NOTEHOLDERS
Section
12.01. 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,
or
(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
13,
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 Noteholders, 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 fifteen (15) days
prior to the date of commencement of solicitation of such action.
Section
12.02. Proof
of Execution by Noteholders.
Subject
to the provisions of Sections
7.01,
7.02
and
13.04,
proof
of the execution of any instrument by a Noteholder or its 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 registry of such
Notes or by a certificate of the Registrar.
The
record of any Noteholders’ meeting shall be proved in the manner provided in
Section
13.05.
83
Section
12.03. Who
Are Deemed Absolute Owners.
The
Company, the Trustee, any paying agent, any conversion agent, any Common
Depositary and any Registrar may deem the Person in whose name such Note shall
be registered upon the Security Register to be, and may treat it 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 made by
any
Person other than the Company or any Registrar) for the purpose of receiving
payment of or on account of the principal of 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, Common Depositary, conversion agent nor any
Registrar shall be affected by any notice to the contrary. All such payments
so
made to any holder for the time being, or upon such holder’s order, 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.
Section
12.04. 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 which are owned by the Company or any other obligor on
the
Notes or any Affiliate of 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
which
a Responsible Officer knows are so owned shall be so disregarded. Notes so
owned
which have been pledged in good faith may be regarded as outstanding for the
purposes of this Section if the pledgee shall establish to the satisfaction
of
the Trustee the pledgee’s right to vote such Notes and that the pledgee is not
the Company, any other obligor on the Notes or any Affiliate of 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
7.01,
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
12.05. Revocation
of Consents; Future Holders Bound.
At
any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section
12.01,
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 which 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
12.02,
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.
84
ARTICLE
13
MEETINGS
OF NOTEHOLDERS
Section
13.01. Purpose
of Meetings.
A
meeting
of Noteholders may be called at any time and from time to time pursuant to
the
provisions of this Article 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 permitted under this Indenture, or to consent to the waiving of any
Default or Event of 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
6;
(b) to
remove
the Trustee and nominate a successor trustee pursuant to the provisions of
Article
7;
(c) to
consent to the execution of an indenture or indentures supplemental hereto
pursuant to the provisions of Section
8.02;
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 provision
of
this Indenture or under applicable law.
Section
13.02. Call
of Meetings 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 twenty-five percent (25%) in aggregate principal amount
of the Notes then outstanding, shall have requested the Trustee to call a
meeting of Noteholders, by written request setting forth in reasonable detail
the action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within twenty (20) days after receipt of
such
request, then the Company or such Noteholders may determine the time and the
place for such meeting and may call such meeting to take any action authorized
in Section
13.01
by
mailing notice a notice of meeting. Notice of every meeting of the Noteholders,
setting forth the time and place of such meeting and in general terms the action
proposed to be taken at such meeting and the establishment of any record date
pursuant to Section
12.01,
shall
be mailed to holders of Notes at their addresses as they shall appear on the
Security Register. Such notice shall also be mailed to the Company. Such notices
shall be mailed not less than twenty (20) nor more than ninety (90) days prior
to the date fixed for the meeting.
Any
meeting of Noteholders shall be valid without notice if the holders of all
Notes
then outstanding are present in person or by proxy or if notice is waived before
or after the meeting by the holders of all Notes outstanding, and if the Company
and the Trustee are either present by duly authorized representatives or have,
before or after the meeting, waived notice.
85
Section
13.03. Qualifications
for Voting.
To
be
entitled to vote at any meeting of Noteholders, a person shall (a) be a holder
of one or more Notes on the record date pertaining to such meeting or (b) be
a
person appointed by an instrument in writing as proxy by a holder of one or
more
Notes on the record date pertaining to 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.
Section
13.04. Regulations.
Notwithstanding
any other provisions of this Indenture, the Trustee may make such reasonable
regulations as it may deem advisable for any meeting of Noteholders, in regard
to proof of the holding of Notes and of the appointment of proxies, and in
regard to the appointment and duties of inspectors of votes, the submission
and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall think
fit.
The
Company or the Noteholders calling the meeting, as the case may be, shall,
by an
instrument in writing, appoint a temporary chairman of the meeting. A permanent
chairman and a permanent secretary of the meeting shall be elected by vote
of
the holders of a majority in principal amount of the Notes represented at the
meeting and entitled to vote at the meeting.
Subject
to the provisions of Section
12.04,
at any
meeting each Noteholder or proxyholder shall be entitled to one vote for each
$100,000 principal amount of Notes held or represented by him; provided
that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other
than
by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Noteholders. Any meeting
of Noteholders duly called pursuant to the provisions of Section
13.02
may be
adjourned from time to time by the holders of a majority of the aggregate
principal amount of Notes represented at the meeting, whether or not
constituting a majority of the aggregate principal amount of Notes outstanding,
the latter of which shall constitute a quorum, and the meeting may be held
as so
adjourned without further notice.
Section
13.05. Voting.
The
vote
upon any resolution submitted to any meeting of Noteholders shall be by written
ballot on which shall be subscribed the signatures of the holders of Notes
or of
their representatives by proxy and the outstanding principal amount of the
Notes
held or represented by them. The permanent 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
13.02.
The
record shall show the principal amount of the Notes voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of
the
duplicates shall be delivered to the Company and the other to the Trustee to
be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.
86
Any
record so signed and verified shall be conclusive evidence of the matters
therein stated.
Section
13.06. No
Delay of Rights by Meeting.
Nothing
contained in this Article 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
14
CONVERSION
OF NOTES
Section
14.01. Right
to Convert.
(a) Subject
to and upon compliance with the provisions of this Indenture, the holder of
any
Note shall have the right, at such holder’s option at any time prior to the
close of business on the date of maturity of the Notes, to convert the principal
amount of the Note, or any portion of such principal amount which is a multiple
of $100,000, into fully paid and non-assessable shares of Common Stock (as
such
shares shall then be constituted) at the Conversion Rate in effect at such
time,
by surrender of the Note so to be converted in whole or in part, together with
any required funds, under the circumstances described in this Section and in
the
manner provided in Section
14.02.
(b) A
Note in
respect of which a holder is electing to exercise its option to require the
Company to purchase such holder’s Notes upon an Asset Sale Offer, Change of
Control Offer or Termination of Trading Offer pursuant to Section
3.02
may be
converted only if such holder withdraws its election in accordance with
Section
3.02.
A
holder of Notes is not entitled to any rights of a holder of Common Stock until
such holder has converted his Notes to Common Stock, and only to the extent
such
Notes are deemed to have been converted to Common Stock under this
Article.
Section
14.02. Exercise
of Conversion Right; Issuance of Common Stock on Conversion; No Adjustment
for
Interest or Dividends.
In
order
to exercise the conversion right with respect to any Note in certificated form,
the Company must receive at the office or agency of the Company maintained
for
that purpose or, at the option of such holder, the Corporate Trust Office,
such
Note with the original or facsimile of the form entitled “Conversion
Notice”
on
the
reverse thereof, duly completed and manually signed, together with such Notes
duly endorsed for transfer, accompanied by the funds, if any, required by this
Section. Such notice shall also state the name or names (with address or
addresses) in which the certificate or certificates for shares of Common Stock
which shall be issuable on such conversion shall be issued, and shall be
accompanied by transfer or similar taxes, if required pursuant to Section
14.08.
87
In
order
to exercise the conversion right with respect to any interest in a Global Note,
the beneficial holder must complete, or cause to be completed, the appropriate
instruction form for conversion pursuant to the Common Depositary’s book-entry
conversion program, deliver, or cause to be delivered, by book-entry delivery
an
interest in such Global Note, furnish appropriate endorsements and transfer
documents if required by the Company or the Trustee or conversion agent, and
pay
the funds, if any, required by this Section and any transfer taxes if required
pursuant to Section
14.08.
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
Noteholder at the office or agency maintained by the Company for such purpose
pursuant to Section
4.02
a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such Note or portion thereof as determined
by
the Company in accordance with the provisions of this Article and a check or
cash in respect of any fractional interest in respect of a share of Common
Stock
arising upon such conversion, calculated by the Company as provided in
Section
14.03.
In case
any Note of a denomination greater than $100,000 shall be surrendered for
partial conversion, and subject to Section
2.03,
the
Company shall execute and the Trustee shall authenticate and deliver to the
holder of the Note so surrendered, without charge to such holder, 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 (the “Conversion
Date”)
on
which the requirements set forth above in this Section 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 Rate in effect on the date upon which such Note shall be
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 to the close of
business on the Business Day preceding such Interest Payment Date shall be
accompanied by payment, in immediately available funds or other 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 (1) if the Company has specified a Purchase Date
that
is after a record date and on or prior to the next Interest Payment Date or
(2)
to the extent of any overdue Interest, if any overdue Interest exists at the
time of conversion with respect to such Note. Except as provided above in this
Section, no payment or other 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.
88
Upon
the
conversion of an interest in a Global Note, the Trustee (or other conversion
agent appointed by the Company), or the Custodian at the direction of the
Trustee (or other conversion agent appointed by the Company), shall make a
notation on such Global Note as to the reduction in the principal amount
represented thereby. The Company shall notify the Trustee in writing of any
conversions of Notes effected through any conversion agent other than the
Trustee.
Upon
the
conversion of a Note, that portion of the accrued but unpaid Interest to the
Conversion Date, with respect to the converted Note shall not be canceled,
extinguished or forfeited, but rather shall be deemed to be paid in full to
the
holder thereof through delivery of the Common Stock (together with the cash
payment, if any in lieu of fractional shares) in exchange for the Note being
converted pursuant to the provisions hereof, and the Fair Market Value of such
shares of Common Stock (together with any such cash payment in lieu of
fractional shares) shall be treated as issued, to the extent thereof, first
in
exchange for and in satisfaction of the Company’s obligation to pay the
principal amount of the converted Note, the accrued but unpaid Interest through
the Conversion Date and the balance, if any, of such Fair Market Value of such
Common Stock (and any such cash payment) shall be treated as issued in exchange
for and in satisfaction of the right to convert the Note being converted
pursuant to the provisions hereof.
Section
14.03. Cash
Payments in Lieu of Fractional Shares.
No
fractional shares of Common Stock or scrip certificates representing fractional
shares shall be issued upon conversion of Notes. If more than one Note shall
be
surrendered for conversion at one time by the same holder, the number of full
shares that shall be issuable upon conversion shall be computed on the basis
of
the aggregate principal amount of the Notes (or specified portions thereof
to
the extent permitted hereby) so surrendered. If any fractional share of stock
would be issuable upon the conversion of any Note or Notes, the Company shall
make an adjustment and payment therefor in cash at the Closing Sale Price on
the
last Trading Day immediately preceding the Conversion Date thereof to the holder
of Notes.
Section
14.04. Conversion
Rate.
Each
$100,000 principal amount of the Notes shall be initially convertible into
4,237 shares
of
Common Stock at the initial Conversion Price of $23.60 per share, as specified
in the form of Note (herein called the “Conversion
Rate”)
attached as Exhibit
A
hereto,
subject to adjustment as provided in this Article.
Section
14.05. Adjustment
of Conversion Rate.
The
Conversion Rate shall be adjusted from time to time by the Company as
follows:
(a) In
case
the Company shall hereafter pay a dividend or make a distribution to all holders
of the outstanding Common Stock in shares of Common Stock, the Conversion Rate
shall be increased so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect at the opening of business on the
date
following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution by a fraction,
89
(i) the
numerator of which shall be the sum of the number of shares of Common Stock
outstanding at the close of business on the date fixed for the determination
of
shareholders entitled to receive such dividend or other distribution plus the
total number of shares of Common Stock constituting such dividend or other
distribution; and
(ii) the
denominator of which shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination,
such
increase to become effective immediately after the opening of business on the
day following the date fixed for such determination. For the purpose of this
paragraph (a), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company will
not pay any dividend or make any distribution on shares of Common Stock held
in
the treasury of the Company. If any dividend or distribution of the type
described in this Section
14.05(a)
is
declared but not so paid or made, the Conversion Rate shall again be adjusted
to
the Conversion Rate that would then be in effect if such dividend or
distribution had not been declared.
(b) In
case
the Company shall issue rights or warrants to all holders of its outstanding
shares of Common Stock entitling them (for a period expiring within forty-five
(45) days after the date fixed for determination of shareholders entitled to
receive such rights or warrants) to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market Price immediately
preceding the date such distribution is first publicly announced by the Company,
the Conversion Rate shall be increased so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect immediately prior to
the
date fixed for determination of shareholders entitled to receive such rights
or
warrants by a fraction,
(i) the
numerator of which shall be the number of shares of Common Stock outstanding
on
the date fixed for determination of shareholders entitled to receive such rights
or warrants plus the total number of additional shares of Common Stock offered
for subscription or purchase, and
(ii) the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding at the close of business on the date fixed for determination of
shareholders entitled to receive such rights or warrants plus the number of
shares that the aggregate offering price of the total number of shares so
offered would purchase at a price equal to the Current Market Price immediately
preceding the date such distribution is first publicly announced by the
Company,
such
adjustment shall be successively made whenever any such rights or warrants
are
issued, and shall become effective immediately after the opening of business
on
the day following the date fixed for determination of shareholders entitled
to
receive such rights or warrants. To the extent that shares of Common Stock
are
not delivered after the expiration of such rights or warrants, the Conversion
Rate shall be readjusted to the Conversion Rate that would then be in effect
had
the adjustments made upon the issuance of such rights or warrants been made
on
the basis of delivery of only the number of shares of Common Stock actually
delivered. If such rights or warrants are not so issued, the Conversion Rate
shall again be adjusted to be the Conversion Rate that would then be in effect
if such date fixed for the determination of shareholders entitled to receive
such rights or warrants had not been fixed. In determining whether any rights
or
warrants entitle the holders to subscribe for or purchase shares of Common
Stock
at a price less than the Current Market Price immediately preceding the date
such distribution is first publicly announced by the Company, and in determining
the aggregate offering price of such shares of Common Stock, there shall be
taken into account any consideration received by the Company for such rights
or
warrants and any amount payable on exercise or conversion thereof, the value
of
such consideration, if other than cash, to be determined by the Board of
Directors.
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(c) In
case
outstanding shares of Common Stock shall be subdivided into a greater number
of
shares of Common Stock, the Conversion Rate in effect at the opening of business
on the day following the day upon which such subdivision becomes effective
shall
be proportionately increased, and, conversely, in case outstanding shares of
Common Stock shall be combined into a smaller number of shares of Common Stock,
the Conversion Rate in effect at the opening of business on the day following
the day upon which such combination becomes effective shall be proportionately
reduced, such increase or reduction, 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 Common
Stock shares of any class of capital stock of the Company or evidences of its
indebtedness or assets (including securities, but excluding any rights or
warrants referred to in Section
14.05(b),
and
excluding any dividend or distribution (x) paid exclusively in cash or (y)
referred to in Section
14.05(a)
(any of
the foregoing hereinafter in this Section
14.05(d)
called
the “Securities”)),
then, in each such case (unless the Company elects to reserve such Securities
for distribution to the Noteholders upon the conversion of the Notes so that
any
such holder converting Notes will receive upon such conversion, in addition
to
the shares of Common Stock to which such holder is entitled, the amount and
kind
of such Securities which such holder would have received if such holder had
converted its Notes into Common Stock immediately prior to the Record Date
for
such distribution of the Securities) the Conversion Rate shall be increased
so
that the same shall be equal to the rate determined by multiplying the
Conversion Rate in effect on the Record Date with respect to such distribution
by a fraction,
(i) the
numerator of which shall be the Current Market Price on such Record Date;
and
(ii) the
denominator of which shall be the Current Market Price on such Record Date
less
the Fair Market Value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a resolution of the Board
of
Directors) on the Record Date of the portion of the Securities so distributed
applicable to one share of Common Stock,
91
such
adjustment to become effective immediately prior to the opening of business
on
the day following such Record Date; provided
that, if
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 the Record Date. If such
dividend or distribution is not so paid or made, the Conversion Rate shall
again
be adjusted to be the Conversion Rate 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
14.05(d)
by
reference to the actual or when issued trading market for any securities, it
must in doing so consider the prices in such market over the same period used
in
computing the Current Market Price on the applicable Record Date.
Notwithstanding the foregoing, if the Securities distributed by the Company
to
all holders of its Common Stock consist of capital stock of, or similar equity
interests in, a Subsidiary or other business unit, the Conversion Rate shall
be
increased so that the same shall be equal to the rate determined by multiplying
the Conversion Rate in effect on the Record Date with respect to such
distribution by a fraction,
(i) the
numerator of which shall be the sum of (A) the average of the Closing Sale
Prices of the Common Stock for the ten (10) Trading Days commencing on and
including the fifth Trading Day after the Ex-Dividend Time plus (B) the Fair
Market Value of the securities distributed in respect of each share of Common
Stock for which this Section
14.05(d)
applies,
which shall equal the number of Securities distributed in respect of each share
of Common Stock multiplied by the average of the closing sale prices of those
Securities distributed (where such closing sale prices are available) for the
ten (10) Trading Days commencing on and including the fifth Trading Day after
the Ex-Dividend Time; and
(iii) the
denominator of which shall be the average of the Closing Sale Prices of the
Common Stock for the ten (10) Trading Days commencing on and including the
fifth
Trading Day after the Ex-Dividend Time,
such
adjustment to become effective immediately prior to the opening of business
on
the day following such Record Date; provided
that the
Company may in lieu of the foregoing adjustment make adequate provision 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 the Record Date with respect to such distribution.
92
Rights
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 certain circumstances), which rights or
warrants, until the occurrence of a specified event or events (“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 be deemed not to have been distributed for purposes of this Section
(and no adjustment to the Conversion Rate under this Section will be required)
until the occurrence of the earliest Trigger Event, whereupon such rights and
warrants shall be deemed to have been distributed and an appropriate adjustment
(if any is required) to the Conversion Rate shall be made under this
Section
14.05(d).
If any
such right or warrant, including any such existing rights or warrants
distributed prior to the date of this Indenture, are subject to events, upon
the
occurrence of which such rights or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date
of the occurrence of any and each such event shall be deemed to be the date
of
distribution and record date with respect to new rights or warrants with such
rights (and a termination or expiration of the existing rights or warrants
without exercise by any of the holders thereof). In addition, in the event
of
any distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Rate under this Section was
made, (1) in the case of any such rights or warrants that shall all have been
redeemed or repurchased without exercise by any holders thereof, the Conversion
Rate 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 or holders of Common Stock with respect to such rights
or
warrants (assuming such holder had retained such rights 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 or warrants that shall have expired or been
terminated without exercise by any holders thereof, the Conversion Rate shall
be
readjusted as if such rights and warrants had not been issued.
No
adjustment of the Conversion Rate shall be made pursuant to this Section
14.05(d)
in
respect of rights or warrants distributed or deemed distributed on any Trigger
Event to the extent that such rights or warrants are actually distributed,
or
reserved by the Company for distribution to holders of Notes upon conversion
by
such holders of Notes to Common Stock.
For
purposes of this Section
14.05(d)
and
Sections
14.05(a)
and
14.05(b),
any
dividend or distribution to which
this
Section
14.05(d)
is
applicable that also includes shares of Common Stock, or rights or warrants
to
subscribe for or purchase shares of Common Stock (or both), shall be deemed
instead to be (1) a dividend or distribution of the evidences of indebtedness,
assets or shares of capital stock other than such shares of Common Stock or
rights or warrants (and any Conversion Rate adjustment required by this
Section
14.05(d)
with
respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Rate adjustment required
by
Sections
14.05(a)
and
14.05(b)
with
respect to such dividend or distribution shall then be made), except (A) 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
other distribution”, “the date fixed for the determination of shareholders
entitled to receive such rights or warrants” and “the date fixed for such
determination” within the meaning of Sections
14.05(a)
and
14.05(b)
and (B)
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
14.05(a).
93
(e) In
case
the Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock cash (excluding any dividend or distribution in connection with
the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary), then, in such case, the Conversion Rate shall be increased so
that
the same shall equal the rate determined by multiplying the Conversion Rate
in
effect immediately prior to the close of business on such Record Date by a
fraction,
(i) the
numerator of which shall be the Current Market Price on such Record Date;
and
(ii) the
denominator of which shall be the Current Market Price on such Record Date
less
the amount of cash so distributed applicable to one share of Common
Stock,
such
adjustment to be effective immediately prior to the opening of business on
the
day following the Record Date; provided
that if
the portion of the cash 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 cash
such holder would have received had such holder converted each Note on the
Record Date. If such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such dividend or distribution had not been
declared.
(f) In
case a
tender or exchange offer made by the Company or any Subsidiary for all or any
portion of the Common Stock shall expire and such tender or exchange offer
(as
amended upon the expiration thereof) shall require the payment to shareholders
of consideration per share of Common Stock having a Fair Market Value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors) that as of the last
time (the “Expiration
Time”)
tenders or exchanges may be made pursuant to such tender or exchange offer
(as
it may be amended) exceeds the Closing Sale Price of a share of Common Stock
on
the Trading Day next succeeding the Expiration Time, the Conversion Rate shall
be increased so that the same shall equal the rate determined by multiplying
the
Conversion Rate in effect immediately prior to the Expiration Time by a
fraction,
(i) the
numerator of which shall be the sum of (x) 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 or exchange
offer) of all shares validly tendered or exchanged 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
(y) the product of the number of shares of Common Stock outstanding (less any
Purchased Shares) at the Expiration Time and the Closing Sale Price of a share
of Common Stock on the Trading Day next succeeding the Expiration Time,
and
94
(ii) the
denominator of which shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time multiplied
by the Closing Sale Price of a share of Common Stock on the Trading Day next
succeeding the Expiration Time,
such
adjustment to become effective immediately prior to the opening of business
on
the day following the Expiration Time. If the Company is obligated to purchase
shares pursuant to any such tender or exchange offer, but the Company is
permanently prevented by applicable law from effecting any such purchases or
all
such purchases are rescinded, the Conversion Rate shall again be adjusted to
be
the Conversion Rate that would then be in effect if such tender or exchange
offer had not been made.
(g) On
February 16 and August 16 of each year, beginning with February 16, 2009, the
Conversion Rate shall be adjusted to equal the quotient obtained by dividing
(i)
$100,000 by (ii) the Trading Reference VWAP; provided
that no
such adjustment shall be made if the number of shares issuable upon conversion
of the Notes at such adjusted Conversion Rate would be lower than the number
of
shares issuable at then existing Conversion Rate (after giving effect to prior
adjustments permitted pursuant to this clause).
(h) If
at any
time after the Issue Date the Company shall issue or sell its Common Stock
at a
price per share less than the Current Market Price then in effect, the
Conversion Rate shall be increased such that the Conversion Price is equal
to
the lowest price at which the Company has issued or sold its Common Stock after
the Issue Date such adjustment to take effect as of the date of the issuance
or
sale of such Common Stock; provided,
however,
that no
adjustment shall be made to the Conversion Price for the (i) issuance of Common
Stock pursuant to exercise of warrants or (ii) issuance of Common Stock or
any
other securities exercisable into shares of Common Stock (so long as all such
issuances in the aggregate do not exceed fifteen percent (15%) of the Common
Stock of the Company issued and outstanding immediately prior to such issuance
or grants) pursuant to exercise of stock options whether granted or reserved
under the Company’s employee stock plan, in each case of (i) and (ii), existing
on the Issue Date, or (iii) issuance or sale of any Common Stock in connection
with the Acquisitions. For purposes of this paragraph, “Acquisitions”
means
the acquisitions of Shenzhen Hongtianzhi Electronics Co., Ltd., Wuhan Higheasy
Electronic Technology Co., Changzhou Minking Electronic Co., Ltd., Shenzhen
Huiruitong Electrical Appliance Co., Ltd. and Vorx Telecommunications Co.,
Ltd.
(in Beijing).
(i) For
purposes of this Section
14.05,
the
following terms shall have the meaning indicated:
(i) “Current
Market Price”
shall
mean the average of the daily Closing Sale Prices per share of Common Stock
for
the twenty (20) consecutive Trading Days ending on the earlier of the Trading
Day immediately preceding the relevant date and the day before the “ex” date
with respect to the closing of the issuance, distribution, subdivision or
combination requiring such computation. For purpose of this paragraph, the
term
“ex” date, (1) 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 Sale Price was
obtained without the right to receive such issuance or distribution, and (2)
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.
95
If
another issuance, distribution, subdivision or combination to which Section
14.05
applies
occurs during the period applicable for calculating “Current Market Price”
pursuant to the definition in the preceding paragraph, “Current Market Price”
shall be calculated for such period in a manner determined by the Board of
Directors to reflect the impact of such issuance, distribution, subdivision
or
combination on the Closing Sale Price of the Common Stock during such
period.
(ii) “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).
(iii) “Trading
Day”
shall
mean (x) if the applicable security is quoted on the Nasdaq Global Market,
Global Select Market or Capital Market, a day on which trades may be made
thereon, (y) if the applicable security is listed or admitted for trading on
the
American Stock Exchange, New York Stock Exchange or another national securities
exchange, a day on which the American Stock Exchange, New York Stock Exchange
or
another national securities exchange is open for business, or (z) 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.
(j) The
Company may make such increases in the Conversion Rate, in addition to those
required by Section
14.05(a)
through
(i)
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 and Nasdaq Marketplace rules, the Company
from time to time may increase the Conversion Rate by any amount for any period
of time if the period is at least twenty (20) Business Days, the increase is
irrevocable during the period and the Board of Directors shall have made a
determination that such increase would be in the best interests of the Company,
which determination shall be conclusive. Whenever the Conversion Rate is
increased pursuant to the preceding sentence, the Company shall mail to holders
of record of the Notes a notice of the increase at least fifteen (15) days
prior
to the date the increased Conversion Rate takes effect, and such notice shall
state the increased Conversion Rate and the period during which it will be
in
effect.
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(k) No
adjustment in the Conversion Rate shall be required unless such adjustment
would
require an increase or decrease of at least one percent (1%) in such rate;
provided
that any
adjustments that by reason of this Section
14.05(l)
are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article shall be made by
the
Company and shall be made to the nearest cent or to the nearest one-ten
thousandth (1/10,000) of a share, as the case may be. No adjustment need be
made
for rights to purchase Common Stock pursuant to a Company plan for reinvestment
of dividends or interest or for any issuance of Common Stock or convertible
or
exchangeable securities or rights to purchase Common Stock or convertible or
exchangeable securities. To the extent the Notes become convertible into cash,
assets, property or securities (other than capital stock of the Company), no
adjustment need be made thereafter as to the cash, assets, property or such
securities. Interest will not accrue on any cash into which the Notes are
convertible.
(l) Whenever
the Conversion Rate 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 Rate after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.
Unless and until a Responsible Officer of the Trustee shall have received such
Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any
adjustment of the Conversion Rate and may assume that the last Conversion Rate
of which it has knowledge is still in effect. Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the
Conversion Rate setting forth the adjusted Conversion Rate and the date on
which
each adjustment becomes effective and shall mail such notice of such adjustment
of the Conversion Rate to the holder of each Note at his last address appearing
on the Security Register provided for in Section
4.02
of this
Indenture, within twenty (20) days after execution thereof. Failure to deliver
such notice shall not affect the legality or validity of any such
adjustment.
(m) In
any
case in which this Section provides that an adjustment shall become effective
immediately after (1) a record date or Record Date for an event, (2) the date
fixed for the determination of shareholders entitled to receive a dividend
or
distribution pursuant to Section
14.05(a),
(3) a
date fixed for the determination of shareholders entitled to receive rights
or
warrants pursuant to Section
14.05(b),
or (4)
the Expiration Time for any tender or exchange offer pursuant to Section
14.05(f),
(each a
“Determination
Date”),
the
Company may elect to defer until the occurrence of the applicable Adjustment
Event (as hereinafter defined) (x) issuing to the holder of any Note converted
after such Determination Date and before the occurrence of such Adjustment
Event, the additional shares of Common Stock or other securities issuable upon
such conversion by reason of the adjustment required by such Adjustment Event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment and (y) paying to such holder any amount in cash
in
lieu of any fraction pursuant to Section
14.03.
For
purposes of this Section
14.05(n),
the
term “Adjustment
Event”
shall
mean:
97
(i) in
any
case referred to in clause (1) hereof, the occurrence of such
event,
(ii) in
any
case referred to in clause (2) hereof, the date any such dividend or
distribution is paid or made,
(iii) in
any
case referred to in clause (3) hereof, the date of expiration of such rights
or
warrants, and
(iv) in
any
case referred to in clause (4) hereof, the date a sale or exchange of Common
Stock pursuant to such tender or exchange offer is consummated and becomes
irrevocable.
(n) For
purposes of this Section, the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu
of
fractions of shares of Common Stock. The Company will not pay any dividend
or
make any distribution on shares of Common Stock held in the treasury of the
Company.
Section
14.06. Effect
of Reclassification, Consolidation, Merger or Sale.
If
any of
the following events occur, namely (i) any reclassification or change of the
outstanding shares of Common Stock (other than (x) a subdivision or combination
to which Section
14.05(c)
applies)
as a result of which holders of Common Stock shall be entitled to receive stock,
other securities or other property or assets (including cash) with respect
to or
in exchange for such Common Stock, (ii) 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, other securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, or (iii)
any sale or conveyance of all or substantially all of the properties and assets
of the Company to any other Person as a result of which holders of Common Stock
shall be entitled to receive stock, other 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 (in form satisfactory to the Trustee)
providing that each Note shall be convertible into the kind and amount of shares
of stock, other securities or other 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 are 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 such holder’s rights of election, if any, as to
the kind or amount of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance (provided
that, if
the kind or amount of stock, other securities or other property or assets
(including cash) 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 the kind and amount of stock, other securities
or other property or assets (including cash) 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 which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article.
98
The
Company shall cause notice of the execution of such supplemental indenture
to be
mailed to each holder of Notes, at its address appearing on the Security
Register provided for in Section
4.02
of this
Indenture, within twenty (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 shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.
If
this
Section applies to any event or occurrence, Section
14.05
shall
not apply.
Section
14.07. Mandatory
Conversion.
In
addition to the rights of the Noteholders to convert the Notes as set forth
in
Section
14.01(a),
(a) if
2010
Mandatory Conversion Trigger shall have occurred, on the next succeeding Trading
Day, 50% of the Notes then outstanding shall be mandatorily converted, on a
pro
rata
basis
according to principal amount, at the applicable Conversion Ratio;
(b) if
both
2010 Mandatory Conversion Trigger and 2011 Mandatory Conversion Trigger shall
have occurred, in addition to Section 14.07(a) above, on the next succeeding
Trading Day after 2011 Mandatory Conversion Trigger, all of the Notes then
outstanding shall be mandatorily converted at the applicable Conversion Ratio;
and
(c) if
2010
Mandatory Conversion Trigger shall not have occurred and only 2011 Mandatory
Conversion Trigger shall have occurred, on the next succeeding Trading Day,
50%
of the Notes then outstanding shall be mandatorily converted, on a pro
rata
basis
according to principal amount, at the applicable Conversion Ratio.
The
Company shall promptly take all steps necessary to provide for the issuance
of
shares of Common Stock to the holders of Notes in connection with any such
mandatory conversion of the Notes.
“2010
Mandatory Conversion Trigger”
means,
during the one year period from February 16, 2009 to February 15, 2010 (such
dates inclusive), the 45-day VWAP equals or is greater than $40.00 per share
of
Common Stock; and
99
“2011
Mandatory Conversion Trigger”
means,
during the one year period from February 16, 2010 to February 15, 2011 (such
dates inclusive), the 45-day VWAP equals or is greater than $45.00 per share
of
Common Stock.
“45-day
VWAP”
means
as of February
15 of the applicable year, the simple arithmetic average of the VWAPs as shown
on Bloomberg for the forty-five Trading Days preceding such February 15, as
proportionally adjusted for any subdivision, consolidation, reclassification
or
similar event of the shares of the Common Stock. For the purposes this
Section
14.07
only,
“Trading Day” shall mean a trading day on which the minimum trading volume of
shares of the Common Stock on the Trading Market exceed 150,000 shares of the
Common Stock.
Section
14.08. Taxes
on Shares Issued.
The
issue
of stock certificates on conversions of Notes shall be made without charge
to
the converting Noteholder for any documentary, stamp or similar issue or
transfer tax in respect of the issue thereof. The Company shall not, however,
be
required to pay any such tax which may be payable in respect of any transfer
involved in the issue and delivery of stock in any name other than that of
the
holder of any Note converted, and the Company shall not be required to issue
or
deliver any such stock certificate unless and until the Person or Persons
requesting the issue thereof shall have 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
14.09. Reservation
of Shares; Shares to Be Fully Paid; Compliance with Governmental Requirements;
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 of Common Stock
to
provide for the conversion of the Notes from time to time as such Notes are
presented for conversion.
Before
taking any action which would cause an adjustment increasing the Conversion
Rate
to an amount that would cause the Conversion Price to be reduced below the
then
par value, if any, of the shares of Common Stock issuable upon conversion of
the
Notes, the Company will take all corporate action which may, in the opinion
of
its counsel, be necessary in order that the Company may validly and legally
issue shares of such Common Stock at such adjusted Conversion Rate.
The
Company covenants that all shares of Common Stock which may be issued upon
conversion of Notes will upon issue be fully paid and non-assessable by the
Company and free from all taxes, liens and charges with respect to the issue
thereof.
The
Company covenants that, if any shares of Common Stock to be provided for the
purpose of conversion of Notes hereunder require registration with or approval
of any governmental authority under any federal or state law before such shares
may be validly issued upon conversion, the Company will in good faith and as
expeditiously as possible, to the extent then permitted by the rules and
interpretations of the Commission (or any successor thereto), endeavor to secure
such registration or approval, as the case may be.
100
The
Company further covenants that, if at any time the Common Stock shall be listed
on the Nasdaq Global Market, Nasdaq Global Select Market or Nasdaq Capital
Market or any other national securities exchange or automated quotation system,
the Company will, if permitted by the rules of such exchange or automated
quotation system, list and keep listed, so long as the Common Stock shall be
so
listed on such exchange or automated quotation system, all Common Stock issuable
upon conversion of the Notes; provided
that if
the rules of such exchange or automated quotation system permit the Company
to
defer the listing of such Common Stock until the first conversion of the Notes
into Common Stock in accordance with the provisions of this Indenture, the
Company covenants to list such Common Stock issuable upon conversion of the
Notes in accordance with the requirements of such exchange or automated
quotation system at such time.
Section
14.10. Responsibility
of Trustee.
The
Trustee and any other conversion agent shall not at any time be under any duty
or responsibility to any Noteholder to determine the Conversion Rate or whether
any facts exist which may require any adjustment of the Conversion Rate, 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, which 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. 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. Without limiting the generality of the foregoing, neither
the
Trustee nor any conversion agent shall be under any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
entered into pursuant to Section
14.06
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
14.06
or to
any adjustment to be made with respect thereto, but, subject to the provisions
of Section
7.01,
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
14.11. Notice
to Holders Prior to Certain Actions.
In
case:
(a) the
Company shall declare a dividend (or any other distribution) on its Common
Stock
that would require an adjustment in the Conversion Rate pursuant to Section
14.05;
or
(b) the
Company shall authorize the granting to the holders of all or substantially
all
of its Common Stock of rights or warrants to subscribe for or purchase any
share
of any class or any other rights or warrants; or
101
(c) of
any
reclassification or reorganization of the Common Stock of the Company (other
than a subdivision or combination of its outstanding Common Stock, or a change
in par value, or from par value to no par value, or from no par value to par
value), or of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company;
or
(d) of
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
Noteholder at such holder’s address appearing on the Security Register provided
for in Section
4.02
of this
Indenture, as promptly as possible but in any event at least ten (10) days
prior
to the applicable date hereinafter specified, a notice stating (x) the date
on
which a record is to be taken for the purpose of such dividend, distribution
or
rights or warrants, or, if a record is not to be taken, the date as of which
the
holders of Common Stock of record to be entitled to such dividend, distribution
or rights are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up
is
expected to become effective or occur, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up.
Section
14.12. Shareholder
Rights Plans.
Each
share of Common Stock issued upon conversion of Notes pursuant to this Article
shall be entitled to receive the appropriate number of rights, if any, and
the
certificates representing the Common Stock issued upon such conversion shall
bear such legends, if any, in each case as may be provided by the terms of
any
shareholder rights plan adopted by the Company, as the same may be amended
from
time to time. If at the time of conversion, however, the rights have separated
from the shares of Common Stock in accordance with the provisions of the
applicable shareholder rights agreement so that the holders of the Notes would
not be entitled to receive any rights in respect of Common Stock issuable upon
conversion of the Notes, the conversion rate will be adjusted in accordance
with
Section
14.05(d)
treating
all rights previously issued as Securities for purposes of such adjustment,
subject to readjustment in the event of the expiration, termination or
redemption of the rights.
ARTICLE
15
MISCELLANEOUS
PROVISIONS
Section
15.01. Provisions
Binding on Company’s Successors.
All
the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
102
Section
15.02. Official
Acts by Successor Corporation.
Any
act
or proceeding by any provision of this Indenture authorized or required to
be
done or performed by any board, 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 Person that shall at the time be the lawful sole
successor of the Company.
Section
15.03. Addresses
for Notices, Etc.
Any
notice or demand which 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 deposited postage prepaid by registered
or
certified mail in a post office letter box or sent by telecopier transmission
addressed as follows:
If
to the
Company:
China
Security & Surveillance Technology, Inc.
13/F,
Shenzhen Special Zone Press Tower
Shennan
Road, Futian, Shenzhen
People’s
Republic of China
Attention:
Mr. Tu Xxx Xxxx
Facsimile
No: x00 000 00000000
With
a
copy to:
Xxxxxx
Xxxx Xxxxx Raysman & Xxxxxxx LLC
000
0xx
Xxxxxx,
X.X.
Xxxxxxxxxx,
XX 00000
X.X.X.
Attention:
Xxx Xxxxxxxxxx, Esq.
Facsimile
No: x0 000 000 0000
If
to the
Trustee:
The
Bank
of New York
000
Xxxxxxx Xxxxxx
Xxxxx
0X
Xxx
Xxxx,
XX 00000
U.S.A.
Attention:
Global Corporate Trust
Facsimile
No: x0 000 000 0000/5803
The
Trustee, by notice to the Company, may designate additional or different
addresses for subsequent notices or communications.
103
Any
notice or communication mailed to a Noteholder shall be mailed to such holder
by
first-class mail, postage prepaid, at his address as it appears on the Security
Register and shall be sufficiently given to such holder 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
15.04. Governing
Law.
THIS
INDENTURE, THE GUARANTEE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
Section
15.05. 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, 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 include: (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) 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; (3) 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 (4) a statement as to whether or not, in the opinion of
such
person, such condition or covenant has been complied with.
Section
15.06. Legal
Holidays.
In
any
case in which the date of maturity of Interest on or principal of the Notes
or
the redemption date of any Note will not be a Business Day, then payment of
such
Interest on or principal 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 date of maturity or the redemption date, and no Interest shall
accrue for the period from and after such date.
Section
15.07. Company
Responsible for Making Calculations.
The
Company will be responsible for making all calculations required under the
Notes. The Company will make these calculations in good faith and absent
manifest error, these calculations will be final and binding on the Noteholders.
Promptly after the calculation thereof, the Company will provide to each of
the
Trustee and any other conversion agent and Officers’ Certificate setting forth a
schedule of its calculations, and each of the Trustee and any other conversion
agent is entitled to conclusively rely upon the accuracy of such calculations
without independent verification. The Trustee will forward the Company’s
calculations to any holder upon the written request of such holder.
104
Section
15.08. Benefits
of Indenture.
Nothing
in this Indenture or in the Notes, express or implied, shall give to any Person,
other than the parties hereto, any paying agent, any authenticating agent,
any
conversion agent, any Common Depositary, any 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
15.09. 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
15.10. 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 delivery
of
Notes in connection with the original issuance thereof and transfers and
exchanges of Notes hereunder, including under Sections
2.04,
2.05,
2.06,
2.07,
3.02
and
14.02,
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
7.07.
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 corporation 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
corporation.
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 either promptly appoint a successor authenticating agent or itself assume
the duties and obligations of the former authenticating agent under this
Indenture and, upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of such appointment
of
a successor authenticating agent to all holders of Notes as the names and
addresses of such holders appear on the Security Register.
105
The
Company agrees to pay to the authenticating agent from time to time such
compensation for its services as shall be agreed upon in writing between the
Company and the authenticating agent.
The
provisions of Sections
7.02,
7.03,
7.04
and
12.03
and this
Section shall be applicable to any authenticating agent.
Section
15.11. Indenture
and Notes Solely Corporate Obligations.
No
recourse for the payment of the principal of, 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
incorporator, shareholder, employee, agent, officer, director or subsidiary,
as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, 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 issue of the
Notes.
Section
15.12. 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.
Section
15.13. Severability.
In
case
any provision in this Indenture or in the Notes shall be invalid, illegal or
unenforceable, then (to the extent permitted by law) the validity, legality
and
enforceability of the remaining provisions shall not in any way be affected
or
impaired thereby.
[Signature
page(s) to follow.]
106
IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed.
CHINA SECURITY & SURVEILLANCE TECHNOLOGY,
INC.
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By: | /s/ Tu Xxx Xxxx | |
Name:
|
Tu Xxx Xxxx
|
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Title: | CEO |
CHINA SAFETECH HOLDINGS LIMITED
|
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By: | /s/ Tu Xxx Xxxx | |
Name:
|
Tu Xxx Xxxx |
|
Title: | CEO |
CHINA SECURITY & SURVEILLANCE TECHNOLOGY (HK)
LTD.
|
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By: | /s/ Tu Xxx Xxxx | |
Name:
|
Tu Xxx Xxxx |
|
Title: | CEO |
CHAIN STAR INVESTMENTS LTD.
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By: | /s/ Tu Xxx Xxxx | |
Name:
|
Tu Xxx Xxxx |
|
Title: | Director |
FOR
THE PURPOSE OF SECTION 4.18(A) ONLY
GOLDEN
GROUP CORPORATION (SHENZHEN) LIMITED
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By: | /s/ Tu Xxx Xxxx | |
Name:
|
Tu Xxx Xxxx |
|
Title: | Director |
SHANGHAI
XXXXX XXXX DIGITAL TECHNOLOGY CO., LTD.
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By: | /s/ Tu Xxx Xxxx | |
Name:
|
Tu Xxx Xxxx |
|
Title: | Director |
CHINA
SECURITY & SURVEILLANCE TECHNOLOGY (PRC),
INC.
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By: | /s/ Tu Xxx Xxxx | |
Name:
|
Tu Xxx Xxxx |
|
Title: | Director |
SHENZHEN
TONGXING SHIXUN TECHNOLOGY
CO., LTD.
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By: | /s/ Xxxxx Xxxx Hui | |
Name:
|
Xxxxx Xxxx Hui |
|
Title: | Director |
SHENZHEN
HONGTIANZHI ELECTRONICS
CO., LTD.
|
||
|
|
|
By: | /s/ Xxxxx Xxxxx | |
Name:
|
Xxxxx Xxxxx |
|
Title: | Director |
SHANGHAI
XXXXX XXXX PUBLIC SAFETY PREVENTION TECHNOLOGY CO.,
LTD.
|
||
|
|
|
By: | /s/ Yang Xxx Xxxx | |
Name:
|
Yang Xxx Xxxx |
|
Title: | Director |
SHANGHAI
XXXXX XXXX DIGITAL EQUIPMENT LTD.
|
||
|
|
|
By: | /s/ Yang Xxx Xxxx | |
Name:
|
Yang Xxx Xxxx |
|
Title: | Director |
GUANGZHOU
SHIXING DIGITAL TECHNOLOGY CO.,
LTD.
|
||
|
|
|
By: | /s/ Xxxxx Xx | |
Name:
|
Xxxxx Xx |
|
Title: | Director |
THE
BANK OF NEW YORK,
a
New York banking corporation,
as
Trustee
|
||
|
|
|
By: | /s/ Xxxx Xxx | |
Name:
|
Xxxx Xxx |
|
Title: | Assistant Treasurer |
EXHIBIT
A
[FORM
OF
FACE OF NOTE]
[UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF EUROCLEAR
BANK
S.A./N.V. (“EUROCLEAR”), OR CLEARSTREAM BANKING, SOCIÉTÉ ANONYME
(“CLEARSTREAM”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
ITS
AUTHORIZED NOMINEE OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF EUROCLEAR OR CLEARSTREAM (AND ANY PAYMENT IS MADE TO ITS
AUTHORIZED NOMINEE, OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF EUROCLEAR OR CLEARSTREAM), ANY TRANSFER, PLEDGE OR OTHER
USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, ITS AUTHORIZED NOMINEE, HAS AN INTEREST
HEREIN.]1
THIS
SECURITY AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY HAVE
NOT
BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) OR OTHER SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE, BY ACQUISITION HEREOF, THE HOLDER:
(1) REPRESENTS
THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT;
(2) AGREES
THAT IT WILL NOT WITHIN THE PERIOD SET FORTH IN RULE 144 UNDER THE SECURITIES
ACT (CURRENTLY TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY OTHER
THAN
WITH RESPECT TO AFFILIATES) (A) RESELL OR OTHERWISE TRANSFER THE SECURITY
EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY
EXCEPT (I) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (II) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(III)
TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION
S
UNDER THE SECURITIES ACT, (IV) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE, OR (V) PURSUANT
TO
A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER OR
(B)
ENGAGE
IN HEDGING TRANSACTIONS WITH RESPECT TO THIS SECURITY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH SECURITY UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT; AND
1 This
legend should be included only if the Note is a Global Note.
A-1
(3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS
TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(A)(V) ABOVE) A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
[IN
CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.]2
2 This
legend should be included only if the Note is a Definitive
Note.
A-2
CHINA
SECURITY & SURVEILLANCE TECHNOLOGY, INC.
1.0%
GUARANTEED SENIOR UNSECURED CONVERTIBLE NOTES DUE 2012
ISIN:
XS0298379701
Common
Code: 029837970
No.
2
$__________
CHINA
SECURITY & SURVEILLANCE TECHNOLOGY, INC., a corporation duly organized and
validly existing under the laws of the State of Delaware (herein called the
“Company”,
which
term includes any successor corporation under the Indenture referred to on
the
reverse hereof), for value received hereby promises to pay to The Bank of New
York Depositary (Nominees) Limited, or registered assigns, as common depositary
for Clearstream Banking, société anonyme and/or Euroclear Bank S.A./N.V., at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, (i) the Repurchase Amount as set forth on Schedule
I
hereto
on April 24, 2012, (ii) interest, semi-annually on April 24 and October 24
of
each year, commencing October 24, 2007 on the outstanding principal sum of
the
Note at said office or agency, in like coin or currency, at the rate per annum
of 1.0%, from and including April 24, 2007 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for to, but
excluding the following Interest Payment Date and (iii) interest on overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) interest at the rate borne by the Notes, if any, at the rate
of
5% per annum.
Except
as
otherwise provided in the Indenture, the interest payable on the Note pursuant
to the Indenture on any April 24 or October 24 will be paid to the Person
entitled thereto as it appears in the Security Register at the close of business
on the record date, which shall be the April 10 or October 10
(whether
or not a Business Day) next preceding such April 24 or October 24, as provided
in the Indenture; provided
that any
such interest not punctually paid or duly provided for shall be payable as
provided in the Indenture. The Company shall pay interest (i) on any Notes
in
certificated form by check mailed to the address of the Person entitled thereto
as it appears in the Security Register (provided
that the
holder of Notes with an aggregate principal amount in excess of $1,000,000
shall, at the written election of such holder, be paid by wire transfer of
immediately available funds) or (ii) on any Global Note by wire transfer of
immediately available funds to the account of the Common Depositary or its
nominee.
Reference
is made to the further provisions of this Note set forth on the reverse hereof,
including, without limitation, provisions giving the holder of this Note the
right to convert this Note into Common Stock of the Company on the terms and
subject to the limitations referred to on the reverse hereof and as more fully
specified in the Indenture. Such further provisions shall for all purposes
have
the same effect as though fully set forth at this place.
This
Note
shall be governed by and construed in accordance with the laws of the State
of
New York.
A-3
This
Note
shall not be valid or become obligatory for any purpose until the certificate
of
authentication hereon shall have been manually signed by the Trustee or a duly
authorized authenticating agent under the Indenture.
A-4
IN
WITNESS WHEREOF, the Company has caused this Note to be duly
executed.
CHINA
SECURITY & SURVEILLANCE TECHNOLOGY, INC.
By:
Name:
Title:
TRUSTEE’S
CERTIFICATE OF AUTHENTICATION
This
is
one of the Notes described in the within-named Indenture.
THE
BANK
OF NEW YORK,
a
New
York banking corporation,
as
Trustee
By:
Authorized
Signatory
Dated:
A-5
[FORM
OF
REVERSE OF NOTE]
CHINA
SECURITY & SURVEILLANCE TECHNOLOGY, INC.
1.0%
GUARANTEED SENIOR UNSECURED CONVERTIBLE NOTE DUE 2012
This
Note
is one of a duly authorized issue of Notes of the Company, designated as its
1.0%
Guaranteed Senior Unsecured Convertible Notes due 2012 (herein called the
“Notes”),
in an
initial aggregate principal amount of $__________, issued and to be issued
under
and pursuant to an Indenture dated April 24, 2007 (herein called the
“Indenture”),
among
the Company, China Safetech Holdings Limited and China Security &
Surveillance Technology (HK) Ltd., as the Guarantors, and The
Bank
of New York, a New York banking corporation, as trustee (herein called the
“Trustee”),
to
which Indenture and all indentures supplemental thereto reference is hereby
made
for a description of the rights, limitations of rights, obligations, duties
and
immunities thereunder of the Trustee, the Company and the holders of the
Notes.
In
case
an Event of Default shall have occurred and be continuing, the principal of
and
accrued and unpaid Interest on all Notes may be declared by either the Trustee
or the holders of not less than 25% in aggregate principal amount of the Notes
then outstanding, and upon said declaration shall become, due and payable,
in
the manner, with the effect and subject to the conditions provided in the
Indenture.
The
Indenture contains provisions permitting the Company and the Trustee, with
the
consent of the holders of a majority in aggregate principal amount of the Notes
at the time outstanding, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions
of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Notes; provided
that no
such supplemental indenture shall (i) extend the fixed maturity of any Note,
(ii) reduce the rate or extend the time of payment of Interest thereon, (iii)
reduce the principal amount thereof or reduce any amount payable upon redemption
or repurchase thereof, (iv) change the obligation of the Company to repurchase
any Note upon the happening of a Termination
of Trading
in a
manner adverse to the holders of Notes, (v) impair the right of any Noteholder
to institute suit for the payment thereof, (vi) make the principal thereof
or
interest thereon payable in any coin or currency other than that provided in
the
Notes, (vii) impair the right to convert the Notes into Common Stock or reduce
the number of shares of Common Stock or any other property receivable by a
Noteholder upon conversion subject to the terms set forth in the Indenture,
including Section 14.05 thereof, in each case, without the consent of the holder
of each Note so affected, (viii) modify any of the provisions of Section 8.02
or
Section 6.07 thereof, except to increase any such percentage or to provide
that
certain other provisions of the Indenture cannot be modified or waived without
the consent of the holder of each Note so affected, (ix) change any obligation
of the Company to maintain an office or agency in the places and for the
purposes set forth in Section 4.02 thereof, (x) reduce the quorum or voting
requirements set forth in Article 13, (xi) subordinate the Notes or any
Guarantee to any other obligation of the Company or the applicable Guarantor,
(xii) release any security interest that may have been granted in favor of
the
holders of the Notes other than pursuant to the terms of such security interest,
(xiii) at any time after a Change of Control has occurred, change the time
at
which the Change of Control Offer relating thereto must be made or at which
the
Notes must be repurchased pursuant to such Change of Control Offer, (xiv) at
any
time after the Company is obligated to make an Asset Sale Offer with the Excess
Proceeds from Asset Sales, change the time at which such Asset Sale Offer must
be made or at which the Notes must be repurchased pursuant thereto, (xv) make
any change in any Guarantee that would adversely affect the holders or (xvi)
reduce the aforesaid percentage of Notes, the holders of which are required
to
consent to any such supplemental indenture, without the consent of the holders
of all Notes then outstanding. Subject to the provisions of the Indenture,
the
holders of a majority in aggregate principal amount of the Notes at the time
outstanding may on behalf of the holders of all of the Notes waive any past
Default or Event of Default under the Indenture and its consequences except
(A)
a default in the payment of Interest on, or the principal of, any of the Notes,
(B) a failure by the Company to convert any Notes into Common Stock of the
Company, (C) a default in the payment of the purchase price pursuant to Section
3.02 of the Indenture or (D) a default in respect of a covenant or provisions
of
the Indenture which under Article 10 of the Indenture cannot be modified or
amended without the consent of the holders of each or all Notes then outstanding
or affected thereby. Any such consent or waiver by the holder of this Note
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Note and any
Notes which may be issued in exchange or substitution hereof, irrespective
of
whether or not any notation thereof is made upon this Note or such other
Notes.
A-6
No
reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and Interest on this Note at the
place, at the respective times, at the rate and in the coin or currency herein
prescribed.
Interest
on the Notes shall be computed on the basis of a 360-day year of twelve 30-day
months.
The
Notes
are issuable in fully registered form, without coupons, in denominations of
$100,000 principal amount and any multiple of $100,000. At the office or agency
of the Company referred to on the face hereof, and in the manner and subject
to
the limitations provided in the Indenture, without payment of any service charge
but with payment of a sum sufficient to cover any tax, assessment or other
governmental charge that may be imposed in connection with any registration
or
exchange of Notes, Notes may be exchanged for a like aggregate principal amount
of Notes of any other authorized denominations.
The
Notes
are not subject to redemption through the operation of any sinking
fund.
In
the
event that the Company shall be required to commence an Asset Sale Offer, a
Change of Control Offer or a Termination
of Trading
Offer,
the Company shall mail to all holders of record of the Notes a notice which
states the terms of such Offer to Purchase, and, in the case of a Change of
Control Offer or Termination
of Trading
Offer,
the circumstances and relevant facts regarding such event. Each holder shall
have the right to accept such offer and require the Company to repurchase all
or
any portion of such holder’s Notes in cash equal to the Repurchase
Amount.
Holders
electing to have a Note purchased pursuant to a Offer to Purchase shall deliver
to the Company such Note with the form entitled “Purchase
Notice”
on
the
reverse thereof duly completed, together with the Note, duly endorsed for
transfer, at any time prior to the close of business on the Business Day
immediately preceding the Purchase Date, and shall deliver the Notes to the
Trustee (or other paying agent appointed by the Company) as set forth in the
Indenture.
A-7
If
the
Purchase Date falls after a record date and on or prior the corresponding
Interest Payment Date, then accrued and unpaid Interest to, but excluding,
the
Purchase Date shall be paid on such Interest Payment Date to the holders of
record of such Notes on the applicable record date instead of to the holders
surrendering such Notes for repurchase on such date. The Notes will be subject
to repurchase in multiples of $100,000 principal amount.
Holders
have the right to withdraw any Purchase Notice by delivering to the Trustee
(or
other paying agent appointed by the Company) a written notice of withdrawal
up
to the close of business on the Business Day immediately preceding the Purchase
Date all as provided in the Indenture.
If
money
or cash, sufficient to pay the repurchase price of all Notes or portions thereof
to be purchased as of the Purchase Date is deposited with the Trustee (or other
paying agent appointed by the Company), on the Purchase Date, interest will
cease to accrue on such Notes (or portions thereof) immediately after such
Purchase Date, and the holder thereof shall have no other rights as such other
than the right to receive the repurchase price upon surrender of such
Note.
Subject
to the occurrence of certain events and in compliance with the provisions of
the
Indenture, prior to the final maturity date of the Notes, the holder hereof
has
the right, at its option, to convert each $100,000 principal amount of the
Notes
into 4,237 shares of the Company’s Common Stock (a conversion price of
approximately $23.60 per share), as such shares shall be constituted at the
date
of conversion and subject to adjustment from time to time as provided in the
Indenture, upon surrender of this Note with the form entitled “Conversion
Notice”
on
the
reverse thereof duly completed, to the Company at the office or agency of the
Company maintained for that purpose in accordance with the terms of the
Indenture, or at the option of such holder, the Corporate Trust Office, and,
unless the shares issuable on conversion are to be issued in the same name
as
this Note, duly endorsed by, or accompanied by instruments of transfer in form
satisfactory to the Company duly executed by, the holder or by his duly
authorized attorney. The Company will notify the holder thereof in writing
of
any event triggering the right to convert the Notes as specified above in
accordance with the Indenture.
No
adjustment in respect of interest on any Note converted or dividends on any
shares issued upon conversion of such Note will be made upon any conversion
except as set forth in the next sentence. If this Note (or portion hereof)
is
surrendered for conversion during the period from the close of business on
any
record date for the payment of interest to the close of business on the Business
Day preceding the following Interest Payment Date, this Note (or portion hereof
being converted) must be accompanied by payment, in immediately available funds
or other 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 shall be required (1) if the Company has specified a Purchase
Date
that is during such period or (2) to the extent of any overdue Interest, if
any
overdue interest exists at the time of conversion with respect to such Note.
A-8
No
fractional shares will be issued upon any conversion, but an adjustment and
payment in cash will be made, as provided in the Indenture, in respect of any
fraction of a share which would otherwise be issuable upon the surrender of
any
Note or Notes for conversion.
A
Note in
respect of which a holder is exercising its right to require repurchase upon
a
Asset Sale Offer, Change of Control Offer or Termination
of Trading
Offer on
a Purchase Date may be converted only if such holder withdraws its election
to
exercise either such right in accordance with the terms of the
Indenture.
Upon
due
presentment for registration of transfer of this Note at the office or agency
of
the Company maintained for that purpose in accordance with the terms of the
Indenture, a new Note or Notes of authorized denominations for an equal
aggregate principal amount will be issued to the transferee in exchange thereof,
subject to the limitations provided in the Indenture, without charge except
for
any tax, assessment or other governmental charge imposed in connection
therewith.
The
Company, the Trustee, any authenticating agent, any paying agent, any conversion
agent and any Registrar may deem and treat the registered holder hereof as
the
absolute owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or any Registrar) for the purpose of receiving payment
hereof, or on account hereof, for the conversion hereof and for all other
purposes, and neither the Company nor the Trustee nor any other authenticating
agent nor any paying agent nor other conversion agent nor any Registrar shall
be
affected by any notice to the contrary. All payments made to or upon the order
of such registered holder shall, to the extent of the sum or sums paid, satisfy
and discharge liability for monies payable on this Note.
No
recourse for the payment of the principal of or Interest on this Note, or for
any claim based hereon or otherwise in respect hereof, and no recourse under
or
upon any obligation, covenant or agreement of the Company in the Indenture
or
any supplemental indenture or in any Note, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
shareholder, employee, agent, officer or director or subsidiary, as such, past,
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
For
purposes of sections 1272, 1273 and 1275 of the Internal Revenue Code of 1986,
as amended, this Note is being issued with Tax Original Issue Discount and
the
issue date of this Note is April 24, 2007.
This
Note
shall be governed by and construed in accordance with the laws of New
York.
Terms
used in this Note and defined in the Indenture are used herein as therein
defined.
A-9
ABBREVIATIONS
The
following abbreviations, when used in the inscription of the face of this Note,
shall be construed as though they were written out in full according to
applicable laws or regulations.
TEN COM |
-
|
as tenants in common | UNIF GIFT MIN ACT |
-
|
Custodian |
TEN ENT |
-
|
as tenant by the entireties | (Cust) (Minor) | ||
JT TEN |
-
|
as joint tenants with right of survivorship
under Uniform Gifts to Minors Act
and
not as tenants in common
|
|||
(State) |
Additional
abbreviations may also be used though not in the above list.
A-10
SCHEDULE
I
CHINA
SECURITY & SURVEILLANCE TECHNOLOGY, INC.
1.0%
Guaranteed Senior Unsecured Convertible Notes due 2012
No.
2
The
original Principal Amount of this Note is FIFTY MILLION DOLLARS ($50,000,000).
The Company will pay the Repurchase Amount as defined below.
“Repurchase
Amount”
means,
with respect to any Note, the Redemption Price plus
any
accrued and unpaid Interest on such Note (including post-petition interest
in
any proceeding under any Bankruptcy Law) and interest accrued on overdue
principal (and, to the extent lawful, on overdue installments of interest)
and
premium, if any, at a rate that is 5% per annum in excess of the rate of
Interest then in effect.
“Redemption
Price”
means
the amount calculated in accordance with the following formula, rounded (if
necessary) to two decimal places with 0.005 being rounded upwards:
Redemption
Price = I x (1 + r/4)d/90
|
||
Where:
|
||
I
|
=
|
Issue
price (100% of Principal Amount) of the Notes;
|
r
|
=
|
15.0%
expressed as a decimal; and
|
d
|
=
|
number
of days from and including the Issue Date to but excluding, the date
for
redemption, calculated on the basis of a 360-day year consisting
of 12
months of 30 days each, and in the case of an incomplete month, the
actual
number of days elapsed.
|
For
the
avoidance of doubt, if the date fixed for redemption is one of the following
quarter-annual dates, the Redemption Price for each US$100,000 principal amount
shall be as set out in the table below in respect of such quarter-annual
date:
Quarter-annual
Date
|
Redemption
Price (US$)
|
|
July
24, 2007
|
US$103,750.00
|
|
October
24, 2007
|
$107,640.63
|
|
January
24, 2008
|
$111,677.15
|
|
April
24, 2008
|
$115,865.04
|
|
July
24, 2008
|
$120,209.98
|
|
October
24, 2008
|
$124,717.85
|
|
January
24, 2009
|
$129,394.77
|
|
April
24, 2009
|
$134,247.08
|
|
July
24, 2009
|
$139,281.34
|
|
October
24, 2009
|
$144,504.39
|
|
January
24, 2010
|
$149,923.31
|
|
April
24, 2010
|
$155,545.43
|
|
July
24, 2010
|
$161,378.39
|
|
October
24, 2010
|
$167,430.08
|
|
January
24, 2011
|
$173,708.70
|
|
April
24, 2011
|
$180,222.78
|
|
July
24, 2011
|
$186,981.13
|
|
October
24, 2011
|
$193,992.93
|
|
January
24, 2012
|
$201,267.66
|
|
April
24, 2012
|
$208,815.20
|
A-11
For
purposes thereof, the Principal Amount has been adjusted in accordance with
the
terms of the Indenture as set forth below:
Date
Principal
Amount
Notation
Explaining Principal
Amount
Recorded
Authorized
Signature of Trustee or Custodian
A-12
CONVERSION
NOTICE
TO:
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.
_______
The
undersigned registered owner of this Note hereby irrevocably exercises the
option to convert this Note, or the portion thereof (which is $100,000 or a
multiple thereof) below designated, into shares of Common Stock of China
Security & Surveillance Technology, Inc. in accordance with the terms of the
Indenture referred to in this Note, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Notes representing any unconverted principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. Capitalized terms used herein but
not
defined shall have the meanings ascribed to such terms in the Indenture. If
shares or any portion of this Note not converted are to be issued in the name
of
a person other than the undersigned, the undersigned will provide the
appropriate information below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest, including additional interest, if any, accompanies this
Note.
Dated:
Signature(s)
Signature(s)
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Registrar in
addition to, or in substitution for, STAMP.
Fill
in
the registration of shares of Common Stock if to be issued, and Notes if to
be
delivered, other than to and in the name of the registered holder:
(Name)
(Street Address)
(City, State and Zip Code)
Please print name and address
Principal
amount to be converted
(if
less than all):
$
Social
Security or Other Taxpayer Identification Number:
A-13
PURCHASE
NOTICE
TO:
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.
_______
The
undersigned registered owner of this Note hereby irrevocably acknowledges
receipt of a notice from China Security & Surveillance Technology, Inc. (the
“Company”)
regarding the right of holders to elect to require the Company to repurchase
the
Notes upon the occurrence of either an Asset Sale Offer, a Change of Control
Offer or a Termination of Trading Offer and requests and instructs the Company
to repay the entire principal amount of this Note, or the portion thereof (which
is $100,000 or an integral multiple thereof) below designated, in accordance
with the terms of the Indenture at the price of the
Repurchase Amount, to the registered holder hereof.
Capitalized
terms used herein but not defined shall have the meanings ascribed to such
terms
in the Indenture. The Notes shall be purchased by the Company as of the Purchase
Date pursuant to the terms and conditions specified in the
Indenture.
$
principal amount of the Notes to which this Purchase Notice relates (if less
than entire principal amount) pursuant to 4.12, 4.17 or 4.23 of the Indenture,
check the box below:
o Section
4.12 Purchase
Date:_______________
o Section
4.17
o Section
4.23
Dated:
Signature(s):
NOTICE:
The above signatures of the holder(s) hereof must correspond with the name
as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
A-14
Note
Certificate Number (if applicable):
Principal
amount to be repurchased (if less than all):
Social
Security or Other Taxpayer Identification Number:
Assignment
Form
To
assign
this Note, fill in the form below:
(I)
or
(we) assign and transfer this Note to
(Insert
assignee’s social security or other tax I.D. no.)
(Print or type assignee’s name, address and zip code)
and
irrevocably appoint
______________________________________________________________ as
agent
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
______________
Your
Signature: ____________________________________
(Sign
exactly as your name appears on the face of this
Note)
|
Signature
Guarantee:
A-15
EXHIBIT
B
FORM
OF NOTATION OF GUARANTEE
For
value
received, each Guarantor (which term includes any successor Person under the
Indenture), jointly and severally, unconditionally guarantees, to the extent
set
forth in the Indenture and subject to the provisions in the Indenture, dated
April 24, 2007 (the “Indenture”),
among
China Security & Surveillance Technology, Inc., as issuer (the “Company”),
the
Guarantors listed on the signature pages thereto and The Bank of New York,
a New
York banking corporation, as trustee (the “Trustee”),
(a)
the due and punctual payment of the principal of, premium, if any, and interest
on the Notes, whether at maturity, by acceleration, redemption, repurchase
or
otherwise, the due and punctual payment of interest on overdue principal and
premium, if any, and, to the extent permitted by law, interest and the due
and
punctual performance of all other obligations of the Company to the holders
or
the Trustee all in accordance with the terms of the Indenture and (b) in case
of
any extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to
the
holders of Notes and to the Trustee pursuant to the Guarantee and the Indenture
are expressly set forth in Article 9 of the Indenture and reference is hereby
made to the Indenture for the precise terms of the Guarantee. This Guarantee
is
subject to release as and to the extent set forth in Section 9.05 of the
Indenture. Each holder of a Note, by accepting the same agrees to and shall
be
bound by such provisions. Capitalized terms used herein and not defined are
used
herein as so defined in the Indenture.
[GUARANTOR NAME] | ||
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By: | ||
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B-1
EXHIBIT
C
FORM
OF CERTIFICATE OF TRANSFER
China
Security & Surveillance Technology, Inc.
13/F,
Shenzhen Special Zone Press Tower
Shennan
Road, Futian, Shenzhen
People’s
Republic of China
The
Bank
of New York
000
Xxxxxxx Xxxxxx
Xxxxx
0X
Xxx
Xxxx,
XX 00000
U.S.A.
Attention:
Global Corporate Trust
Re:
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1.0%
GUARANTEED SENIOR UNSECURED CONVERTIBLE NOTES DUE
2012
|
Reference
is hereby made to the Indenture, dated April 24, 2007 (the “Indenture”),
among
CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC., as issuer (the “Company”),
the
Guarantors thereto and THE BANK OF NEW YORK, a New York banking corporation,
as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
___________________,
(the “Transferor”)
owns
and proposes to transfer the Note[s] or interest in such Note[s] in the
principal amount of $___________ (the “Transfer”),
to
___________________________ (the “Transferee”).
In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK
ALL THAT APPLY]
1. Check
if Transferee will take delivery of a beneficial interest in the Global Note
or
a Definitive Note Pursuant to Rule 144A.
The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the “Securities
Act”),
and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect
to
which such Person exercises sole investment discretion, and such Person and
each
such account is a “qualified institutional buyer” within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer
is
in compliance with any applicable blue sky securities laws of any state of
the
United States. Upon consummation of the proposed Transfer in accordance with
the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the legend printed
on the Global Note and/or the Definitive Note and in the Securities
Act.
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2.
Check
if Transferee will take delivery of a beneficial interest in the Global Note
or
a Definitive Note pursuant to Regulation S.
The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a Person in the United
States and (A) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (B) the transaction was executed in, on or through the facilities
of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer
in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(a) of Regulation
S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Distribution
Compliance Period (as defined in Regulation S under the Securities Act), (A)
the
transfer is not being made to a U.S. Person or for the account or benefit of
a
U.S. Person, (B) the Transferee is not a U.S. person and is not acquiring the
Notes for the account or benefit of any U.S. person or is a U.S. person who
purchased securities in a transaction that did not require registration under
the Securities Act, (C) the Transferee understands that it may and agrees to
resell the Notes only in accordance with the provisions of Regulation S,
pursuant to registration under the Securities Act, or pursuant to an available
exemption from registration; and understands that it may not and agrees
not
to
engage
in
hedging
transactions
with regard to the Notes or the common stock issuable upon conversion unless
in
compliance with the Securities Act; (D) the Transferee acknowledges that the
certificates evidencing the Notes will contain a legend to the effect that
transfer is prohibited except in accordance with the provisions of Regulation
S,
pursuant to registration under the Securities Act, or pursuant to an available
exemption from registration; and that hedging transactions involving those
securities may not be conducted unless in compliance with the Securities Act;
(E) the Transferee acknowledges that the Company is required to refuse to
register any transfer of the securities not made in accordance with the
provisions of Regulation S, pursuant to registration under the Securities Act,
or pursuant to an available exemption from registration; provided,
however,
that if
the Notes are in bearer form or foreign law prevents the Company from refusing
to register securities transfers, other reasonable procedures (such as a legend
described above) are implemented to prevent any transfer of the securities
not
made in accordance with the provisions of Regulation S. Upon consummation of
the
proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions
on
Transfer enumerated in the legend printed on the Global Note and/or the
Definitive Note and in the Securities Act.
3. Check
and complete if Transferee will take delivery of a beneficial interest in the
Global Note or a Definitive Note pursuant to any provision of the Securities
Act
other than Rule 144A or Regulation S.
The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Global Notes and Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that:
(i)
such
Transfer is being effected pursuant to and in accordance with Rule 144 under
the
Securities Act; or
C-2
(ii)
such
Transfer is being effected to the Company or a subsidiary thereof; or
(iii)
such
Transfer is being effected pursuant to an effective registration statement
under
the Securities Act.
This
certificate and the statements contained herein are made for your benefit and
the benefit of the Company.
[Insert
Name of
Transferor]
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By: | ||
Name:
Title:
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Dated: | ||
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X-0
XXXXXXX
X
XXXX
XX XXXXXXXXXXX LEGEND FOR
COMMON
STOCK ISSUED UPON CONVERSION
THE
SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR
OTHER SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE OFFERED
OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE, BY ACQUISITION HEREOF,
THE HOLDER:
(1) REPRESENTS
THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT;
(2) AGREES
THAT IT WILL NOT WITHIN THE PERIOD SET FORTH IN RULE 144 UNDER THE SECURITIES
ACT (CURRENTLY TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY OTHER
THAN
WITH RESPECT TO AFFILIATES) (A) RESELL OR OTHERWISE TRANSFER THE SECURITY
EVIDENCED HEREBY EXCEPT (I) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (II) TO
A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (III) TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE, OR
(V)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE
SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER
OR (B)
ENGAGE
IN HEDGING TRANSACTIONS WITH RESPECT TO THIS SECURITY UNLESS IN COMPLIANCE
WITH
THE SECURITIES ACT; AND
(3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS
TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(A)(V) ABOVE) A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
D-1